EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
     SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 21,
2007, by and among Toreador Resources Corporation, a Delaware corporation, with
headquarters located at 4809 Cole Avenue, Suite 108, Dallas, Texas 75205 (the
“Company”), and the investors listed on the Schedule of Buyers attached hereto
(individually, a “Buyer” and collectively, the “Buyers”).
WHEREAS:
     A.       The Company and each Buyer is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and
Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the 1933 Act.
     B.       Each Buyer wishes to purchase, and the Company wishes to sell,
upon the terms and conditions stated in this Agreement, that aggregate number of
shares of the Common Stock, par value $0.15625 per share, of the Company (the
“Common Stock”), set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers (which aggregate amount for all Buyers together shall be
2,710,843 shares of Common Stock and shall collectively be referred to herein as
the “Common Shares”) and (ii) warrants, in substantially the form attached
hereto as Exhibit A (the "Warrants”), to acquire that number of shares of Common
Stock set forth opposite such Buyer’s name in column (4) on the Schedule of
Buyers (as exercised, collectively, the “Warrant Shares”).
     C.       Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
“Registration Rights Agreement”) pursuant to which the Company has agreed to
provide certain registration rights with respect to the Common Shares and the
Warrant Shares under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
     D.       The Common Shares, the Warrants and the Warrant Shares
collectively are referred to herein as the “Securities”.
     NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
     1.       PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.
               (a) Purchase of Common Shares and Warrants. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to each Buyer, and each Buyer severally, but
not jointly, agrees to purchase from the Company on the Closing Date (as defined
below), the number of Common Shares as is set forth opposite such Buyer’s name
in column (3) on the Schedule of Buyers, along with Warrants to acquire up to
that number of Warrant Shares as is set forth opposite such Buyer’s name in
column (4) on the

 

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Schedule of Buyers (the “Closing”). The Closing shall occur on the Closing Date
at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York
10022.
               (b)       Purchase Price. The purchase price for the Common
Shares and related Warrants to be purchased by each Buyer at the Closing shall
be the amount set forth opposite such Buyer’s name in column (5) of the Schedule
of Buyers (the “Purchase Price”) which shall be equal to the amount of $16.60
per Common Share.
               (c)       Closing Date. The date and time of the Closing (the
“Closing Date”) shall be 10:00 a.m., New York City Time, on the date hereof (or
such other date and time as is mutually agreed to by the Company and each
Buyer).
               (d)       Form of Payment. On the Closing Date, (i) each Buyer
shall pay its respective Purchase Price to the Company for the Common Shares and
Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of
immediately available funds in accordance with the Company’s written wire
instructions, and (ii) the Company shall deliver to each Buyer (A) one or more
stock certificates, free and clear of all restrictive and other legends (except
as expressly provided in Section 2(h) hereof), evidencing the number of Common
Shares such Buyer is purchasing as is set forth opposite such Buyer’s name in
column (3) of the Schedule of Buyers and (B) a Warrant pursuant to which such
Buyer shall have the right to acquire such number of Warrant Shares as is set
forth opposite such Buyer’s name in column (4) of the Schedule of Buyers, in
each case duly executed on behalf of the Company and registered in the name of
such Buyer.
     2.       BUYER’S REPRESENTATIONS AND WARRANTIES.
               Each Buyer represents and warrants with respect to only itself
that:
               (a) Organization; Authority. Such Buyer is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter
into and to consummate the transactions contemplated by the Transaction
Documents (as defined below) to which it is a party and otherwise to carry out
its obligations hereunder and thereunder.
               (b) No Public Sale or Distribution. Such Buyer is (i) acquiring
the Common Shares and the Warrants and (ii) upon exercise of the Warrants will
acquire the Warrant Shares issuable upon exercise thereof, in the ordinary
course of business for its own account and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act and such Buyer does
not have a present arrangement to effect any distribution of the Securities to
or through any person or entity; provided, however, that by making the
representations herein, such Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act. Such Buyer is acquiring the
Securities hereunder in the ordinary course of its business. Such Buyer does not
presently have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Securities.

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               (c)       Accredited Investor Status. Such Buyer is an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D.
               (d)       Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
               (e)       Information. Such Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by such Buyer. Such Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence investigations conducted by
such Buyer or its advisors, if any, or its representatives shall modify, amend
or affect such Buyer’s right to rely on the Company’s representations and
warranties contained herein. Such Buyer understands that its investment in the
Securities involves a high degree of risk and is able to afford a complete loss
of such investment. Such Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.
               (f)       No Governmental Review. Such Buyer understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
               (g)       Transfer or Resale. Such Buyer understands that except
as provided in the Registration Rights Agreement: (i) the Securities have not
been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless
(A) subsequently registered thereunder and sold pursuant to an effective
registration statement, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the
1933 Act, as amended (or a successor rule thereto) (collectively, “Rule 144”);
(ii) any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person (as defined in Section 3(r)) through whom the sale is made) may
be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
Person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder. Notwithstanding the foregoing, the Securities may be

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pledged in connection with a bona fide margin account or other loan secured by
the Securities and such pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Buyer effecting
a pledge of Securities shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement
or any other Transaction Document (as defined below), including, without
limitation, this Section 2(g); provided, that in order to make any sale,
transfer or assignment of Securities, such Buyer and its pledgee shall make such
disposition in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act.
               (h)       Legends. Such Buyer understands that the certificates
or other instruments representing the Common Shares and the Warrants Shares
shall bear, until such time as the resale of the Common Shares and the Warrant
Shares have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement, and except as set forth below, any legend as
required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE] HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall, at such
Buyer’s election either (x) issue a certificate without such legend to the
holder of the Common Shares or Warrant Shares upon which it is stamped or
(y) issue to such holder by electronic delivery at the applicable balance
account at The Depository Trust Company (“DTC”), if, unless otherwise required
by state securities laws, (i) such Common Shares or Warrant Shares are
registered for resale under the 1933 Act, (ii) in connection with a sale,
assignment or other transfer, such holder provides the Company with an opinion
of counsel, in a generally acceptable form, to the effect that such sale,
assignment or transfer of the Common Shares or Warrant Shares may be made
without registration under the applicable requirements of the 1933 Act and that
such legend is no longer required, or (iii) such holder provides the Company
with reasonable assurance that the Common Shares or Warrant Shares can be sold,
assigned or transferred pursuant to Rule 144(k).

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               (i)       Validity; Enforcement. This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of such Buyer and shall constitute the legal, valid and
binding obligations of such Buyer enforceable against such Buyer in accordance
with their respective terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.
               (j)       No Conflicts. The execution, delivery and performance
by such Buyer of this Agreement and the Registration Rights Agreement and the
consummation by such Buyer of the transactions contemplated hereby and thereby
will not (i) result in a violation of the organizational documents of such Buyer
or (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Buyer is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such Buyer,
except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of such Buyer to perform its obligations hereunder.
               (k)       Residency. Such Buyer is a resident of that
jurisdiction specified below its address on the Schedule of Buyers.
               (l)       Certain Trading Activities. Such Buyer acknowledges
that it is aware, and it will advise any Affiliate (as defined in Rule 405
promulgated pursuant to the 1933 Act) of such Buyer which (x) has knowledge of
the transactions contemplated hereby, (y) has or shares discretion relating to
such Buyer’s investments or trading or information concerning such Buyer’s
investments and (z) is subject to such Buyer’s review or input concerning such
Affiliate’s investments or trading (collectively, “Trading Affiliates”) who is
unaware, that, subject to certain limited exceptions, the U.S. federal and state
securities laws prohibit any person who has material, non-public information
about a company from purchasing or selling securities of such company or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities.
     3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
               The Company represents and warrants to each of the Buyers that:
               (a)       Organization and Qualification. Each of the Company and
its “U.S. Subsidiaries” (which for purposes of this Agreement means any entity
in which the Company, directly or indirectly, owns capital stock or holds an
equity or similar interest that is organized in the United States) is a
corporation duly organized and validly existing in good standing under the laws
of the jurisdiction in which it is organized, and has the requisite corporate
power and authorization to own its properties and to carry on its business as
now being conducted. Each of the Company and its U.S. Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the

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failure to be so qualified or be in good standing would not reasonably be
expected to have a Material Adverse Effect. Each of the Company’s “Foreign
Subsidiaries” (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest that is organized in a country other than the United States),
is duly organized or formed and is validly existing in good standing under the
laws of the jurisdiction in which it is organized or formed and has the
requisite power and authorization to own its properties and to carry on its
business as now being conducted. Each of the Foreign Subsidiaries is duly
qualified as a foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not reasonably be
expected to have a Material Adverse Effect. As used in this Agreement, “Material
Adverse Effect” means any material adverse effect on the business, properties,
assets, operations, results of operations or condition (financial or otherwise)
of the Company and its U.S. Subsidiaries and Foreign Subsidiaries (each, a
“Subsidiary” and collectively, the “Subsidiaries”), taken as a whole, or on the
transactions contemplated hereby and the other Transaction Documents or by the
agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents. The Company has no Subsidiaries
except as set forth on Schedule 3(a).
               (b)       Authorization; Enforcement; Validity. The Company has
the requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5), the Warrants
and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the “Transaction Documents”) and to issue the Securities in accordance with the
terms hereof and thereof. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Common Shares and the Warrants and the reservation for issuance and the
issuance of the Warrant Shares issuable upon exercise of the Warrant have been
duly authorized by the Company’s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders. This Agreement and the other Transaction Documents have been duly
executed and delivered by the Company, and constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.
               (c)       Issuance of Securities. The Common Shares and the
Warrants are duly authorized and, upon issuance in accordance with the terms
hereof, shall be validly issued and free from all taxes, liens and charges with
respect to the issue thereof and the Common Shares shall be fully paid and
nonassessable with the holders being entitled to all rights accorded to a holder
of Common Stock. As of the Closing Date, the Company shall have duly authorized
and reserved for issuance a number of shares of Common Stock which equals the
number of Warrant Shares. The Company shall, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued Capital Stock, solely

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for the purpose of effecting the exercise of the Warrants, the number of shares
of Common Stock issuable upon exercise of the Warrants. Upon exercise in
accordance with the Warrants, the Warrant Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, with the holders being entitled to all rights accorded to
a holder of Common Stock. The offer and issuance by the Company of the
Securities is exempt from registration under the 1933 Act.
               (d)       No Conflicts. The execution, delivery and performance
of the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Common Shares and the Warrants and the
reservation for issuance and issuance of the Warrant Shares) will not (i) result
in a violation of the Certificate of Incorporation (as defined below) or Bylaws
(as defined below) of the Company or any of its Subsidiaries or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of The NASDAQ Global Market (the "Principal Market”))
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected, except
with regard to (ii) and (iii) where such conflict, default, rights of
termination, amendment, acceleration or cancellation, violation of law, rule,
regulation, order, judgment or decree would not be reasonably expected to have a
Material Adverse Effect.
               (e)       Consents. Except as set forth on Schedule 3(e), the
Company is not required to obtain any consent, authorization or order, or make
any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents, in each case in accordance with the terms hereof or
thereof, except where the failure to obtain any consent, authorization or order
of, or make any filing or registration would not be reasonably likely to result
in a Material Adverse Effect. Except as set forth on Schedule 3(e), all
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the Closing Date, except where the failure to obtain any
consent, authorization or order, or make any filing or registration would not be
reasonably likely to result in a Material Adverse Effect. The Company and its
Subsidiaries are unaware of any facts or circumstances that might prevent the
Company from obtaining or effecting any of the registration, application or
filings pursuant to the preceding sentence. The Company is not in violation of
the listing requirements of the Principal Market and has no knowledge of any
facts that would reasonably lead to delisting or suspension of the Common Stock
in the foreseeable future.
               (f)       Acknowledgment Regarding Buyer’s Purchase of
Securities. The Company acknowledges and agrees that each Buyer is acting solely
in the capacity of arm’s length purchaser with respect to the Transaction
Documents to which such Buyer is a party and the transactions contemplated
hereby and thereby and that no Buyer is (i) an officer or director of the
Company, (ii) an Affiliate of the Company or any of its Subsidiaries or (iii) to
the Knowledge of the Company, a “beneficial owner” of more than 10% of the
shares of Common Stock (as

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defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended (the "1934 Act”)). The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company or any of its
Subsidiaries (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer’s purchase of the Securities. The Company
further represents to each Buyer that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives. “Knowledge” or any derivation thereof with
respect to the Company or any of its Subsidiaries means the conscious awareness
of Nigel Lovett, Michael FitzGerald, Doug Weir or Charles Campise of a
particular fact or other matter.
               (g)       No General Solicitation; Placement Agent’s Fees.
Neither the Company, nor any of its Affiliates, nor any Person acting on its or
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other
than for persons engaged by any Buyer or its investment advisor) relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and
hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney’s fees and out-of-pocket expenses) arising in
connection with any such claim. The Company acknowledges that it has engaged
Merrill Lynch & Co., Inc. as placement agent (the “Agent”) in connection with
the sale of the Securities. Other than the Agent, the Company has not engaged
any placement agent or other agent in connection with the sale of the
Securities.
               (h)       No Integrated Offering. None of the Company, its
Subsidiaries, any of their Affiliates, and any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause the purchase
and sale of the Securities contemplated hereby to be integrated with prior
offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of the Principal Market. None of the Company, its Subsidiaries,
their Affiliates and any Person acting on their behalf will take any action or
steps referred to in the preceding sentence that would require registration of
any of the Securities under the 1933 Act or cause the purchase and sale of the
Securities contemplated hereby to be integrated with other offerings.
               (i)       Application of Takeover Protections; Rights Agreement.
Except as set forth in Schedule 3(i), the Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Certificate of Incorporation or the laws of the State of Delaware
which is or could become applicable to any Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and any Buyer’s ownership of the Securities. The
Company has not adopted a stockholder rights plan or similar

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arrangement relating to accumulations of beneficial ownership of Securities or a
change in control of the Company.
               (j)       SEC Documents; Financial Statements. Except as set
forth in Schedule 3(j), during the two (2) years prior to the date hereof, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof or prior to the date of the Closing, and all exhibits included therein
and financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the “SEC Documents”). The
Company has delivered to the Buyers or their respective representatives true,
correct and complete copies of the SEC Documents not available on the EDGAR
system. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Except as
set forth in Schedule 3(j), as of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Except as set forth in
Schedule 3(j), such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyers which is not
included in the SEC Documents, including, without limitation, information
referred to in Section 2(e) of this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstance under which they are or
were made, not misleading.
               (k)       Absence of Certain Changes. Except as disclosed in
Schedule 3(k), since December 31, 2005, there has been no change or development
that would reasonably be expected to result in a Material Adverse Effect. Except
as disclosed in Schedule 3(k), since December 31, 2005, the Company has not
(i) declared or paid any dividends, (ii) sold any assets outside of the ordinary
course of business or (iii) had capital expenditures outside of the ordinary
course of business. Neither the Company nor any of its Subsidiaries has taken
any steps to seek protection pursuant to any bankruptcy law nor does the Company
have any Knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so. The Company and its Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and
after giving effect to the transactions contemplated hereby to occur at the
Closing, will not be Insolvent (as defined below). For purposes of this
Section 3(k), “Insolvent” means, with respect to any Person (as defined in
Section 3(r)) (i) the present fair saleable value of such Person’s assets is
less than the

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amount required to pay such Person’s total Indebtedness (as defined in
Section 3(r)), (ii) such Person is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, (iii) such Person intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such debts mature or
(iv) such Person has unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted.
               (l)       No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.
               (m)       Conduct of Business; Regulatory Permits. Neither the
Company nor its Subsidiaries is in violation of any term of or in default under
their respective Certificate of Incorporation or Bylaws. Neither the Company nor
any of its Subsidiaries is in violation of any federal, state, local or foreign
judgment, decree or order or any statute, ordinance, rule or regulation
(collectively, “Laws”) applicable to the Company or its Subsidiaries, and
neither the Company nor any of its Subsidiaries will conduct its business in
violation of any Laws, in both cases, except for possible violations which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the foregoing, the Company is
not in violation of any of the rules, regulations or requirements of the
Principal Market and has no knowledge of any facts or circumstances that would
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. Except as set forth on Schedule 3(m), since
December 31, 2005, (i) the Common Stock has been designated for quotation or
listed on the Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (iii) the Company has received
no communication, written or oral, from the SEC or the Principal Market
regarding the suspension or delisting of the Common Stock from the Principal
Market. The Company and its Subsidiaries possess all certificates,
authorizations, permits and other approvals (“Permits”) issued by the
appropriate federal, state or foreign regulatory authorities necessary under
Laws to conduct their respective businesses, except where the failure to possess
such certificates, authorizations or permits would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, and to the
Knowledge of the Company or any Subsidiary, neither the Company nor any such
Subsidiary has received any written notice of proceedings relating to the
revocation or modification of any such Permits.
               (n)       Foreign Corrupt Practices. Neither the Company, nor any
of its Subsidiaries, nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, in the course of
its actions for, or on behalf of, the Company (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as

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amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
               (o)       Sarbanes-Oxley Act. The Company is in compliance with
any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are
effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof.
               (p)       Transactions With Affiliates. Except as set forth on
Schedule 3(p), none of the officers, directors or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
               (q)       Equity Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of (y) 30,000,000 shares of
Common Stock, of which as of the date hereof, 16,215,829 shares are issued and
outstanding, 1,156,368 shares are reserved for issuance pursuant to the
Company’s employee incentive plan and other options and warrants outstanding and
2,464,766 shares are reserved for issuance pursuant to securities exercisable or
exchangeable for, or convertible into, shares of Common Stock and (z) 4,000,000
shares of preferred stock, par value $1.00 per share, of which as of the date
hereof, 72,000 shares are issued and outstanding. All of such outstanding shares
have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as set forth on Schedule 3(q): (i) no shares of the
Company’s capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company;
(ii) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any shares of
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries; (iii) there
are no outstanding debt securities, notes, credit agreements, credit facilities
or other agreements, documents or instruments evidencing Indebtedness (as
defined in Section 3(s)) of the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries is or may become bound; (iv) there are no
financing statements securing obligations in any material amounts, either singly
or in the aggregate, filed in connection with the Company or any of its
Subsidiaries; (v) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement);
(vi) there are no outstanding securities or instruments of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or

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any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; (viii) the Company does not have any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement; and (ix) the Company and its Subsidiaries have no material
liabilities or material obligations required to be disclosed in the SEC
Documents (as defined herein) but not so disclosed in the SEC Documents, other
than those incurred in the ordinary course of the Company’s or any Subsidiary’s
respective businesses. The Company has furnished or made available to the Buyer
upon such Buyer’s request, true, correct and complete copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof and
the certificate or articles of incorporation or other organizational documents
of the Subsidiaries (collectively, the “Certificate of Incorporation”), and the
Company’s Bylaws and the bylaws or other similar documents of the Subsidiaries,
as amended and as in effect on the date hereof (collectively, the “Bylaws”), and
the terms of all securities convertible into, or exercisable or exchangeable
for, shares of Common Stock and the material rights of the holders thereof in
respect thereto.
               (r)       Indebtedness and Other Contracts. Except as disclosed
in Schedule 3(r), neither the Company nor any of its Subsidiaries (i) has any
outstanding Indebtedness (as defined below), (ii) is in violation of any term of
or in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Effect, or (iii) is a party to any contract, agreement or instrument relating to
any Indebtedness, the performance of which, in the judgment of the Company’s
officers, has or is reasonably expected to have a Material Adverse Effect.
Schedule 3(r) provides a detailed description of the material terms of any such
outstanding Indebtedness. For purposes of this Agreement: (x) "Indebtedness” of
any Person means, without duplication (A) all indebtedness for borrowed money,
(B) all obligations issued, undertaken or assumed as the deferred purchase price
of property or services (other than trade payables entered into in the ordinary
course of business) (including, without limitation, “capital leases” in
accordance with generally accepted accounting principles), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through
(G) above; (y) “Contingent Obligation”

