10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           

Commission file number 0-02517

TOREADOR RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	75-0991164
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
4809 Cole Avenue, Suite 108
Dallas, Texas	75205
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (214) 559-3933

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [   ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at September 30, 2002
Common Stock, $0.15625 par value	9,337,517 shares

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	ITEM 1 — FINANCIAL STATEMENTS
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF OPERATIONS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
	ITEM 4 — CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 1 — LEGAL PROCEEDINGS
	ITEM 2 — CHANGES IN SECURITIES AND USE OF PROCEEDS — None.
	ITEM 3 — DEFAULTS UPON SENIOR SECURITIES — None.
	ITEM 4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS — None.
	ITEM 5 — OTHER INFORMATION — None.
	ITEM 6 — EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
CERTIFICATION
EXHIBITS INDEX
EX-3.2 Certificate of Designation of Series A-1
EX-10.1 3rd Amendment to Loan Agreement
EX-10.2 4th Amendment to Loan Agreement
EX-10.3 Settlement Agreement

TOREADOR RESOURCES CORPORATION

INDEX

			Page Number
PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements (Unaudited)			2
		Consolidated Balance Sheets (Unaudited) September 30, 2002 and December 31, 2001		2
		Consolidated Statements of Operations (Unaudited) Three and Nine Months Ended September 30, 2002 and 2001		3
		Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2002 and 2001		4
		Notes to Consolidated Financial Statements		5
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
	Item 3. Quantitative and Qualitative Disclosure about Market Risk			19
	Item 4. Controls and Procedures			20
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings			21
	Item 2. Changes in Securities and Use of Proceeds			21
	Item 3. Defaults Upon Senior Securities			21
	Item 4. Submission of Matters to a Vote of Security Holders			21
	Item 5. Other Information			21
	Item 6. Exhibits and Reports on Form 8-K			21
	Signatures			22
	Certification of G. Thomas Graves III			23
	Certification of Douglas W. Weir			24

1

PART I. FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

TOREADOR RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

					September 30,			December 31,
					2002			2001
					(in thousands, except share data)
ASSETS
Current assets:
		Cash and cash equivalents			$	677		$	2,155
		Accounts and notes receivable				3,774			3,456
		Available-for-sale securities, at fair value				74			348
		Unrealized gains on commodity derivatives				—			993
		Other				2,533			1,151
			Total current assets			7,058			8,103
				Properties and equipment, net, successful efforts method		69,141			78,028
Investments in unconsolidated entities						2,753			2,855
Income taxes receivable						702			—
Goodwill						5,671			5,076
Other assets						503			392
			Total Assets		$	85,828		$	94,454
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
		Accounts payable and accrued liabilities			$	6,101		$	6,078
		Unrealized loss on commodity derivatives				1,418			—
		Current portion of long-term debt				2,700			2,625
		Income taxes payable				571			279
			Total current liabilities			10,790			8,982
Long-term debt						31,967			36,874
Deferred tax liability						11,507			12,883
Convertible debenture						2,160			2,160
			Total liabilities			56,424			60,899
Stockholders’ equity:
	Preferred stock, $1.00 par value, 4,000,000 shares authorized; 160,000 issued					160			160
	Common stock, $0.15625 par value, 30,000,000 shares authorized; 10,058,544 shares issued					1,572			1,572
	Capital in excess of par value					29,656			29,593
		Retained earnings				834			4,617
	Accumulated other comprehensive income (loss)					(284	)		(33	)
						31,938			35,909
		Treasury stock at cost:
			721,027 and 681,027 shares			(2,534	)		(2,354	)
			Total stockholders’ equity			29,404			33,555
			Total Liabilities and Stockholders’ Equity		$	85,828		$	94,454

