Document:

EXHIBIT 10.4
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                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION  RIGHTS  AGREEMENT (this  "Agreement"),  dated as of April
___,  2003,  is made  by and  among  Tidelands  Oil & Gas  Corporation,  a Texas
corporation (the "Company") and Impact International, L.L.C. ("Impact").

         Whereas,  Impact has requested,  and the Company has agreed to provide,
registration  rights with respect to the Registrable  Securities (as hereinafter
defined), as set forth in this Agreement.

         Now,  therefore,  for and in  consideration  of the  mutual  agreements
contained herein and for other good and valuable consideration,  the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:

         Section 1. Definitions.  As used in this Agreement, the following terms
shall have the following meanings:

                   "Affiliate" shall mean, when used with respect to a specified
Person, any Person which (a) directly or indirectly  controls,  is controlled by
or is under  common  control  with such  specified  Person,  (b) is an  officer,
director,  partner,  trustee or manager of such Person, or of a Person described
in clause (a) of this sentence, or (c) is a Relative of such specified Person or
of an individual  described in clauses (a) or (b) of this  sentence.  As used in
this  definition,  the term "control" means  possession,  directly or indirectly
(through  one or more  intermediaries),  of the  power to  direct  or cause  the
direction  of  management  and  policies of a Person  through an ownership of at
least a majority of the outstanding  voting interests of such Person, or through
the power to appoint,  elect or direct the vote of, a majority of the members of
the  governing  body of such Person  whether by contract,  voting trust or other
agreement.  "Relative"  shall mean,  with  respect to any  individual,  (i) such
individual's  spouse,  (ii) any direct descendent,  parent,  grandparent,  great
grandparent  or sibling  (in each case,  whether by blood or  adoption)  of such
individual  or such  individual's  spouse,  and  (iii)  any  spouse  of a person
described in clause (ii) of this sentence.

                   "Approved  Appraiser"  shall  mean  a  nationally  recognized
investment banking firm,  accounting firm or valuation firm mutually  acceptable
to the Company and the holders of the Registrable Securities.

                   "Common  Stock"  shall mean  shares of the  Company's  Common
Stock.

                   "Current  Market  Price" at any date shall mean, in the event
the Common  Stock is traded in the over the  counter  market or on a national or
regional securities exchange,  the average of the daily closing prices per share
of Common Stock for thirty (30)  consecutive  trading days ending three  trading
days before such date (as adjusted for any stock dividend, split, combination or
reclassification  that took  effect  during  such 33 trading  day  period).  The
closing price for each day shall be the last reported sale price regular way or,
in case no such  reported  sale takes place on such day, the average of the last
closing  bid and asked  prices  regular  way,  in either  case on the  principal
national  securities exchange on which the Common Stock is listed or admitted to
trading,  or if not listed or  admitted  to trading on any  national  securities

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exchange,  the closing sale price for such day reported by Nasdaq, if the Common
Stock is traded over-the-counter and quoted in the National Market System, or if
the Common  Stock is so traded,  but not so quoted,  the  average of the closing
reported  bid and asked  prices of the Common Stock as reported by Nasdaq or any
comparable  system,  or,  if the  Common  Stock is not  listed  on Nasdaq or any
comparable  system, the average of the closing bid and asked prices as furnished
by two members of the National Association of Securities Dealers,  Inc. selected
from time to time by the  Corporation  for that purpose.  If the Common Stock is
not publicly traded or is not traded in such manner that the quotations referred
to above are available for the period required  hereunder,  Current Market Price
per share of  Common  Stock  shall be  deemed to be the fair  value per share of
Common Stock as determined by an Approved Appraiser.

                   "Exchange  Act" shall  mean the  Securities  Exchange  Act of
1934,  as  amended,  and  the  rules  and  regulations  of the  SEC  promulgated
thereunder.

                   "Holder" shall mean the holder of a Registrable  Security, as
provided in Section 2 hereof.

                   "Losses"  shall  have the  meaning  set  forth in  Section  8
hereof.

                   "Person" shall mean an individual, partnership,  corporation,
limited  partnership,  limited  liability  company,  foreign  limited  liability
company, trust, estate, corporation, custodian, trustee-executor, administrator,
nominee or entity in a representative capacity.

                   "Piggyback  Notice"  shall  have  the  meaning  set  forth in
Section 4 hereof.

                   "Piggyback  Registration" shall have the meaning as set forth
in Section 4 hereof.

                   "Proceeding" shall mean an action,  claim, suit,  arbitration
or  proceeding  (including,  without  limitation,  an  investigation  or partial
proceeding, such as a deposition), whether commenced or threatened.

                   "Prospectus"  shall  mean  the  prospectus  included  in  any
Registration  Statement  (including,   without  limitation,  a  prospectus  that
discloses  information  previously omitted from a prospectus filed as part of an
effective  Registration  Statement in reliance upon Rule 430A promulgated  under
the Securities  Act), as amended or supplemented  by any prospectus  supplement,
with  respect to the terms of the  offering  of any  portion of the  Registrable
Securities covered by such Registration Statement,  and all other amendments and
supplements to the  Prospectus,  including  post-effective  amendments,  and all
material  incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

                   "Purchase  and Sale  Agreement"  means the  Purchase and Sale
Agreement dated the date hereof between the Company and Impact.

                   "Registrable  Securities"  shall  mean the  shares  of Common
Stock issued and  issuable to the holder of the Warrant  upon its exercise  and,
subject to the next succeeding  sentence and Section 12(c) hereof, any successor
or assign of such  shares  (including  any  shares  of  Common  Stock  issued or
distributed by way of dividend,  stock split or other distribution in respect of

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such shares).  As to any  particular  Registrable  Securities,  once issued such
securities  shall  cease  to be  Registrable  Securities  when (i) they are sold
pursuant to an effective  Registration  Statement under the Securities Act, (ii)
they are sold pursuant to Rule 144 (or any similar provision then in force under
the Securities Act), or (iii) they shall have ceased to be outstanding.

                   "Registration" shall mean any registration  effected pursuant
to Section 3 or 4 hereof.

                   "Registration  Notice"  shall have the  meaning  set forth in
Section 3 hereof.

                   "Registration   Statement"   shall   mean  any   registration
statement  of the  Company  under the  Securities  Act that  permits  the public
offering of any of the Registrable Securities pursuant to the provisions of this
Agreement,  including  the  Prospectus,   amendments  and  supplements  to  such
registration statement,  including post-effective  amendments,  all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.

                   "Rule 144" shall mean Rule 144 under the  Securities  Act, as
such Rule may be amended from time to time,  or any similar  rule or  regulation
hereafter adopted by the SEC.