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means, as to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to any indebtedness, lease, dividend or
other obligation of another Person if the primary purpose or intent of the
Person incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or in part)
against loss with respect thereto; and (z) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
               (s)       Absence of Litigation. Except as set forth on
Schedule 3(s), there is no action, suit, proceeding, inquiry or investigation
before or by the Principal Market, any court, public board, government agency,
self-regulatory organization or body pending or, to the Knowledge of the
Company, threatened against or affecting the Company, the Common Stock or any of
its Subsidiaries or any of the Company’s or the Company’s Subsidiaries’ officers
or directors, whether of a civil or criminal nature or otherwise. The matters
set forth on Schedule 3(s) would not have a Material Adverse Effect.
               (t)       Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Except as set forth on Schedule 3(t), neither the
Company nor any Subsidiary has been refused any insurance coverage sought or
applied for. Neither the Company nor any Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
               (u)       Employee Relations. (i) Neither the Company nor any of
its Subsidiaries is a party to any collective bargaining agreement or employs
any member of a union. The Company and its Subsidiaries believe that their
relations with their employees are good. No executive officer (as defined in
Rule 501(f) of the 1933 Act) of the Company or any of its Subsidiaries has
notified the Company or any such Subsidiary that such officer intends to leave
the Company or any such Subsidiary or otherwise terminate such officer’s
employment with the Company or any such Subsidiary. No executive officer of the
Company or any of its Subsidiaries is, or is now expected to be, in violation of
any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing matters.
                         (ii)       The Company and its Subsidiaries are in
compliance with all federal, state, local and foreign laws and regulations
respecting labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

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               (v)       Title. Except as set forth on Schedule 3(v), the
Company and its Subsidiaries have good and defensible title to all properties
and assets owned by them, in each case free and clear of any security interests,
mortgages, liens, encumbrances, claims or other defects, except (i) such as
would not materially and adversely affect the value of such property and
(ii) such as would not materially interfere with the current use of such
property by the Company or its Subsidiaries. The real property, improvements,
equipment and personal property held under lease by the Company or Subsidiaries
are held under valid and enforceable leases, with such exceptions as would not
materially interfere with the current use of such real property, improvements,
equipment or personal property by the Company or Subsidiaries. As used herein,
the term “lease” shall not include any exploration, exploitation or
rehabilitation permit held by the Company or its Subsidiaries.
               (w)       Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, original works of authorship, trade secrets and other
intellectual property rights and all applications related thereto (“Intellectual
Property Rights”) necessary to conduct their respective businesses as now
conducted. None of the Company’s or its Subsidiaries’ Intellectual Property
Rights have expired, terminated or been abandoned, or are expected to expire,
terminate or be abandoned, within three years from the date of this Agreement.
The Company does not have any Knowledge of any infringement by the Company or
any of its Subsidiaries of Intellectual Property Rights of others. There is no
claim, action or proceeding made or brought, or to the Knowledge of the Company,
threatened, against the Company or any of its Subsidiaries regarding its
Intellectual Property Rights. To the Knowledge of the Company, there are no
facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights.
               (x)       Environmental Laws. The Company and its Subsidiaries
(i) are in compliance with any and all Environmental Laws (as hereinafter
defined), (ii) have received all Permits necessary under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such Permits where, in each
case, the failure to so comply could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. The term
“Environmental Laws” means all Laws relating to pollution or protection of human
health and the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous Materials”) into the environment,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials, as
well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
               (y)       Subsidiary Rights. Except as set forth on
Schedule 3(y), the Company or one of its Subsidiaries has the unrestricted right
to vote, and (subject to limitations imposed by

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applicable law) to receive dividends and distributions on, all capital
securities of its Subsidiaries as owned by the Company or such Subsidiary.
               (z)       Tax Status. The Company and each of its Subsidiaries
(i) has made or filed all federal, foreign and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and
(iii) has set aside on its books provision reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim.
               (aa)       Internal Accounting and Disclosure Controls. Except as
set forth on Schedule 3(aa), the Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization and
(iv) the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. Except as set forth on Schedule 3(aa),
the Company maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15 under the 1934 Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the 1934 Act is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms of the SEC, including,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Company’s management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure. Except as set forth on Schedule 3(aa), during the
twelve months prior to the date hereof neither the Company nor any of its
Subsidiaries have received any notice or correspondence from any accountant
relating to any potential material weakness in any part of the system of
internal accounting controls of the Company or any of its Subsidiaries.
               (bb)       Form S-1 Eligibility. The Company is eligible to
register the Common Shares and the Warrant Shares for resale by the Buyers using
Form S-1 promulgated under the 1933 Act.
               (cc)       Off Balance Sheet Arrangements. There is no
transaction, arrangement, or other relationship between the Company and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed or
that otherwise would be reasonably likely to have a Material Adverse Effect.
               (dd)       Manipulation of Price. The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to

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result in the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities, (ii) other
than the Agent, sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) other than the Agent
paid or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
               (ee)       Transfer Taxes. On the Closing Date, all stock
transfer or other taxes (other than income or similar taxes) which are required
to be paid in connection with the sale and transfer of the Securities to be sold
to each Buyer hereunder will be, or will have been, fully paid or provided for
by the Company, and all laws imposing such taxes will be or will have been
complied with.
               (ff)       Investment Company Status. The Company is not, and
upon consummation of the sale of the Securities will not be, an “investment
company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of 1940, as
amended.
               (gg)       Acknowledgement Regarding Buyers’ Trading Activity. It
is understood and acknowledged by the Company (i) that none of the Buyers have
been asked by the Company or its Subsidiaries to agree, nor has any Buyer agreed
with the Company or its Subsidiaries, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold the Securities for any specified
term; (ii) that any Buyer, and counterparties in “derivative” transactions to
which any such Buyer is a party, directly or indirectly, presently may have a
“short” position in the Common Stock, and (iii) that each Buyer shall not be
deemed to have any affiliation with or control over any arm’s length
counterparty in any “derivative” transaction. The Company further understands
and acknowledges that (a) one or more Buyers may engage in hedging and/or
trading activities at various times during the period that the Securities are
outstanding and (b) such hedging and/or trading activities, if any, can reduce
the value of the existing stockholders’ equity interest in the Company both at
and after the time the hedging and/or trading activities are being conducted.
The Company acknowledges that such aforementioned hedging and/or trading
activities do not constitute a breach of this Agreement or any of the documents
executed in connection herewith.
               (hh)       U.S. Real Property Holding Corporation. The Company is
not, has never been, and so long as any Securities remain outstanding, shall not
become, a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Buyer’s request.
               (ii) Disclosure. Other than with respect to the occurrence of the
purchase and sale contemplated hereby, the Company confirms that neither it nor
any other Person acting on its behalf has provided any of the Buyers or their
respective agents or counsel with any information that currently constitutes or
could reasonably be expected to constitute material, nonpublic information. The
Company understands and confirms that each of the Buyers will rely on the
foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Buyers regarding the Company, its
business and the transactions contemplated hereby, including the Schedules to
this Agreement, furnished by or on behalf of the Company are

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true and correct and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each press release issued by the Company during the twelve
(12) months preceding the date of this Agreement did not at the time of release
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. No event or circumstance has occurred or information exists with
respect to the Company or any Subsidiary or either of its or their respective
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company’s reports filed under the
1934 Act are being incorporated into an effective registration statement filed
by the Company under the 1933 Act). The Company acknowledges and agrees that no
Buyer makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 2.
     4.       COVENANTS.
               (a)       Reasonable Best Efforts. Each party shall use its
reasonable best efforts timely to satisfy each of the covenants and the
conditions to be satisfied by it as provided in Sections 5, 6 and 7 of this
Agreement.
               (b)       Form D and Blue Sky. The Company agrees to file a
Form D with respect to the Securities as required under Regulation D and to
provide a copy thereof to each Buyer promptly after such filing. The Company, on
or before the Closing Date, shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify the Securities for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to the Buyers on or prior to the
Closing Date. The Company shall make all filings and reports relating to the
offer and sale of the Securities required under applicable securities or “Blue
Sky” laws of the states of the United States following the Closing Date.
               (c)       Reporting Status. Until the date on which the Investors
(as defined in the Registration Rights Agreement) shall have sold all the Common
Shares and Warrant Shares and none of the Warrants are outstanding (the
“Reporting Period”), the Company shall timely file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would otherwise permit such
termination.
               (d)       Use of Proceeds. The Company will use the proceeds from
the sale of the Securities for general corporate purposes, including general and
administrative expenses and not for (i) the repayment of any outstanding
Indebtedness of the Company or any of its Subsidiaries, or (ii) the redemption
or repurchase of any of its or its Subsidiaries’ equity securities.
               (e)       Financial Information. The Company agrees to send the
following to each Investor during the Reporting Period (i) unless the following
are filed with the SEC through

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EDGAR and are available to the public through the EDGAR system, within one
(1) Business Day after the filing thereof with the SEC, a copy of its Annual
Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on
Form 8-K and any registration statements (other than on Form S-8) or amendments
filed pursuant to the 1933 Act, and (ii) copies of any notices and other
information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders. As used herein, “Business Day” means any day other than Saturday,
Sunday or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.
               (f)       Listing. The Company shall promptly secure the listing
of all of the Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed (subject to official
notice of issuance) and shall maintain such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock’s authorization for
listing on the Principal Market. Neither the Company nor any of its Subsidiaries
shall take any action which would be reasonably expected to result in the
delisting or suspension of the Common Stock on the Principal Market. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this Section 4(f).
               (g)       Fees. Subject to Section 8 below, at Closing, the
Company shall pay an expense allowance to Capital Ventures International LP (a
Buyer) or its designee(s) (in addition to any other expense amounts paid to any
Buyer prior to the date of this Agreement) for all reasonable costs and expenses
incurred in connection with the transactions contemplated by the Transaction
Documents (including all reasonable legal fees and disbursements in connection
therewith, documentation and implementation of the transactions contemplated by
the Transaction Documents and due diligence in connection therewith), in an
amount not to exceed $30,000 (in addition to any other expense amounts paid to
any Buyer prior to the date of this Agreement), which amount shall be withheld
by such Buyer from its Purchase Price at the Closing. The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, or broker’s commissions relating to or arising out of the transactions
contemplated hereby and incurred by the Company, including, without limitation,
any fees payable to the Agent. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
reasonable attorney’s fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment.
               (h)       Pledge of Securities. The Company acknowledges and
agrees that the Securities may be pledged by an Investor (as defined in the
Registration Rights Agreement) in connection with a bona fide margin agreement
or other loan or financing arrangement that is secured by the Securities. The
pledge of Securities shall not be deemed to be a transfer, sale or assignment of
the Securities hereunder, and no Investor effecting a pledge of Securities shall
be required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(g) of this Agreement;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(g) of this Agreement in order to effect a sale, transfer
or assignment of Securities to such pledgee. The Company hereby agrees to
execute and

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deliver such documentation as a pledgee of the Securities may reasonably request
in connection with a pledge of the Securities to such pledgee by an Investor.
               (i)       Disclosure of Transactions and Other Material
Information. On or before 8:30 a.m., New York City time, on the first Business
Day following the date of this Agreement, the Company shall issue a press
release and file a Current Report on Form 8-K describing the terms of the
transactions contemplated by the Transaction Documents in the form required by
the 1934 Act and attaching the material Transaction Documents (including,
without limitation, this Agreement (and all schedules to this Agreement) and the
form of the Registration Rights Agreement) as exhibits to such filing (including
all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing
with the SEC, no Buyer shall be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of its
respective officers, directors, employees or agents, that is not disclosed in
the 8-K Filing. The Company shall not, and shall cause each of its Subsidiaries
and its and each of their respective officers, directors, employees and agents,
not to, provide any Buyer with any material, nonpublic information regarding the
Company or any of its Subsidiaries from and after the filing of the 8-K Filing
with the SEC without the express written consent of such Buyer or as may be
required under the terms of the Transaction Documents. If a Buyer has, or
believes it has, received any such material, nonpublic information regarding the
Company or any of its Subsidiaries, it may provide the Company with written
notice thereof. The Company shall, within five (5) Trading Days of receipt of
such notice, make public disclosure of such material, nonpublic information. In
the event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Buyer shall have the right to make a public disclosure,
in the form of a press release, public advertisement or otherwise, of such
material, nonpublic information without the prior approval by the Company, its
Subsidiaries, or any of its or their respective officers, directors, employees
or agents. No Buyer shall have any liability to the Company, its Subsidiaries,
or any of its or their respective officers, directors, employees, stockholders
or agents for any such disclosure. Subject to the foregoing, neither the
Company, its Subsidiaries nor any Buyer shall issue any press releases or any
other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the 8-K Filing
and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written consent of
any applicable Buyer, neither the Company nor any of its Subsidiaries or
affiliates shall disclose the name of such Buyer in any filing, announcement,
release or otherwise, unless such disclosure is required by law, regulation or
the Principal Market.
               (j)       Additional Registration Statements. Until the date that
is 90 calendar days from the Effective Date (as defined in the Registration
Rights Agreement), the Company will not file a new registration statement under
the 1933 Act relating to securities that are not the Securities other than a
Form S-8 or Form S-4; for the avoidance of doubt, the foregoing shall not
restrict the Company’s ability to amend a registration statement of the Company
already on file with the SEC (an "Existing Registration Statement”) (or
supplement the prospectus contained

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therein) provided that neither the amendment nor the prospectus supplement
increases the aggregate number of shares of Common Stock registered pursuant to
such Existing Registration Statement.
               (k)       Corporate Existence. So long as any Buyer beneficially
owns any Securities, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company’s assets, except in the
event of a merger or consolidation or sale of all or substantially all of the
Company’s assets, where the surviving or successor entity in such transaction
(i) assumes the Company’s obligations hereunder and under the agreements and
instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose common stock is quoted on or listed for trading on the
Principal Market, the NASDAQ Capital Market, The NASDAQ Global Select Market,
the New York Stock Exchange or the American Stock Exchange.
               (l)       Additional Issuances of Securities.
                         (i)       For purposes of this Section 4(l), the
following definitions shall apply.
                           (1)       “Approved Stock Plan” means any employee
benefit plan which has been approved by the Board of Directors of the Company,
pursuant to which the Company’s securities may be issued to any employee,
officer, consultant or director for services provided to the Company.
                           (2)       “Common Stock Equivalents” means,
collectively, Options and Convertible Securities.
                           (3)       “Convertible Securities” means any stock or
securities (other than Options) convertible into or exercisable or exchangeable
for Common Stock.
                           (4)       “Excluded Securities” means Common Stock
issued or issuable: (i) in connection with any Approved Stock Plan, (ii) upon
exercise of the Warrants, (iii) upon exercise or conversion of any Options or
Convertible Securities which are outstanding on the day immediately preceding
the Closing Date, provided that the terms of such Options or Convertible
Securities are not materially amended, modified or changed on or after the
Closing Date, including, without limitation any amendment, modification or
change to decrease the exercise or conversion price, increase the term of, or
increase the number of shares issuable upon conversion or exercise of such
Option or Convertible Security and (iv) in connection with any strategic
acquisition or strategic transaction by the Company, whether through an
acquisition of stock or a merger of any business, assets or technologies the
primary purpose of which is not to raise equity capital.
                           (5)       “Options” means any rights, warrants or
options to subscribe for or purchase Common Stock or Convertible Securities.
                           (6)       “Trading Day” means any day on which the
Common Stock is traded on the Principal Market, or, if the Principal Market is
not the principal

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trading market for the Common Stock, then on the principal securities exchange
or securities market on which the Common Stock is then traded; provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00 p.m., New York City time).
                         (ii)       From the date hereof until the Effective
Date (the “Trigger Date”), the Company will not, directly or indirectly, offer,
sell, grant any option to purchase, or otherwise dispose of (or announce any
offer, sale, grant or any option to purchase or other disposition of) any of its
or its Subsidiaries’ equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for shares of Common Stock or Common Stock
Equivalents (any such offer, sale, grant, disposition or announcement being
referred to as a "Subsequent Placement”); provided that the foregoing shall not
apply to any Subsequent Placement which does not have the right to be registered
for resale prior to the three (3) month anniversary of the Effective Date.
                         (iii)       The restrictions contained in subsections
(ii) of this Section 4(l) shall not apply in connection with the issuance of any
Excluded Securities.
               (m)       Variable Securities. For so long as any Securities
remain outstanding, the Company shall not, in any manner, issue or sell any
rights, warrants or options to subscribe for or purchase Common Stock or
directly or indirectly convertible into or exchangeable or exercisable for
Common Stock at a price which varies or may vary with the market price of the
Common Stock, including by way of one or more reset(s) to any fixed price.
               (n)       Conduct of Business. The business of the Company and
its Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect.
     5.       REGISTER; TRANSFER AGENT INSTRUCTIONS.
               (a)       Register. The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to each holder of Securities), a register for the Common
Shares and the Warrants, in which the Company shall record the name and address
of the Person in whose name the Common Shares and the Warrants have been issued
(including the name and address of each transferee), the number of Common Shares
held by such Person and the number of Warrant Shares issuable upon exercise of
the Warrants held by such Person. The Company shall keep the register open and
available at all times during business hours for inspection of any Buyer or its
legal representatives.
               (b)       Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates or credit shares to the applicable balance accounts
at DTC, registered in the name of each Buyer or its

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respective nominee(s), for the Common Shares, and the Warrant Shares issued at
the Closing or upon exercise of the Warrants in such amounts as specified from
time to time by each Buyer to the Company upon exercise of the Warrants in the
form of Exhibit C attached hereto (the "Irrevocable Transfer Agent
Instructions”). The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and
stop transfer instructions to give effect to Section 2(h) hereof, will be given
by the Company to its transfer agent, and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents. If a Buyer
effects a sale, assignment or transfer of the Securities in accordance with
Section 2(h) and the other Transaction Documents, the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance accounts at DTC in such
name and in such denominations as specified by such Buyer to effect such sale,
transfer or assignment. In the event that such sale, assignment or transfer
involves Common Shares or Warrant Shares sold, assigned or transferred pursuant
to an effective registration statement or pursuant to Rule 144, the transfer
agent shall issue such Common Shares or Warrant Shares to the Buyer, assignee or
transferee, as the case may be, without any restrictive legend. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Buyer. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5(b) will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
               (c)       Additional Relief. If the Company shall fail for any
reason or for no reason to issue to the Buyer unlegended certificates or issue
such Common Shares or Warrant Shares to such Buyer by electronic delivery at the
applicable balance account at DTC within three (3) Trading Days (as defined
below) after the receipt of documents necessary for the removal of the legend
set forth in Section 2(h) above (the “Deadline Date”), then in addition to all
other remedies available to the Buyer, if on or after the Trading Day
immediately following such three Trading Day period, the Buyer purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Buyer of such Common Shares or Warrant Shares that
the Buyer anticipated receiving without legend from the Company (a “Buy-In"),
then the Company shall, within three (3) Business Days after the Buyer’s request
and in the Buyer’s discretion, either (i) pay cash to the Buyer in an amount
equal to the Buyer’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In Price"), at which
point the Company’s obligation to deliver such unlegended Common Shares or
Warrant Shares shall terminate, or (ii) promptly honor its obligation to deliver
to the Buyer such unlegended Common Shares or Warrant Shares as provided above
and pay cash to the Buyer in an amount equal to the excess (if any) of the
Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) the Closing Bid Price on the Removal Date. For purposes hereof,
“Closing Bid Price” means, for any security as of any date, the last closing bid
price for such security on the Principal Market, as reported by Bloomberg, or,
if the Principal Market begins to operate on an extended hours basis and does
not designate the closing bid price then the last bid price of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or trading market for
such security, the last closing bid price of