See accompanying notes to the consolidated financial statements

2

TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

			Three Months Ended						Nine Months Ended
			September 30						September 30
			2002			2001			2002			2001
			(in thousands, except per share data)
Revenues:
	Oil and gas sales		$	5,800		$	2,719		$	17,365		$	11,568
	Gain (loss) on commodity derivatives			(1,128	)		454			(3,562	)		1,022
	Lease bonuses and rentals			120			162			621			488
		Total revenues		4,792			3,335			14,424			13,078
Costs and expenses:
	Lease operating			1,834			780			5,563			2,332
	Exploration and acquisition			263			497			712			997
	Depreciation, depletion and amortization			1,428			662			4,601			2,278
	General and administrative			1,728			633			5,397			1,960
		Total costs and expenses		5,253			2,572			16,273			7,567
Operating income (loss)				(461	)		763			(1,849	)		5,511
Other income (expense)
	Equity in losses of unconsolidated investments			(10	)		(18	)		(74	)		(173	)
	Gain (loss) on sale of properties and other assets			(1,082	)		115			(2,117	)		285
	Loss on sale of marketable securities			—			(15	)		(1	)		(10	)
	Interest and other			217			42			184			143
	Interest expense			(658	)		(276	)		(1,517	)		(975	)
		Total other income (expense)		(1,533	)		(152	)		(3,525	)		(730	)
Net income (loss) before income taxes				(1,994	)		611			(5,374	)		4,781
Provision (benefit) for income taxes				(828	)		226			(1,861	)		1,769
Net income (loss)				(1,166	)		385			(3,513	)		3,012
Less: dividends on preferred shares				90			90			270			270
Income (loss) available to common shares			$	(1,256	)	$	295		$	(3,783	)	$	2,742
Basic income (loss) per share			$	(0.13	)	$	0.05		$	(0.40	)	$	0.43
Diluted income (loss) per share			$	(0.13	)	$	0.04		$	(0.40	)	$	0.40
Weighted average shares outstanding
	Basic			9,338			6,374			9,345			6,320
	Diluted			9,338			6,582			9,345			7,568

See accompanying notes to the consolidated financial statements

3

TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

				Nine Months Ended
				September 30
				2002			2001
				(in thousands)
Cash flows from operating activities:
	Net income (loss)			$	(3,513	)	$	3,012
	Adjustments to reconcile net income to net cash provided by operating activities:
		Change in fair value of commodity derivatives			2,411			(373	)
		Depreciation, depletion and amortization			4,601			2,278
		Loss (gain) on sale of properties			2,117			(285	)
		Loss on sale of marketable securities			1			10
		Equity in loss of unconsolidated investments			102			173
		Dry holes and abandonments			—			553
	Decrease (increase) in operating assets:
		Accounts and notes receivable			(379	)		517
		Income taxes receivable			(702	)		—
		Other current assets			(1,648	)		(788	)
		Other assets			44			109
	Increase (decrease) in operating liabilities:
		Accounts payable and accrued liabilities			(568	)		(225	)
		Income taxes payable			292			928
		Deferred taxes			(1,174	)		(32	)
		Other			63			—
			Net cash provided by operating activities		1,647			5,877
Cash flows from investing activities:
	Expenditures for properties and equipment				(2,147	)		(10,633	)
	Proceeds from the sale of properties and equipment				4,316			638
	Investment in EnergyNet.com, Inc.				—			(100	)
	Purchase of marketable securities				(51	)		(643	)
	Proceeds from sale of marketable securities				215			326
			Net cash provided by (used in) investing activities		2,333			(10,412	)
Cash flows from financing activities:
	Payment for debt issuance costs				(175	)		(138	)
	Borrowings under revolving credit arrangements				4,207			9,043
	Repayments under revolving credit arrangements				(9,039	)		(5,383	)
	Proceeds from issuance of stock				—			247
	Payment of preferred dividends				(270	)		(270	)
	Purchase of treasury stock				(180	)		(468	)
			Net cash provided by (used in) financing activities		(5,457	)		3,031
Net decrease in cash and cash equivalents					(1,477	)		(1,504	)
Cash and cash equivalents, beginning of period					2,155			1,756
Cash and cash equivalents, end of period				$	678		$	252
Supplemental disclosure of cash flow information:
	Cash paid during the period for income taxes			$	124		$	842
	Cash paid during the period for interest			$	1,473		$	821

See accompanying notes to the consolidated financial statements

4

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1 – BASIS OF PRESENTATION

You should read these consolidated financial statements along with the consolidated financial statements and notes in the 2001 Annual Report on Form 10-K of Toreador Resources Corporation (the “Company, we, us, our”) filed with the Securities and Exchange Commission. In our opinion, the information furnished herein reflects all adjustments, only consisting of normal recurring adjustments necessary for a fair presentation of the results of these interim periods. Operating results for the three- and nine-month periods ended September 30, 2002, may not necessarily be indicative of the results for the year ending December 31, 2002.