                   "SEC" shall mean the  Securities  and Exchange  Commission or
any successor agency having jurisdiction under the Securities Act.

                   "Securities  Act" shall mean the  Securities  Act of 1933, as
amended, and the rules and regulations promulgated by the SEC thereunder.

                   "underwritten  registration or  underwritten  offering" shall
mean  a  registration  in  which  securities  of  the  Company  are  sold  to an
underwriter for reoffering to the public.

                   "Warrants" shall mean those stock purchase  warrants executed
and  delivered  by the  Company  to Impact  pursuant  to the  Purchase  and Sale
Agreement dated the date hereof for the purchase of shares of Common Stock.

         Section 2. Holders of Registrable Securities.  A Person is deemed to be
a  holder  ("Holder")  of  Registrable  Securities  whenever  such  Person  owns
Registrable  Securities  or has a right to acquire such  Registrable  Securities
through its exercise of a Warrant.

         Section 3. Registration.

                   (a) Requests for Registration. A Holder, upon written request
(a "Registration Notice"), shall be entitled to cause the Company to prepare and
file a Registration Statement with respect to the aggregate number of shares for
which  the  Holder  has  requested  registration.   The  Company  shall  file  a
Registration  Statement on the form that counsel for the Company and counsel for
the Holder agree is appropriate for the plan of sale or other  disposition to be
used by the Holder of the Warrant.  The Company  shall prepare and file with the
SEC such amendments and supplements to the Registration Statement and Prospectus

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relating  to the  offer  and  sale of the  shares  covered  by the  Registration
Statement as may be necessary to keep the Registration  Statement  effective and
to comply with the  provisions of  Securities  Act with respect to the offer and
sale of the shares during the period required to effect the  distribution of the
shares.

                   After such time as the Company  shall become  eligible to use
Form S-3 (or comparable form) for the  Registration  under the Securities Act of
any of its  securities,  the  Holder  shall be  entitled  to  request  that such
Registration be a "shelf" registration pursuant to Rule 415 under the Securities
Act.

                   No Registration shall be deemed to have occurred for purposes
of this Section 3(a) if the  Registration  Statement  relating  thereto does not
become effective or is not maintained effective for the period required pursuant
to this  Section  3(a),  in  which  case the  Holder  shall  be  entitled  to an
additional Registration in lieu thereof.

                   All requests for Registration made pursuant to this Section 3
shall specify the amount of  Registrable  Securities  to be  registered  and the
intended methods of disposition thereof.

                   The Company  shall be required to maintain the  effectiveness
of the  Registration  Statement with respect to any Registration for a period of
at least 180 days (or such date as all Registrable  Securities have been sold if
a "shelf  registration"  is requested)  after the effective date thereof or such
shorter period in which all Registrable Securities included in such Registration
Statement have actually been sold; provided,  however, that such period shall be
extended  for a period of time equal to the  period  the  holder of  Registrable
Securities refrains from selling any securities included in such registration at
the request of an  underwriter  of the  Company or the Company  pursuant to this
Agreement.

                   (b)  Priority  on  Registration.  If any  of the  Registrable
Securities  registered  pursuant  to a  Registration  are to be  sold  in a firm
commitment  underwritten  offering, and the managing underwriter or underwriters
advise the Holders in writing that in its view the total number or dollar amount
of  Registrable  Securities  proposed to be sold in such  offering is such as to
adversely affect the success of such offering  (including,  without  limitation,
securities  proposed to be included by other holders of  securities  entitled to
include  securities  in such  Registration  Statement  pursuant to incidental or
piggyback  registration  rights),  then  there  shall be  included  in such firm
commitment  underwritten  offering  the number or dollar  amount of  Registrable
Securities that in the opinion of such managing  underwriter can be sold without
adversely  affecting such offering,  and such  Registrable  Securities  shall be
allocated  pro-rata among the Holders  requesting such registration on the basis
of the percentage of the Registrable  Securities of the Company  requested to be
included in such Registration  Statement by the Holders that have requested that
such  securities  be  included  in the  registration.  In  connection  with  any
Registration to which the provisions of this subsection (b) apply, no securities
other than Registrable  Securities shall be covered by such Registration  except
as  provided in  subsection  (d)(ii)  hereof,  and such  registration  shall not
diminish the right of the Holders to request  registration  under this Section 3
for any Shares not included in such Registration as a result.

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                   (c)  Postponement  of  Registration.  The  Company  shall  be
entitled to postpone (but not more than once in any twelve month period),  for a
reasonable period of time not in excess of 60 days, the filing of a Registration
Statement  requested  pursuant to this Section 3 if the Company  delivers to the
Holder a certificate signed by both the President and Chief Financial Officer of
the Company  stating that, in the good faith  judgment of the Board of Directors
of the  Company,  such  Registration  and  offering  could  adversely  affect or
interfere  with any bona fide material  financing of the Company or any material
transaction under consideration by the Company. Such certificate shall contain a
general  statement of the reasons for such  postponement and an approximation of
the anticipated delay.

                   (d)  Registration of Other  Securities.  Whenever the Company
shall effect a  Registration  pursuant to this Section 3 in  connection  with an
underwritten  offering  by  one  or  more  Holders,  no  securities  other  than
Registrable  Securities  shall be included among the securities  covered by such
Registration  unless (i) the managing  underwriter  of such offering  shall have
advised each holder of Registrable  Securities  requesting such  registration in
writing that it believes that the inclusion of such other  securities  would not
adversely affect such offering or (ii) the inclusion of such other securities is
approved  by the  affirmative  vote of the holders of at least a majority of the
Registrable Securities to be included in such Registration.

         Section 4.Piggyback Registration.

                   (a) Right to Piggyback. If, at any time there are outstanding
any  Registrable  Securities,  the  Company  proposes  to  file  a  Registration
Statement  under the  Securities Act with respect to an offering of Common Stock
(other than a registration  statement (i) on Form S-4, Form S-8 or any successor
forms thereto or (ii) filed solely in connection  with an exchange  offer or any
employee  benefit or  dividend  reinvestment  plan),  whether or not for its own
account,  then,  the  Company  shall  give  prompt  written  notice of each such
proposed  filing at least  thirty (30) days before the  anticipated  filing date
(the "Piggyback  Notice") to the Holders.  The Piggyback  Notice shall offer the
Holders the opportunity to include in such Registration  Statement the number of
Registrable   Securities   as  each  such  holder  may  request  (a   "Piggyback
Registration").  Subject to Section 4(b) hereof,  the Company  shall  include in
each such Piggyback  Registration  all  Registrable  Securities  with respect to
which the Company has received written requests for inclusion therein within ten
(10) days after notice has been given to the applicable Holder. The Holder shall
be  permitted  to  withdraw  all or part of the  Registrable  Securities  from a
Piggyback Registration at any time prior to the effective date of such Piggyback
Registration. The Company shall not be required to maintain the effectiveness of
the Registration  Statement for a Piggyback  Registration  beyond the earlier to
occur of (i) 120 days after the effective date thereof and (ii)  consummation of
the distribution by the holders of the Registrable  Securities  included in such
Registration Statement.