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such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the holder of Securities. If the Company and the
holder of Securities are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section 9(p). All such
determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the applicable calculation
period.
     6.       CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
               The obligation of the Company hereunder to issue and sell the
Common Shares and the related Warrants to each Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Buyer with prior written notice thereof:
                         (i)       Such Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Company.
                         (ii)       Such Buyer shall have delivered to the
Company the Purchase Price (less, in the case of Capital Ventures International
LP, the amounts withheld pursuant to Section 4(g)) for the Common Shares and the
related Warrants being purchased by such Buyer and each other Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
                         (iii)       The representations and warranties of such
Buyer shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date which shall be
true and correct as of such specified date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.
     7.       CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
               The obligation of each Buyer hereunder to purchase the Common
Shares and the related Warrants at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided
that these conditions are for each Buyer’s sole benefit and may be waived by
such Buyer at any time in its sole discretion by providing the Company with
prior written notice thereof:

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                         (i)       The Company shall have executed and delivered
to such Buyer (i) each of the Transaction Documents and (ii) the Common Shares
(in such amounts as is set forth across from such Buyer’s name in column (3) of
the Schedule of Buyers) and the related Warrants (in such amounts as is set
forth across from such Buyer’s name in column (4) of the Schedule of Buyers)
being purchased by such Buyer at the Closing pursuant to this Agreement.
                         (ii)       Such Buyer shall have received the opinion
of Haynes and Boone, LLP, the Company’s outside counsel (“Company Counsel”),
dated as of the Closing Date, in substantially the form of Exhibit D attached
hereto.
                         (iii)       The Company shall have delivered to such
Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of
Exhibit C attached hereto, which instructions shall have been delivered to and
acknowledged in writing by the Company’s transfer agent.
                         (iv)       The Company shall have delivered to such
Buyer a certificate evidencing the incorporation and good standing of the
Company and each of its U.S. Subsidiaries in such corporation’s state of
incorporation issued by the Secretary of State of such state of incorporation as
of a date within 10 days of the Closing Date.
                         (v)       The Company shall have delivered to such
Buyer a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State (or comparable
office) of each jurisdiction in which the Company conducts business and is
required to so qualify, as of a date within 10 days of the Closing Date.
                         (vi) The Common Stock (I) shall be listed on the
Principal Market and (II) shall not have been suspended, as of the Closing Date,
by the SEC or the Principal Market from trading on the Principal Market nor
shall suspension by the SEC or the Principal Market have been threatened, as of
the Closing Date, either (A) in writing by the SEC or the Principal Market or
(B) by falling below the minimum listing maintenance requirements of the
Principal Market.
                         (vii)       The Company shall have delivered to such
Buyer a certified copy of the Certificate of Incorporation as certified by the
Secretary of State of the State of Delaware within 10 days of the Closing Date.
                         (viii)       The Company shall have delivered to such
Buyer a certificate, executed by the Secretary of the Company and dated as of
the Closing Date, as to (i) the resolutions consistent with Section 3(b) as
adopted by the Company’s Board of Directors in a form reasonably acceptable to
such Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as
in effect at the Closing, in the form attached hereto as Exhibit D.
                         (ix)       (i) The representations and warranties of
the Company, to the extent not qualified by materiality or Material Adverse
Effect, shall have been true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date which shall be
true and correct in all material respects as of such specified date), (ii) the
representations and warranties of the Company, to the extent qualified by
materiality or Material Adverse Effect,

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shall have been true and correct as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date which shall be true and correct as of such specified
date), and (iii) the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date. Such Buyer shall have received a certificate,
executed by the Senior Vice President and Chief Financial Officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer in the form attached
hereto as Exhibit E.
                         (x)       The Company shall have delivered to such
Buyer a letter from the Company’s transfer agent certifying the number of shares
of Common Stock outstanding as of a date within five days of the Closing Date.
                         (xi)       The Company shall have obtained all
governmental, regulatory or third party consents and approvals, if any,
necessary for the sale of the Securities.
                         (xii)       The Company shall have delivered to such
Buyer such other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request.
     8.       TERMINATION. In the event that the Closing shall not have occurred
with respect to a Buyer on or before five (5) Business Days from the date hereof
due to the Company’s or such Buyer’s failure to satisfy the conditions set forth
in Sections 6 and 7 above (and the nonbreaching party’s failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, this if this Agreement is terminated pursuant to this
Section 8 by Capital Ventures International, LP, the Company shall remain
obligated to reimburse Capital Ventures International, LP for the expenses
described in Section 4(g) above.
     9.       MISCELLANEOUS.
               (a) Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of Manhattan
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such

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service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
               (b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
               (c) Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.
               (d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
               (e)       Entire Agreement; Amendments. This Agreement and the
other Transaction Documents supersede all other prior oral or written agreements
between the Buyers, the Company, their Affiliates and Persons acting on their
behalf with respect to the matters discussed herein, and this Agreement, the
other Transaction Documents and the instruments referenced herein contain the
entire understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
holders of Securities representing at least a majority of the amount of the
Common Shares, or, if prior to the Closing Date, the Buyers listed on the
Schedule of Buyers as being obligated to purchase at least a majority of the
amount of the Common Shares, and any amendment to this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding on all
Buyers, holders of Common Shares and holders of the Warrants, as applicable. No
provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Common Shares then outstanding. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration also is offered to
all of the parties to the Transaction Documents, holders of Common Shares or
holders of Warrants, as the case may be. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents. Without limiting the foregoing, the
Company confirms that, except as set forth in

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this Agreement, no Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company or otherwise.
               (f) Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with an overnight courier service, in each case properly addressed
to the party to receive the same. The addresses and facsimile numbers for such
communications shall be:
     If to the Company:
Toreador Resources Corporation
4809 Cole Avenue
Suite 108
Dallas, Texas 75205
Telephone: (214) 559-3933
Facsimile: (214) 559-3945
Attention: Doug Weir
     with a copy (for informational purposes only) to:
Haynes and Boone, LLP
901 Main St., Suite 3100
Dallas, TX 75202
Telephone: (214) 651-5562
Facsimile: (214) 200-0676
Attention: Janice V. Sharry, Esq.
     If to the Transfer Agent:
American Stock Transfer & Trust Company
59 Maiden Lane — Plaza Level
New York, NY 10038
Telephone: (718) 921-8293
Facsimile: (718) 921-8334
Attention: Issac Kagan
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers,
     with a copy (for informational purposes only) to:
Schulte Roth & Zabel LLP
919 Third Avenue

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New York, New York 10022
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Attention: Eleazer N. Klein, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or
(C) provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
               (g) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Common Shares. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of Common Shares representing at least a majority
of the number of the Common Shares, including by merger or consolidation. A
Buyer may assign some or all of its rights hereunder without the consent of the
Company, in which event such assignee shall be deemed to be a Buyer hereunder
with respect to such assigned rights.
               (h) No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
               (i) Survival. Unless this Agreement is terminated under
Section 8, the representations and warranties of the Company and the Buyers
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4, 5 and 9 shall survive the Closing and the delivery and exercise of
Securities, as applicable. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
               (j) Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
               (k) Indemnification. In consideration of each Buyer’s execution
and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company’s other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless each Buyer and each other holder of the Securities and all of their
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing Persons’ agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits,

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claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (other than incidental or consequential damages, losses,
liabilities and expenses) (irrespective of whether any such Indemnitee is a
party to the action for which indemnification hereunder is sought), and
including reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought
or made against such Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Company) and arising out of or
resulting from the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 9(k) shall be the same as those set forth in
Section 6 of the Registration Rights Agreement.
               (l)       No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
               (m)       Remedies. Each Buyer and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and
all rights and remedies which such holders have been granted at any time under
any other agreement or contract and all of the rights which such holders have
under any law. Any Person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.
Furthermore, the Company recognizes that in the event that it fails to perform,
observe, or discharge any or all of its obligations under the Transaction
Documents, any remedy at law may prove to be inadequate relief to the Buyers.
The Company therefore agrees that the Buyers shall be entitled to seek temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages and without posting a bond or other security.
               (n)       Rescission and Withdrawal Right. Notwithstanding
anything to the contrary contained in (and without limiting any similar
provisions of) the Transaction Documents, whenever any Buyer exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Buyer may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights.
               (o)       Payment Set Aside. To the extent that the Company makes
a payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the

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Buyers enforce or exercise their rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, foreign, state
or federal law, common law or equitable cause of action), then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
               (p)       Dispute Resolution. In the case of a dispute as to the
determination of the Closing Bid Price, the Company shall submit the disputed
determinations via facsimile within two Business Days of receipt of the notice
giving rise to such dispute to the Buyer. If the Buyer and the Company are
unable to agree upon such determination of the Closing Bid Price within three
Business Days of such disputed determination being submitted to the Buyer, then
the Company shall, within two Business Days submit via facsimile the disputed
determination of the Closing Bid Price to an independent, reputable investment
bank selected by the Company and approved by the Buyer. The Company shall cause
at its expense the investment bank to perform the determinations and notify the
Company and the Buyer of the results no later than ten Business Days from the
time it receives the disputed determinations. Such investment bank’s
determination shall be binding upon all parties absent demonstrable error.
               (q)       Independent Nature of Buyers’ Obligations and Rights.
The obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group, and the Company will not assert any
such claim, with respect to such obligations or the transactions contemplated by
the Transaction Documents and the Company acknowledges that the Buyers are not
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Buyer confirms that
it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Buyer to be
joined as an additional party in any proceeding for such purpose.
[Signature Page Follows]

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     IN WITNESS WHEREOF, each Buyer and the Company have caused its respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

            COMPANY:

TOREADOR RESOURCES CORPORATION
      By:   /s/ Douglas Weir         Name:   Douglas Weir        Title:   Senior
VP & CFO     

[Signature Page to Securities Purchase Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

            BUYERS:

CAPITAL VENTURES INTERNATIONAL
      By:   Heights Capital Management, Inc., its authorized agent              
                By:   /s/ Martin Kobinger         Name:   Martin Kobinger       
Title:   Investment Manager     

[Signature Page to Securities Purchase Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

            BUYERS:

GOLDMAN SACHS & CO.
      By:   /s/ Albert Dombrowski         Name:   Albert Dombrowski       
Title:   Authorized Signatory     

[Signature Page to Securities Purchase Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

            BUYERS:

SF CAPITAL PARTNERS LTD.
      By:   /s/ Brian H. Davidson         Name:   Brian H. Davidson       
Title:   Managing Director     

[Signature Page to Securities Purchase Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

            BUYERS:

OLD LANE, LP ON BEHALF OF OLD
LANE CAYMAN MASTER FUND, LP
      By:   /s/ Jonathan Barton         Name:   Jonathan Barton        Title:  
Managing Director     

[Signature Page to Securities Purchase Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

            BUYERS:

OLD LANE, LP ON BEHALF OF OLD
LANE HMA MASTER FUND, LP
      By:   /s/ Jonathan Barton         Name:   Jonathan Barton        Title:  
Managing Director     

[Signature Page to Securities Purchase Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

            BUYERS:

OLD LANE, LP ON BEHALF OF OLD
LANE US MASTER FUND, LP
      By:   /s/ Jonathan Barton         Name:   Jonathan Barton        Title:  
Managing Director     

[Signature Page to Securities Purchase Agreement]

 

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SCHEDULE OF BUYERS

                                  (1)   (2)   (3)   (4)   (5)   (6)            
                  Number of   Number of       Legal Representative’s Buyer  
Address and Facsimile Number   Common Shares   Warrant Shares   Purchase Price  
Address and Facsimile Number
 
                               
Capital Ventures International LP
  c/o Heights Capital Management, Inc.     903,614       163,052     $
15,000,000     Schulte Roth & Zabel LLP
 
  101 California Street, Suite 3250
San Francisco, CA 94111
Attention: Martin Kobinger
Facsimile: (415) 403-6525
Telephone: (415) 403-6500
Residence: Cayman Islands                           919 Third Avenue
New York, New York 10022
Attention: Eleazer Klein, Esq.
Facsimile: (212) 593-5955
Telephone: (212) 756-2376
 
                               
Goldman Sachs & Co.
  85 Broad Street
New York, NY 10004-2456
Attention: Daniel Oneglia
Tel: 212-902-8212
daniel.oneglia@gs.com     903,614       163,052     $ 15,000,000     Cravath,
Swaine & Moore LLP
825 Eighth Avenue
New York, New York 10019
Attention: Erik Tavzel
Facsimile: (212) 474-3700
Telephone: (212) 474-1796

 

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                                  (1)   (2)   (3)   (4)   (5)   (6)            
                  Number of   Number of       Legal Representative’s Buyer  
Address and Facsimile Number   Common Shares   Warrant Shares   Purchase Price  
Address and Facsimile Number
SF Capital Partners Ltd.
  c/o Stark Offshore Management LLC     602,410       108,701     $ 10,000,000  
   
 
  3600 South Lake Drive
St. Francis, WI 53235
Attention: Brian Davidson
Tel: 414-294-7016
Fax: 414-294-7700
bdavidson@starkinvestments.com                            
 
                               
Old Lane Cayman Master Fund, LP
  Old Lane, LP     179,518       32,393     $ 2,980,000      
 
  500 Park Avenue, 2nd Floor
New York, NY 10022
Attention: Jonathan Barton
Chief Financial Officer
Tel: 212-572-3260
jonathan.barton@oldlane.com                            
 
                               
Old Lane HMA Master Fund, LP
  Old Lane, LP     50,904       9,185     $ 845,000      
 
  500 Park Avenue, 2nd Floor
New York, NY 10022
Attention: Jonathan Barton
Chief Financial Officer
Tel: 212-572-3260
jonathan.barton@oldlane.com                            
 
                               
Old Lane US Master Fund, LP
  Old Lane, LP     70,783       12,772     $ 1,175,000      
 
  500 Park Avenue, 2nd Floor
New York, NY 10022
Attention: Jonathan Barton
Chief Financial Officer
Tel: 212-572-3260
jonathan.barton@oldlane.com                            

[Signature Page to Securities Purchase Agreement]

 

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[Signature Page to Securities Purchase Agreement]

 

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EXHIBITS

     
Exhibit A
  Form of Warrant
Exhibit B
  Form of Registration Rights Agreement
Exhibit C
  Form of Irrevocable Transfer Agent Instructions
Exhibit D
  Form of Company Counsel Opinion
Exhibit E
  Form of Secretary’s Certificate
Exhibit F
  Form of Officer’s Certificate

 

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SCHEDULES

         
Schedule 3(a)
  -   List of Subsidiaries
Schedule 3(e)
  -   Consents
Schedule 3(i)
  -   Application of Takeover Protections
Schedule 3(j)
  -   SEC Documents
Schedule 3(k)
  -   Absence of Certain Changes
Schedule 3(m)
  -   Conduct of Business
Schedule 3(p)
  -   Transactions with Affiliates
Schedule 3(q)
  -   Equity Capitalization
Schedule 3(r)
  -   Indebtedness and Other Contracts
Schedule 3(s)
  -   Absence of Litigation
Schedule 3(t)
  -   Insurance
Schedule 3(v)
  -   Title
Schedule 3(y)
      Subsidiary Rights
Schedule 3(aa)
  -   Internal Accounting and Disclosure Controls

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EXHIBIT A
[FORM OF WARRANT]
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
TOREADOR RESOURCES CORPORATION
Warrant To Purchase Common Stock
Warrant No.:           
Number of Shares:           
March 23, 2007 (“Issuance Date”)
          Toreador Resources Corporation, a Delaware corporation (the
“Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, [CAPITAL VENTURES
INTERNATIONAL LP] [GOLDMAN SACHS & CO.] [SF CAPITAL PARTNERS LTD.] [OLD LANE
CAYMAN MASTER FUND, LP] [OLD LANE HMA MASTER FUND, LP] [OLD LANE US MASTER FUND,
LP], the registered holder hereof or its permitted assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company, at
the Exercise Price (as defined below) then in effect, upon surrender of this
Warrant to Purchase Common Stock (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any
time or times on or after the date hereof, but not after 11:59 p.m., New York
time, on the Expiration Date (as defined below), ___(___)1 fully paid
nonassessable shares of Common Stock (as defined below) (the “Warrant Shares”).
To the extent any holder of SPA Warrants (as defined below) has not exercised
its SPA Warrants in full (such unexercised number of Warrant Shares,
collectively, the “Remaining Shares”) on
 

    1Insert a number of shares equal to such Holder’s pro rata portion of
489,155 shares.

