Document:

Exhibit 10(a)*

 

AMENDMENT
TO

EMPLOYMENT
AGREEMENT

 

This amendment (the “Amendment”) effective as of January 28, 2010
amends that certain Employment Agreement (as Amended and Restated December 31,
2008) between Regis Corporation (the “Corporation”) and Paul D. Finkelstein (“Finkelstein”
or “Executive”) (the “Agreement”).

 

1.                                       The Agreement is hereby amended by
deleting paragraph 4(f) thereof and replacing it with the following new
paragraph 4(f):

 

(f)            Retirement Benefit/Survivor Benefits. 
The Corporation shall pay to the Executive, if living, or to each of his
Designated Beneficiary and his former spouse Barbara (referred to herein as the
Executive’s “Former Spouse”), in the event of his death, the following
sums upon the terms and conditions and for the periods hereinafter set forth:

 

(i)            Retirement Payments to the Executive. 
Upon the Executive’s termination of employment with the Corporation, the
Corporation shall pay to the Executive a lump sum cash payment of an amount
(sometimes referred to as his “Retirement Benefit”) equal to the present
value of a hypothetical annuity payable to the Executive for life starting on
the first day of the month following his termination of employment with the
Corporation, with monthly payments equal to his Adjusted Monthly Benefit.  For the purpose of determining this present
value, the following assumptions shall apply:

 

(1)          Interest: Payments shall be discounted to present
value at a rate of interest equal to the yield to maturity, of 30-year U.S.
Treasury Notes as of the Executive’s termination of employment.

 

(2)           Mortality:  It
shall be assumed that payments will be made for the joint life and last
survivor expectancy of the Executive and his Former Spouse, or the life
expectancy of the Executive if the Former Spouse is not then living, as
determined at the start of payments under Table II (Joint Life and Last
Survivor Expectancy), or Table I (Single Life Expectancy), as applicable, found
the IRS Publication 590.

 

(3)           Cost of Living Adjustment: It shall be assumed that
the Consumer Price Index increases by four percent (4%) per year to derive the
Adjusted Monthly Benefit.

 

(ii)          Survivor Benefits. If the Executive dies while employed with the
Corporation (or after his termination of employment with the Corporation but
prior to payment under (i) above), the Corporation shall make the
following payments:

 

(1)           to Executive’s Designated Beneficiary, a lump sum cash
payment equal to one half of the Retirement Benefit to which the Executive
would have been entitled were he living, to be paid to the Designated
Beneficiary within thirty days after the Executive’s death (referred to herein
as the “Beneficiary Survivor Benefit”); and

 

(2)           to Executive’s Former Spouse, one half of the Adjusted
Monthly Benefit to which the Executive would have been entitled were he living
and were he to receive his Retirement Benefit in the form of an annuity for his
life, such payments to commence within thirty (30) days after the Executive’s 

 

 

death and to continue
monthly for the remainder of her life (referred to herein as the “Former
Spouse Survivor Benefit”, and, with the Beneficiary Survivor Benefit,
collectively as the “Survivor Benefits”).

 

(iii)          Termination for Cause.  If the
Executive’s employment with the Corporation is terminated at any time for Cause
(as defined in Section 8), the Corporation shall have no obligation to
make any payments to him or his Former Spouse  under
this Section 4(f) and all such future payments shall be forfeited.

 

2.                                       The Agreement is hereby amended by
deleting paragraphs 7(a)(ii), 7(b)(ii) and 7(c)(ii) and replacing
each of them with the following new paragraph:

 

(ii)           Accrued Obligations. 
In addition, the Executive shall also be entitled to the following: (1) a
payment equal to the Highest Annual Bonus, pro rata based on the portion of the
year ended on the date of the termination; (2) unpaid deferred
compensation under the Regis Corporation Executive Retirement Savings Plan (as
restated or amended, and including any successor thereto), together with all
earnings thereon (it being understood that this is separate from, and in
addition to each of the Retirement Benefit and the Survivor Benefits set forth
in Section 4(f) hereof); and (3) accrued vacation pay.

 

3.                                       The Agreement is hereby amended by
replacing the definition of “Designated Beneficiary” in paragraph 8
thereof as follows:

 

“Designated Beneficiary” shall mean, as of the
time of Executive’s death, Executive’s surviving spouse, or such other person
or persons as the Executive shall have designated in writing and has or have
been accepted in writing by the Corporation, or, in the absence of either, the
Executive’s estate.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment this 28th day of January 2010.

 

 

	
   

  	
  REGIS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric A. Bakken

  
	
   

  	
   

  	
  Name:

  	
  Eric A. Bakken

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President, Secretary & General
  Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul D. Finkelstein

  
	
   

  	
   

  	
  Name:

  	
  Paul D. Finkelstein

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board of Directors, President and
  Chief Executive Officer

  

 

2Exhibit 10.1

 

EXECUTION VERSION

 

INVESTMENT
AGREEMENT

 

THIS INVESTMENT AGREEMENT (this “Agreement”)
is entered into on the 10th day of May 2010 by and between Toreador Energy
France S.C.S., a company existing under the laws of France (hereinafter
referred to as “Toreador”) and an indirect
subsidiary of Toreador Resources Corporation, a Delaware corporation, and Hess
Oil France S.A.S, a company existing under the laws of France (hereinafter
referred to as “Hess”) and a wholly owned
subsidiary of Hess Corporation, a Delaware corporation.  The companies named above, and their
respective successors and assignees (if any), may sometimes individually be
referred to as “Party” and collectively as the “Parties.”

 

WHEREAS,
as of the date of this Agreement, Toreador holds, or has pending permits in
respect of, the working interests (collectively, the “Original
Working Interests”) in the exploration permits (the “Permits”) set forth on Exhibit A attached
hereto, in each case which have been, or may be, granted to it in accordance
with the mining legislation and regulations applicable in France on the basis
of commitments to execute and finance certain exploration works;

 

WHEREAS,
Toreador is willing to delegate the execution and the financing of the
exploration works referred to above and has offered Hess to perform such
exploration works and provide such financing and participate in the Original
Working Interests subject to the conditions set forth herein;

 

WHEREAS,
Hess wishes and agrees to participate, subject to the terms and conditions set
forth herein, in the Original Working Interests and perform the exploration
works and provide such financing; and

 

WHEREAS,
Toreador and Hess wish herewith to specify the terms and conditions of Hess’s
participation in the Original Working Interests and the delegation to Hess of
the execution and financing of certain exploration, appraisal and development
activities on the Permits.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants,
agreements and obligations set forth herein, and other good and valuable
consideration, the legal sufficiency of which is hereby acknowledged, the
Parties agree as follows:

 

1.                                       DEFINITIONS

 

1.1                                 Whenever used in this Agreement, the following terms shall have the
meanings assigned to them hereunder unless specifically defined otherwise or
unless the context otherwise requires:

 

“Acquired Interest”  shall have the meaning ascribed to it in Section 5.2.

 

“Acquiring Party” shall have the
meaning ascribed to it in Section 5.2.

 

1

 

“Acquisition
Fee” shall have the meaning ascribed to it in Section 2.1.

 

“Acreage Delivered” shall equal the
gross acreage attributable to the Permits for which Hess is a Co-Titleholder or to the
permits for which Hess acquires a working interest pursuant to Section 5.

 

“Acreage Represented”
shall mean 1,137,000 gross acres.

 

“Affiliate”
shall be any entity that directly or indirectly wholly owns, is wholly owned
by, or is under common control of a Party.

 

“Agreement” shall
have the meaning ascribed to it in the preamble.

 

“Area of Mutual Interest” shall have
the meaning ascribed to it in Section 5.1.

 

“bbl”
shall mean one (1) stock tank barrel of oil, or a volume of forty two (42)
U.S. gallons.

 

“Co-Titleholder” shall
have the meaning ascribed to it in Section 4.2(f).

 

“dollars” or “$” shall mean U.S.
dollars.

 

“Election Notice” shall have the meaning ascribed to it in Section 3.4(a).

 

“Expert” shall have
the meaning ascribed to it in Section 14.3.

 

“Force Majeure” shall
mean any event or circumstance, which is beyond the control of the Party or
Parties concerned (acting and having acted as a reasonable and prudent
operator), directly resulting in, or causing the failure by, such Party or
Parties to perform any of its or their obligations under this Agreement, which
failure could not have been prevented or overcome by the exercise by it or them
of the standard of a reasonable and prudent operator, including, without
limitation (i) acts of God, earthquake, flood, lightning, fires, storm,
storm warnings, and navigational and maritime perils; (ii) strikes,
lockouts or other industrial disturbances (including strikes, lockouts or other
industrial disturbances involving only the staff or business of the Party
seeking to rely on the Force Majeure event); (iii) acts of war, civil
disturbances, blockades, insurrections, riots, occupation of premises or
facilities, terrorism, epidemics; or (iv) any law, order, rule,
regulation, act, restraint, omission or failure to act of any governmental body
or authority, civil or military (whether or not in fact legally valid).

 

“French Administration”
shall mean the French Administration and any agency thereof.