                   (b) Priority on Piggyback  Registrations.  The Company  shall
use reasonable  efforts to cause the managing  underwriter or  underwriters of a
proposed  underwritten  offering  to permit  Holders of  Registrable  Securities
requested to be included in the  registration  for such  offering to include all
such Registrable Securities on the same terms and conditions as any other shares
of capital stock, if any, of the Company included therein.  Notwithstanding  the
foregoing,  if the managing  underwriter or  underwriters  of such  underwritten
offering  have  informed  the  Company  in  writing  that it is their good faith

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opinion that the total amount of securities  that such holders,  the Company and
any other Persons having rights to participate in such  registration,  intend to
include in such  offering  is such as to  adversely  affect the  success of such
offering,  then the amount of  securities  to be offered  (i) for the account of
holders of  Registrable  Securities  and (ii) for the  account of all such other
Persons (other than the Company) shall be reduced or limited  pro-rata among the
holders  of  Registrable  Securities  and such  other  Persons  requesting  such
registration  on the basis of the  percentage of the  Registrable  Securities or
other  securities of the Company  requested to be included in such  Registration
Statement by such holders that have requested  that such  securities be included
in the  registration  to the  extent  necessary  to reduce  the total  amount of
securities  to be included in such  offering to the amount  recommended  by such
managing underwriter or underwriters.

         Section  5.  Restrictions  on Public  Sale by  Holders  of  Registrable
Securities. Each Holder agrees, in connection with any underwritten registration
of Registrable  Securities  filed pursuant to Section 3 or Section 4 hereof,  if
requested  (pursuant  to a  written  notice)  by  the  managing  underwriter  or
underwriters  in an  underwritten  offering,  not to effect any  public  sale or
distribution  of any  of the  Company's  securities  (except  as  part  of  such
underwritten offering), including a sale pursuant to Rule 144, during the period
commencing on the date of the request and  continuing  for not more than 60 days
after the effective date of the  Registration  Statement  pursuant to which such
public  offering  shall be made or such  lesser  period  as is  required  by the
managing underwriter,  provided, however, that all officers and directors of the
Company must be subject to similar restrictions.

         Section 6.  Registration  Procedures.  If and  whenever  the Company is
required to use its reasonable  best efforts to effect the  registration  of any
Registrable  Securities  under the  Securities  Act as provided in Section 3 and
Section 4 hereof,  the Company shall effect such registration to permit the sale
of such Registrable Securities in accordance with the intended method or methods
of disposition  thereof, and pursuant thereto the Company shall cooperate in the
sale of the securities and shall, as expeditiously as possible:

                   (a) Prepare and file with the SEC a Registration Statement or
Registration  Statements  on such form which shall be available  for the sale of
the  Registrable  Securities  by the  Holders  thereof  in  accordance  with the
intended method or methods of distribution  thereof, and use its reasonable best
efforts to cause such  Registration  Statement to become effective and to remain
effective  as  provided  herein;   provided,   however,  that  before  filing  a
Registration  Statement or Prospectus or any amendments or  supplements  thereto
(including  documents that would be  incorporated  or deemed to be  incorporated
therein by reference),  the Company shall furnish or otherwise make available to
the  Holders  covered by such  Registration  Statement,  their  counsel  and the
managing  underwriters,  if any,  copies of all such  documents  proposed  to be
filed. The Company shall not file any such Registration  Statement or Prospectus
or any amendments or supplements  thereto  (including  such documents that, upon
filing, would be incorporated or deemed to be incorporated by reference therein)
with  respect  to a  Registration  to which the  holders  of a  majority  of the
Registrable Securities covered by such Registration Statement, their counsel, or
the managing  underwriters,  if any, shall reasonably  object, in writing,  on a
timely basis, unless, in the opinion of the Company, such filing is necessary to
comply with applicable law.

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                   (b)  Prepare  and  file  with  the SEC  such  amendments  and
post-effective  amendments to each Registration Statement as may be necessary to
keep such  Registration  Statement  continuously  effective  during  the  period
provided  herein with respect to the  disposition of all  securities  covered by
such Registration Statement; and cause the related Prospectus to be supplemented
by any  Prospectus  supplement as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of the securities  covered
by such Registration  Statement,  and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act.

                   (c) Notify each selling Holder,  its counsel and the managing
underwriters,  if any,  promptly,  and (if requested by any such Person) confirm
such notice in writing,  (i) when a Prospectus or any  Prospectus  supplement or
post-effective  amendment has been filed,  and,  with respect to a  Registration
Statement or any post-effective  amendment,  when the same has become effective,
(ii) of any  request  by the SEC or any  other  Federal  or  state  governmental
authority for amendments or  supplements to a Registration  Statement or related
Prospectus or for  additional  information,  (iii) of the issuance by the SEC of
any stop order suspending the  effectiveness of a Registration  Statement or the
initiation  of any  proceedings  for  that  purpose,  (iv)  if at any  time  the
representations  and  warranties  of the  Company  contained  in  any  agreement
(including any underwriting  agreement) contemplated by Section 6(o) below cease
to be true and  correct,  (v) of the receipt by the Company of any  notification
with  respect  to  the  suspension  of  the   qualification  or  exemption  from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose, and (vi) of
the  happening of any event that makes any statement  made in such  Registration
Statement or related  Prospectus  or any document  incorporated  or deemed to be
incorporated  therein  by  reference  untrue  in any  material  respect  or that
requires the making of any changes in such Registration Statement, Prospectus or
documents  so  that,  in the  case of the  Registration  Statement,  it will not
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the statements  therein,
not misleading,  and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements  therein,  in light of the  circumstances  under
which they were made, not misleading.

                   (d) Use its reasonable  best efforts to obtain the withdrawal
of any order suspending the  effectiveness of a Registration  Statement,  or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction.