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or prior to 11:59 p.m., New York time, on the Expiration Date, the number of
Warrant Shares for which the SPA Warrants of each other holder of SPA Warrants
who has exercised its SPA Warrants in full on such date (the “Fully Exercised
Holders”) shall be increased by such Fully Exercised Holder’s pro rata portion
of the Remaining Shares and the Expiration Date of the SPA Warrants held by the
Fully Exercised Holders shall be extended by five Trading Days (as defined in
the Securities Purchase Agreement). Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in
Section 12. This Warrant is one of the Warrants to purchase Common Stock (the
“SPA Warrants”) issued pursuant to Section 1 of that certain Securities Purchase
Agreement, dated as of March 21, 2007 (the “Subscription Date”), by and among
the Company and the investors (the “Buyers”) referred to therein (the
“Securities Purchase Agreement”).
     10. EXERCISE OF WARRANT.
          Mechanics of Exercise. Subject to the terms and conditions hereof,
this Warrant may be exercised by the Holder on any day on or after the date
hereof, in whole or in part, by (i) delivery of a written notice, in the form
attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election
to exercise this Warrant and (ii) payment to the Company of an amount equal to
the applicable Exercise Price multiplied by the number of Warrant Shares as to
which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash
or by wire transfer of immediately available funds. The Holder shall not be
required to deliver the original Warrant in order to effect an exercise
hereunder. Execution and delivery of the Exercise Notice with respect to less
than all of the Warrant Shares shall have the same effect as cancellation of the
original Warrant and issuance of a new Warrant evidencing the right to purchase
the remaining number of Warrant Shares. On or before the first (1st) Business
Day following the date on which the Company has received each of the Exercise
Notice and the Aggregate Exercise Price (the "Exercise Delivery Documents”), the
Company shall transmit by facsimile an acknowledgment of confirmation of receipt
of the Exercise Delivery Documents to the Holder and the Company’s transfer
agent (the “Transfer Agent”). On or before the third (3rd) Business Day
following the date on which the Company has received all of the Exercise
Delivery Documents (the “Share Delivery Date”), the Company shall issue and
dispatch by overnight courier to the address as specified in the Exercise
Notice, a certificate, registered in the Company’s share register in the name of
the Holder or its designee, for the number of shares of Common Stock to which
the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise
Notice and Aggregate Exercise Price referred to in clause (ii) above, the Holder
shall be deemed for all corporate purposes to have become the holder of record
of the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the certificates evidencing such Warrant
Shares. If this Warrant is submitted in connection with any exercise pursuant to
this Section 1(a) and the number of Warrant Shares represented by this Warrant
submitted for exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as practicable and in
no event later than three Business Days after any exercise and at its own
expense, issue a new Warrant (in accordance with Section 5(d)) representing the
right to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under this Warrant, less the number of Warrant Shares with respect
to which this Warrant is exercised. No fractional shares of Common Stock are to
be issued upon the exercise of this Warrant, but rather the number of shares of
Common Stock to be

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issued shall be rounded up to the nearest whole number. The Company shall pay
any and all taxes which may be payable with respect to the issuance and delivery
of Warrant Shares upon exercise of this Warrant.
          Exercise Price. For purposes of this Warrant, “Exercise Price” means
$16.60, subject to adjustment as provided herein.
          Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section 9(p) of the
Securities Purchase Agreement.
     11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. THE EXERCISE
PRICE AND THE NUMBER OF WARRANT SHARES SHALL BE ADJUSTED FROM TIME TO TIME AS
FOLLOWS:
          Adjustment upon Subdivision or Combination of Common Stock. If the
Company at any time on or after the Subscription Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Subscription Date combines (by
combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately decreased.
Any adjustment under this Section 2(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
     12. NONCIRCUMVENTION. THE COMPANY HEREBY COVENANTS AND AGREES THAT THE
COMPANY WILL NOT, BY AMENDMENT OF ITS CERTIFICATE OF INCORPORATION, BYLAWS OR
THROUGH ANY REORGANIZATION, TRANSFER OF ASSETS, CONSOLIDATION, MERGER, SCHEME OF
ARRANGEMENT, DISSOLUTION, ISSUE OR SALE OF SECURITIES, OR ANY OTHER VOLUNTARY
ACTION, AVOID OR SEEK TO AVOID THE OBSERVANCE OR PERFORMANCE OF ANY OF THE TERMS
OF THIS WARRANT, AND WILL AT ALL TIMES IN GOOD FAITH CARRY OUT ALL THE
PROVISIONS OF THIS WARRANT AND TAKE ALL ACTION AS MAY BE REQUIRED TO PROTECT THE
RIGHTS OF THE HOLDER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
COMPANY (I) SHALL NOT INCREASE THE PAR VALUE OF ANY SHARES OF COMMON STOCK
RECEIVABLE UPON THE EXERCISE OF THIS WARRANT ABOVE THE EXERCISE PRICE THEN IN
EFFECT, (II) SHALL TAKE ALL SUCH ACTIONS AS MAY BE NECESSARY OR APPROPRIATE IN
ORDER THAT THE COMPANY MAY VALIDLY AND LEGALLY ISSUE FULLY PAID AND
NONASSESSABLE SHARES OF COMMON STOCK UPON THE EXERCISE OF THIS WARRANT, AND
(III) SHALL, SO LONG AS ANY OF THE SPA WARRANTS ARE OUTSTANDING, TAKE ALL ACTION
NECESSARY TO RESERVE

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AND KEEP AVAILABLE OUT OF ITS AUTHORIZED AND UNISSUED SHARES OF COMMON STOCK,
SOLELY FOR THE PURPOSE OF EFFECTING THE EXERCISE OF THE SPA WARRANTS, THE NUMBER
OF SHARES OF COMMON STOCK AS SHALL FROM TIME TO TIME BE NECESSARY TO EFFECT THE
EXERCISE OF THE SPA WARRANTS THEN OUTSTANDING (WITHOUT REGARD TO ANY LIMITATIONS
ON EXERCISE).
     13. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED HEREIN, THE HOLDER, SOLELY IN SUCH PERSON’S CAPACITY AS A
HOLDER OF THIS WARRANT, SHALL NOT BE ENTITLED TO VOTE OR RECEIVE DIVIDENDS OR BE
DEEMED THE HOLDER OF SHARE CAPITAL OF THE COMPANY FOR ANY PURPOSE, NOR SHALL
ANYTHING CONTAINED IN THIS WARRANT BE CONSTRUED TO CONFER UPON THE HOLDER,
SOLELY IN SUCH PERSON’S CAPACITY AS THE HOLDER OF THIS WARRANT, ANY OF THE
RIGHTS OF A STOCKHOLDER OF THE COMPANY OR ANY RIGHT TO VOTE, GIVE OR WITHHOLD
CONSENT TO ANY CORPORATE ACTION (WHETHER ANY REORGANIZATION, ISSUE OF STOCK,
RECLASSIFICATION OF STOCK, CONSOLIDATION, MERGER, CONVEYANCE OR OTHERWISE),
RECEIVE NOTICE OF MEETINGS, RECEIVE DIVIDENDS OR SUBSCRIPTION RIGHTS, OR
OTHERWISE, PRIOR TO THE ISSUANCE TO THE HOLDER OF THE WARRANT SHARES WHICH SUCH
PERSON IS THEN ENTITLED TO RECEIVE UPON THE DUE EXERCISE OF THIS WARRANT. IN
ADDITION, NOTHING CONTAINED IN THIS WARRANT SHALL BE CONSTRUED AS IMPOSING ANY
LIABILITIES ON THE HOLDER TO PURCHASE ANY SECURITIES (UPON EXERCISE OF THIS
WARRANT OR OTHERWISE) OR AS A STOCKHOLDER OF THE COMPANY, WHETHER SUCH
LIABILITIES ARE ASSERTED BY THE COMPANY OR BY CREDITORS OF THE COMPANY.
NOTWITHSTANDING THIS SECTION 4, THE COMPANY SHALL PROVIDE THE HOLDER WITH COPIES
OF THE SAME NOTICES AND OTHER INFORMATION GIVEN TO THE STOCKHOLDERS OF THE
COMPANY GENERALLY, CONTEMPORANEOUSLY WITH THE GIVING THEREOF TO THE
STOCKHOLDERS.
     14. REISSUANCE OF WARRANTS.
          Transfer of Warrant. If this Warrant is to be transferred in
accordance with Section 11, the Holder shall surrender this Warrant to the
Company, whereupon the Company will forthwith issue and deliver upon the order
of the Holder a new Warrant (in accordance with Section 5(d)), registered as the
Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less then the total number of
Warrant Shares then underlying this Warrant is being transferred, a new Warrant
(in accordance with Section 5(d)) to the Holder representing the right to
purchase the number of Warrant Shares not being transferred.
          Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary
form and, in the case of mutilation, upon surrender and

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cancellation of this Warrant, the Company shall execute and deliver to the
Holder a new Warrant (in accordance with Section 5(d)) representing the right to
purchase the Warrant Shares then underlying this Warrant.
          Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon
the surrender hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 5(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, that no Warrants for fractional shares of
Common Stock shall be given.
          Issuance of New Warrants. Whenever the Company is required to issue a
new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be
of like tenor with this Warrant, (ii) shall represent, as indicated on the face
of such new Warrant, the right to purchase the Warrant Shares then underlying
this Warrant (or in the case of a new Warrant being issued pursuant to Section
5(a) or Section 5(c), the Warrant Shares designated by the Holder which, when
added to the number of shares of Common Stock underlying the other new Warrants
issued in connection with such issuance, does not exceed the number of Warrant
Shares then underlying this Warrant), (iii) shall have an issuance date, as
indicated on the face of such new Warrant which is the same as the Issuance
Date, and (iv) shall have the same rights and conditions as this Warrant.

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     15. NOTICES. WHENEVER NOTICE IS REQUIRED TO BE GIVEN UNDER THIS WARRANT,
UNLESS OTHERWISE PROVIDED HEREIN, SUCH NOTICE SHALL BE GIVEN IN ACCORDANCE WITH
SECTION 9(F) OF THE SECURITIES PURCHASE AGREEMENT. THE COMPANY SHALL PROVIDE THE
HOLDER WITH PROMPT WRITTEN NOTICE OF ALL ACTIONS TAKEN PURSUANT TO THIS WARRANT,
INCLUDING IN REASONABLE DETAIL A DESCRIPTION OF SUCH ACTION AND THE REASON
THEREFORE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY WILL
GIVE WRITTEN NOTICE TO THE HOLDER (I) IMMEDIATELY UPON ANY ADJUSTMENT OF THE
EXERCISE PRICE, SETTING FORTH IN REASONABLE DETAIL, AND CERTIFYING, THE
CALCULATION OF SUCH ADJUSTMENT AND (II) AT LEAST FIFTEEN DAYS PRIOR TO THE DATE
ON WHICH THE COMPANY CLOSES ITS BOOKS OR TAKES A RECORD (A) WITH RESPECT TO ANY
DIVIDEND OR DISTRIBUTION UPON THE SHARES OF COMMON STOCK, (B) WITH RESPECT TO
ANY GRANTS, ISSUANCES OR SALES OF ANY OPTIONS, CONVERTIBLE SECURITIES OR RIGHTS
TO PURCHASE STOCK, WARRANTS, SECURITIES OR OTHER PROPERTY TO HOLDERS OF SHARES
OF COMMON STOCK, AS A WHOLE, OR (C) FOR DETERMINING RIGHTS TO VOTE WITH RESPECT
TO ANY FUNDAMENTAL TRANSACTION, DISSOLUTION OR LIQUIDATION, PROVIDED IN EACH
CASE THAT SUCH INFORMATION SHALL BE MADE KNOWN TO THE PUBLIC PRIOR TO OR IN
CONJUNCTION WITH SUCH NOTICE BEING PROVIDED TO THE HOLDER.
     16. AMENDMENT AND WAIVER. EXCEPT AS OTHERWISE PROVIDED HEREIN, THE
PROVISIONS OF THIS WARRANT MAY BE AMENDED AND THE COMPANY MAY TAKE ANY ACTION
HEREIN PROHIBITED, OR OMIT TO PERFORM ANY ACT HEREIN REQUIRED TO BE PERFORMED BY
IT, ONLY IF THE COMPANY HAS OBTAINED THE WRITTEN CONSENT OF THE REQUIRED
HOLDERS; PROVIDED THAT NO SUCH ACTION MAY INCREASE THE EXERCISE PRICE OF ANY SPA
WARRANT OR DECREASE THE NUMBER OF SHARES OR CLASS OF STOCK OBTAINABLE UPON
EXERCISE OF ANY SPA WARRANT WITHOUT THE WRITTEN CONSENT OF THE HOLDER. NO SUCH
AMENDMENT SHALL BE EFFECTIVE TO THE EXTENT THAT IT APPLIES TO LESS THAN ALL OF
THE HOLDERS OF THE SPA WARRANTS THEN OUTSTANDING.
     17. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS WARRANT SHALL BE GOVERNED BY,
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE
OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR
ANY OTHER JURISDICTIONS) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTIONS OTHER THAN THE STATE OF NEW YORK.
     18. CONSTRUCTION; HEADINGS. THIS WARRANT SHALL BE DEEMED TO BE JOINTLY
DRAFTED BY THE COMPANY AND ALL THE BUYERS AND SHALL

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NOT BE CONSTRUED AGAINST ANY PERSON AS THE DRAFTER HEREOF. THE HEADINGS OF THIS
WARRANT ARE FOR CONVENIENCE OF REFERENCE AND SHALL NOT FORM PART OF, OR AFFECT
THE INTERPRETATION OF, THIS WARRANT.
     19. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. THE
REMEDIES PROVIDED IN THIS WARRANT SHALL BE CUMULATIVE AND IN ADDITION TO ALL
OTHER REMEDIES AVAILABLE UNDER THIS WARRANT AND THE OTHER TRANSACTION DOCUMENTS,
AT LAW OR IN EQUITY (INCLUDING A DECREE OF SPECIFIC PERFORMANCE AND/OR OTHER
INJUNCTIVE RELIEF), AND NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE HOLDER RIGHT
TO PURSUE ACTUAL DAMAGES FOR ANY FAILURE BY THE COMPANY TO COMPLY WITH THE TERMS
OF THIS WARRANT. THE COMPANY ACKNOWLEDGES THAT A BREACH BY IT OF ITS OBLIGATIONS
HEREUNDER WILL CAUSE IRREPARABLE HARM TO THE HOLDER AND THAT THE REMEDY AT LAW
FOR ANY SUCH BREACH MAY BE INADEQUATE. THE COMPANY THEREFORE AGREES THAT, IN THE
EVENT OF ANY SUCH BREACH OR THREATENED BREACH, THE HOLDER OF THIS WARRANT SHALL
BE ENTITLED, IN ADDITION TO ALL OTHER AVAILABLE REMEDIES, TO AN INJUNCTION
RESTRAINING ANY BREACH, WITHOUT THE NECESSITY OF SHOWING ECONOMIC LOSS AND
WITHOUT ANY BOND OR OTHER SECURITY BEING REQUIRED.
     20. TRANSFER. THIS WARRANT MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED WITHOUT THE CONSENT OF THE COMPANY.
     21. CERTAIN DEFINITIONS. FOR PURPOSES OF THIS WARRANT, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:
          "Business Day” means any day other than Saturday, Sunday or other day
on which commercial banks in the City of New York are authorized or required by
law to remain closed.
          "Common Stock” means (i) the Company’s shares of Common Stock, par
value $0.15625 per share, and (ii) any share capital into which such Common
Stock shall have been changed or any share capital resulting from a
reclassification of such Common Stock.
          "Convertible Securities” means any stock or securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for shares of Common Stock.
          "Eligible Market” means the Principal Market, The New York Stock
Exchange, Inc., the American Stock Exchange, The NASDAQ Global Select Market or
The NASDAQ Capital Market.
          "Expiration Date” means the date thirty (30) days after the Issuance
Date or, if such date falls on a day other than a Business Day or on which
trading does not take place on the Principal Market (a “Holiday”), the next date
that is not a Holiday.

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          "Fundamental Transaction” means that the Company shall, directly or
indirectly, in one or more related transactions, (i) consolidate or merge with
or into (whether or not the Company is the surviving corporation) another
Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company to another Person,
or (iii) allow another Person to make a purchase, tender or exchange offer that
is accepted by the holders of more than the 50% of the outstanding shares of
Common Stock (not including any shares of Common Stock held by the Person or
Persons making or party to, or associated or affiliated with the Persons making
or party to, such purchase, tender or exchange offer), or (iv) consummate a
stock purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires more than
the 50% of the outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock
purchase agreement or other business combination), (v) reorganize, recapitalize
or reclassify its Common Stock, or (vi) any “person” or “group” (as these terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or
shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock.
          "Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.
          "Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.
          "Principal Market” means The NASDAQ Global Market.
          "Registration Rights Agreement” means that certain registration rights
agreement by and among the Company and the Buyers.
          "Required Holders” means the holders of the SPA Warrants representing
at least two-thirds of shares of Common Stock underlying the SPA Warrants then
outstanding.
[Signature Page Follows]

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     IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common
Stock to be duly executed as of the Issuance Date set out above.

            TOREADOR RESOURCES CORPORATION
      By:           Name:           Title:        

 

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EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
TOREADOR RESOURCES CORPORATION
     The undersigned holder hereby exercises the right to purchase
                     of the shares of Common Stock (“Warrant Shares”) of
Toreador Resources Corporation, a Delaware corporation (the “Company”),
evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
     1. Form of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as a “Cash Exercise” with respect to                     
Warrant Shares.
     2. Payment of Exercise Price. In the event that the holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$                     to the Company in accordance with the terms of the
Warrant.
     3. Delivery of Warrant Shares. The Company shall deliver to the holder
                     Warrant Shares in accordance with the terms of the Warrant.
Date:                           ,           

                Name of Registered Holder
   
 
       
By:
       
 
 
 
Name:    
 
  Title:    

 

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ACKNOWLEDGMENT
     The Company hereby acknowledges this Exercise Notice and hereby directs
American Stock Transfer & Trust Company to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent Instructions dated
March ___, 2007 from the Company and acknowledged and agreed to by American
Stock Transfer & Trust Company.

            TOREADOR RESOURCES CORPORATION
      By:           Name:           Title:      

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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
          REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of
March 21, 2007, by and among Toreador Resources Corporation, a Delaware
corporation, with headquarters located at 4809 Cole Avenue, Suite 108, Dallas,
Texas 75205 (the “Company”), and the investors listed on the Schedule of Buyers
attached hereto (each, a “Buyer” and collectively, the “Buyers”).
          WHEREAS:
          A. In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (the “Securities Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to each Buyer (i) shares (the
“Common Shares”) of the Company’s common stock, par value $0.15625 per share
(the “Common Stock”) and (ii) warrants (the “Warrants”) which will be
exercisable to purchase shares of Common Stock (as exercised, the “Warrant
Shares”) in accordance with the terms of the Warrants.
          B. In accordance with the terms of the Securities Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the “1933 Act”), and applicable
state securities laws.
          NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
of the Buyers hereby agree as follows:
          1. Definitions.
          As used in this Agreement, the following terms shall have the
following meanings:
               (a) “Business Day” means any day other than Saturday, Sunday or
any other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
               (b) “Closing Date” shall have the meaning set forth in the
Securities Purchase Agreement.
               (c) “Effective Date” means the date the Registration Statement is
first declared effective by the SEC.
               (d) “Effectiveness Deadline” means the date which is 150 calendar
days after the Closing Date.

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               (e) “Filing Deadline” means 60 calendar days after the Closing
Date.
               (f) “Investor” means a Buyer, any transferee or assignee thereof
to whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 10 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 10.
               (g) “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and governmental or any department or agency thereof.
               (h) “One Month Anniversary” means the one month anniversary of a
Filing Failure, Effectiveness Failure and Maintenance Failure, as applicable.
               (h) “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
               (i) “Registrable Securities” means (i) the Common Shares,
(ii) the Warrant Shares issued or issuable upon exercise of the Warrants and
(iii) any capital stock of the Company issued or issuable with respect to the
Common Shares, the Warrant Shares or the Warrants as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on exercise of the Warrants.
               (j) “Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering the
Registrable Securities.
               (k) “Required Holders” means the holders of at least two thirds
of the Registrable Securities.
               (l) “Required Registration Amount” means the number of Common
Shares issued, subject to adjustment as provided in Section 2(e).
               (m) “Rule 415” means Rule 415 under the 1933 Act or any successor
rule providing for offering securities on a continuous or delayed basis.
               (n) “SEC” means the United States Securities and Exchange
Commission.
          Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.

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          2. Registration.
               (a) Mandatory Registration. The Company shall prepare, and, as
soon as practicable but in no event later than the Filing Deadline, file with
the SEC the Registration Statement on Form S-1 covering the resale of all of the
Registrable Securities (the date of such filing, the “Filing Date”). In the
event that Form S-1 is unavailable for such a registration, the Company shall
use such other form as is available for such a registration on another
appropriate form reasonably acceptable to the Required Holders, subject to the
provisions of Section 2(d). The Registration Statement prepared pursuant hereto
shall register for resale at least the number of shares of Common Stock equal to
the Required Registration Amount as of the Filing Date, subject to adjustment as
provided in Section 2(e), and shall contain the “Selling Stockholders” section
and “Plan of Distribution” attached hereto as Annex I. The Company shall use its
best efforts to have the Registration Statement declared effective by the SEC as
soon as practicable, but in no event later than the Effectiveness Deadline. By
9:30 am New York City time on the date following the Effective Date, the Company
shall file with the SEC in accordance with Rule 424 under the 1933 Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement.
               (b) Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and each increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Investor’s Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor to the extent such shares are still
required to be registered on a registration statement. Any shares of Common
Stock included in a Registration Statement and which remain allocated to any
Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement. In no event shall the Company
include any securities other than Registrable Securities on any Registration
Statement without the prior written consent of Buyers holding at least a
majority of the Registrable Securities.
               (c) Legal Counsel. Subject to Section 5 hereof, the Required
Holders shall have the right to select one legal counsel to review and oversee
any registration pursuant to this Section 2 (“Legal Counsel”), which shall be
Schulte Roth & Zabel LLP or such other counsel as thereafter designated by the
Required Holders. The Company and Legal Counsel shall reasonably cooperate with
each other in performing the Company’s obligations under this Agreement.
               (d) Form S-3. The Company shall undertake to register the
Registrable Securities on Form S-3 as soon as such form is available for use by
the Company, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.