 

“Government Approval”
shall have the meaning ascribed to it in Section 4.1(b).

 

“Gross Acreage” shall equal the gross
acreage attributable to the Permits for which a Working Interest Assignment has become
effective under Section 4.1 or permits for which Hess acquires a working
interest pursuant to Section 5.

 

“Hess”
shall have the meaning ascribed to it in the preamble.

 

2

 

“Hess
Money Spent” shall mean money spent by Hess in fulfillment of
the Work Program, which shall be calculated in accordance with the
specifications set forth in Annex A.

 

“Hess
Revenue” shall mean Hess’s monthly revenue from production on
the Gross Acreage.

 

“Management Committee” shall have the
meaning ascribed to it in Section 3.2(a).

 

“Non-Acquiring Party” shall have the
meaning ascribed to it in Section 5.2.

 

“Non-Wholly Owned Pending Permits”
shall mean the pending Permits listed in Exhibit H.

 

“Non-Wholly Owned Permits”
shall mean the Permits listed in Exhibit F.

 

“OECD
Convention” shall mean the OECD Convention on Combating Bribery
of Foreign Public Officials in International Business Transactions, signed in
Paris on December 17, 1997, which entered into force on February 15,
1999, and the Convention’s Commentaries.

 

“Offered Interest” shall have the
meaning ascribed to it in Section 5.2.

 

“Organizational Rules” shall mean the
organizational rules of the Management Committee set forth in Exhibit D.

 

“Original
Working Interests” shall have the meaning ascribed to it in the
recitals.

 

“Participation
Agreements” shall have the meaning ascribed to it in Section 4.3(c).

 

“Party”
or “Parties” shall
have the meaning ascribed to it in the preamble.

 

“Permits”
shall have the meaning ascribed to it in the recitals.

 

“Phase 1”
shall mean the period of time between the date hereof and the Phase 1
Completion Deadline.

 

“Phase 1
Completion Date” shall have the meaning ascribed to it in Section 3.3(c).

 

“Phase 1
Completion Deadline” shall mean the last day of the thirty
(30)-month period following the date on which Government
Approval (or refusal, as the case may be) for all the Wholly Owned Permits is
obtained.

 

“Phase 1
Completion Notice” shall have the meaning ascribed to it in Section 3.3(c).

 

“Phase 1 Work” shall mean the
exploration, appraisal and/or development activities described under Phase 1 of
the Work Program.

 

“Phase 2”
shall mean the thirty six (36)-month period commencing on the calendar day
following the earlier of the Phase 1 Completion Deadline or the date on which
the Parties agree in accordance with Section 3.3(c) that
Hess Money Spent during Phase 1 equals or exceeds $50,000,000 (fifty million
dollars).

 

3

 

“Phase 2
Completion Date” shall have the meaning ascribed to it in Section 3.5(b).

 

“Phase 2
Completion Deadline” shall mean the last day of the thirty six
(36)-month period from the date on which Phase 2 commenced.

 

“Phase 2
Completion Notice” shall have the meaning ascribed to it in Section 3.5(b).

 

“Phase 2 Work” shall mean the
exploration, appraisal and/or development activities described under Phase 2 of
the Work Program.

 

“Production
Success Fee” shall have the meaning ascribed to it in Section 8.2(a).

 

“Production
Success Fee Cap” shall have the meaning ascribed to it in Section 8.2(c).

 

“Production
Trigger” shall have the meaning ascribed to it in Section 8.2(a).

 

“Proposed Application Interest” shall
have the meaning ascribed to it in Section 5.4.

 

“Proposed Reserves” shall have the
meaning ascribed to it in Section 8.1(c).

 

“Proved Developed Reserves” shall
have the meaning ascribed to such term
by Rule 4—10(a) of Regulation S—X promulgated by the SEC.

 

“Received”
shall have the meaning ascribed to it in Section 13.1.

 

“Reserves”
shall mean the Proved Developed Reserves attributable to the Original Working
Interests in the Permits and the Proved Developed Reserves attributable to the
interests acquired by Hess and Toreador pursuant to Section 5.

 

“Reserves
Success Fee” shall have the meaning ascribed to it in Section 8.1(a).

 

“Reserves
Success Fee Cap” shall have the meaning
ascribed to it in Section 8.1(e).

 

“Resulting
Working Interest” shall mean Hess’s working interest in a Permit
equal to Hess Money Spent during Phase 1 divided  by $120,000,000 (one hundred twenty million dollars) and then multiplied by
50% and then multiplied by the Original
Working Interest in such Permit (provided that no Resulting Working Interest
shall under any circumstances exceed 50% of the Original Working Interest) (collectively, the “Resulting
Working Interests”).

 

“SEC”
shall mean the U.S. Securities and Exchange Commission.

 

“Tax Authority”
shall mean any local, municipal, governmental, state, federal or other fiscal,
customs or excise authority with responsibility for or competent to impose,
collect or administer any form of tax.

 

“Toreador”
shall have the meaning ascribed to it in the preamble.

 

“Transaction Costs” shall have the
meaning ascribed to it in Section 5.2.

 

4

 

“Transfer
Working Interest” shall mean 50% of an Original Working Interest
(collectively, the “Transfer
Working Interests”).

 

“VAT” shall mean value
added tax imposed in any member state of the European Union, including France,
pursuant to the EC Council Directive 2006/112 on the common system of value
added tax and national legislation, including French legislation, implementing
that Directive together with all penalties or interest thereon or any tax of a
similar nature which may be substituted for or levied in addition to it.

 

“Wholly Owned Pending Permits”
shall mean the pending Permits listed in Exhibit G.

 

“Wholly Owned Permits”
shall mean the Permits listed in Exhibit E.

 

“Work
Program”  shall mean
the work program attached hereto as Exhibit B.

 

“Working Interest Assignments”
shall have the meaning ascribed to it in Section 4.1(a).

 

“Working
Interest Balance” shall mean the working interest in each Permit
equal to the Transfer Working Interest minus the
Resulting Working Interest.

 

2.             ACQUISITION FEE

 

2.1           As a result of Hess acquiring up to 50% of the
Original Working Interests on the terms and conditions set forth herein, Hess
agrees to pay to Toreador within thirty (30) calendar days of execution of this
Agreement, $15,000,000 (fifteen million dollars) increased by applicable VAT at
the current standard rate of 19.6% (the “Acquisition
Fee”) by wire transfer of immediately available funds to a bank
account previously designated by Toreador in writing.

 

3.             WORK PROGRAM

 

3.1           Subject to the
terms and conditions of this Agreement, Hess agrees to be delegated the
financing and carrying out of the Work Program and to expend $120,000,000 (one
hundred twenty million dollars) with respect to the Work Program, carrying
Toreador 100% in respect thereof, meaning, for the avoidance of doubt, that
Toreador shall not be responsible for any cost or expense related thereto,
provided, that, all costs and expenses incurred in excess of $120,000,000 (one
hundred twenty million dollars) shall be borne by Toreador and Hess in
accordance with the relevant Participation Agreement.

 

3.2           Management
Committee.

 

(a)   To provide for the overall supervision
and direction of the Work Program, the Parties shall establish a management
committee (the “Management Committee”)
of four (4) persons composed of representatives of each of Toreador and
Hess.  The Management Committee shall act
in accordance with the Organizational Rules.

 

(b)   Each of Toreador and Hess
shall appoint two (2) representatives and one (1) alternate
representative to serve on the Management Committee with initial composition as
set forth in the Organizational Rules. 
Each Party shall have the right to change any of its 

 

5

 

representatives or alternate at any time by giving written notice of
such change to the other Party.  During
Phase 1 and Phase 2, the chairman of the Management Committee shall be one of
Toreador’s members of the Management Committee until Hess becomes operator of
record for any of the Permits and thereafter a Hess member shall serve as the
chairman. Following Phase 2, the chairman position shall rotate annually.

 

(c)   Subject to the Organizational Rules, the Management
Committee shall have the power and duty to determine the operations that are
necessary or desirable to fulfill the Work Program in accordance with this
Agreement. The Management Committee will determine and approve the budget for
the Permits under the Work Program.

 

(d)   The Management Committee may establish such advisory
sub-committees as it considers desirable from time to time.  The Management Committee shall provide each
sub-committee with written terms of reference and any such sub-committee shall
be subject to such procedures as the Management Committee may determine.

 

3.3           Phase 1 Working Interests.

 

(a)   Phase 1 shall commence on
the date hereof.

 

(b)   The
Parties shall use reasonable endeavors to allow Hess to spud the first well
under the Work Program by December 31, 2010, the second well by March 31,
2011 and the third well by June 30, 2011. 
The 2010 budget and the proposed 2010-2012 timeline for the Work Program
are set forth in Exhibit C.