                   (e) If requested by the managing underwriters, if any, or the
holders of a majority of the then outstanding  Registrable Securities being sold
in connection with an underwritten  offering,  promptly  include in a Prospectus
supplement  or  post-effective   amendment  such  information  as  the  managing
underwriters, if any, and such Holders may reasonably request in order to permit
the intended  method of  distribution  of such  securities and make all required
filings of such Prospectus  supplement or such post-effective  amendment as soon
as practicable after the Company has received such request;  provided,  however,
that the Company  shall not be required to take any actions  under this  Section
6(e) that are not, in the opinion of counsel for the Company, in compliance with
applicable law.

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                   (f)  Furnish to each  selling  Holder,  its  counsel and each
managing underwriter, if any, without charge, at least one conformed copy of the
Registration   Statement,   the  Prospectus  and  Prospectus   supplements,   if
applicable,  and each  post-effective  amendment  thereto,  including  financial
statements (but excluding schedules,  all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits, unless requested in writing
by such holder, counsel or underwriter).

                   (g) Deliver to each  selling  Holder,  its  counsel,  and the
underwriters,  if any,  without  charge,  as many  copies of the  Prospectus  or
Prospectuses   (including  each  form  of  Prospectus)  and  each  amendment  or
supplement thereto as such Persons may reasonably request in connection with the
distribution of the Registrable Securities; and the Company, subject to the last
paragraph of this Section 6, hereby  consents to the use of such  Prospectus and
each  amendment  or  supplement  thereto by each of the selling  Holders and the
underwriters,  if  any,  in  connection  with  the  offering  and  sale  of  the
Registrable  Securities  covered by such  Prospectus  and any such  amendment or
supplement thereto.

                   (h) Prior to any public  offering of Registrable  Securities,
use its  reasonable  best efforts to register or qualify or  cooperate  with the
selling  Holders,  the  underwriters,  if any, and their  respective  counsel in
connection  with the  registration  or  qualification  (or  exemption  from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or "Blue Sky" laws of such jurisdictions  within the United
States as any seller or underwriter  reasonably  requests in writing and to keep
each such  registration  or  qualification  (or exemption  therefrom)  effective
during the period such  Registration  Statement is required to be kept effective
and to take any other  action that may be  necessary or advisable to enable such
holders  of  Registrable  Securities  to  consummate  the  disposition  of  such
Registrable Securities in such jurisdiction; provided, however, that the Company
will not be required to (i) qualify generally to do business in any jurisdiction
where it is not then so qualified or (ii) take any action that would  subject it
to general service of process in any such  jurisdiction  where it is not then so
subject.

                   (i)  Cooperate  with the  selling  Holders  and the  managing
underwriters,  if any, to  facilitate  the timely  preparation  and  delivery of
certificates (not bearing any legends) representing Registrable Securities to be
sold  after  receiving  written   representations  from  each  Holder  that  the
Registrable  Securities  represented  by the  certificates  so delivered by such
Holder will be transferred in accordance with the  Registration  Statement,  and
enable such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters, if any, or Holders may request at least
two (2)  business  days prior to any sale of  Registrable  Securities  in a firm
commitment public offering, but in any other such sale, within ten (10) business
days prior to having to issue the securities.

                   (j) Use its reasonable  best efforts to cause the Registrable
Securities  covered  by the  Registration  Statement  to be  registered  with or
approved by such other  governmental  agencies or authorities  within the United
States,  except as may be required solely as a consequence of the nature of such
selling  Holder's  business,  in which case the Company  will  cooperate  in all
reasonable  respects  with the  filing of such  Registration  Statement  and the
granting of such approvals,  as may be necessary to enable the seller or sellers
thereof or the  underwriters,  if any, to  consummate  the  disposition  of such
Registrable Securities.

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                   (k) Upon the occurrence of any event  contemplated by Section
6(c)(vi)  above,  prepare  a  supplement  or  post-effective  amendment  to  the
Registration Statement or a supplement to the related Prospectus or any document
incorporated  or deemed to be  incorporated  therein by  reference,  or file any
other  required  document so that, as thereafter  delivered to the purchasers of
the  Registrable  Securities  being sold  thereunder,  such  Prospectus will not
contain an 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
light of the circumstances under which they were made, not misleading.

                   (l) Prior to the effective date of the Registration Statement
relating  to  the  Registrable  Securities,  provide  a  CUSIP  number  for  the
Registrable Securities.

                   (m) Provide and cause to be  maintained a transfer  agent and
registrar for all Registrable  Securities covered by such Registration Statement
from and after a date not later  than the  effective  date of such  Registration
Statement.

                   (n) Use its  reasonable  best  efforts to cause all shares of
Registrable  Securities covered by such Registration  Statement to be authorized
to be quoted on the Nasdaq  National  Market or listed on a national  securities
exchange if shares of the particular class of Registrable Securities are at that
time quoted on the Nasdaq  National  Market or listed on such  exchange,  as the
case may be.

                   (o) Enter into such  agreements  (including  an  underwriting
agreement  in  form,  scope  and  substance  as  is  customary  in  underwritten
offerings) and take all such other actions  reasonably  requested by the holders
of a majority of the Registrable  Securities being sold in connection  therewith
(including those reasonably requested by the managing  underwriters,  if any) to
expedite or facilitate the disposition of such  Registrable  Securities,  and in
such  connection,  whether or not an underwriting  agreement is entered into and
whether or not the registration is an underwritten  registration,  (i) make such
representations and warranties to the holders of such Registrable Securities and
the  underwriters,  if any,  with respect to the business of the Company and its
subsidiaries, and the Registration Statement,  Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, in
form,  substance and scope as are customarily made by issuers to underwriters in
underwritten  offerings,  and, if true,  confirm the same if and when requested,
(ii) use its reasonable best efforts to furnish to the selling Holders  opinions
of counsel to the Company and updates  thereof  (which  counsel and opinions (in
form,  scope and  substance)  shall be reasonably  satisfactory  to the managing
underwriters,  if any, and counsels to the selling  Holders),  addressed to each
selling  Holder  and each of the  underwriters,  if any,  covering  the  matters
customarily  covered in opinions  requested in  underwritten  offerings and such
other matters as may be reasonably  requested by such counsel and  underwriters,
(iii) use its  reasonable  best  efforts to obtain  "cold  comfort"  letters and
updates thereof from the independent certified public accountants of the Company
(and, if necessary,  any other independent  certified public  accountants of any
subsidiary  of the Company or of any business  acquired by the Company for which
financial  statements and financial data are, or are required to be, included in
the Registration Statement) who have certified the financial statements included
in such  Registration  Statement,  addressed to each selling Holder (unless such

                                       9
<PAGE>

accountants  shall be prohibited  from so addressing  such letters by applicable
standards of the accounting  profession) and each of the  underwriters,  if any,
such  letters  to  be in  customary  form  and  covering  matters  of  the  type
customarily  covered in "cold comfort"  letters in connection with  underwritten
offerings,  (iv) if an  underwriting  agreement is entered into,  the same shall
contain  indemnification  provisions and procedures  substantially to the effect
set forth in  Section 8 hereof  with  respect to all  parties to be  indemnified
pursuant to said Section and (v) deliver such documents and  certificates as may
be  reasonably  requested  by the  holders  of a  majority  of  the  Registrable
Securities being sold, their counsel and the managing  underwriters,  if any, to
evidence the  continued  validity of the  representations  and  warranties  made
pursuant to Section 6(o)(i) above and to evidence  compliance with any customary
conditions  contained in the underwriting  agreement or other agreement  entered
into by the  Company.  The  above  shall  be done at  each  closing  under  such
underwriting or similar agreement, or as and to the extent required thereunder.