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               (e) Sufficient Number of Shares Registered. In the event the
number of shares available under a Registration Statement filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities required
to be covered by such Registration Statement or an Investor’s allocated portion
of the Registrable Securities pursuant to Section 2(b), the Company shall amend
the applicable Registration Statement, or file a new Registration Statement (on
the short form available therefor, if applicable), or both, so as to cover at
least the Required Registration Amount as of the trading day immediately
preceding the date of the filing of such amendment or new Registration
Statement, in each case, as soon as practicable, but in any event not later than
fifteen (15) days after the Company becomes aware of the necessity therefore
unless audited year end financial statements would be required for such
amendment or new Registration Statement, then the time period shall be 5
Business Days after the filing of the audited year end financial statements with
the SEC. The Company shall use its reasonable best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof. For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall
be deemed “insufficient to cover all of the Registrable Securities” if at any
time the number of shares of Common Stock available for resale under such
Registration Statement is less than the number of Registrable Securities that
are required to be sold pursuant to a registration statement. The calculation
set forth in the foregoing sentence shall be made without regard to any
limitations on the exercise of the Warrants and such calculation shall assume
that the Warrants are then exercisable into shares of Common Stock.
               (f) Effect of Failure to File and Obtain and Maintain
Effectiveness of Registration Statement. If (i) a Registration Statement
covering all the Registrable Securities required to be covered thereby and
required to be filed by the Company pursuant to this Agreement is (A) not filed
with the SEC on or before the Filing Deadline (a “Filing Failure”) or (B) not
declared effective by the SEC on or before the Effectiveness Deadline (an
“Effectiveness Failure”) or (ii) on any day after the Effective Date sales of
all the Registrable Securities required to be included on such Registration
Statement cannot be made (other than during an Allowable Grace Period (as
defined in Section 3(r)) pursuant to such Registration Statement (including,
without limitation, because of a failure to keep such Registration Statement
effective, to disclose such information as is necessary for sales to be made
pursuant to such Registration Statement, to register a sufficient number of
shares of Common Stock or to maintain the listing of the Common Stock) (a
“Maintenance Failure”) then, as partial relief for the damages to any holder by
reason of any such delay in or reduction of its ability to sell the underlying
shares of Common Stock (which remedy shall not be exclusive of any other
remedies available at law or in equity), (A) the Company shall pay to each
holder of Registrable Securities relating to such Registration Statement an
amount in cash equal to one percent (1.0%) of the aggregate Purchase Price (as
such term is defined in the Securities Purchase Agreement) of such Investor’s
Registrable Securities included in such Registration Statement on each of the
following dates: (i) the day of a Filing Failure and the One Month Anniversary
of such Filing Failure (pro rated for periods totaling less than thirty days);
(ii) the day of an Effectiveness Failure and on the One Month Anniversary of
such Effectiveness Failure (pro rated for periods totaling less than thirty
days); (iii) the initial day of a Maintenance Failure and the One Month
Anniversary of such Maintenance Failure (pro rated for periods totaling less
than thirty days); and (B) the Company shall pay to each holder of Registrable
Securities relating to such Registration Statement an amount in cash equal to

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two percent (2.0%) of the aggregate Purchase Price of such Investor’s
Registrable Securities included in such Registration Statement on each of the
following dates: (i) on the thirtieth day after the One Month Anniversary of a
Filing Failure and on every thirtieth day thereafter (pro rated for periods
totaling less than thirty days) until such Filing Failure is cured; (ii) on
every thirtieth day after the One Month Anniversary of an Effectiveness Failure
and on every thirtieth day thereafter (pro rated for periods totaling less than
thirty days) until such Effectiveness Failure is cured; and (iii) on every
thirtieth day after the One Month Anniversary of a Maintenance Failure and on
every thirtieth day thereafter (pro rated for periods totaling less than thirty
days) until such Maintenance Failure is cured. The payments to which a holder
shall be entitled pursuant to this Section 2(g) are referred to herein as
“Registration Delay Payments.” Registration Delay Payments shall be paid on the
earlier of (I) the dates set forth above and (II) the third Business Day after
the event or failure giving rise to the Registration Delay Payments is cured. In
the event the Company fails to make Registration Delay Payments in a timely
manner, such Registration Delay Payments shall bear interest at the rate of one
and one-half percent (1.5%) per month (prorated for partial months) until paid
in full.
               3. Related Obligations.
          At such time as the Company is obligated to file a Registration
Statement with the SEC pursuant to Section 2(a), 2(d) or 2(e), the Company will
use its reasonable best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
               (a) The Company shall submit to the SEC, within five (5) Business
Days after the Company learns that no review of a particular Registration
Statement will be made by the staff of the SEC or that the staff of the SEC has
no further comments on a particular Registration Statement, as the case may be,
a request for acceleration of effectiveness of such Registration Statement to a
time and date not later than 48 hours after the submission of such request. The
Company shall keep each Registration Statement effective pursuant to Rule 415 at
all times until the earlier of (i) the date as of which the Investors may sell
all of the Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated under
the 1933 Act or (ii) the date on which the Investors shall have sold all the
Registrable Securities covered by such Registration Statement (the “Registration
Period”). The Company shall ensure that each Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein
(in the case of prospectuses, in the light of the circumstances in which they
were made) not misleading.
               (b) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as

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all of such Registrable Securities shall have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set
forth in such Registration Statement. In the case of amendments and supplements
to a Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the Company
filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report
under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC within one Business Day after the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration Statement.
               (c) The Company shall (A) permit Legal Counsel and each Investor
to review and comment upon (i) a Registration Statement at least five
(5) Business Days prior to its initial filing with the SEC and (ii) all pre and
post effective amendments and supplements to all Registration Statements (except
for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K and any similar or successor reports) within a reasonable
number of days prior to their filing with the SEC, and (B) not file any
Registration Statement or pre or post effective amendment or supplement thereto
in a form to which Legal Counsel or any Investor reasonably objects. The Company
shall not submit a request for acceleration of the effectiveness of a
Registration Statement or any amendment or supplement thereto without the prior
approval of Legal Counsel, which consent shall not be unreasonably withheld. The
Company shall furnish to Legal Counsel and each Investor, without charge,
(i) copies of any correspondence from the SEC or the staff of the SEC to the
Company or its representatives relating to any Registration Statement,
(ii) promptly after the same is prepared and filed with the SEC, one copy of any
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, if
requested by an Investor and not otherwise available on the EDGAR system, and
all exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate with
Legal Counsel and any Investor in performing the Company’s obligations pursuant
to this Section 3.
               (d) The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge,
(i) promptly after the same is prepared and filed with the SEC, at least one
copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, if requested by an Investor and not otherwise available on the EDGAR
system, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned by such
Investor.
               (e) The Company shall use its reasonable best efforts to
(i) register and qualify, unless an exemption from registration and
qualification applies, the resale by Investors of the Registrable Securities
covered by a Registration Statement under such other

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securities or “blue sky” laws of all applicable jurisdictions in the United
States, (ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify Legal Counsel and each Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.
               (f) The Company shall notify Legal Counsel and each Investor in
writing of the happening of any event, as promptly as practicable after becoming
aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (provided that in no event shall such
notice contain any material, nonpublic information), and, subject to
Section 3(r), promptly prepare a supplement or amendment to such Registration
Statement to correct such untrue statement or omission, and deliver ten
(10) copies of such supplement or amendment to Legal Counsel and each Investor
(or such other number of copies as Legal Counsel or such Investor may reasonably
request). The Company shall also promptly notify Legal Counsel and each Investor
in writing (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Investor by facsimile
on the same day of such effectiveness and by overnight mail), (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
               (g) The Company shall use its reasonable best efforts to prevent
the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and each Investor who
holds Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
               (h) If any Investor is required under applicable securities law
to be described in the Registration Statement as an underwriter, at the
reasonable request of such Investor, the Company shall furnish to such Investor,
on the date of the effectiveness of the

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Registration Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from the
Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the Investors, and (ii) an
opinion, dated as of such date, of counsel representing the Company for purposes
of such Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the Investors.
               (i) Upon the written request of any Investor in connection with
any Investor’s due diligence requirements, if any, the Company shall make
available for inspection by (i) any Investor, (ii) Legal Counsel and (iii) one
firm of accountants or other agents retained by the Investors (collectively, the
“Inspectors”), all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree in writing to hold in strict confidence and shall not make any disclosure
(except to an Investor) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement of which the Inspector
has knowledge. Each Investor agrees that it shall, upon learning that disclosure
of such Records is required or is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein (or in any other confidentiality agreement
between the Company and any Investor) shall be deemed to limit the Investors’
ability to sell Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations.
               (j) The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
               (k) The Company shall use its reasonable best efforts either to
(i) cause all the Registrable Securities covered by a Registration Statement to
be listed on each

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securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities covered by a
Registration Statement on The NASDAQ Global Market, The NASDAQ Capital Market,
The NASDAQ Global Select Market, the New York Stock Exchange, the American Stock
Exchange or any successors thereto and, without limiting the generality of the
foregoing, to use its best efforts to arrange for at least two market makers to
register with the National Association of Securities Dealers, Inc. (“NASD”) as
such with respect to such Registrable Securities. The Company shall pay all fees
and expenses in connection with satisfying its obligation under this
Section 3(k).
               (l) The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable and pursuant
to the terms set forth in the Securities Purchase Agreement, at the Investor’s
option either (i) facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable Securities or
(ii) promptly issue to such holder by electronic delivery at the applicable
balance account at The Depository Trust Company the Registrable Securities to be
offered pursuant to a Registration Statement and enable such certificates to be
in such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the Investors may request.
               (m) If requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as an Investor reasonably requests to be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being offered or sold, the purchase price being paid therefor and any
other terms of the offering of the Registrable Securities to be sold in such
offering; (ii) as soon as practicable make all required filings of such
prospectus supplement or post-effective amendment after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) as soon as practicable, supplement or make amendments to
any Registration Statement if reasonably requested by an Investor holding any
Registrable Securities.
               (n) The Company shall use its best efforts to cause the
Registrable Securities covered by a Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.
               (o) The Company shall make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with, and in the manner provided by, the provisions of Rule 158 under the 1933
Act) covering a twelve-month period beginning not later than the first day of
the Company’s fiscal quarter next following the effective date of a Registration
Statement.

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               (p) The Company shall otherwise use its reasonable best efforts
to comply with all applicable rules and regulations of the SEC in connection
with any registration hereunder.
               (q) Within two (2) Business Days after a Registration Statement
which covers Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.
               (r) Notwithstanding anything to the contrary herein, at any time
after the Effective Date, the Company may delay the disclosure of material,
non-public information concerning the Company the disclosure of which at the
time is not, in the good faith opinion of the Board of Directors of the Company
and its counsel, in the best interest of the Company and, in the opinion of
counsel to the Company, otherwise required (a “Grace Period”); provided, that
the Company shall promptly (i) notify the Investors in writing of the existence
of a Grace Period in conformity with the provisions of this Section 3(r)
(provided that in each notice the Company will not disclose the content of such
material, non-public information to the Investors) and the date on which the
Grace Period will begin, and (ii) notify the Investors in writing of the date on
which the Grace Period ends; and, provided further, that no Grace Period shall
exceed thirty (30) consecutive days and during any three hundred sixty five
(365) day period such Grace Periods shall not exceed an aggregate of sixty
(60) days and the first day of any Grace Period must be at least five (5)
trading days after the last day of any prior Grace Period (each, an “Allowable
Grace Period”). For purposes of determining the length of a Grace Period above,
the Grace Period shall begin on and include the date the Investors receive the
notice referred to in clause (i) and shall end on and include the later of the
date the Investors receive the notice referred to in clause (ii) and the date
referred to in such notice. The provisions of Section 3(g) hereof shall not be
applicable during the period of any Allowable Grace Period. Upon expiration of
the Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such
material, non-public information is no longer applicable. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection with any sale
of Registrable Securities with respect to which an Investor has entered into a
contract for sale, and delivered a copy of the prospectus included as part of
the applicable Registration Statement, prior to the Investor’s receipt of the
notice of a Grace Period and for which the Investor has not yet settled.
          4. Obligations of the Investors.
               (a) At least five (5) Business Days prior to the first
anticipated filing date of a Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor’s Registrable
Securities included in such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable

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Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
               (b) Each Investor, by such Investor’s acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor’s election to exclude all of such Investor’s
Registrable Securities from such Registration Statement.
               (c) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(g)
or the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor’s receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not
yet settled.
               (d) Each Investor covenants and agrees that it will comply with
the prospectus delivery requirements of the 1933 Act as applicable to it or an
exemption therefrom in connection with sales of Registrable Securities pursuant
to the Registration Statement.
          5. Expenses of Registration.
          All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company.
The Company shall also reimburse the Investors for the fees and disbursements of
Legal Counsel in connection with registration, filing or qualification pursuant
to Sections 2 and 3 of this Agreement which amount shall be limited to $20,000.
          6. Indemnification.
          In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
               (a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, partners, members, employees, agents, representatives of, and each
Person, if any, who controls any Investor within the meaning of the 1933 Act or
the 1934 Act (each, an “Indemnified Person”), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs,

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reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or
several , but excluding incidental and consequential damages, losses,
liabilities and expenses) (collectively, “Claims”), incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto (“Indemnified Damages”), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in the light of the circumstances under which the statements therein
were made, not misleading, (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement or (iv) any material violation of this Agreement (the
matters in the foregoing clauses (i) through (iv) being, collectively,
“Violations”). Subject to Section 6(c), the Company shall reimburse the
Indemnified Persons, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person for such Indemnified Person expressly for use
in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(d); (ii) shall not be available
to the extent such Claim is based on a failure of the Investor to deliver or to
cause to be delivered the prospectus made available by the Company, including a
corrected prospectus, if such prospectus or corrected prospectus was timely made
available by the Company pursuant to Section 3(d); and (iii) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 10.
               (b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement and each Person, if any,
who controls the Company within the meaning of the 1933 Act or the 1934

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Act (each, an “Indemnified Party”), against any Claim or Indemnified Damages to
which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section 6(c), such
Investor will reimburse any legal or other expenses reasonably incurred by an
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b)
and the agreement with respect to contribution contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that an Investor
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 10. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
               (c) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the reasonable fees and expenses of not more than
one counsel for such Indemnified Person or Indemnified Party to be paid by the
indemnifying party, if, in the reasonable opinion of the Indemnified Person or
the Indemnified Party, as the case may be, the representation by such counsel of
the Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. In the case of an Indemnified Person, legal counsel
referred to in the immediately preceding sentence shall be selected by the
Investors holding at least a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates. The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or Claim. The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprized at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No

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indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
               (d) The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.
               (e) The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
          7. Contribution.
          To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no Person involved in the sale of Registrable Securities which Person is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) in connection with such sale shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant to
such Registration Statement.
          8. Piggy-Back Registrations. If at any time during the Registration
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Investor a written notice of
such determination and, if within fifteen days after the date of such notice,
any such Investor shall so request in writing, the Company shall include in such

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registration statement all or any part of such Registrable Securities such
Investor requests to be registered.
          9. Reports Under the 1934 Act.
          With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration (“Rule 144”), the Company agrees to:
               (a) make and keep public information available, as those terms
are understood and defined in Rule 144;
               (b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and
               (c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
to permit the Investors to sell such securities pursuant to Rule 144 without
registration.
          10. Assignment of Registration Rights.
          The rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of such Investor’s
Registrable Securities if: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment;
(ii) the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; and
(v) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement.
          11. Amendment of Registration Rights.
          Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Required Holders. Any amendment or waiver effected in accordance with
this Section 11 shall be binding upon each Investor and the Company. No such
amendment shall be effective to the extent that it applies to less than all of

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the holders of the Registrable Securities. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of this Agreement unless the same consideration also is offered
to all of the parties to this Agreement.
          12. Miscellaneous.
               (a) A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the such record owner of such Registrable Securities.
               (b) Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
               If to the Company:
Toreador Resources Corporation
4809 Cole Avenue, Suite 108
Dallas, Texas 75205
Telephone: (214) 559-3933
Facsimile: (214) 559-3945
Attention: Doug Weir
          With a copy (which shall not constitute notice), to
Haynes and Boone, LLP
901 Main St., Suite 3100
Dallas, TX 75202
Telephone: (214) 651-5562
Facsimile: (214) 200-0676
Attention: Janice V. Sharry, Esq.
               If to Legal Counsel:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022

18

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Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Attention: Eleazer Klein, Esq.
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer’s representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
               (c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
               (d) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
               (e) This Agreement, the other Transaction Documents (as defined
in the Securities Purchase Agreement) and the instruments referenced herein and
therein constitute

19

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the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement, the other Transaction Documents and the instruments referenced herein
and therein supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
               (f) Subject to the requirements of Section 10, this Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.
               (g) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
               (h) This Agreement may be executed in identical counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
               (i) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
               (j) All consents and other determinations required to be made by
the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders, determined as if all of
the Warrants held by Investors then outstanding have been exercised for
Registrable Securities without regard to any limitations on exercise of the
Warrants.
               (k) The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
               (l) This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
               (m) The obligations of each Buyer hereunder are several and not
joint with the obligations of any other Buyer, and no provision of this
Agreement is intended to confer any obligations on any Buyer vis-à-vis any other
Buyer. Nothing contained herein, and no action taken by any Buyer pursuant
hereto, shall be deemed to constitute the Buyers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Buyers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated herein.
* * * * * *

20

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

            COMPANY:

Toreador Resources Corporation
      By:           Name:           Title:      

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

            BUYERS:

CAPITAL VENTURES INTERNATIONAL
      By:           Name:           Title:        

[Signature Page to Registration Rights Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

            BUYERS:

GOLDMAN SACHS & CO.
      By:           Name:           Title:        

[Signature Page to Registration Rights Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

            BUYERS:

SF CAPITAL PARTNERS LTD.
      By:           Name:           Title:      

[Signature Page to Registration Rights Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

            BUYERS:

OLD LANE CAYMAN MASTER FUND, LP
      By:           Name:           Title:        

[Signature Page to Registration Rights Agreement]

 

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     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

            BUYERS:

OLD LANE HMA MASTER FUND, LP
      By:           Name:           Title:        

[Signature Page to Registration Rights Agreement]

 

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

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

            BUYERS:

OLD LANE US MASTER FUND, LP
      By:           Name:           Title:        

[Signature Page to Registration Rights Agreement]

 

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SCHEDULE OF BUYERS

              Buyer Address   Buyer’s Representative’s Address Buyer   and
Facsimile Number   and Facsimile Number    
Capital Ventures International
  c/o Heights Capital Management, Inc.   Schulte Roth & Zabel LLP
 
  101 California Street, Suite 3250   919 Third Avenue
 
  San Francisco, CA 94111   New York, New York 10022
 
  Attention: Martin Kobinger   Attention: Eleazer Klein, Esq.
 