 

(c)   Phase
1 shall be deemed to be completed when Hess Money Spent during Phase 1 equals
$50,000,000 (fifty million dollars) (as agreed by the Parties in accordance
with this provision, the “Phase 1 Completion
Date”), provided that the Phase 1 Completion Date shall be no later
than the Phase 1 Completion Deadline. 
Upon Hess’s determination that Hess Money Spent during Phase 1 equals or
exceeds $50,000,000 (fifty million dollars), Hess shall deliver prompt written
notice (the “Phase 1 Completion Notice”)
to Toreador setting forth in detail the specifics of the Phase 1 Work performed
and its proposed calculation of the Hess Money Spent in respect thereof.  Toreador shall have forty-five (45) calendar
days from receipt of the Phase 1 Completion Notice to deliver notice to Hess of
any objection to the contents thereof. 
Any dispute relating to the determination of Hess Money Spent during
Phase 1 shall be resolved in accordance with Section 14.3. For the
avoidance of doubt, Hess Money Spent shall continue to be calculated until the
Phase 1 Completion Deadline for purposes of Section 3.5(b) and for purposes of calculating the Resulting Working Interest pursuant to Section 3.4(b) and
Section 3.5(c).  At any time during
Phase 1, Toreador shall have the right at its cost to audit the Hess Money
Spent during Phase 1.

 

(d)   Subject to Section 3.3(e),
in the event Hess Money Spent does not equal or
exceed $50,000,000 (fifty million dollars) by the Phase 1 Completion Deadline: (i) Hess
shall not be entitled to maintain any portion of the Transfer Working
Interests, (ii) Hess shall hereby assign, and as promptly as practicable
take any and all other action required to assign, back to Toreador the Transfer
Working Interests (provided, that, the Working Interest Assignments contemplated
by Section 4 have been completed) and, if Hess is then a Co-Titleholder of
a 

 

6

 

Permit, Hess shall as
promptly as practicable take any and all action to surrender title in the
Permits, (iii) Hess shall no longer be, and shall lose its election to
become, operator under any of the Permits and (iv) Toreador may terminate
this Agreement upon the completion of the Parties’ existing obligations with
respect to the transfer back to Toreador of the Transfer Working Interests and
the surrender by Hess of title in the Permits. 
For the avoidance of doubt, no payment or any other consideration shall
be due to Hess as a result of this Section 3.3(d).  Toreador
shall not be entitled to any remedy under French law or under this Agreement
other than the remedy set out in this Section 3.3(d) unless in the event of
gross negligence, fraud or wilful misconduct.

 

(e)   In the event Hess Money
Spent does not equal or exceed
$50,000,000 (fifty million dollars) by the Phase 1 Completion Deadline for
reasons which are beyond Hess’s control and which can be qualified as Force
Majeure, the Phase 1 Completion Deadline shall, subject to the terms of this
provision, be extended for the period of time for which Phase 1 has been
suspended because Hess has been prevented or hindered from completing Phase 1
Work as a result of Force Majeure.  In
order to claim Force Majeure Hess shall notify Toreador in writing of the Force
Majeure promptly after the occurrence of the facts relied on and shall keep
Toreador informed in writing of all significant developments.  Such notice shall give reasonably detailed
particulars of the Force Majeure and also estimate the period of time which
Hess reasonably believes will be required to remedy the Force Majeure. Hess
shall use commercially reasonable efforts to remove or overcome the Force
Majeure situation as promptly as possible. 
If the period of time for which a Force Majeure is continuing exceeds
six (6) months and Toreador is able to perform, or cause the performance
of, the work required under the Work Program, Toreador may, in its sole
discretion, be entitled to perform, or
cause to be performed, such work at the sole cost and expense of Hess.

 

3.4           Option to Proceed to Phase 2.

 

(a)   Upon
the Phase 1 Completion Date, Hess shall have the option to proceed to Phase
2.  Hess shall notify Toreador in writing
(an “Election Notice”) at any time
after the Phase 1 Completion Date, but no later than fifteen (15) calendar days
prior to the Phase 1 Completion Deadline, of its election whether it so elects
to proceed with Phase 2.  Such election
shall be conditioned on the agreement of the Parties in accordance with Section 3.3(c) that
Hess Money Spent during Phase 1 equals or exceeds $50,000,000 (fifty million
dollars) (if such agreement has not been reached prior to the date of the
Election Notice).  There shall be no
penalty to Hess (including, for the avoidance of doubt, any requirement to
incur any future expenditures under this Agreement, other than in accordance
with the terms and conditions of the Participation Agreements) solely for an
election by Hess to not enter Phase 2.  A
failure by Hess to timely provide an Election Notice shall be deemed an
election by Hess not to proceed to Phase 2.

 

(b)   If
the Parties agree in accordance with Section 3.3(c) that the Phase 1
Completion Date has occurred and Hess has elected (or deemed to have elected)
not to proceed to Phase 2: (i) Hess shall maintain the Resulting Working
Interest in each of the Permits, (ii) Hess shall hereby assign, and as
promptly as practicable take any and all other action required to assign, back
to Toreador the Working Interest Balance (provided, that, the Working Interest
Assignments contemplated by Section 4 have been completed), (iii) Hess
shall no longer be, and shall lose its election to become, operator under any
of the Permits and (iv) Toreador may 

 

7

 

terminate this Agreement
upon the completion of the Parties’ existing obligations with respect to the
Working Interest Assignments and the grant of title to the Permits.  For the avoidance of doubt, no payment or any
other consideration shall be due to Hess as a result of this Section 3.4(b).

 

3.5           Phase 2 Working Interest.

 

(a)   If
Hess elects to proceed to Phase 2, Phase 2 shall commence upon the calendar day
following  the earlier of the Phase 1 Completion
Deadline or the date on which Hess
Money Spent during Phase 1 equals or exceeds $50,000,000 (fifty million
dollars) as determined in accordance with Section 3.3(c).

 

(b)   Phase
2 shall be deemed to be completed when Hess Money Spent during Phase 2 equals
$70,000,000 (seventy million dollars) (less, Hess Money Spent during Phase 1 in
excess of $50,000,000 (fifty million dollars), if any) (as agreed by the
Parties in accordance with this provision, the “Phase 2 Completion Date”), provided, that, the Phase 2
Completion Date shall be no later than the Phase 2 Completion Deadline.  Upon Hess’s determination that Hess Money
Spent during Phase 2 equals $70,000,000 (seventy million dollars) (as may be
adjusted pursuant to this Section 3.5(b)),
Hess shall deliver prompt written notice to Toreador setting forth in detail
its proposed calculation of the Hess Money Spent during Phase 2 (the “Phase 2 Completion Notice”).  Toreador shall have forty-five (45) calendar
days from receipt thereof to deliver to Hess notice of any objection to the
calculation of Hess Money Spent during Phase 2 as set forth in the Phase 2
Completion Notice.  Any dispute relating
to the determination of whether Hess Money Spent during Phase 2 equals
$70,000,000 (seventy million dollars) (as may be adjusted pursuant
to this Section 3.5(b)) shall be resolved
in accordance with Section 14.3.  At
any time during Phase 2, Toreador shall have the right at its cost to audit the
proposed Hess Money Spent during Phase 2.

 

(c)   Subject
to Section 3.5(d), in the event Hess Money Spent does not equal
$70,000,000 (seventy million dollars) (as may be adjusted pursuant
to Section 3.5(b)) by the Phase 2 Completion
Deadline: (i) Hess shall maintain its Resulting Working Interests, (ii) Hess
shall hereby assign, and as promptly as practicable take any and all other
action required to assign, back to Toreador the Working Interest Balance
(provided, that, the Working Interest Assignments contemplated by Section 4
have been completed), (iii) Hess shall no longer be, and shall lose its
election to become, operator under any of the Permits and (iv) Toreador
may terminate this Agreement upon the completion of the Parties’ existing
obligations with respect to the Working Interest Assignments and the grant of
title to the Permits.  For the avoidance
of doubt, no payment or any other consideration shall be due to Hess as a
result of this Section 3.5(c).  Toreador shall not be entitled to any remedy under French law or under
this Agreement other than the remedy set out in this Section 3.5(c) unless
in the event of gross negligence, fraud or wilful misconduct.

 

(d)   In
the event Hess Money Spent does not equal or exceed $70,000,000 (seventy
million dollars) (as may be adjusted pursuant to Section 3.5(b))
by the Phase 2 Completion Deadline for
reasons which are beyond Hess’s control and which can be qualified as Force
Majeure, the Phase 2 Completion Deadline shall, subject to the terms of this
provision, be extended for the period of time for which Phase 2 has been
suspended because Hess has been 

 

8

 

prevented or hindered from
completing Phase 2 Work as a result of Force Majeure.  In order to claim Force Majeure Hess shall
notify Toreador in writing of the Force Majeure promptly after the occurrence
of the facts relied on and shall keep Toreador informed in writing of all
significant developments.  Such notice
shall give reasonably detailed particulars of the Force Majeure and also
estimate the period of time which Hess reasonably believes will be required to
remedy the Force Majeure. Hess shall use commercially reasonable efforts to
remove or overcome the Force Majeure situation as promptly as possible.  If the period of time for
which a Force Majeure is continuing exceeds six (6) months and Toreador is
able to perform, or cause the performance of, the work required under the Work
Program, Toreador may, in its sole discretion, be entitled to perform, or cause to be performed, such
work at the sole cost and expense of Hess.