                   (p) Make available for inspection by a representative  of the
selling Holders of Registrable Securities,  any underwriter participating in any
such  disposition  of  Registrable  Securities,  if any,  and any  attorneys  or
accountants  retained by such  selling  Holders or  underwriter,  at the offices
where normally kept, during  reasonable  business hours, all financial and other
records,  pertinent  corporate  documents and  properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information in each case reasonably  requested by
any such representative,  underwriter, attorney or accountant in connection with
such Registration Statement; provided, however, that any information that is not
generally  publicly  available at the time of delivery of such information shall
be kept  confidential by such Persons unless (i) disclosure of such  information
is  required  by  court  or  administrative   order,  (ii)  disclosure  of  such
information,  in the opinion of counsel to such  Person,  is required by law, or
(iii) such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by such Person.  In the case of a
proposed disclosure pursuant to (i) or (ii) above, such Person shall be required
to give the Company  written  notice of the  proposed  disclosure  prior to such
disclosure  and, if requested  by the Company,  assist the Company in seeking to
prevent or limit the proposed  disclosure.  Without  limiting the foregoing,  no
such  information  shall be used by such  Person  as the  basis  for any  market
transactions  in securities of the Company or its  subsidiaries  in violation of
law.

                   (q) Comply with all applicable  rules and  regulations of the
SEC  and  make  available  to the  Holders  earning  statements  satisfying  the
provisions of Section 11(a) of the  Securities Act and Rule 158  thereunder,  or
any similar rule promulgated  under the Securities Act, no later than forty-five
(45) days after the end of any twelve  (12)  month  period (or ninety  (90) days
after the end of any twelve (12) month  period if such period is a fiscal  year)
(i) commencing at the end of any fiscal quarter in which Registrable  Securities
are sold to  underwriters  in a firm  commitment  or best  efforts  underwritten
offering and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first  fiscal  quarter of the Company  after the  effective
date of a  Registration  Statement,  which  statements  shall  cover one of said
twelve (12) month periods.

                   (r) Cause its officers to use their  reasonable  best efforts
to  support  the  marketing  of  the  Registrable   Securities  covered  by  the
Registration  Statement (including,  without limitation,  participation in "road
shows") taking into account the Company's business needs.

                                       10
<PAGE>

                   The Company may require each seller of Registrable Securities
as to which any  registration  is being  effected  to furnish to the  Company in
writing such information required in connection with such registration regarding
such seller and the distribution of such  Registrable  Securities as the Company
may,  from time to time,  reasonably  request in  writing  and the  Company  may
exclude from such  registration  the  Registrable  Securities  of any seller who
unreasonably  fails to furnish such  information  within a reasonable time after
receiving such request.

                   Each Holder agrees if such Holder has Registrable  Securities
covered by such Registration Statement that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 6(c)(ii),
6(c)(iii),  6(c)(v) or 6(c)(vi) hereof,  such Holder will forthwith  discontinue
disposition  of  such  Registrable   Securities  covered  by  such  Registration
Statement  or  Prospectus  until  such  Holder's  receipt  of the  copies of the
supplemented or amended Prospectus contemplated by Section 6(k) hereof, or until
it is  advised  in  writing  by the  Company  that  the  use  of the  applicable
Prospectus  may be  resumed,  and  has  received  copies  of any  additional  or
supplemental  filings  that are  incorporated  or deemed to be  incorporated  by
reference in such  Prospectus;  provided,  however that the Company shall extend
the time  periods  under  Section 3 with  respect to the length of time that the
effectiveness  of a  Registration  Statement must be maintained by the amount of
time the Holder is required to discontinue disposition of such securities.

         Section 7.  Registration  Expenses.  All  reasonable  fees and expenses
incident to the  performance of or compliance with this Agreement by the Company
(including, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the  National  Association  of  Securities  Dealers,  Inc.  and (B) of
compliance with securities or Blue Sky laws, including,  without limitation, any
fees and  disbursements  of counsel for the underwriters in connection with Blue
Sky qualifications of the Registrable Securities pursuant to Section 6(h)), (ii)
printing  expenses   (including,   without  limitation,   expenses  of  printing
certificates for Registrable  Securities in a form eligible for deposit with The
Depository  Trust  Company  and of  printing  prospectuses  if the  printing  of
prospectuses  is  requested  by the  managing  underwriters,  if any,  or by the
holders of a majority of the Registrable Securities included in any Registration
Statement),  (iii)  messenger,  telephone and delivery  expenses of the Company,
(iv) fees and  disbursements  of counsel for the  Company,  (v)  expenses of the
Company   incurred  in  connection  with  any  road  show,  and  (vi)  fees  and
disbursements  of all independent  certified public  accountants  referred to in
Section 6(o)(iii) hereof  (including,  without  limitation,  the expenses of any
"cold  comfort"  letters  required  by this  Agreement)  and any other  persons,
including  special experts  retained by the Company,  and shall be borne, in the
case the  Registration  is made under Section 3, by the Holders  requesting  the
Registration  and, in the case the  Registration is made under Section 4, by the
Company  whether or not any of the  Registration  Statements is filed or becomes
effective.  The Company  shall pay its  internal  expenses  (including,  without
limitation,  all salaries and expenses of its officers and employees  performing
legal or  accounting  duties),  the  expense of any annual  audit,  the fees and
expenses  incurred  in  connection  with the  listing  of the  securities  to be
registered on any securities  exchange on which similar securities issued by the
Company are then listed and rating  agency fees and the fees and expenses of any
Person, including special experts, retained by the Company.