  Facsimile: (415) 403-6525   Facsimile: (212) 593-5955
 
  Telephone: (415) 403-6500   Telephone: (212) 756-2376
 
  Residence: Cayman Islands    
 
       
Goldman Sachs & Co.
  85 Broad Street   Cravath, Swaine & Moore LLP
 
  New York, NY 10004-2456   825 Eighth Avenue
 
  Attention: Daniel Oneglia   New York, New York 10019
 
  Tel: 212-902-8212   Attention: Erik Tavzel
 
  daniel.oneglia@gs.com   Facsimile: (212) 474-3700
 
      Telephone: (212) 474-1796
 
       
SF Capital Partners Ltd.
  c/o Stark Offshore Management LLC    
 
  3600 South Lake Drive    
 
  St. Francis, WI 53235    
 
  Attention: Brian Davidson    
 
  Tel: 414-294-7016    
 
  Fax: 414-294-7700    
 
  bdavidson@starkinvestments.com    
Old Lane Cayman Master Fund, LP
  Old Lane, LP    
 
  500 Park Avenue, 2nd Floor    
 
  New York, NY 10022    
 
  Attention: Jonathan Barton    
 
  Chief Financial Officer    
 
  Tel: 212-572-3260    
 
  jonathan.barton@oldlane.com    
 
       
Old Lane HMA Master Fund, LP
  Old Lane, LP    
 
  500 Park Avenue, 2nd Floor    
 
  New York, NY 10022    
 
  Attention: Jonathan Barton    
 
  Chief Financial Officer    
 
  Tel: 212-572-3260    
 
  jonathan.barton@oldlane.com    
 
       
Old Lane US Master Fund, LP
  Old Lane, LP    
 
  500 Park Avenue, 2nd Floor    
 
  New York, NY 10022    
 
  Attention: Jonathan Barton    
 
  Chief Financial Officer    
 
  Tel: 212-572-3260    
 
  jonathan.barton@oldlane.com    

 

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EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
American Stock Transfer & Trust Company
59 Maiden Lane – Plaza Level
New York, NY 10038

          Attention:   Issac Kagan
 
       
 
  Re:   Toreador Resources Corporation

Ladies and Gentlemen:
          [We are][I am] counsel to Toreador Resources Corporation, a Delaware
corporation (the “Company”), and have represented the Company in connection with
that certain Securities Purchase Agreement, dated as of March 21, 2007 (the
“Securities Purchase Agreement”), entered into by and among the Company and the
buyers named therein (collectively, the “Holders”) pursuant to which the Company
issued to the Holders its shares of the Company’s Common Stock, par value
$$0.15625 per share (the “Common Stock”) and warrants exercisable for shares of
Common Stock (the “Warrants”). Pursuant to the Securities Purchase Agreement,
the Company also has entered into a Registration Rights Agreement with the
Holders (the “Registration Rights Agreement”) pursuant to which the Company
agreed, among other things, to register the resale of the Registrable Securities
(as defined in the Registration Rights Agreement), including the shares of
Common Stock issuable upon exercise of the Warrants under the Securities Act of
1933, as amended under the Securities Act of 1933, as amended (the “1933 Act”).
In connection with the Company’s obligations under the Registration Rights
Agreement, on                                          , 2007, the Company filed
a Registration Statement on Form S-1 (File No. 333-                    ) (the
“Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the Registrable Securities which names each of the Holders as
a selling stockholder thereunder.
          In connection with the foregoing, [we][I] advise you that a member of
the SEC’s staff has advised [us][me] by telephone that the SEC has entered an
order declaring the Registration Statement effective under the 1933 Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.
          Subject to the specific prohibitions contained in the Registration
Rights Agreement regarding the inability to use the Registration Statement under
specific circumstances (the “Registration Statement Limitations”) and in
reliance upon the Holders’ representations and covenants in Section 2(g) of the
Securities Purchase Agreement, this letter shall serve as our standing
instruction to you that the shares of Common Stock are freely transferable by
the Holders pursuant to the Registration Statement provided that the prospectus
delivery requirements, if any, are complied with. Subject to the Registration
Statement Limitations, you need not require further letters from us to effect
any future legend-free issuance or reissuance of shares of Common Stock to the
Holders as contemplated by the Company’s Transfer Agent

 

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

 

           Instructions dated March                    , 2007. This letter shall
serve as our standing instruction with regard to this matter.

              Very truly yours,
 
            [ISSUER’S COUNSEL]
 
       
 
  By:    
 
       
CC: [LIST NAMES OF HOLDERS]
       

 

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ANNEX I
SELLING STOCKHOLDERS
     The shares of common stock being offered by the selling stockholders are
those previously issued to the Selling Stockholders and those issuable to the
Selling Stockholders upon exercise of the warrants. For additional information
regarding the issuances of common stock and the warrants, see “Private Placement
of Common Shares and Warrants” above. We are registering the shares of common
stock in order to permit the selling stockholders to offer the shares for resale
from time to time. Except for the ownership of the shares of common stock and
the warrants, the selling stockholders have not had any material relationship
with us within the past three years.
     The table below lists the selling stockholders and other information
regarding the beneficial ownership of the shares of common stock by each of the
selling stockholders. The second column lists the number of shares of common
stock beneficially owned by each selling shareholder, based on its ownership of
the shares of common stock and the warrants, as of                     , 2007,
assuming exercise of the warrants held by the selling stockholders on that date,
without regard to any limitations on exercise.
     The third column lists the shares of common stock being offered by this
prospectus by the selling stockholders.
     In accordance with the terms of registration rights agreements with the
holders of the shares of common stock and the warrants, this prospectus
generally covers the resale of at least the sum of (i) the number of shares of
common stock issued and (ii) the shares of common stock issued and issuable upon
exercise of the related warrants, determined as if the outstanding warrants were
exercised, as applicable, in full, as of the trading day immediately preceding
the date this registration statement was initially filed with the SEC. The
fourth column assumes the sale of all of the shares offered by the selling
stockholders pursuant to this prospectus.

 

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                                      Maximum Number of                    
Shares of Common             Number of Shares of     Stock to be Sold     Number
of Shares of       Common Stock Owned     Pursuant to this     Common Stock
Owned   Name of Selling Stockholder   Prior to Offering     Prospectus     After
Offering  
Capital Ventures International (1)
                    0  
 
                       
Goldman Sachs & Co.
                       
 
                       
SF Capital Partners Ltd.
                       
 
                       
Old Lane Cayman Master Fund, LP
                       
 
                       
Old Lane HMA Master Fund, LP
                       
 
                       
Old Lane US Master Fund, LP
                       

 

(1)   Heights Capital Management, Inc., the authorized agent of Capital Ventures
International (“CVI”), has discretionary authority to vote and dispose of the
shares held by CVI and may be deemed to be the beneficial owner of these shares.
Martin Kobinger, in his capacity as Investment Manager of Heights Capital
Management, Inc., may also be deemed to have investment discretion and voting
power over the shares held by CVI. Mr. Kobinger disclaims any such beneficial
ownership of the shares. CVI is affiliated with one or more registered
broker-dealers. CVI purchased the shares being registered hereunder in the
ordinary course of business and at the time of purchase, had no agreements or
understandings, directly or indirectly, with any other person to distribute such
shares.

 

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PLAN OF DISTRIBUTION
     We are registering the shares of common stock previously issued and the
shares of common stock issuable upon exercise of the warrants to permit the
resale of these shares of common stock by the holders of the common stock and
warrants from time to time after the date of this prospectus. We will not
receive any of the proceeds from the sale by the selling stockholders of the
shares of common stock. We will bear all fees and expenses incident to our
obligation to register the shares of common stock.
     The selling stockholders may sell all or a portion of the shares of common
stock beneficially owned by them and offered hereby from time to time directly
or through one or more underwriters, broker-dealers or agents. If the shares of
common stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions or
agent’s commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions,

  •   on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale;     •   in the
over-the-counter market;     •   in transactions otherwise than on these
exchanges or systems or in the over-the-counter market;     •   through the
writing of options, whether such options are listed on an options exchange or
otherwise;     •   ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;     •   block trades in which the
broker-dealer will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction;     •
  purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;     •   an exchange distribution in accordance with the rules of
the applicable exchange;     •   privately negotiated transactions;     •  
short sales;     •   sales pursuant to Rule 144;     •   broker-dealers may
agree with the selling securityholders to sell a specified number of such shares
at a stipulated price per share;

 

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

 

  •   a combination of any such methods of sale; and     •   any other method
permitted pursuant to applicable law.

     If the selling stockholders effect such transactions by selling shares of
common stock to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of
discounts, concessions or commissions from the selling stockholders or
commissions from purchasers of the shares of common stock for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the shares of common stock or otherwise, the selling stockholders
may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of common stock in the course of hedging in
positions they assume. The selling stockholders may also sell shares of common
stock short and deliver shares of common stock covered by this prospectus to
close out short positions and to return borrowed shares in connection with such
short sales. The selling stockholders may also loan or pledge shares of common
stock to broker-dealers that in turn may sell such shares.
     The selling stockholders may pledge or grant a security interest in some or
all of the warrants or shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933, as amended, amending, if
necessary, the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer and donate the shares of common stock
in other circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
     The selling stockholders and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be “underwriters”
within the meaning of the Securities Act, and any commission paid, or any
discounts or concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed which will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.
     Under the securities laws of some states, the shares of common stock may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.

 

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

 

     There can be no assurance that any selling stockholder will sell any or all
of the shares of common stock registered pursuant to the shelf registration
statement, of which this prospectus forms a part.
     The selling stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock. All of the foregoing may affect the marketability of the shares of common
stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
     We will pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be $[ ] in total,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or “blue sky” laws; provided,
however, that a selling stockholder will pay all underwriting discounts and
selling commissions, if any. We will indemnify the selling stockholders against
liabilities, including some liabilities under the Securities Act, in accordance
with the registration rights agreements, or the selling stockholders will be
entitled to contribution. We may be indemnified by the selling stockholders
against civil liabilities, including liabilities under the Securities Act, that
may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreements, or we may be entitled to contribution.
          Once sold under the shelf registration statement, of which this
prospectus forms a part, the shares of common stock will be freely tradable in
the hands of persons other than our affiliates.

 

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EXHIBIT C
TRANSFER AGENT INSTRUCTIONS
TOREADOR RESOURCES CORPORATION
March                     , 2007
American Stock Transfer & Trust Company
59 Maiden Lane – Plaza Level
New York, NY 10038
Attention: Issac Kagan
Ladies and Gentlemen:
          Reference is made to that certain Securities Purchase Agreement, dated
as of March 21, 2007 (the “Agreement”), by and among Toreador Resources
Corporation, a Delaware corporation (the “Company”), and the investors named on
the Schedule of Buyers attached thereto (collectively, the “Holders”), pursuant
to which the Company is issuing to the Holders shares (the “Common Shares”) of
Common Stock of the Company, par value $0.15625 per share (the “Common Stock”)
and (ii) warrants (the “Warrants”), which are exercisable to purchase shares of
Common Stock.
          As required by the Agreement and pursuant to the Holders’
representations and covenants contained inn Section 2(g) of the Agreement, this
letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time), subject
to any stop transfer instructions that we may issue to you from time to time, if
at all:
          (I) To issue shares of common stock upon transfer or resale of the
common shares; and
          (II) To issue shares of common stock upon the exercise of the warrants
(the “warrant shares”) to or upon the order of a holder from time to time upon
delivery to you of a properly completed and duly executed exercise notice, in
the form attached hereto as Exhibit I, which has been acknowledged by the
company as indicated by the signature of a duly authorized officer of the
company thereon.
          You acknowledge and agree that so long as you have previously received
(a) written confirmation from the Company’s legal counsel that either (i) a
registration statement covering resales of the Common Shares and the Warrant
Shares has been declared effective by the Securities and Exchange Commission
(the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”) and
you have not received a notice from the Company that resale of the Common Shares
and Warrant Shares under a registration statement are not permitted at that time
(a “No Registered Resale Notice”) pursuant to the terms of the Registration
Rights

 

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           Agreement dated as of March 21, 2007 by and among the Company and the
Holders, or (ii) sales of the Common Shares and/or Warrant Shares may be made in
conformity with Rule 144 under the 1933 Act (“Rule 144”) and (b) if applicable,
a copy of such registration statement and you have not received a No Registered
Resale Notice, then within three (3) business days after your receipt of a
notice of transfer, you shall issue the certificates representing the Common
Shares and the Warrant Shares registered in the names of such transferees, and
such certificates shall not bear any legend restricting transfer of the Common
Shares thereby and should not be subject to any stop-transfer restriction;
provided, however, that if such Common Shares and Warrant Shares are not
registered for resale under the 1933 Act or not able to be sold under Rule 144,
then the certificates for such Common Shares and/or Warrant Shares shall bear
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
          A form of written confirmation from the Company’s outside legal
counsel that a registration statement covering resales of the Common Shares and
the Warrant Shares has been declared effective by the SEC under the 1933 Act is
attached hereto as Exhibit II.

 

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          Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at                     .

                  Very truly yours,    
 
                TOREADOR RESOURCES CORPORATION    
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
  Title:        
 
           
THE FOREGOING INSTRUCTIONS ARE
           
ACKNOWLEDGED AND AGREED TO
           
 
           
this                      day of March 2007
           
 
           
AMERICAN STOCK TRANSFER & TRUST COMPANY
           

             
By:
                     
 
  Name:        
 
           
 
  Title:        
 
           

      Enclosures
 
   
cc:
  Capital Ventures International LP
 
  [Other Buyers]
 
  Eleazer Klein, Esq.

 

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EXHIBIT I
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
TOREADOR RESOURCES CORPORATION
     The undersigned holder hereby exercises the right to purchase
                                         of the shares of Common Stock (“Warrant
Shares”) of Toreador Resources Corporation, a Delaware corporation (the
“Company”), evidenced by the attached Warrant to Purchase Common Stock (the
“Warrant”). Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.
     1. Form of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as a “Cash Exercise” with respect to
                                         Warrant Shares.
     2. Payment of Exercise Price. In the event that the holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$                                         to the Company in accordance with the
terms of the Warrant.
     3. Delivery of Warrant Shares. The Company shall deliver to the holder
                     Warrant Shares in accordance with the terms of the Warrant.

          Date:                                          __, ______    
 
              Name of Registered Holder    
 
       
By:
       
 
 
 
Name:    
 
  Title:    

 

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ACKNOWLEDGMENT
     The Company hereby acknowledges this Exercise Notice and hereby directs
American Stock Transfer & Trust Company to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent Instructions dated
March ___, 2007 from the Company and acknowledged and agreed to by American
Stock Transfer & Trust Company.

            TOREADOR RESOURCES CORPORATION
      By:           Name:           Title:      

 

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EXHIBIT II
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
American Stock Transfer & Trust Company
59 Maiden Lane – Plaza Level
New York, NY 10038
Attn: Issac Kagan
     Re:     Toreador Resources Corporation
Ladies and Gentlemen:
          We are counsel to Toreador Resources Corporation, a Delaware
corporation (the “Company”), and have represented the Company in connection with
that certain Securities Purchase Agreement, dated as of March 21, 2007 (the
“Securities Purchase Agreement”), entered into by and among the Company and the
buyers named therein (collectively, the “Holders”) pursuant to which the Company
issued to the Holders its shares of the Company’s Common Stock, par value
$0.15625 per share (the “Common Stock”) and warrants exerciable for shares of
Common Stock (the “Warrants”). Pursuant to the Securities Purchase Agreement,
the Company also has entered into a Registration Rights Agreement with the
Holders (the “Registration Rights Agreement”) pursuant to which the Company
agreed, among other things, to register the resale of the Registrable Securities
(as defined in the Registration Rights Agreement) under the Securities Act of
1933, as amended (the “1933 Act”). In connection with the Company’s obligations
under the Registration Rights Agreement, on                      ___, 2007, the
Company filed a Registration Statement on Form S-1 (File
No. 333-                    ) (the “Registration Statement”) with the Securities
and Exchange Commission (the “SEC”) relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.
          In connection with the foregoing, we advise you that a member of the
SEC’s staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

A-1

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          Subject to the specific prohibitions contained in the Registration
Rights Agreement regarding the inability to use the Registration Statement under
specific circumstances (the “Registration Statement Limitations”) and in
reliance upon the Holders’ representations and covenants in Section 2(g) of the
Securities Purchase Agreement, this letter shall serve as our standing
instruction to you that the shares of Common Stock are freely transferable by
the Holders pursuant to the Registration Statement provided that the prospectus
delivery requirements, if any, are complied with. Subject to the Registration
Statement Limitations, you need not require further letters from us to effect
any future legend-free issuance or reissuance of shares of Common Stock to the
Holders as contemplated by the Company’s Transfer Agent Instructions dated March
___, 2007.

            Very truly yours,
 
HAYNES AND BOONE, LLP
      By:                        

CC:     [LIST NAMES OF HOLDERS]

 

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EXHIBIT D
March ___, 2007
Each of the Investors set forth on the Schedule of Buyers
to the Purchase Agreement (defined below)
at the respective addresses set forth in the Schedule of Buyers
Ladies and Gentlemen:
     We have acted as special counsel to Toreador Resources Corporation, a
Delaware corporation (the “Company”) in connection with the transactions
contemplated by the Securities Purchase Agreement (the “Purchase Agreement”),
dated as of March ___, 2007, by and among the Company and each person set forth
under the column “Buyer” on the Schedule of Buyers thereto (each a “Buyer” and,
collectively, the “Buyers”). Pursuant to the Purchase Agreement, the Company is
to issue and the Buyers are to purchase an aggregate of                   shares
of the Company’s common stock, par value $0.15625 per share (the “Common Stock”)
and the warrants (the “Warrants”) exercisable into an aggregate maximum number
of ___ shares of Common Stock (the “Warrant Shares”) . The opinions expressed
below are being delivered to the Buyers in accordance with Section 7(ii) of the
Purchase Agreement. Capitalized terms used herein, unless otherwise defined
herein, have the respective meanings set forth in the Purchase Agreement.
Scope of Examination and
Certain Assumptions, Qualifications, Limitations, and Exceptions
     In rendering the opinions expressed below, we have reviewed copies of the
following documents (collectively, the “Transaction Documents”):
     (a) the Purchase Agreement;
     (b) the Registration Rights Agreement, dated as of March ___, 2007, by and
among the Company and the Buyers; and
     (c) the Warrant Agreements dated as of the date hereof, by and among the
Company and the Buyers (the “Warrant Agreements”) setting forth the terms of the
Warrants (as defined in the Warrant Agreements).
     In addition to the Transaction Documents, we have reviewed and relied upon
the following documents in rendering our opinions:

 

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     (a) the Certificate of Incorporation of the Company, as certified by the
Secretary of State of the State of Delaware on March 19, 2007 (the “Certificate
of Incorporation”);
     (b) the Bylaws of the Company, as certified to us by the Secretary of the
Company on March ___, 2007 (the “Bylaws”);
     (c) Resolutions of the Board of Directors of the Company, certified to us
by the Secretary of the Company;
     (d) a Certificate of Existence and Good Standing, dated March 19, 2007 for
the Company issued by the Secretary of State of the State of Delaware;
     (e) the certificates of formation, certificates of existence and good
standing of the subsidiaries (the “Subsidiaries”) described on Schedule A
attached hereto (collectively, the “Subsidiary Certificates”);
     (f) an Officer’s Certificate of the Company, dated March ___, 2007 (the
“Officer’s Certificate”); and
     (g) such other instruments and documents as we have deemed necessary as a
basis for expressing our opinions hereinafter set forth.
     The documents described in clauses (a) through (e) immediately above are
collectively referred to herein as the “Organizational Documents.”
     As to various questions of fact material to the opinions expressed below,
we have relied in part, and to the extent we deem reasonably necessary, on the
correctness and accuracy of the representations and warranties and other
information contained in the Transaction Documents, the Organizational Documents
and the Officer’s Certificate, without independent check or verification of the
accuracy thereof.
     In rendering the opinions expressed below, we have assumed, with your
consent and without independent verification, (a) the authenticity and
genuineness of all signatures on all documents that we have reviewed, (b) the
authenticity of all documents submitted to us as originals, (c) the conformity
to original documents of all documents submitted to us as certified,
photostatic, or facsimile copies, (d) the authenticity of the originals of the
documents referred to in the immediately preceding clause (c), (e) that all
persons (other than the Company) executing the Transaction Documents have full
power (corporate or otherwise), authority, capacity, and legal right to execute,
enter into, deliver, and perform the obligations of such person(s) under the
Transaction Documents to which they are a party and that the Transaction
Documents have been duly authorized, executed, and delivered by all persons
(other than the Company), (f) that the Transaction Documents constitute the
legal, valid, binding, and enforceable agreements of all the parties thereto
(other than the Company),