 

(e)   Following
the Phase 2 Completion Date, Toreador and Hess shall bear the costs of any
subsequent exploration, appraisal and development activity in relation to the
Permits in accordance with the relevant Participation Agreement.

 

3.6           Enforcement of Transfer-Back Obligations.  For
purposes of Sections 3.3(d), 3.4(b) and 3.5(c), Hess hereby grants to
Toreador an irrevocable mandate for Toreador to act in the name, and on behalf
of, Hess, and at Hess’s expense, in order to take any actions to complete the
transfer back to Toreador of the Transfer Working Interests or the Working
Interest Balance (including pursuant to the terms of the relevant Participation
Agreement) and the surrender of title to the Permits as may be required by
Sections 3.3(d), 3.4(b) and 3.5(c). 
Hess acknowledges that Toreador is entering into this Agreement in
consideration that Hess is irrevocably bound by such transfer obligations under
the terms and conditions of Sections 3.3(d), 3.4(b) and 3.5(c) and
hereby irrevocably waives its right to revoke these transfer obligations and
renounces the provisions of Article 1142 of the French Civil Code. As a
result, the Parties agree that should Hess fail to perform such transfer
obligations in accordance with Sections 3.3(d), 3.4(b) and 3.5(c),
Toreador shall be entitled to obtain enforcement (exécution forcée) of such transfer obligations, without
prejudice to its right to obtain damages for loss suffered from this failure by
Hess to perform such transfer-back obligation.

 

4.             ASSIGNMENT OF WORKING INTERESTS, GRANT OF TITLE AND PARTICIPATION
AGREEMENTS

 

4.1           Assignment of Transfer Working Interests.

 

(a)   Subject to the terms and conditions of this Agreement,
including, without limitation Sections 3.3, 3.5 and this Section 4.1, by
the Parties’ execution of this Agreement, Toreador hereby assigns to Hess, and
Hess agrees to accept, the Transfer Working Interests (such assignments, the “Working Interest Assignments”).

 

(b)   As
promptly as practicable but no later than seven (7) calendar days
following the date hereof, the Parties shall notify the French Administration
of this Agreement.  Each Working Interest Assignment shall be subject to the approval or deemed approval by the
French Administration within sixty (60) calendar days of submission thereof (or
such extended period as may be advised by the French Administration in writing)
(each such approval, a “Government Approval”).  The Parties shall cooperate to submit to the
French Administration any other supporting documentation as may be required by
the French Administration in order to obtain the 

 

9

 

Government
Approvals, including, without limitation, a
copy of this Agreement (or a French translation or French summary thereof in an
agreed form) and any
documentation required by the French Administration to evaluate the financial
capacities of Hess.

 

(c)   In the case of each Wholly Owned Permit, the
Working Interest Assignment shall be subject to, and effective on the date of,
the Government Approval for such Wholly Owned Permit.

 

(d)   In the case of each Non-Wholly Owned Permit, the
Working Interest Assignment shall be subject to, and effective on the date of
the last to occur of: (i) the Government Approval for such Non-Wholly
Owned Permit, (ii) the waiver by the other party or parties thereto of
their preemptive rights (if any) with respect to such Working Interest
Assignment and (iii) the execution by Hess, Toreador and such other party
or parties of an amendment and novation of the existing participation agreement
between Toreador and such other party or parties governing
the operations on
such Non-Wholly Owned Permit to reflect Hess’s Transfer Working Interest.

 

(e)   In the case of each Wholly Owned Pending Permit,
the Working Interest Assignment shall be subject to, and effective on the date
of the last to occur of: (i) the Government Approval for such Wholly Owned
Pending Permit and (ii) the grant by the French Administration of the
Wholly Owned Pending Permit to Toreador.

 

(f)    In the case of each Non-Wholly Owned Pending
Permit, the Working Interest Assignment shall be subject to, and effective on
the date of the last to occur of: (i) the Government Approval for such
Non-Wholly Owned Pending Permit, (ii) the grant by the French
Administration of the Non-Wholly Owned Pending Permit to Toreador and such
other party or parties and (iii) the execution by Hess, Toreador and such
other party or parties of a participation agreement governing
the operations on
such Non-Wholly Owned Pending Permit.

 

(g)   Toreador and Hess shall each use its commercially
reasonable efforts to obtain the satisfaction of each of the conditions set
forth in Sections 4.1(c), (d), (e) and (f), and a Party shall provide
prompt written notice to the other Party when any of such conditions has been
satisfied.

 

4.2           Grant of Title to Permits.

 

(a)   Promptly upon the effectiveness of the Working
Interest Assignment in a Wholly Owned Permit in accordance with Section 4.1(c),
the Parties shall execute and submit to the French Administration a demande de mutation (including a convention de mutation).

 

(b)   Promptly upon the effectiveness of the Working
Interest Assignment in a Non-Wholly Owned Permit in accordance with Section 4.1(d),
the Parties shall execute, and shall use commercially reasonable efforts to
cause the other party or parties to the Non-Wholly Owned Permit to execute, and
submit to the French Administration a demande
de mutation (including a convention
de mutation).

 

(c)   Promptly upon the effectiveness of the Working
Interest Assignment in a Wholly Owned Pending Permit in accordance with Section 4.1(e),
the Parties shall execute and 

 

10

 

submit
to the French Administration a demande de
mutation (including a convention
de mutation),

 

(d)   Promptly upon the effectiveness of the Working
Interest Assignment in a Non-Wholly Owned Pending Permit in accordance with Section 4.1(f),
the Parties shall execute, and shall use commercially reasonable efforts to
cause the other party or parties to the Non-Wholly Owned Pending Permit to
execute, and submit to the French Administration a demande de mutation (including a convention de mutation).

 

(e)   The Parties shall cooperate to submit to the
French Administration any other supporting documentation as may be required by
the French Administration in order for Hess to become a Co-Titleholder in the
Permits.

 

(f)    Grant of title to the Permits to reflect Hess
as a co-titleholder in a Permit (a “Co-Titleholder”)
shall be effective on the date of the publication of the grant of such title in
the Journal Officiel de la République
Française.

 

4.3           Participation Agreements.

 

(a)   Promptly upon the effectiveness of the Working
Interest Assignment in a Wholly Owned Permit in accordance with Section 4.1(c),
Toreador and Hess shall create a société en participation in respect to, and enter into and
execute an individual participation agreement to govern the operations on, such
Wholly Owned Permit in the form attached hereto as Exhibit I, and an
accounting procedure, the form of which is attached hereto as Exhibit J.

 

(b)   Promptly upon the effectiveness of the Working
Interest Assignment in a Wholly Owned
Pending Permit in accordance with Section 4.1(e), Toreador and Hess shall
create a société en participation in respect to,
and enter into and execute an individual participation agreement for the
exploration of, and to govern the operations on, such Wholly Owned Pending
Permit in the form attached hereto as Exhibit I, and an
accounting procedure, the form of which is attached hereto as Exhibit J.

 

(c)   The
participation agreements referred to in Sections 4.1(d), 4.1(f), 4.3(a) and
4.3(b) shall be herein referred to collectively as the “Participation Agreements,” and each, a “Participation Agreement.”  Subject to Section 15.9, each
Participation Agreement shall govern the operations on the relevant Permit and
the Parties’ obligations with respect thereto.

 

(d)   Upon the French Administration granting Hess title to a Permit in
accordance with Section 4.2, the Parties shall cooperate to submit the
relevant Participation Agreement to the French Administration as soon as
reasonably practicable.

 

(e)   The Parties undertake to agree and finalize the forms of acknowledgement
agreement and special agreement on the basis of the documents attached hereto
as Exhibit K and Exhibit L, respectively.  Should the Parties fail to agree on the form
of such agreements within sixty (60) calendar days of the date hereof, the
acknowledge agreement and the special agreement attached hereto as Exhibit K
and Exhibit L, respectively, shall be deemed to be agreed by the
Parties.

 

11

 

5.                                       AREA OF MUTUAL INTEREST

 

5.1                                 The Parties have designated
an area of mutual interest as set forth on Annex B (the “Area of Mutual Interest”).

 

5.2                                 Subject to Section 5.4,
from the date hereof and until this Agreement terminates, if any Party or any
of its respective Affiliates (the “Acquiring Party”)
directly or indirectly acquires or agrees to acquire a permit in the Area of
Mutual Interest or any working interest or other interest or any contract right,
including pursuant to a farm-in agreement, related thereto (each, an “Acquired Interest”), the Acquiring Party shall offer in
writing to the other Party (the “Non-Acquiring Party”)
within thirty (30) calendar days of the acquisition of such exploration permit
in respect of such Acquired Interest or the execution of an agreement to
acquire such Acquired Interest, the right to acquire 50% in the Acquired
Interest (the “Offered Interest”) on the same
terms and conditions by which the Acquiring Party has acquired or will acquire
the Acquired Interest, including (x) the consideration paid by the
Acquiring Party and (y) the Acquiring Party’s reasonable out-of-pocket
costs and expenses directly incurred in connection with the acquisition of the
Acquired Interest (the “Transaction Costs”).   The Non-Acquiring
Party shall provide written notice to the Acquiring Party within thirty (30)
calendar days after receipt of such notice as to the Non-Acquiring Party’s
election as to whether it will acquire the Offered Interest on such terms and
conditions.  Failure of the Non-Acquiring
Party to timely provide such notice shall be deemed an election by the
Non-Acquiring Party not to acquire the Offered Interest.