                                       11
<PAGE>

                   The Company shall not be required to pay in any  Registration
(i) fees and  disbursements of any counsel retained by any Holder of Registrable
Securities  or by any  underwriter  (except as set forth in clauses  7(i)(B) and
7(vii)), (ii) any underwriter's fees (including  discounts,  commissions or fees
of underwriters, selling brokers, dealer managers or similar securities industry
professionals)  relating to the distribution of the Registrable  Securities,  or
(iii)  any  other  expenses  of  the  Holders  of  Registrable   Securities  not
specifically  required to be paid by the Company pursuant to the first paragraph
of this Section 7.

         Section 8. Indemnification.

                   (a)  Indemnification  by  the  Company.  The  Company  shall,
without  limitation  as to time,  indemnify  and hold  harmless,  to the fullest
extent permitted by law, each Holder whose Registrable Securities are covered by
a Registration Statement or Prospectus,  the officers,  directors,  accountants,
agents and employees of each of them,  each Person who controls each such holder
(within  the  meaning of Section 15 of the  Securities  Act or Section 20 of the
Exchange Act) and the officers, directors,  accountants, agents and employees of
each such  controlling  person,  each  underwriter,  if any, and each person who
controls  (within the meaning of Section 15 of the  Securities Act or Section 20
of the  Exchange  Act) such  underwriter,  from and  against any and all losses,
claims, damages,  liabilities,  costs (including,  without limitation,  costs of
preparation  and  reasonable  attorneys'  fees and any  legal  or other  fees or
expenses  incurred  by such  party  in  connection  with  any  investigation  or
Proceeding),  expenses, judgments, fines, penalties, charges and amounts paid in
settlement (collectively,  "Losses"), as incurred,  arising out of or based upon
any untrue statement (or alleged untrue  statement) of a material fact contained
in any prospectus,  offering circular,  or other document (including any related
registration  statement,  notification,  or  the  like)  incident  to  any  such
registration, qualification, or compliance, or based on any omission (or alleged
omission)  to state  therein a material  fact  required to be stated  therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the  Company  and  relating  to action or  inaction  required  of the Company in
connection with any such registration,  qualification,  or compliance,  and will
reimburse each such Holder,  each of its officers,  directors,  partners,  legal
counsel,  and accountants  and each person  controlling  such Holder,  each such
underwriter,  and each person who controls any such  underwriter,  for any legal
and any other expenses  reasonably incurred in connection with investigating and
defending  or  settling  any such claim,  loss,  damage,  liability,  or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability, or expense arises out of or is based on
any untrue statement or omission by such holder or underwriter,  but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement,  prospectus,  offering
circular,  or other  document in reliance  upon and in  conformity  with written
information  furnished  to the  Company by such  Holder.  It is agreed  that the
indemnity  agreement  contained  in this Section 8(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected  without the consent of the Company  (which consent shall
not be unreasonably withheld).

                   (b)   Indemnification  by  Holder.  In  connection  with  any
Registration  Statement  in which a Holder is  participating,  such Holder shall
furnish to the Company in writing  such  information  as the Company  reasonably
requests for use in connection with any Registration Statement or Prospectus and
agrees to indemnify,  to the fullest extent permitted by law,  severally and not

                                       12
<PAGE>

jointly,  the  Company,  its  directors,  officers,   accountants,   agents  and
employees,  each Person who controls the Company  (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling persons, and each underwriter,
if any, and each person who  controls  such  underwriter  (within the meaning of
Section 15 of the Securities  Act and Section 20 of the Exchange Act),  from and
against all Losses arising out of or based on any untrue statement of a material
fact  contained  in  any  such  registration  statement,   prospectus,  offering
circular,  or other  document,  or any omission to state therein a material fact
required to be stated  therein or necessary to make the  statements  therein not
misleading,  and  will  reimburse  the  Company  and such  directors,  officers,
partners,  legal counsel,  and accountants,  persons,  underwriters,  or control
persons for any legal or any other  expenses  reasonably  incurred in connection
with  investigating or defending any such claim,  loss,  damage,  liability,  or
action,  in each case to the extent,  but only to the  extent,  that such untrue
statement  or  omission  is  made in such  registration  statement,  prospectus,
offering  circular,  or other  document in reliance upon and in conformity  with
written information furnished to the Company by such Holder specifically for use
in connection with the preparation of such registration  statement,  prospectus,
offering circular or other document provided,  however,  that the obligations of
such Holder  hereunder shall not apply to amounts paid in settlement of any such
claims, losses,  damages, or liabilities (or actions in respect thereof) if such
settlement is effected  without the consent of such Holder (which  consent shall
not be unreasonably withheld); and provided, further, that the liability of each
selling Holder  hereunder shall be limited to the net proceeds  received by such
selling  Holder  from  the  sale  of  Registrable  Securities  covered  by  such
Registration Statement. In addition,  insofar as the foregoing indemnity relates
to any such untrue statement or omission made in the preliminary  prospectus but
eliminated  or remedied in the  amended  prospectus  on file with the SEC at the
time the  registration  statement  becomes  effective or in the final prospectus
filed  pursuant to applicable  rules of the SEC or in any supplement or addendum
thereto and such new prospectus is delivered to the  underwriter,  the indemnity
agreement  herein  shall  not  inure to the  benefit  of such  underwriter,  any
controlling person of such underwriter and their respective Representatives,  if
a copy of the final prospectus  filed pursuant to such rules,  together with all
supplements  and  addenda  thereto  was not  furnished  to the  person or entity
asserting  the  loss,  liability,  claim or  damage at or prior to the time such
furnishing is required by the Securities Act.

                   (c)  Conduct of  Indemnification  Proceedings.  If any Person
shall  be  entitled  to  indemnity  hereunder  (an  "indemnified  party"),  such
indemnified  party  shall  give  prompt  notice to the  party  from  which  such
indemnity  is  sought  (the  "indemnifying  party")  of  any  claim  or  of  the
commencement  of any  Proceeding  with respect to which such  indemnified  party
seeks indemnification or contribution pursuant hereto;  provided,  however, that
the delay or failure to so notify the  indemnifying  party shall not relieve the
indemnifying  party from any  obligation or liability  except to the extent that
the  indemnifying  party  has been  prejudiced  by such  delay or  failure.  The
indemnifying party shall have the right, exercisable by giving written notice to
an  indemnified  party  promptly  after the receipt of written  notice from such
indemnified  party of such claim or  Proceeding,  to, unless in the  indemnified
party's reasonable  judgment a conflict of interest between such indemnified and
indemnifying  parties  may  exist  in  respect  of such  claim,  assume,  at the
indemnifying party's expense, the defense of any such claim or Proceeding,  with
counsel reasonably  satisfactory to such indemnified party;  provided,  however,
that an indemnified party shall have the right to employ separate counsel in any
such claim or Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such  indemnified  party
unless: (i) the indemnifying party agrees to pay such fees and expenses; or (ii)
the  indemnifying  party  fails  promptly to assume the defense of such claim or
Proceeding  or  fails  to  employ  counsel   reasonably   satisfactory  to  such
indemnified  party; in which case the indemnified  party shall have the right to
employ counsel and to assume the defense of such claim or proceeding;  provided,
however,  that the indemnifying party shall not, in connection with any one such