 

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

 

and (g) the correctness and accuracy of all the facts set forth in all
documents, minutes, certificates, and reports identified in this letter or
reviewed by us.
     Our opinions expressed herein are limited to the laws of the State of New
York (with respect to our opinion paragraphs 2(b), 3 and 7 below), the law of
the State of Texas (with respect to opinion paragraph 1 below relating to
Toreador Exploration & Production, Inc.), the General Corporation Law of the
State of Delaware (the “DGCL”) (with respect to our opinion paragraphs 1, 2(a),
3, 4 and 5), and the federal laws of the United States (with respect to our
opinion paragraphs 6 and 8, below), and we express no opinion herein with
respect to the laws of any other jurisdiction. For the purposes of those
opinions expressed below which address matters prospectively, we have assumed,
with your consent, that the facts and law governing the performance by the
parties of their prospective obligations under the Transaction Documents will be
identical to the facts and latest compilations of law governing such performance
as of the date of this letter.
     We have assumed, with your consent and without independent check or
verification, for purposes of the opinions expressed below, that no mutual
mistake, misunderstanding, or fraud exists with respect to any of the matters
relevant to such opinions. We have also assumed, with your consent, that the
parties to the Transaction Documents, and the agents of such parties, have acted
in good faith and that consummation of the transactions contemplated by the
Transaction Documents have complied or will comply with any requirement of good
faith, fair dealing, and conscionability.
     As used in the opinions expressed below, the phrase “our Actual Knowledge”
means the conscious awareness of facts or other information by the attorneys
currently with our firm that are principally responsible for and have given
substantial attention to the preparation and review of the Transaction
Documents. We have not undertaken any investigation of the knowledge of other
attorneys of this firm or any investigation to determine the existence of any
other documents or facts. No inference as to our knowledge or investigation
shall be drawn from the fact of our representation of any other party or
otherwise.
Specific Assumptions and Qualifications on
Opinions Regarding Incorporation, Existence, and Good Standing
     In rendering the opinions expressed in Paragraph 1 below with respect to
the existence and good standing of the Company, we have relied on certifications
from the Secretary of State of Delaware attesting to the valid existence and
good standing of such entity and express our opinions as of the dates of such
certifications. In rendering the opinions expressed in Paragraph 1 below with
respect to the Company being a corporation, we have relied on certifications
from the Secretary of State of Delaware and express our opinions as of the dates
of such certifications. In connection with our opinion in Paragraph 1 below
concerning the Subsidiaries being corporations and the existence and good
standing of the Subsidiaries, we have relied on the Subsidiary Certificates and
express our opinions as of the dates of such certifications.

 

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Specific Assumptions, Qualifications, Limitations,
and Exceptions Concerning Enforceability
     Our opinion in Paragraph 2 below is subject to the following:
     1. The enforceability of the Transaction Documents is subject to (a) the
effects of (i) applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium, rearrangement, liquidation, conservatorship, or similar
laws of general application now or hereafter in effect relating to or affecting
the rights of creditors generally, (ii) general equity principles, and
(iii) statutory provisions of the federal Bankruptcy Code and the Uniform
Fraudulent Conveyance Act as adopted by the State of New York (and related court
decisions) pertaining to the voidability of preferential or fraudulent
transfers, conveyances, and obligations and (b) the application of an implied
covenant of good faith and fair dealing under New York law.
     2. We express no opinion as to: (a) the enforceability of provisions of the
Transaction Documents to the extent that such provisions: (i) purport to waive
or affect any rights to notices required by law and that are not subject to
waiver; (ii) purport to waive trial by jury; (iii) state that any Buyer’s
failure or delay in exercising rights, powers, privileges or remedies under the
Transaction Documents shall not operate as a waiver thereof; (iv) purport to
indemnify any Buyer for violations of federal or state securities laws or
environmental laws, or any obligation to the extent such obligation arises from
or is a result of any Buyer’s own fraud, negligence, or willful misconduct or to
the extent that such indemnification is inconsistent with public policy;
(v) purport to establish or satisfy certain factual standards or conditions;
(vi) purport to sever unenforceable provisions from the Transaction Documents,
to the extent that the enforcement of remaining provisions would frustrate the
fundamental intent of the parties to such documents; (vii) purport to restrict
access to legal or equitable remedies; (viii) purport to waive any claim of the
Company against any Buyer arising out of, or in any way related to, the
Transaction Documents; or (ix) provide that decisions by a party are conclusive
or may be made in its sole discretion; (b) whether a court would grant specific
performance or any other equitable remedy with respect to enforcement of any
provision contained in the Transaction Documents; (c) the enforceability of any
provision in the Transaction Documents that purports to appoint an agent for
service of process or establish or otherwise affect jurisdiction, venue,
evidentiary standards, or limitation periods, or procedural rights in any suit
or other proceeding; or (d) the enforceability of any provision in the
Transaction Documents that purports to waive, subordinate, or otherwise restrict
or deny access to rights, benefits, claims, causes of action, or remedies that
cannot be waived, subordinated, or otherwise restricted or denied.
     3. We express no opinion regarding the enforceability of any documents or
agreements referenced in the Transaction Documents (other than the Transaction
Documents).
     4. We express no opinion as to any provision relating to choice of
governing law contained in the Transaction Documents to the extent the
application of such provision may be subject to constitutional limitations.
Specific Limitations and Qualifications on

 

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Opinions Regarding Violation of Laws
     With respect to our opinions in Paragraph 3 below with respect to no
violation of any applicable law and our opinions in Paragraph 7 below as to the
lack of any required consents, approvals, or authorizations of governmental
authorities, our opinions are expressed only with respect to statutes or
regulations that a lawyer in New York exercising reasonable and customary
professional diligence would reasonably recognize as being applicable to the
parties to or the transactions contemplated by the Transaction Documents. In
addition, we express no opinion as to the following: (a) federal securities laws
and regulations administered by the Securities and Exchange Commission (except
to the extent stated in Paragraph 6 below), New York or any other state “Blue
Sky” laws and regulations (except to the extent stated in Paragraph 7 below),
and laws and regulations relating to commodity (and other) futures and indices
and other similar instruments; (b) pension and employee benefit laws and
regulations; (c) antitrust and unfair competition laws and regulations;
(d) compliance with any fiduciary duty or similar requirements; (e) fraudulent
transfer and fraudulent conveyance laws; (f) environmental laws and regulations;
(g) land use and subdivision laws and regulations; (h) tax laws and regulations;
(i) racketeering laws and regulations (e.g., RICO); (j) laws, regulations, and
policies concerning: i) national and local emergency; ii) possible judicial
deference to acts of sovereign states; and iii) criminal and civil forfeiture
laws; (k) other statutes of general application to the extent they provide for
criminal prosecution (e.g., mail fraud and wire fraud statutes); or (l) the
statutes and ordinances, the administrative decisions, and the rules and
regulations of counties, towns, municipalities, and special political
subdivisions (whether created or enabled through legislative action at the
federal, state, or regional level), and any judicial decisions to the extent
they deal with any of the foregoing.

 

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Other Specific Assumptions, Qualifications, Limitations and Exceptions
     In rendering the opinion(s) expressed in Paragraph 3 below with respect to
the absence of a breach, default or violation with or under any of the
agreements set forth on Schedule B attached hereto (the “Reviewed Agreements”),
which have been certified to us by an officer of the Company in the Officer’s
Certificate as the only material agreements of the Company, we (i) have made no
examination of, and express no opinion with respect to, any financial or
accounting provisions or matters contained in any Reviewed Agreement, and
(ii) limit our opinion to only matters readily ascertainable from the face of
such Reviewed Agreements.
     In rendering the opinion(s) expressed in Paragraph 5 below regarding the
number of shares of authorized capital stock of the Company, we have relied on
our review of the Certificate of Incorporation. In rendering the opinion(s)
expressed in Paragraph 5 below regarding the number of outstanding shares of
capital stock of the Company, we have relied on the Officer’s Certificate as to
the number of outstanding shares on such date. In rendering the opinion(s)
expressed in Paragraph 5 below regarding the number of shares reserved for
issuance, in addition to the Purchase Agreement and the Warrant Agreements, we
have relied upon the ability of the board of directors as of March 21, 2007 to
reserve for issuance the number of shares issuable upon currently outstanding
equity incentive plans and stock options agreements, conversion of the currently
outstanding Series A-1 Convertible Preferred Stock, the exercise of currently
outstanding warrants, and the conversion of the currently outstanding 5%
Convertible Senior Notes due 2025.
Specific Limitations and Qualifications
on Opinions Regarding the Securities Act
     In rendering the opinions expressed in Paragraph 6 below, we advise you
that, with respect to our opinions regarding the registration exemption
applicable to the offer and sale of the Securities under the Purchase Agreement,
we have, with your consent, assumed and relied upon the accuracy of the
representations and warranties and the compliance with the covenants of the
Company and the Buyers contained in the Purchase Agreement.
Opinions
     Based upon the foregoing and in reliance thereon and subject to the
assumptions, qualifications, limitations, and exceptions set forth herein, we
are of the opinion that:
     1. The Company is a corporation validly existing and in good standing under
the laws of the State of Delaware. The Company has the requisite corporate power
to own, lease and operate its properties and to conduct its business as
described in the Form 10-K for the year-ended December 31, 2006. Each of the
Subsidiaries is a corporation validly existing under the laws of the state of
its formation.
     2. (a)The Company has the requisite corporate power and authority to
execute, deliver and perform all of its obligations under the Transaction
Documents, including the issuance of the

 

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Common Shares, the Warrants and the Warrant Shares, in accordance with the terms
thereof. The execution and delivery of the Transaction Documents by the Company
and the consummation of the transactions contemplated therein have been duly
authorized by the Company’s Board of Directors, and no further consent or
authorization of the Company, its Board of Directors or its stockholders is
required therefore.
     (b) The Transaction Documents have been duly executed and delivered by the
Company. The Transaction Documents constitute valid and binding agreements of
the Company, enforceable against the Company in accordance with their respective
terms.
     3. The execution, delivery and performance by the Company of the
Transaction Documents, the consummation by the Company of the transactions
contemplated by the Transaction Documents and the compliance by the Company with
the terms thereof (a) do not violate or constitute a default (or an event which,
with the giving of notice or lapse of time or both, constitutes or would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration under, for which a waiver or consent has not been
obtained (i) the Certificate of Incorporation or Bylaws of the Company; (ii) the
Reviewed Agreements; or (iii) any statute, law, rule or regulation applicable to
the Company; and (b) pursuant to the Reviewed Agreements, do not and will not
result in or require the creation of any lien, security interest or other charge
or encumbrance upon or with respect to any of the Company’s properties.
     4. When issued in accordance with the terms of the Purchase Agreement, the
Common Shares will be duly authorized and validly issued, fully paid and
nonassessable, and free of any and all liens or charges and free of any
preemptive or similar rights to the extent contained in the Company’s
Certificate of Incorporation or Bylaws. When issued in accordance with the
Warrant Agreement, the Warrant Shares will be duly authorized and validly
issued, fully paid and nonassessable and free from any and all liens or charges
and free of preemptive or similar rights to the extent contained in the
Company’s Certificate of Incorporation or Bylaws. The Warrant Shares have been
duly and validly authorized and reserved for issuance by all requisite corporate
action.
     5. As of the date hereof and immediately after the consummation of the
transactions contemplated by the Transaction Documents, the authorized capital
stock of the Company consists of (i) 30,000,000 shares of Common Stock, of which
as of the date hereof, 16,215,829 shares will be issued and outstanding, and
3,621,134 shares have been reserved for issuance pursuant to the Company’s
equity incentive plans and stock option agreements, conversion of the
outstanding Series A-1 Convertible Preferred Stock, 5% Convertible Senior Notes
due 2025, the exercise of outstanding warrants and the exercise of the Warrants
into Warrant Shares and no additional shares are reserved for issuance pursuant
to any currently outstanding securities, and (ii) 4,000,000 shares of preferred
stock, of which 72,000 shares are currently issued and outstanding shares of
Series A-1 Convertible Preferred Stock. None of such Common Stock is subject to
preemptive rights or other similar rights pursuant to the Certificate of
Incorporation or the Bylaws or under the DGCL or pursuant to any Reviewed
Agreement.

 

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     6. The offer and sale of the Common Shares and Warrants in accordance with
the Purchase Agreement and the issuance of the Common Shares and Warrant Shares
in accordance with the Transaction Documents constitute transactions exempt from
the registration requirements of the Securities Act of 1933, as amended.
     7. No authorization, approval, consent, filing, or other order of any
federal or state governmental body, regulatory agency, self-regulatory
organization or stock exchange or market, or the stockholders of the Company, or
any court, or to our Actual Knowledge, any third party is required to be
obtained by the Company to enter into and perform its obligations under the
Transaction Documents or for the issuance and sale of the Common Shares, the
Warrants and Warrant Shares in accordance with the Transaction Documents, or for
the exercise of any rights and remedies under any Transaction Documents that has
not already been obtained or is contemplated pursuant to the terms thereof
except (i) the filing of a Form D under Regulation D of the Securities Act of
1933, as amended, (ii) the filing of a Form 8-K pursuant to the Securities
Exchange Act of 1934, as amended, (iii) the filing of a notification of the
issuance of shares with The NASDAQ Stock Market and (iv) the filing of a Form 99
with the State of New York.
     8. The Company is not an “investment company” or any entity controlled by
an “investment company,” as such term is defined in the Investment Company Act
of 1940, as amended.
     This opinion (i) has been furnished to you at your request, and we consider
it to be a confidential communication that may not be furnished, reproduced,
distributed or disclosed to anyone without our prior written consent, (ii) is
rendered solely in connection with the transactions contemplated by the
Transaction Documents, and may not be relied upon by any other person or for any
other purpose without our prior written consent, (iii) is rendered as of the
date hereof, and we undertake no, and hereby disclaim any kind of, obligation to
advise you of any changes or any new developments that might affect any matters
or opinions set forth herein and (iv) is limited to the matters stated herein,
and no opinions may be inferred or implied beyond the matters expressly stated
herein.
Very truly yours,
HAYNES AND BOONE, LLP

 

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SCHEDULE A
Subsidiaries

                          Certificates of     Jurisdiction of   Type of  
Existence and Name of Subsidiary   Formation   Organization   Good Standing
Toreador Exploration & Production Inc.
  Texas   Corporation   Articles of Incorporation from the Secretary of State of
Texas dated March 19, 2007.
Certificate of Existence from the Secretary of State of Texas dated March 20,
2007. Certificate of Good Standing from the Comptroller of Public Accounts of
the State of Texas dated March 19, 2007.
 
           
Tormin, Inc.
  Delaware   Corporation   Certificate of Incorporation from the Secretary of
State of Delaware dated March 19, 2007.
 
          Certificate of Existence from the Secretary of State of Delaware dated
March 19, 2007. Certificate of Incorporation from the Secretary of State of
Delaware dated March 19, 2007.
 
           
Toreador Acquisition
Corporation
  Delaware   Corporation   Certificate of Existence from the Secretary of State
of Delaware dated March 19, 2007.
 
          Certificate of Incorporation from the Secretary of State of Delaware
dated March 16, 2007.
 
         
Madison (Turkey, Inc.)
  Delaware   Corporation   Certificate of Existence from the Secretary of State
of Delaware dated March 16, 2007.

A-1

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SCHEDULE B
Reviewed Agreements
Settlement Agreement, dated June 25, 1998, among the Gralee Persons, the Dane
Falb Persons and Toreador Royalty Corporation
Warrant, dated July 22, 2004, issued by Toreador Resources Corporation to Nigel
Lovett.
Warrant No. 30, issued by Toreador Resources Corporation to Rich Brand amending
and replacing Warrant dated July 22, 2004
Registration Rights Agreement, effective November 1, 2002, among Toreador
Resources Corporation and persons party thereto
Registration Rights Agreement, dated October 20, 2003, between Toreador
Resources Corporation and William I. Lee and Wilco Properties, Inc.
Registration Rights Agreement, dated December 22, 2003, between Toreador
Resources Corporation and Wilco Properties Inc
Registration Rights Agreement, dated July 22, 2004, between Toreador Resources
Corporation and the Investors party thereto.
Registration Rights Agreement, dated July 22, 2004, between Toreador Resources
Corporation and the Investors party thereto
Registration Rights Agreement dated September 27, 2005 by and between Toreador
Resources Corporation and UBS Securities LLC and the other initial purchasers
named in the purchase agreement.
Indenture dated as of September 27, 2005 by and between Toreador Resources
Corporation and The Bank of New York Trust Company, N.A.
Employment letter agreement between Madison Oil Company and Michael J.
FitzGerald dated September 10, 2001
Toreador Royalty Corporation 1990 Stock Option Plan
Amendment to Toreador Royalty Corporation 1990 Stock Option Plan, effective as
of May 15, 1997
Toreador Royalty Corporation Amended and Restated 1990 Stock Option Plan,
effective as of September 24, 1998

 

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Amendment Number One to Toreador Resources Corporation Amended and Restated 1990
Stock Option Plan
Amendment Number Two to Toreador Resources Corporation Amended and Restated 1990
Stock Option Plan
Toreador Royalty Corporation 1994 Non-Employee Director Stock Option Plan, as
amended
Toreador Resources Corporation Amended and Restated 1994 Non-employee Director
Stock Option Plan
Toreador Resources Corporation 2002 Stock Option Plan
Amendment Number One to the Toreador Resources Corporation 2002 Stock Option
Plan
Toreador Resources Corporation 2005 Long-Term Incentive Plan
Amendment to Toreador Resources Corporation 2005 Long-Term Incentive Plan
Form of Employee Restricted Stock Award
Form of 2005 Outside Director Restricted Stock Award
Form of 2006 Outside Director Restricted Stock Award
Summary Sheet: 2006 Executive Officer Annual Base Salaries
Summary Sheet: 2006 Short Term Incentive Compensation Plan
Summary of Amendment to Restricted Stock Award Agreement of Thomas P. Kellogg,
dated April 6, 2006
Summary Sheet: 2005 Director Compensation
Summary Sheet: 2006 Non-Employee Director Equity Compensation
Summary Sheet: 2007 Director Compensation.
Michael FitzGerald Employee Restricted Stock Award Agreement dated May 30, 2006
Ed Ramirez Employee Restricted Stock Award Agreement dated May 30, 2006
Michael J. FitzGerald Change in Control Agreement dated November 8, 2006
Herbert C. Williamson III Restricted Stock Award Agreement dated November 8,
2006

 

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Nigel Lovett Restricted Stock Award Agreement dated November 8, 2006
Nicholas Rostow Restricted Stock Award Agreement dated November 8, 2006
Letter Agreement by and between Toreador Resources Corporation and G. Thomas
Graves III, dated January 25, 2007
Summary Sheet: 2007 Nigel Lovett’s Annual Base Salary
Summary Sheet: 2007 Executive Officer Base Salaries
G. Thomas Graves III Stock Award Agreement dated January 25, 2007
Summary Sheet: 2007 Short-Term Incentive Compensation Plan
Form of Indemnification Agreement, dated as of April 25, 1995, between Toreador
Royalty Corporation and each of the members of our Board of Directors
Contract for the Supply of Crude Oil from the Parisian Basin, effective
January 1, 1997, between Elf Antwar France and Midland Madison Petroleum Company
(n/k/a Madison Energy France)
Subordinated Revolving Credit Agreement, dated as of October 3, 2001, between
Madison Oil Company and Toreador Resources Corporation
Subordinated Revolving Credit Note, dated as of October 3, 2001, between
Toreador Resources Corporation and Madison Oil Company
Credit Agreement, dated December 30, 2004, by and among Toreador Resources
Corporation, Toreador Acquisition Corporation, Toreador Exploration and
Production, Inc. and Texas Capital Bank, N.A.
Guaranty, dated December 30, 2004, executed by Toreador Resources Corporation in
favor of Texas Capital Bank, N.A.
Warrant to Purchase Common Stock of Toreador Resources Corporation dated
July 11, 2005, by and between Toreador Resources Corporation and Natexis Banques
Popularis
Form of Subscription Agreement for September 16, 2005 Private Placement.
Purchase Agreement dated November 22, 2005 by and among Toreador Resources
Corporation, UBS Securities LLC and the other initial Purchasers named in
Exhibit A attached thereto
Loan and Guarantee Agreement dated December 28, 2006 by and among Toreador
Resources Corporation, as Guarantor, Toreador Turkey Ltd. as Borrower and
Guarantor, Toreador Romania Ltd, a Borrower and Guarantor, Madison Oil France
SAS, as Borrower and Guarantor, Toreador

 

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Energy France S.C.S., as Borrower and Guarantor, Toreador International Holding
L.L.C., as Guarantor, and International Finance Corporation
Security Agreement dated February 21, 2007 (signed by Toreador Resources on
February 27, 2007) by and between Toreador Resources Corporation, as Assignor,
and International Finance Corporation, as Assignee
Quota Charge Agreement dated February 28, 2007 by and between Toreador Resources
Corporation, as Charger, and International Finance Corporation, as Chargee.