 

5.3                                 Upon (x) the
Non-Acquiring Party’s timely election to acquire the Offered Interest and (y) reimbursement
by the Non-Acquiring Party of (i) 50% of the consideration paid by the
Acquiring Party and (ii) 50% of the Transaction Costs, the Acquiring Party
shall as promptly as reasonably practicable effect the transfer of the Offered
Interest to the Non-Acquiring Party.

 

5.4                                 Notwithstanding the above,
if, from the date hereof and until this Agreement terminates, an Acquiring
Party intends or proposes to make an application to the French Administration
for a permit (the “Proposed Application
Interest”), then the Acquiring Party must give notice in writing to
the Non-Acquiring Party of its intention to apply for such Proposed Application
Interest and the proposed terms and conditions thereof and shall offer the
Non-Acquiring Party the opportunity to join the Acquiring Party in applying for
the Proposed Application Interest.  The
Non-Acquiring Party shall provide written notice to the Acquiring Party within
thirty (30) calendar days after receipt of such notice as to the Non-Acquiring
Party’s election as to whether it will join the Acquiring Party in submitting
an application to obtain the Proposed Application Interest.  Failure of the Non-Acquiring Party to timely
provide such notice shall be deemed an election by the Non-Acquiring Party not
to join the Acquiring Party in submitting an application to obtain the Proposed
Application Interest. If the Non-Acquiring Party elects not to join the
Acquiring Party in making such an application, Section 5.2 shall not
apply; provided, however, that if the French Administration subsequently
proposes a substantive change to the application, then the Acquiring Party must
give a new notice to the Non-Acquiring Party in accordance with this Section 5.4.

 

12

 

5.5                                 Any permit jointly obtained
in accordance with this Section 5 shall be subject to the terms and
conditions of this Agreement, including, without limitation for purposes of Section 8.

 

6.                                       TERMINATION

 

6.1                                 If Government Approval is
refused for each and every Wholly Owned Permit, this Agreement shall
immediately terminate, unless otherwise agreed by the Parties, and Toreador
shall repay to Hess within thirty (30) calendar days the Acquisition Fee by
wire transfer of immediately available funds to a bank account designated by
Hess in writing.  The Working Interest
Assignments shall thereafter have no force or effect, and Hess shall have no
Transfer Working Interest whatsoever in the Permits and shall be deemed to have
reassigned any rights or equitable interest it may have acquired under this
Agreement to Toreador retroactive to the date of this Agreement.

 

6.2                                 If Government Approval is
obtained for at least one but not all the Wholly Owned Permits,
Hess shall have the right, but not the obligation, to terminate this
Agreement by providing written notice to Toreador, such right of
termination expiring fifteen (15) calendar days after the date on which
Government Approval (or refusal, as the case may be) for the last of the Wholly
Owned Permits is obtained.  If Hess
exercises such termination right, Toreador shall, within ninety (90) calendar
days after such termination of this Agreement, reimburse Hess for (a) Hess
Money Spent until the date on which Government Approval (or refusal, as the
case may be) for the last of the Wholly Owned Permits is obtained (with
interest calculated as EUROLIBOR three
(3) months rate plus four (4.0) percentage points) and (b) the
Acquisition Fee, by wire transfer of immediately available funds to a bank
account designated by Hess in writing. 
The Working Interest Assignments shall have no force or effect, and Hess
shall thereafter have no Transfer Working Interest whatsoever in the Permits
and shall be deemed to have reassigned any rights or equitable interest it may
have acquired under this Agreement to Toreador retroactive to the date of this
Agreement.

 

6.3                                 Subject to Sections 3.3(e) and
3.5(d), Toreador may terminate this Agreement if (a) Hess Money Spent does
not equal or exceed $50,000,000 (fifty million dollars) by the Phase 1
Completion Deadline, (b) Hess does not elect to proceed to Phase 2, or (c) Hess
Money Spent does not equal $70,000,000 (seventy million dollars) (as may be
adjusted pursuant to Section 3.5(b)) by the Phase 2 Completion Deadline,
provided, that, in the case of (b) or
(c) above, (x) the Working Interest Assignments contemplated by Section 4, and, as the
case may be, transfer back obligations referred to in Section 3, have been completed and (y) each Participation Agreement shall
remain in full force and effect thereafter in accordance with its terms.

 

6.4                                 Unless earlier terminated by
(a) mutual written agreement of both Parties, (b) under Section 6.1,
(c) by Toreador under Section 6.3 or (d) by Hess under Section 6.2,
this Agreement shall terminate ten (10) years after the date hereof,
provided that each Participation
Agreement shall remain in full force and effect thereafter in accordance with
its terms to the extent applicable.

 

6.5                                 Sections
8, 11, 12, 13, 14 and 15 shall survive any
termination of this Agreement.

 

13

 

7.                                       OPERATORSHIP

 

7.1                                 Toreador shall remain the operator of record of such Permits for which it
is operator until such time as Hess has become a Co-Titleholder of such Permit.
Upon Hess becoming a Co-Titleholder of a Permit, Hess may, subject to Section 7.4
below, elect to become the operator of record of such Permit. If Hess so elects
to become operator, it shall provide Toreador with written notice specifying
the Permit(s) on which Hess wishes to become operator, and Toreador shall
thereafter resign as operator of such Permits in accordance with the provisions
of the relevant Participation Agreement. Upon receiving such notice, Toreador
and Hess shall cooperate to submit to the French Administration such
documentation as may be required by the French Administration in order to
effect such transfer of operatorship. 
For the avoidance of doubt, no payment nor any other consideration shall
be due to Toreador as a result of Toreador’s ceasing to be the operator of the
Permits.

 

7.2                                 Until such time
as Hess is the operator of record on each Wholly-Owned Permit and, as the case
may be, each Wholly-Owned Pending Permit which would be granted by the French
Administration, Toreador shall delegate to Hess the operator’s duties and powers relating to the monitoring and carrying
out of drilling activities in the Permit’s acreage as well as other geological
and geophysical activities related to such drilling and such other duties and
powers as determined by the Management Committee.

 

7.3                                 If (a) Hess
Money Spent does not equal or exceed $50,000,000 (fifty million dollars) by the
Phase 1 Completion Deadline, (b) Hess does not elect to proceed to Phase
2, or (c) Hess Money Spent does not equal $70,000,000 (seventy million
dollars) (as may be adjusted pursuant to Section 3.5(b)) by the Phase 2
Completion Deadline, Hess shall no longer be,
and shall lose its election to become, operator under any of the Permits.  If Hess is then an operator on any Permit, it
shall immediately resign as operator, and operatorship shall revert to
Toreador  in accordance of the provisions
of the relevant Participation Agreement. 
For the avoidance of doubt, no payment nor any other consideration shall
be due to Hess as a result of Hess’s ceasing to be the operator of the Permits.

 

7.4                                 The Parties shall use commercially reasonable efforts to have Hess
appointed as operator of the Non-Wholly Owned Permits and Non-Wholly Owned
Pending Permits.

 

8.                                       SUCCESS FEES

 

8.1                                 Reserves Success Fee.

 

(a)          Hess shall pay Toreador a success fee (the “Reserves Success Fee”) of $1.00 per bbl of Reserves as agreed
by the Parties in accordance with Section 8.1(c).

 

(b)         The
Reserves Success Fee shall be calculated and payable annually.  Beginning with the second year the Reserves
Success Fee may be payable, the Reserves Success Fee shall be payable only in
respect of Reserves additions booked in excess of the Reserves from the
previous year.  In no event shall the
Reserves Success Fee be less than $0 (zero dollars).

 

(c)          Within sixty (60) calendar days following Hess’s fiscal year-end, Hess
shall provide Toreador with a written notice setting forth its proposed
Reserves (consistent with its 

 

14

 

annual reserves report
filed with the SEC if it is, at that time, required to file an annual report
with the SEC) (the “Proposed Reserves”).  Toreador shall have thirty (30) calendar days
from receipt thereof to deliver notice to Hess of any objection to the Proposed
Reserves; thereafter, Toreador may, at its sole cost, engage either Degolyer &
MacNaughton or Ryder Scott Petroleum Consultants to complete an evaluation of
the Reserves, such conclusion to be final and binding on the Parties for the
purposes of calculating the Reserves Success Fee.  If Toreador fails to timely provide notice of
an objection to the Proposed Reserves, the Proposed Reserves shall be the
Reserves for purposes of this Section 8.1.

 

(d)         The
Reserves Success Fee shall be payable by Hess within thirty (30) calendar days
of agreement by the Parties of the Reserves in accordance with Section 8.1(c) by
wire transfer of immediately available funds to a bank account designated by
Toreador in writing.