                                       13
<PAGE>

claim or Proceeding or separate but  substantially  similar or related claims or
Proceedings  in  the  same  jurisdiction,   arising  out  of  the  same  general
allegations or  circumstances,  be liable for the fees and expenses of more than
one firm of attorneys  (together with appropriate local counsel) at any time for
all  of  the  indemnified  parties,  or for  fees  and  expenses  that  are  not
reasonable.  Whether or not such defense is assumed by the  indemnifying  party,
such indemnified  party shall not be subject to any liability for any settlement
made without its consent (but such consent shall not be unreasonably  withheld).
The indemnifying  party shall not consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release, in form and
substance  reasonably  satisfactory to the indemnified party, from all liability
in respect of such claim or litigation for which such indemnified party would be
entitled to indemnification hereunder.

                   (d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any Losses (other
than in  accordance  with its  terms),  because  of a failure  or  refusal  of a
governmental  authority to enforce such  provisions in accordance with its terms
due to public policy or otherwise,  then each applicable  indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or  payable  by such  indemnified  party as a  result  of such  Losses,  in such
proportion as is appropriate  to reflect the relative fault of the  indemnifying
party,  on the one hand,  and such  indemnified  party,  on the other  hand,  in
connection  with the  actions,  statements  or omissions  that  resulted in such
Losses as well as any other  relevant  equitable  considerations.  The  relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand, shall be determined by reference to, among other things, whether any
action in  question,  including  any untrue or  alleged  untrue  statement  of a
material fact or omission or alleged omission to state a material fact, has been
taken by, or relates to  information  supplied  by, such  indemnifying  party or
indemnified  party,  and the  parties'  relative  intent,  knowledge,  access to
information and opportunity to correct or prevent any such action,  statement or
omission.

                   The  parties  hereto  agree  that it  would  not be just  and
equitable if  contribution  pursuant to this Section 8(d) were determined by pro
rata  allocation or by any other method of allocation that does not take account
of  the  equitable  considerations  referred  to in  the  immediately  preceding
paragraph.  Notwithstanding the provisions of this Section 8(d), an indemnifying
party that is a selling Holder shall not be required to contribute any amount in
excess of the amount by which the net proceeds from the sale of the  Registrable
Securities  sold by such  indemnifying  party  exceeds the amount of any damages
that such  indemnifying  party has  otherwise  been required to pay by reason of
such untrue or alleged  untrue  statement  or omission or alleged  omission.  No
person  guilty of  fraudulent  misrepresentation  (within the meaning of Section
11(f) of the Securities Act) shall be entitled to  contribution  from any Person
who was not guilty of such fraudulent misrepresentation.

                                       14
<PAGE>

(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.

         Section 9. Rule 144. The Company shall file the reports  required to be
filed by it under the  Securities  Act and the Exchange Act, and shall take such
further action as any holder of Registrable  Securities may reasonably  request,
all to the  extent  required  from  time to time to enable  such  Holder to sell
Registrable  Securities without registration under the Securities Act within the
limitations  of the  exemption  provided  by Rule 144.  Upon the  request of any
Holder,  the  Company  shall  deliver to such holder a written  statement  as to
whether it has complied with such requirements.

         Section  10.  Underwritten  Registrations.  If any  Registration  is an
underwritten  offering, the Holder shall have the right to select the investment
banker or investment bankers and managers to administer the offering, subject to
approval by the Company, not to be unreasonably withheld. The Company shall have
the right to select the investment banker or investment  bankers and managers to
administer any Piggyback Registration.

                   No Person may  participate in any  underwritten  registration
hereunder  unless such Person (i) agrees to sell the  Registrable  Securities it
desires  to have  covered  by the  Registration  on the  basis  provided  in any
underwriting  arrangements in customary form and (ii) completes and executes all
questionnaires,  powers of attorney,  indemnities,  underwriting  agreements and
other  documents  required  under the terms of such  underwriting  arrangements,
provided that such Person shall not be required to make any  representations  or
warranties  other than those  related to title and ownership of shares and as to
the accuracy and  completeness of statements  made in a registration  statement,
prospectus,  offering  circular,  or  other  document  in  reliance  upon and in
conformity  with  written  information  furnished to the Company or the managing
underwriter by such Person.

         Section 11.  Limitation on  Subsequent  Registration  Rights.  From and
after the date of this  Agreement,  the  Company  shall not,  without  the prior
written  consent of the holders of at least a majority  of the then  outstanding
Registrable Securities,  enter into any agreement with any Holder or prospective
holder of any securities of the Company giving such Holder or prospective Holder
any  registration  rights the terms of which are equivalent to or more favorable
than the registration rights granted to Holders hereunder,  or that would reduce
the amount of Registrable Securities the Holders can include in any Registration
filed pursuant to Section 3 hereof,  unless such rights are subordinate to those
of the Holders.

         Section 12. Miscellaneous.

                   (a) Amendments and Waivers. The provisions of this Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given, unless the Company has obtained the written consent of holders
of at least a majority of the Registrable Securities; provided, however, that in
no event shall the  obligations  of any Holder be  materially  increased  or the
rights of any  Investor  be  adversely  affected  (without  similarly  adversely

                                       15
<PAGE>

affecting the rights of all Investors),  except upon the written consent of such
Holder.  Notwithstanding  the foregoing,  a waiver or consent to depart from the
provisions  hereof with  respect to a matter  that  relates  exclusively  to the
rights of Holders whose  securities  are being sold  pursuant to a  Registration
Statement  and that does not directly or  indirectly  affect the rights of other
Holders  may be  given by  holders  of at least a  majority  of the  Registrable
Securities being sold by such Holders pursuant to such Registration Statement.