 

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EXHIBIT E
TOREADOR RESOURCES CORPORATION
SECRETARY’S CERTIFICATE
The undersigned hereby certifies that she is the duly elected, qualified and
acting Secretary of Toreador Resources Corporation, a Delaware corporation (the
“Company”), and that as such she is authorized to execute and deliver this
certificate in the name and on behalf of the Company and in connection with the
Securities Purchase Agreement, dated as of March 21, 2007, by and among the
Company and the investors listed on the Schedule of Buyers attached thereto (the
“Securities Purchase Agreement”), and further certifies in his official
capacity, in the name and on behalf of the Company, the items set forth below.
Capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Securities Purchase Agreement.
Attached hereto as Exhibit A is a true, correct and complete copy of the
unanimous written consent of the Board of Directors of the Company, dated March
___, 2007. The resolutions contained in Exhibit A have not in any way been
amended, modified, revoked or rescinded, have been in full force and effect
since their adoption to and including the date hereof and are now in full force
and effect.
Attached hereto as Exhibit B is a true, correct and complete copy of the
Certificate of Incorporation of the Company, together with any and all
amendments thereto, and no action has been taken to further amend, modify or
repeal such Certificate of Incorporation, the same being in full force and
effect in the attached form as of the date hereof.
Attached hereto as Exhibit C is a true, correct and complete copy of the Amended
and Restated Bylaws of the Company and any and all amendments thereto, and no
action has been taken to further amend, modify or repeal such Bylaws, the same
being in full force and effect in the attached form as of the date hereof.
Each person listed below has been duly elected or appointed to the position(s)
indicated opposite his name and is duly authorized to sign the Securities
Purchase Agreement and each of the Transaction Documents on behalf of the
Company, and the signature appearing opposite such person’s name below is such
person’s genuine signature.

          Name   Position   Signature
 
       
Douglas W. Weir 
  Senior Vice President and Chief Financial Officer     

 

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IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day
of March, 2007.

         
 
 
 
Shirley Anderson    
 
  Secretary    

I, Douglas W. Weir, Senior Vice President and Chief Financial Officer of the
Company, hereby certify that Shirley Anderson is the duly elected, qualified and
acting Secretary of the Company and that the signature set forth above is her
true signature.

         
 
 
 
Douglas W. Weir    
 
  Senior Vice President and Chief Financial Officer    
 
                

 

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EXHIBIT F
TOREADOR RESOURCES CORPORATION
OFFICER’S CERTIFICATE
     The undersigned Senior Vice President and Chief Financial Officer of
Toreador Resources Corporation, a Delaware corporation (the “Company”), hereby
represents, warrants and certifies to the Buyers (as defined below), pursuant to
Section 7(ix) of the Agreement (as defined below), as follows:

  1.   The representations and warranties made by the Company set forth in
Section 3 of the Securities Purchase Agreement, dated as of March 21, 2007 (the
“Agreement”), among the Company and the investors identified on the Schedule of
Buyers attached to the Agreement (the “Buyers”), (i) to the extent not qualified
by materiality or Material Adverse Effect, are true and correct in all material
respects as of the date hereof (except for representations and warranties that
speak as of a specific date, which shall be true and correct in all material
respects as of such specified date) and (ii) to the extent qualified by
materiality or Material Adverse Effect, are true and correct as of the date
hereof (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specified date).     2.   The
Company has, in all material respects, performed, satisfied and complied with
all covenants, agreements and conditions required to be performed, satisfied or
complied with by it under the Transaction Documents as of the date hereof.

Capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Agreement.
     IN WITNESS WHEREOF, the undersigned has executed this certificate this ___
day of March, 2007.

         
 
 
 
Name:    
 
  Title: Senior Vice President and Chief    
 
  Financial Officer    

 

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Schedule 3(a)
List of Subsidiaries
Toreador Exploration & Production, Inc.
Tormin, Inc.
Toreador Acquisition Corporation
Toreador Energy France SCS
Toreador Hungary Ltd.
Toreador Exploration Ltd.
Toreador Romania Ltd.
Toreador Resources Corp. USA Sucursaia Bucuresti (Branch Office)
Toreador International Holdings Ltd.
Toreador Turkey Ltd.
Madison (Turkey), Inc.
Toreador France, S.A.S.
Capstone Royalty of Texas, LLC (50% owner)
EnergyNet.com, Inc.(38.23% owner)
ePsolutions (36.36% owner)
Toreador Acquisition Corporation is not in good standing in New Mexico because
its Annual Report was filed late. Toreador Acquisition Corporation expects to
have the Annual Report processed in the near future and to be in good standing.

 

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Schedule 3(e)
Consents
File Form D with the SEC and state securities commissioners
File Form 99 with New York State
File Form 8-K
File Notification Form: Change in the Number of Shares Outstanding with NASDAQ
Pursuant to Registration Rights Agreements, Mr. William I. Lee and Wilco
Properties, Inc., Mr. Lee, Wilco Properties, Inc., Nigel Lovett and Rich Brand
have the right to include certain of the shares of common stock underlying their
Series A-1 Convertible Preferred Stock included in the registration statement.
Mr. Lee, Wilco Properties, Inc., Mr. Lovett and Mr. Brand have waived this
right.

 

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Schedule 3(i)
Application of Takeover Protections
The Company is subject to §203 of the Delaware General Corporation Law.

 

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Schedule 3(j)
SEC Documents
On January 16, 2007, the Company filed Amendment No. 1 to its Annual Report on
Form 10-K to restate previously issued financial statements for the fiscal years
ended December 31, 2005, 2004 and 2003. The Company also filed Amendments to its
Quarterly Reports on Form 10-Q to restate previously issued financial statements
for the quarterly periods ended March 31, 2006 and June 30, 2006. The
restatements were made in order to (i) reverse a non-cash loss contingency and
(ii) to capitalize interest that previously had been expensed.
Due to restatements of its financial statements, the Company was late in filing
its Quarterly Report on Form 10-Q for the quarterly period ended September 30,
2006, which was filed on January 16, 2007.

 

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Schedule 3(k)
Absence of Certain Changes
See Schedule 3(j).
Toreador has entered into a Letter Agreement to sell its interest in EnergyNet
subject to both EnergyNet and NASD approval.

 

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Schedule 3(m)
Conduct of Business
In connection with the late filing of its Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2006, the Company received a written Staff
Determination Letter from the NASDAQ Stock Market on November 14, 2006, stating
that the Company’s securities are subject to delisting. A hearing before the
NASDAQ Listing Qualifications Panel was held on January 11, 2007, and the
Company filed its Form 10-Q on January 16, 2007. On February 15, 2007, NASDAQ
notified the Company that the Company had cured its filing deficiency and
regained compliance with the continued listing standards on the NASDAQ Stock
Market.

 

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Schedule 3(p)
Transactions with Affiliates
William I. Lee, a director of the Company, is also Chairman of the Board of
Directors and majority owner of Wilco Properties, Inc. (“Wilco”), to which the
Company subleases office space pursuant to a sub-lease agreement. The Company
has an informal agreement with Wilco under which one of the two companies
incurs, on behalf of the other, certain miscellaneous expenses that are
subsequently reimbursed by the other company.
Frederic Auberty is Toreador’s Vice President-International Operations and is
the stepson of William I. Lee, a Toreador director.
Herschel Sanders is Toreador’s Vice President-Land and is the son of H.R.
Sanders, Jr., a Toreador director.

 

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Schedule 3(q)
Equity Capitalization
Pursuant to certain warrant agreements exercisable into 36,400 shares, from
after July 22, 2008 until July 22, 2009 or a Change of Control, the holders of
the warrants can force Toreador to pay the difference between the closing price
on the date of surrender and the exercise price of the warrant.
See the first sentence of Section 3(q)
See Schedule 3(r)
See Schedule 3(e) regarding the waiver of the right of Mr. Lee and Wilco
Properties, Inc. to include shares in the registration statement.
There are options exercisable into 501,170 shares of Common Stock.
There are warrants exercisable into 98,760 shares of Common Stock.
There are 72,000 shares of Series A-1 Convertible Preferred Stock outstanding
which are convertible into 450,000 shares of Common Stock.
There is $82,250,000 of 5% Convertible Senior Notes due 2025 which are
convertible into 2,014,766 shares of Common Stock.

 

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Schedule 3(r)
Indebtedness and Other Contracts
Credit Facility with Texas Capital Bank, N.A.
Toreador is a party to a five-year $25 million reserve-based borrowing facility
with Texas Capital Bank, N.A. The facility bears interest at a rate of prime
less 0.5% and is collateralized by Toreador’s domestic working interests. The
borrowers under this facility are two of Toreador’s domestic subsidiaries, and
Toreador has guaranteed the obligations. The Texas Capital facility requires
monthly interest payments until January 1, 2009 at which time all unpaid
principal and interest are due. The Texas Capital facility contains various
affirmative and negative covenants. These covenants, among other things, limit
additional indebtedness, the sale of assets, change of control and management
and require the Company to meet certain financial requirements.
Credit Facility with International Finance Corporation
Toreador is a party to a loan and guarantee agreement with International Finance
Corporation, which provides for a $25 million secured revolving facility. The
current maximum facility amount is $25 million which maximum facility amount
will increase to $40 million when the projected total borrowing base amount
exceeds $50 million. The loan and guarantee agreement also provides for an
unsecured $10 million facility. Interest accrues on any loans under the
$25 million facility at a rate of 2% over the six month LIBOR rate. Interest
accrues at a rate of 0.5% over the six month LIBOR rate under the $10 million
facility.
On December 31, 2011, the maximum amount available under the $25 million
facility begins to decrease by $5 million every six months from $40 million
(assuming the projected borrowing base amount exceeds $50 million) until the
final portion of the $25 million facility is due on December 15, 2014. On
December 15, 2014, $5 million of the $10 million facility is to be repaid with
the remaining $5 million being due on June 15, 2015.
The Company is to meet the following ratios on a consolidated basis: (i) the
life of loan coverage ratio of not less than: (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 25%; (iii) adjusted
financed 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.
Toreador is subject to certain negative covenants, including, but not limited
to, the following: (i) except as required by law or to pay the dividends on the
Series A-1 Convertible Preferred Stock, paying dividends; (ii) subject to
certain exceptions, incurring debt, making guarantees or creating or permitting
to exist any liens, (iii) subject to certain exceptions, making or permitting to
exist loans or advances to, or deposits, with other persons or investments in
any person or enterprise; (iv) subject to certain exceptions, selling,
transferring, leasing or otherwise disposing of all or a material part of its
borrowing base assets; and (v) subject to certain exceptions, undertaking or
permitting any merger, spin-off, consolidation or reorganization.

 

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International Finance Corporation has a first ranking security interest (a) in
certain proceeds, receivables and contract rights relating to and from the sale
of oil or gas production in France, Turkey and Romania and (b) in funds held in
certain bank accounts. International Finance Corporation has an assignment of
all rights and claims to any compensation or other special payments in respect
of all concessions other than those arising in the normal course of operations
payable by the government of Turkey and Romania. International Finance
Corporation has a first ranking pledge (a) by Toreador International of all its
shares in the borrowers; (b) by Madison Oil of all its shares in Toreador
France; and (c) by Toreador of all its shares in Toreador International.
5% Convertible Senior Notes Due 2025
     On September 27, 2005, Toreador sold $75 million of Convertible Senior
Notes due October 1, 2025 to qualified institutional buyers pursuant to
Rule 144A of the Securities Act of 1933. Toreador also granted the initial
purchasers the option to purchase an additional $11.25 million aggregate
principal amount of Convertible Senior Notes to cover over-allotments. The
option was exercised on September 30, 2005. The total principal amount of
Convertible Senior Notes issued was $86.25 million and total net proceeds were
approximately $82.2 million.
     The Convertible Senior Notes bear interest at a rate of 5% per annum and
can be converted into common stock at an initial conversion rate of 23.3596
shares of common stock per $1,000 principal amount of Convertible Senior Notes ,
subject to adjustment (equivalent to a conversion price of approximately $42.81
per share). Toreador may redeem the Convertible Senior Notes, in whole or in
part, on or after October 6, 2008, and prior to October 1, 2010, for cash at a
redemption price equal to 100% of the principal amount of Convertible Senior
Notes to be redeemed, plus any accrued and unpaid interest, if the closing price
of its common stock exceeds 130% of the conversion price over a specified
period. On or after October 1, 2010, Toreador may redeem the Convertible Senior
Notes, in whole or in part, at a redemption price equal to 100% of the principal
amount of Convertible Senior Notes to be redeemed, plus any accrued and unpaid
interest, irrespective of the price of its common stock. Holders may convert
their Convertible Senior Notes at any time prior to the close of business on the
business day immediately preceding their stated maturity, and holders may, upon
the occurrence of certain fundamental changes, and on October 1, 2010,
October 1, 2015, and October 1, 2020, require Toreador to repurchase all or a
portion of their Convertible Senior Notes for cash in an amount equal to 100% of
the principal amount of such Convertible Senior Notes, plus any accrued and
unpaid interest.

 

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Schedule 3(s)
Absence of Litigation
The Company and its co-venturers have made a claim in respect of the cost of
re-drilling and repeating flow-testing of two wells that were damaged by a
vessel owned by Micoperi. In addition, the Company and its co-venturers have
claimed to recover back from Micoperi a sum of about $8.7 million paid to
Micoperi under the contract between the Company, its co-venturers and Micoperi.
Micoperi has made a cross-claim for about $6.8 million in respect of sums
allegedly due to Micoperi under the contract between the Company, its
co-venturers and Micoperi. Micoperi has also asserted a claim that the arrest of
the vessel “MICOPERI 30” at Palermo, Italy was wrongful and have asserted a
claim for damages in respect of such allegedly wrongful arrest. The Company and
its co-ventures have received security from Micoperi by way of a letter of
undertaking from their insurers, and have provided security to Micoperi in
respect of their cross-claims by way of a bank guarantee of $7.8 million. The
claims and cross-claims are subject to the jurisdiction of the English Court;
however, neither side has yet commenced any court proceedings.

 

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Schedule 3(t)
Insurance
None

 

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Schedule 3(v)
Title
Texas Capital Facility
The credit facility with Texas Capital Bank, N.A. is secured by mortgages on oil
and gas properties owned by Toreador Exploration and Production Inc. (“TEP”) and
Toreador Acquisition Corporation (“TAC”), subsidiaries of the Company, along
with pledges of the Company’s ownership interests of TEP and TAC.
International Finance Corporation Facility
International Finance Corporation has a first ranking security interest (a) in
certain proceeds, receivables and contract rights relating to and from the sale
of oil or gas production in France, Turkey and Romania and (b) in funds held in
certain bank accounts. International Finance Corporation has an assignment of
all rights and claims to any compensation or other special payments in respect
of all concessions other than those arising in the normal course of operations
payable by the government of Turkey and Romania. International Finance
Corporation has a first ranking pledge (a) by Toreador International of all its
shares in the borrowers; (b) by Madison Oil of all its shares in Toreador
France; and (c) by Toreador of all its shares in Toreador International.

 

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Schedule 3(y)
Subsidiary Rights
Certain subsidiaries of the Company which are parties to either the Texas
Capital Bank credit facility or the International Finance Corporation credit
facilities cannot make a Restricted Payment as defined in such credit facility
agreement if there is a default under the credit facility

 

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Schedule 3(aa)
Internal Accounting and Disclosure Controls
As noted in the Annual Report on Form 10-K for the year ended December 31, 2006,
Toreador’s management concluded, and Grant Thornton issued an audit report
confirming, that the Company’s internal control over financial reporting was not
effective as of December 31, 2006 to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with generally accepted accounting
principles.
Toreador’s management identified the following material weaknesses as of
December 31, 2006:

  •   Toreador did not maintain an effective control environment and Toreador’s
financial and accounting organization was not adequate to support Toreador’s
financial reporting requirements. The involvement of corporate personnel in the
reporting of foreign transactions and operations was not sufficient to
accurately capture and record such activity and Toreador did not maintain a
sufficient complement of personnel with an appropriate level of accounting
knowledge, experience and training in the application of generally accepted
accounting principles consistent with the level and complexity of Toreador’s
operations. Toreador also did not have an adequate review and approval process
for recorded journal entries and changes made to the general ledger.     •  
Toreador’s accounting and financial reporting systems and procedures were not
sufficiently designed to ensure consistent and complete application of
Toreador’s accounting policies and to prepare financial statements in accordance
with generally accepted accounting principles. This includes not only the
sufficiency of Toreador’s review of sensitive calculations, reconciliations and
spreadsheets but also the preparation and processing of financial accounting
information.

Toreador’s management is currently evaluating the implementation of procedures
that may be necessary to fully remediate the material weaknesses described
above. Toreador’s management is in the process of making the following changes
to its system of internal controls:

  •   Improving the computerized integrated financial reporting system. This
will automate the manual processes that are causing errors in spreadsheets and
sensitive calculations.     •   Hiring additional experienced accounting staff
to allow for improved segregation of duties and a more thorough review, by
senior financial personnel, of the financial statements and underlying
supporting documentation.     •   Providing additional training to Toreador’s
accounting staff and acquiring other accounting resources to improve Toreador’s
financial reporting.

 

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  •   Formally documenting Toreador’s accounting policies and procedures.

As noted in the Form 10-K/A for the year-ended December 31, 2005, the Forms 10-Q
and 10-Q/A for the quarters ended March 31, 2006 and June 30, 2006 and the Form
10-Q for the quarter ended September 30, 2006, there were material weaknesses in
internal accounting controls.
In the Form 10-K for the year-ended December 31, 2005, Toreador’s independent
auditor’s at the time, Hein & Associates, Inc., found material weaknesses in
Toreador’s internal accounting controls.