 

(e)          Subject to Section 8.3, the Reserves Success Fee shall be payable by
Hess to Toreador for so long as, and until, Hess has paid $80,000,000 (eighty
million dollars) (the “Reserves Success Fee
Cap”) to Toreador in respect of its obligations under this Section 8.1.

 

8.2                                 Production Success Fee.

 

(a)          If gross production from within the Gross Acreage from which Hess is
receiving any revenue, exceeds a rate of 20,000 bbl per day for thirty (30)
consecutive calendar days (the “Production
Trigger”), then Hess shall pay Toreador a production success fee
(the “Production Success Fee”)
equal to 10% (ten percent) of Hess Revenue.

 

(b)         The
Production Success Fee shall be calculated and payable monthly, beginning with
the first full calendar month following the Production Trigger.  The Production Success Fee shall be payable
by Hess to Toreador within sixty (60) calendar days of each month-end by wire
transfer of immediately available funds to a bank account designated by
Toreador in writing, such payment to be accompanied by a detailed monthly
statement setting forth Hess’s calculation of such month’s Production Success
Fee.  Notwithstanding anything herein to
the contrary, Toreador shall have the right to audit at its sole cost the
accounts and records of Hess relating to the Production Success Fee for twenty
four (24) months following receipt of a given monthly statement. Any dispute
relating to the determination of the Production Success Fee shall be resolved
in accordance with Section 14.3.

 

(c)          Subject to Section 8.3, the Production Success Fee shall be payable
by Hess to Toreador until the earlier of thirty-six (36) months following the
date the Production Trigger occurs or until Hess has paid to Toreador
$50,000,000 (fifty million dollars) (the “Production
Success Fee Cap”) in respect of its obligations under this Section 8.2.

 

8.3                                 Adjustment.  If, at the
Phase 1 Completion Deadline, the Acreage Delivered is less than 90% of the
Acreage Represented, then the Reserves Success Fee Cap and the Production
Success Fee Cap shall each be reduced by the same percentage by which the
Acreage Delivered falls below 90% of the Acreage Represented.  For example, if Acreage Delivered equals
966,450 gross acres, then Acreage Delivered would be 85% of the Acreage
Represented.  Thus, the Reserves Success
Fee Cap would be reduced by 5% (90%-85%=5%) or by $4,000,000 (four million
dollars) to $76,000,000 (seventy six million dollars), and the Production
Success Fee Cap 

 

15

 

would
be reduced by 5% (90%-85%=5%) or $2,500,000 (two million five hundred thousand
dollars) to $47,500,000 (forty seven million five hundred thousand dollars).

 

8.4                                 Transfer of Success Fee
Obligations. Notwithstanding any
other provision of this Agreement, Hess shall not sell, assign, farm out,
transfer or otherwise dispose of or create any encumbrance over all or any part
of its Transfer Working Interests unless the transferee agrees to be bound by
the terms of this Section 8, and Hess shall be responsible for any failure
by such transferee to comply with the terms hereof.

 

9.                                       TRANSFER RESTRICTIONS

 

9.1                                 From the date hereof and during Phase 1, Hess shall not sell, assign,
farm out, transfer or otherwise dispose of or create any encumbrance over all
or part of the Transfer Working Interests.

 

9.2                                 From the date hereof until the date on which Government Approval
(or refusal, as the case may be) for the last of the Wholly Owned Permits is
obtained, Toreador shall not assign, farm out,
transfer or sell all or part of the Original Working Interest to a third party.

 

9.3                                 From the date hereof until the Phase 2
Completion Date, if a Party wishes to transfer a working interest in a
Non-Wholly Owned Permit or a Non-Wholly Owned Pending Permit to any other party
to a Participation Agreement for such Permit, it shall send to the other Party
a written notice in connection with such contemplated transfer and the Parties
shall enter into good faith discussions in relation to agreeing terms and
conditions for such contemplated transfer. 
If the Parties fail to agree within sixty (60) calendar days from the
receipt of such notice, the Party wishing to make such transfer to such other
party shall be permitted to do so.

 

9.4                                 From the date hereof until the Phase 2
Completion Date, Toreador shall not transfer or assign more than 40% (forty
percent) of the Original Working Interest in a Permit.

 

9.5                                 During Phase 2, Hess shall only be permitted
to assign an interest in each Permit up to the Resulting Working Interest.

 

9.6                                 Notwithstanding the above, a Party shall be
entitled to assign or transfer all or part of its interest in a Permit to an
Affiliate, provided, that, such Party shall also assign its corresponding
rights and obligations pursuant to this Agreement.

 

9.7                                 Subject to the other provisions in this Section 9,
the relevant Participation Agreement shall govern the terms of any proposed
assignment, farm-out, transfer or sale of a working interest in any Permit by
either Party, including any preemptive right.

 

10.                                 REPRESENTATIONS AND WARRANTIES OF THE PARTIES

 

10.1                           Toreador Representations and Warranties. 
Toreador makes the following representations and warranties as of the
date hereof:

 

(a)          Toreador holds the rights to the Original Working Interests in the Wholly
Owned Permits and Non-Wholly Owned Permits, free and clear of any liens,
claims, burdens or 

 

16

 

encumbrances, other than (i) any
preemptive or other rights set forth in the relevant participation agreement, a
copy of which has been provided to Hess and (ii) the liens, claims,
burdens or encumbrances in favor of the French Administration according to the
terms of the Permits and applicable laws. 
Each Wholly Owned Permit and Non-Wholly Owned Permit is in full force
and effect and no notice of default, termination, or breach under such Wholly
Owned Permit or Non-Wholly Owned Permit has been received by Toreador nor, to
the best of its knowledge, any other party to a Non-Wholly Owned Permit.  Each Wholly Owned Permit or Non-Wholly Owned
Permit, together with applicable laws, contains the entirety of the obligation
of Toreador to the French Administration, and no other understanding or
agreement exists between Toreador and the French Administration, in relation to
the subject matter of such Wholly Owned Permit or Non-Wholly Owned Permit.

 

(b)         Toreador
has provided Hess with a complete and correct copy of each Permit and the
relevant participation agreement for each Non-Wholly Owned Permit. Where
Toreador has provided any translation of a Permit, participation agreement or
any related document, Toreador has done so as a courtesy to Hess, and Toreador
makes no representation or warranty as to the accuracy of the translation.

 

(c)          Toreador is not party to any material litigation, arbitration or
administrative proceeding that would prevent the consummation of Working
Interest Assignments contemplated by this Agreement.

 

(d)         To
the best of its knowledge, the Wholly Owned Permits have been owned and
operated by Toreador in compliance in all material respects with applicable
laws, including environmental laws, with respect to the operation of, and the abandonment
of wells (if any) on, the Wholly Owned Permits. 
To the best of its knowledge, no environmental claim has been commenced
that is reasonably likely to be adversely determined against Toreador and
which, if so determined, is likely to materially prejudice or endanger, in any
manner, the Transfer Working Interests.

 

10.2                      Hess Representations and Warranties. Hess makes the following representations and
warranties to Toreador as of the date hereof:

 

(a)          Hess or its Affiliates have sufficient
technical capability, personnel and resources to fulfill Hess’s obligations
under this Agreement in compliance with all applicable laws as well as
applicable industry safety, health and environmental standards.

 

(b)         Hess
or its Affiliates have sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to fulfill all of its
obligations under this Agreement.

 

10.3                      Mutual Representations and Warranties.  Each
Party makes the following representations and warranties to each other Party as
of the date hereof:

 

(a)          Each Party is duly organized and validly existing under the laws of the
jurisdiction where it is organized.  Each
Party has all requisite corporate or other power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.  This
Agreement has been duly executed and delivered by 

 

17

 

each Party and constitutes
a legal, valid and binding obligation of each Party, enforceable against each
Party in accordance with its terms.

 

(b)         The
execution, delivery, and performance of this Agreement by each Party, the
consummation of the transactions contemplated hereby, and the compliance with
the provisions hereof will not, to the best of its knowledge:

 

(i)             violate any applicable laws or regulations, judgment, decree or award;

 

(ii)          contravene the organizational documents of a Party; or

 

(iii)       result
in a violation of a term or provision, or constitute a default or accelerate
the performance of any obligation under any contract or agreement executed by a
Party hereto, except, with respect to this Section 10.3(b)(iii), as would
not have a material adverse effect.

 

(c)          Neither Party nor, to the best of its knowledge, its Affiliates or any
person acting on its or their behalf has, in connection with the matters which
are the subject of this Agreement, taken any action, directly or indirectly,
that would result in a violation by such persons of the U.S. Foreign Corrupt
Practices Act of 1977 or the principles described in the OECD Convention.

 

10.4                      Indemnification.  The
representations and warranties of the Parties in this Agreement shall survive
for two (2) years from the date hereof. Each of the Parties agrees to indemnify
and hold the other Party harmless for any claims, causes of action or
liabilities, which arise out of the breach of any of the warranties and
representations herein by the indemnifying Party.