                   (b) Notices. All notices required to be given hereunder shall
be in  writing  and shall be deemed to be duly  given if  personally  delivered,
telecopied and confirmed, or mailed by certified mail, return receipt requested,
or overnight delivery service with proof of receipt maintained, at the following
address  (or any other  address  that any such  party may  designate  by written
notice to the other parties):

                  If to the Company:

                           Tidelands Oil & Gas Corporation
                           13330 Leopard, Suite 26
                           Corpus Christi, Texas  78410
                           Attn:  Michael R. Ward, President

                  If to Impact:

                           Impact Energy Services, L.L.C.
                           601 S. Boulder, Suite 700
                           Tulsa, Oklahoma  74119
                           Attn:  Don Jacobsen, President

Any such  notice  shall,  if  delivered  personally,  be  deemed  received  upon
delivery;  shall,  if  delivered by  telecopy,  be deemed  received on the first
business day following  confirmation;  shall, if delivered by overnight delivery
service,  be deemed received the first business day after being sent; and shall,
if  delivered by mail,  be deemed  received  upon the earlier of actual  receipt
thereof or five  business  days  after the date of deposit in the United  States
mail.

                   (c) Successors and Assigns. This Agreement shall inure to the
benefit  of the  Members  of a Holder who have  received  shares of  Registrable
Securities  from a Holder  pursuant  to a  distribution  and shall  inure to the
benefit  of and be  binding  upon  the  successors  and  assigns  of each of the
parties,  including  without  limitation  and  without  the need for an  express
assignment,  subsequent  Holders  acquired,  directly  or  indirectly,  from the
Holders.

                   (d)  Counterparts.  This  Agreement may be executed in two or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.

                   (e) Headings. The section and paragraph headings contained in
this  Agreement are for reference  purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

                                       16
<PAGE>

                   (f) Governing  Law. This  agreement  shall be governed by and
construed in accordance  with the laws of the State of Oklahoma  (without giving
effect to the choice of law principles thereof).

                   (g)  Severability.   If  any  term,  provision,  covenant  or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an  alternative  means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

                   (h) Entire  Agreement.  This  Agreement  is  intended  by the
parties  as a final  expression  of their  agreement,  and is  intended  to be a
complete and  exclusive  statement of the  agreement  and  understanding  of the
parties hereto in respect of the subject matter contained  herein.  There are no
restrictions,  promises, warranties or undertakings,  other than those set forth
or referred to herein,  with respect to the  registration  rights granted by the
Company with respect to Registrable  Securities.  This Agreement  supersedes all
prior  agreements  and  understandings  between the parties with respect to such
subject matter.

                   (i)  Securities  Held  by  the  Company  or  its  Affiliates.
Whenever  the  consent  or  approval  of Holders of a  specified  percentage  of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or its  subsidiaries  shall not be counted in  determining  whether such
consent or approval was given by the holders of such required percentage.

                   (j)  Termination.  This  Agreement  shall  terminate  when no
Registrable Securities remain outstanding;  provided that Sections 7 and 8 shall
survive any termination hereof.

                   (k) Specific  Performance.  The parties hereto  recognize and
agree that money damages may be  insufficient  to compensate  the holders of any
Registrable  Securities  for  breaches by the  Company of the terms  hereof and,
consequently,  that the equitable  remedy of specific  performance  of the terms
hereof will be available in the event of any such breach.

                                       17
<PAGE>

         IN WITNESS  WHEREOF,  the parties hereto have caused this  Registration
Rights Agreement to be duly executed as of the date first above written.

                                                 TIDELANDS OIL & GAS CORPORATION

                                                 By:    ________________________
                                                 Name:  Michael R. Ward
                                                 Title: President

                                                 IMPACT INTERNATIONAL, L.L.C.

                                                 By:    ________________________
                                                 Name:  Don Jacobsen
                                                 Title: ManagerDIGITAL LIGHTWAVE, INC.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNEC­TION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISTRIBU­TION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

SECURED PROMISSORY NOTE

$500,000.00

April 29, 2003

Clearwater, Florida

For value received, Digital Lightwave, Inc., a Delaware corporation (the “Company”), promises to pay to Optel, LLC (the “Holder”), the principal sum of Five Hundred Thousand Dollars ($500,000.00).  Interest shall accrue from the date of this Note on the unpaid principal amount at a rate equal to 10.0% per annum, compounded annually. This Note is subject to the following terms and conditions.

1.

Maturity.  Principal and any accrued but unpaid interest under this Note shall be due and payable upon demand by the Holder at any time after July 31, 2004 (the “Maturity Date”).  Notwithstanding the foregoing, the entire unpaid principal sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due and payable immediately prior to the earlier to occur of (a) a Change of Control (as defined below), (b) the insolvency of the Company, (c) the commission of any act of bankruptcy by the Company, (d) the execution by the Company of a general assignment for the benefit of creditors, (e) the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of 90 days or more, or (f) the appointment of a receiver or trustee to take possession of the property or assets of the Company.  For purposes of this Note a “Change of Control” shall mean a sale of all or substantially all of the Company’s assets, or any merger or consolidation of the Company with or into another corporation; other than a merger or consolidation in which the holders of more than 50% of the shares of capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by the voting securities remaining outstanding or by their being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company, or such surviving entity, outstanding immediately after such transaction.

2.

Payment; Prepayment.  All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company.  Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal. Prepayment of this Note may be made at any time without penalty.  

3.

Transfer; Successors and Assigns.  The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.   This Note may be transferred only upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company.  Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name of, the transferee.  Interest and principal are payable only to the registered holder of this Note.

4.

Governing Law.  This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Florida, without giving effect to principles of conflicts of law.  

5.

Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the party to be notified at such party’s address or facsimile number as set forth below or as subsequently modified by written notice.

6.

Amendments and Waivers.  Any term of this Note may be amended only with the written consent of the Company and the Holder.  Any amendment or waiver effected in accordance with this Section 6 shall be binding upon the Company, each Holder and each transferee of any Note.

8. 

Officers and Directors Not Liable.  In no event shall any, officer or director of the Company be liable for any amounts due or payable pursuant to this Note.

9.

Security Interest.  This Note is secured by all of the assets of the Company in accordance with a separate security agreement originally dated as of February 14, 2003 and amended and restated as of the date hereof (the “Security Agreement”), between the Company and the Holder.  In case of an Event of Default (as defined in the Security Agreement), the Holder shall have the rights set forth in the Security Agreement.

10.

Counterparts.  This Note may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will constitute a single agreement.

11.

Action to Collect on Note.  If action is instituted to collect on this Note, the Company promises to pay all costs and expenses, including reasonable attorney’s fees, incurred in connection with such action.

12.

Loss of Note.  Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a new Note of like tenor.

This Note was entered into as of the date set forth above.

COMPANY:

DIGITAL LIGHTWAVE, INC.

By:  ___________________________

Name: _________________________

           (print)

Title:  __________________________

AGREED TO AND ACCEPTED:

OPTEL, LLC

By:  ___________________________

Name: _________________________

           (print)

Title:  __________________________

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