 

10.5                      Disclaimer of Other Representations and
Warranties.  Except for the representations and warranties
explicitly made in this Agreement, Toreador makes no, and disclaims any,
warranty or representation of any kind, either express, implied, statutory, or
otherwise, including, without limitation, the accuracy or completeness of any
data, reports, records, projections, information, or materials or with respect
to any Permit, reserves or production rates now, heretofore, or hereafter
furnished or made available to Hess in connection with this Agreement.

 

10.6                      In this Section 10
the phrase “to the best of its knowledge” shall mean that the statement is
deemed to have been made after all reasonable enquiry in the context of this
Agreement of those employees who have direct responsibility for the matter in
question and might reasonably be expected to be in possession of information
relevant to the same.

 

11.                                 TAX

 

11.1                           Tax Obligations.

 

(a)          The société en participation to be created
in respect to each Permit shall be tax transparent for French tax purposes and (i) the
identity of its partners shall be disclosed to the French tax authorities no
later than by the end of the first fiscal quarter following the end of the 

 

18

 

fiscal year in which Hess
becomes a partner in such société en participation and
(ii) such partners shall be unlimited partners.

 

(b)         Each
Party shall be responsible for reporting and discharging its own tax measured
by the profit or income of the Party and the satisfaction of such Party’s share
of all obligations under this Agreement. 
Each Party shall protect, defend and indemnify each other Party from any
and all loss, cost or liability arising from the indemnifying Party’s failure
to report and discharge such taxes or satisfy such obligations.  The Parties intend that all income and all
tax benefits (including deductions, depreciation, credits and capitalization)
with respect to the expenditures made by the Parties hereunder will be
allocated by the French tax authorities to the Parties based on the share of
each tax item actually received or borne by each Party.  If such allocation is not accomplished due to
the application of the laws or regulations or other government action, the
Party that has actually benefited through a reduction in income or received
additional tax benefits over the amount based on the share of each tax item
actually received or borne by that respective Party, shall make a payment to
the other Party to ensure that the other Party is in the same after tax
position as if the income and all tax benefits with respect to the expenditure
made by the Parties hereunder had been allocated by the French tax authorities
to the Parties based on the share of each item actually received or borne by
each Party. No payment shall be due by a Party under this Section 11.1(b) if
the tax benefit of such Party does not result in a decrease of the corporate
tax actually paid by such Party.

 

(c)          Hess shall be
solely responsible for bearing any transfer taxes in connection with the
acquisition of the Transfer Working Interests.

 

(d)         Where
any VAT is or become chargeable in respect of any amounts due under this
Agreement, such amounts shall be increased by a sum equal to the VAT so
chargeable at the standard rate, currently 19.6%. For this purpose, any Party receiving
a payment under this Agreement shall deliver a valid invoice to the Party
making such payment, showing the amount of VAT payable under the applicable
legislation.

 

(e)          If the Tax authority determines in writing that VAT is not due in respect
of any payment made between the parties under this Agreement, then the Party
having issued the relevant VAT invoice shall issue to the other Party a revised
invoice and shall (i) use its best endeavors vis-à-vis the Tax authority
to obtain a refund of the VAT initially paid to the Tax authority and (ii) reimburse
such VAT to the other Party, provided that such VAT has been recovered from the
Tax Authority

 

12.                                 CONFIDENTIALITY

 

12.1                           Except as otherwise provided in the
Participation Agreements (which confidentiality provisions will prevail in the
event of any conflict between Section 12 of this Agreement and the
confidentiality provisions of any of the Participation Agreements), each Party
agrees that all information disclosed under this Agreement or in connection
with the Parties’ obligations hereunder, except information in the public
domain or lawfully in possession of a Party prior to the date hereof, shall be
considered confidential and shall not be disclosed to any other person or
entity without the prior written consent of the Party which owns such
confidential information. This obligation of confidentiality shall remain in
force during the term 

 

19

 

of
this Agreement and for a period of two years thereafter. Notwithstanding the
foregoing, confidential information may be disclosed without consent and
without violating the obligations contained in this Article in the
following circumstances:

 

(a)          to an Affiliate provided the Affiliate is bound to the provisions of this
Section 12.1 and the Party disclosing is responsible for the violation of
an Affiliate;

 

(b)         to
the French Administration or other government entity when required by a Permit;

 

(c)          to the extent such information is required to be furnished in compliance
with applicable laws or regulations, or pursuant to any legal proceedings or
because of any order of any court binding upon a Party;

 

(d)         to
attorneys engaged, or proposed to be engaged, by any Party and such attorneys
are bound by an obligation of confidentiality;

 

(e)          to contractors and consultants engaged, or proposed to be engaged, by any
Party where disclosure of such information is essential to such contractor’s or
consultant’s work for such Party;

 

(f)            to a bona fide prospective transferee of a Party’s working interest, or
portion thereof, to the extent appropriate in order to allow the assessment of
such working interest (including an entity with whom a Party and/or its
Affiliates are conducting bona fide negotiations directed toward a merger, consolidation
or the sale of a majority of its or an Affiliate’s shares);

 

(g)         to
a bank or other financial institution to the extent appropriate to a Party
arranging for funding;

 

(h)         to
the extent such information must be disclosed pursuant to any rules or
requirements of any government, government agency or commission or stock
exchange having jurisdiction over such Party or its Affiliates;

 

(i)             to its respective employees, subject to each Party taking sufficient
precautions to ensure such information is kept confidential;

 

(j)             to the extent any information which, through no fault of a Party, becomes
a part of the public domain; and

 

(k)          to a party to a Participation Agreement for a Permit (other than a Party)
or to  the French Administration solely
to the extent as may be required to satisfy the conditions detailed in Section 4.

 

12.2                           Disclosure as pursuant to Sections 12.1(e),
12.1(f) and 12.1(g) shall not be made unless prior to such disclosure
the disclosing Party has obtained a written undertaking from the recipient
party to keep the information strictly confidential for at least as long as the
period set out above and to use the information for the sole purpose described
in Sections 12.1(e), 12.1(f) and 12.1(g)  whichever is applicable,
with respect to the disclosing Party.

 

20

 

12.3                           The Parties shall not use, nor permit the use
of, such confidential information for any other purpose other than for the
transaction contemplated by this Agreement.

 

13.                                 NOTICES.

 

13.1                           Notices. All notices authorized or required between the
Parties by any of the provisions of this Agreement shall be in writing (in
English and in French for any notices which are sent to the French
Administration) and delivered in person, by courier service or facsimile and
properly addressed to the other Party. 
Verbal communication does not constitute notice for purposes of this
Agreement, and e-mail addresses and telephone numbers for the Parties are listed
below as a matter of convenience only.  A
notice given under any provision of this Agreement shall be deemed delivered
only when received by the Party to whom such notice is directed, and the time
for such Party to deliver any notice in response to such originating notice
shall run from the date the originating notice is received.  “Received”
for purposes of this Article shall mean actual delivery of the notice to
the address of the Party specified hereunder.

 

Toreador Energy France S.C.S.

Address:  9 rue Scribe, 75009 Paris,
France

Attention: Craig M. McKenzie

Facsimile: +33 1 47 03 33 71

Email:   cmckenzie@toreador.net

Telephone: +33 1 47 03 34 24

 

with
a copy to:

 

Willkie
Farr & Gallagher LLP

21-23. rue de la Ville l’Evêque

75008 Paris

	
  Attn:

  	
  Laurent
  Faugérolas

  
	
  Fax:

  	
  +
  33 1 40 06 96 06

  

 

Hess Oil France S.A.S

 

Address:  500 Dallas Street, Houston, TX 77002

Attention: Mr. J.W. Wesley

Facsimile: 1-713-609-5608

Email:   jwesley@hess.com

Telephone: 1-713-609-5876

 

14.                                 LAW AND DISPUTE RESOLUTION

 

14.1                           Governing Law.  This
Agreement shall be governed by French law. 
The Dispute Resolution clause, as regards both its validity,
interpretation and its application and its termination or the consequences
shall be governed by French law and, in particular, by the provisions of the
French Civil Procedure Code.

 

21

 

14.2                           Dispute Resolution.

 

(a)          Subject to Section 14.3, the Parties shall attempt to resolve
amicably any dispute that arises concerning this Agreement’s validity,
interpretation, application, termination, rescission and the consequences
thereof.  If a dispute arises and if the
Parties fail to resolve it amicably within sixty (60) calendar days from its
formal acknowledgement, notified by one of the Parties to the others, the
dispute shall be submitted for arbitration and shall be handled in accordance
with the arbitration rules of the International Chamber of Commerce in
Paris, by three arbitrators, in accordance with these rules.  Any such arbitration shall take place in
Paris.  The language of the arbitration
hearings shall be the English language.

 

(b)         The
arbitration decision shall be written and reasoned. It shall be drawn up in the
forms required for its exequatur to be obtained. The arbitrators shall not act
as amiables  compositeurs
(ex equo et bono).  The arbitration decision shall determine and
divide between the Parties the costs of the arbitration proceedings, including
the arbitrators’ fees.

 

(c)          The arbitration decision shall be the final judgment on the dispute. The
Parties agree not to appeal the arbitration decision and not to oppose
enforcement before a court or a governmental authority.

 

(d)         A
Party that, as a result of its refusal to execute the arbitration decision
forces the other Party to initiate legal proceedings to obtain the execution
thereof, shall bear all of the expenses of the execution procedure.

 

(e)          If arbitration proceedings are initiated, such proceedings shall not
suspend or modify in any way the Parties’ obligations under this Agreement,
until the arbitration decision has been rendered.

 

(f)            A Party may apply to any competent judicial authority for interim or
conservatory relief.  The application for
such measures or for the enforcement of such measures ordered by the
arbitrators shall not be deemed an infringement or waiver of the agreement to
arbitrate and shall not affect the powers of the arbitrators.

 

14.3                           Expert Provisions. 
Should the Parties fail to agree on any matters arising pursuant to
Sections 3.3(c), 3.5 or 8.2(b) within forty five (45)
calendar days,
either Party shall have the right to refer the dispute to an independent internationally recognized accounting firm reasonably
satisfactory to Toreador and Hess (the “Expert”),
in which case the provisions of this Section 14.3 shall apply.

 

(a)          If the Parties cannot reach agreement on the selection of an Expert within
fourteen (14) calendar days from the date of request then an Expert shall be
appointed by the Institute of Chartered Accountants in England &
Wales;

 

(b)         No
Expert shall have any interest or duty which is in conflict with the function
of Expert;

 

(c)          The Expert shall establish the procedure to be followed, subject as
provided herein;

 

22

 

(d)         The
Expert shall issue a preliminary decision in respect of the matter in dispute
within a period of one (1) month commencing from the day he/she agrees to
act. Each Party shall have the right, within fourteen (14) calendar days of
receipt of the Expert’s preliminary decision, to make further submissions to
the Expert for his consideration. The Expert shall issue a final decision on
the matter no later than twenty eight (28) calendar days from the date of the
preliminary decision. As long as the Expert shall not have issued its
decisions, the Parties will be able to reach an agreement, which will terminate
the mission of the Expert;

 

(e)          The Parties shall have the right to make such submissions and supply such
information and data to the Expert within fourteen (14) calendar days after the
appointment of the Expert as each such Party deems appropriate, and the Expert
shall be entitled to make such inquiries and receive further submissions and
information and data from such Parties as he/she may require for the purpose of
resolving the matter.  Each Party shall
cooperate with the Expert and give him/her access to the relevant document that
may be requested by the Expert;

 

(f)            If any written communications between a Party and the Expert are made,
copies of all such communications shall, at the same time, be furnished to the
other Parties and where appropriate oral communications shall be reduced to
writing and promptly furnished to the other Parties. The Expert shall consider
all submissions made orally and in writing and any other information and data
given by the Parties before giving a decision. The Expert shall make sure that
the “principe du contradictoire” is respected
at any time;

 

(g)         In
the Expert’s final decision, which shall be in writing, the Expert shall give
fully detailed reasons therefor and such decision shall be final and binding on
the Parties except in the case of fraud or manifest error;

 

(h)         The
Expert shall not be an arbitrator and the law relating to arbitrators or
arbitration shall not apply to such expert or the Expert’s decision, not the
procedure by which such decision is reached;

 

(i)             The costs and expenses of the Expert shall be paid fifty percent (50%) by
Toreador and fifty percent (50%) by Hess.

 

15.                                 GENERAL PROVISIONS

 

15.1                           Relationship of Parties.  The
rights, duties, obligations and liabilities of the Parties under this Agreement
shall be individual, not joint or collective. 
It is not the intention of the Parties to create, nor shall this
Agreement be deemed or construed to create a partnership, joint venture,
association or trust.  This Agreement
shall not be deemed or construed to authorize any Party to act as an agent,
servant or employee for any other Party for any purpose whatsoever except as
explicitly set forth in this Agreement. 
In their relations with each other under this Agreement, the Parties
shall not be considered fiduciaries except as expressly provided in this
Agreement.

 

15.2                           Liability. 
Notwithstanding any other provision of this Agreement:

 

(a)                                  As provided by Article 1151 of the French
civil code, Toreador shall not be liable to Hess for any indirect or
consequential loss whether or not foreseeable at the date of execution 

 

23

 

of this Agreement,
incurred by Hess arising out of or as a result of or in connection with the
performance, non-performance or mis-performance of this Agreement regardless of
the negligence or breach of duty (statutory or otherwise) of Toreador.

 

(b)                                 As provided by Article 1151 of the French
civil code, Hess shall not be liable to Toreador for any indirect or
consequential loss whether or not foreseeable at the date of execution of this
Agreement, incurred by Toreador arising out of or as a result of or in
connection with the performance, non-performance or mis-performance of this
Agreement regardless of the negligence or breach of duty (statutory or otherwise)
of Hess.

 

15.3                           Further Assurances.  Each
of the Parties shall do all such acts and execute and deliver all such
documents as shall be reasonably required in order to fully perform and carry
out the terms of this Agreement.

 

15.4                           Waiver.  No waiver
by any Party of any one or more defaults by another Party in the performance of
any provision of this Agreement shall operate or be construed as a waiver of
any future default or defaults by the same Party whether of a like or of a
different character.  Except as expressly
provided in this Agreement, no Party shall be deemed to have waived, released
or modified any of its rights under this Agreement unless such Party has
expressly stated, in writing, that it does waive, release or modify such right.

 

15.5                           Joint Preparation. Each provision of this Agreement shall be
construed as though all Parties participated equally in the drafting of the
same.  Consequently, the Parties
acknowledge and agree that any rule of construction that a document is to
be construed against the drafting party shall not be applicable to this
Agreement.

 

15.6                           Costs and Expenses. Except as
otherwise provided for in this Agreement, each of the Parties hereto shall pay
the fees and expenses of its respective counsel, accountants, agents, financial
advisors and other experts and representatives and shall pay all other costs
and expenses incurred by it in connection with the negotiation, preparation and
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement.

 

15.7                           Severance of Invalid Provisions.  If
and for so long as any provision of this Agreement shall be deemed to be judged
invalid for any reason whatsoever, such invalidity shall not affect the
validity or operation of any other provision of this Agreement except only so
far as shall be necessary to give effect to the construction of such
invalidity, and any such invalid provision shall be deemed severed from this
Agreement without affecting the validity of the balance of this Agreement.

 

15.8                           Modifications. There shall be no modification of this Agreement
except by written consent of all Parties.

 

15.9                           Priority of Agreement. In the event of any conflict between the
provisions of the main body of this Agreement and its Exhibits, the provisions
of the main body of this Agreement shall prevail. In the event of any conflict
between this Agreement and any of the Participation Agreements, this Agreement
shall prevail.

 

24

 

15.10                     Interpretation.

 

(a)          Headings. The topical headings
used in this Agreement are for convenience only and shall not be construed as
having any substantive significance or as indicating that all of the provisions
of this Agreement relating to any topic are to be found in any particular Section.

 

(b)         Singular and Plural. Reference to the
singular includes a reference to the plural and vice versa.

 

(c)          Section. Unless otherwise
provided, reference to any Section or an Exhibit means a Section or
Exhibit of the Agreement.

 

(d)         Include. “include” and “including”
shall mean to be inclusive without limiting the generality of the description
preceding such term and are used in an illustrative sense and not a limiting
sense.

 

15.11                     Public Announcements. No public announcement or statement
regarding the terms or existence of this Agreement or any other matter relating
to this Agreement or the transaction contemplated hereby shall be made without
prior written consent of the other Party (excluding the Current Report on Form 8-K
to be filed with the SEC by Toreador Resources Corporation in respect of, and
attaching as an exhibit, this Agreement); provided that, notwithstanding any
failure to obtain such approval, no Party shall be prohibited from issuing or
making any such public announcement or statement to the extent it is necessary
to do so in order to comply with the applicable laws, rules or regulations
of any government, government agency or commission, legal proceedings or stock
exchange having jurisdiction over such Party or its Affiliates.  Subject to the above, the Parties shall
jointly agree to the contents of the press release to be issued in relation to
the terms of this Agreement and the execution thereof.

 

15.12                     Entirety. With respect to the subject matter contained
herein, this Agreement (i) is the entire agreement of the Parties; and (ii) supersedes
all prior understandings and negotiations of the Parties.

 

25

 

IN
WITNESS of their agreement each Party has caused its duly authorized representative
to sign this instrument on the date set out in the first sentence of this
Agreement.

 

 

	
   

  	
  TOREADOR ENERGY FRANCE S.C.S.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Craig McKenzie

  
	
   

  	
   

  	
  Name: Craig
  McKenzie

  
	
   

  	
   

  	
  Title:   Duly
  Authorized

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HESS
  OIL FRANCE S.A.S

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stuart Lake

  
	
   

  	
   

  	
  Name: Stuart
  Lake

  
	
   

  	
   

  	
  Title:   President

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