NOTE 2 – COMPREHENSIVE INCOME

The following table presents the components of comprehensive income, net of related tax (amounts in thousands):

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2002			2001			2002			2001
Income (loss) available to common shares	$	(1,256	)	$	295		$	(3,783	)	$	2,742
Foreign currency translation adjustment		657			—			(183	)		—
Change in fair value of available-for-sale securities		(17	)		(25	)		(68	)		(98	)
Comprehensive income (loss)	$	(616	)	$	270		$	(4,034	)	$	2,644

We now report foreign currency translation adjustments as a component of comprehensive income due to our operations in France and Turkey beginning January 1, 2002.

NOTE 3 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

On July 20, 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“Statement 142”). Under Statement 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually (or more frequently if there is a change in operating conditions that would make it prudent to do so) for impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives (although Statement 142 specifies no maximum life). Prior to our merger with Madison Oil Company (“Madison”) on December 31, 2001, we had no goodwill; therefore, when we adopted Statement 142 on January 1, 2002, there was no impact on our financial position. The goodwill we recorded as the result of the Madison merger will be reviewed for impairment on a regular basis as required by Statement 142.

On August 15, 2001, the FASB issued Statement No. 143, Accounting for Asset Retirement Obligations (“Statement 143”). Statement 143 was initiated in 1994 to account for the costs of nuclear decommissioning. The FASB expanded the scope to include similar closure or removal-type costs in other industries that are incurred during the life of an asset. That standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which the liability is incurred. When

5

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. Statement 143 is effective for fiscal years beginning after June 15, 2002, with earlier application encouraged. We will adopt this standard on January 1, 2003. Upon adopting the standard, we estimate that we will increase properties and equipment and record an abandonment liability that will range between $300,000 and $500,000. We do not anticipate that the impact to our results of operations will be material.

On January 1, 2002, we adopted FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“Statement 144”). The new rules significantly change the criteria that would have to be met to classify an asset as held-for-sale. This distinction is important because assets held-for-sale are stated at the lower of their fair values or carrying amounts, and depreciation is no longer recognized. The new rules also supersede the provisions of Accounting Principles Board Opinion No. 30 (“APB 30”) with regard to reporting the effects of a disposal of a segment of a business and require expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred (rather than as of the measurement date as presently required by APB 30). In addition, more dispositions will qualify for discontinued operations treatment in the income statement. Typically, when we identify properties for sale, we sell them immediately via Internet auction. When we sell properties via Internet auction, we set a minimum price (a “reserve price”) that must be met for the auction to close. If the reserve price is not met, we have the ability to remove the property from sale. Because of these facts, the properties identified for sale do not meet the criteria to be classified as assets held-for-sale in accordance with Statement 144. Because we had no properties held for sale at December 31, 2001, adopting Statement 144 did not have a material impact on our financial position at January 1, 2002, or results of operations for the three- and nine-month periods ended September 30, 2002.

In April, 2002, the FASB issued Statement No. 145 (“Statement 145”), “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections,” related to accounting for debt extinguishments, leases and intangible assets of motor carriers. The provisions of Statement 145 are effective for fiscal years beginning after May 15, 2002, with earlier adoption encouraged. Because we do not have, and we do not anticipate having, debt extinguishments or the type of lease transactions mentioned in Statement 145, we believe that adopting Statement 145 will not have a material impact on our financial position or results of operations.

6

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 4 – ACQUISITIONS

On May 31, 2002, we acquired Wilco Turkey Limited (“WTL”) from Wilco Properties, Inc. (“WPI”). WTL’s primary asset is an interest (ranging from 52.5% to 87.5%) in exploration licenses covering 2.2 million acres in the Thrace Basin and in the central and southeast areas of Turkey. On May 31, 2002, we also acquired from F-Co Holdings Kandamis (“F-CO”) additional interests (ranging from 7.5% to 12.5%) in the same exploration licenses. The purpose of the acquisition was to obtain, explore and possibly develop the acreage covered by the licenses. The acreage in the Thrace Basin is adjacent to or near the acreage we held prior to the acquisition of WTL. In exchange for all of the outstanding common stock of WTL, we have agreed to give WPI an overriding royalty interest in any successful wells we drill on the acreage covered by the exploration licenses we acquired. Additionally, both WPI and F-CO retained net profits interests in the operation of the Canhidir #1, a carbon dioxide well that WTL completed prior to the acquisition. The well has proven carbon dioxide reserves, but has not produced to date due to the lack of a carbon dioxide market. We have also agreed to give F-CO, in exchange for its interest in the acreage, an overriding royalty interest in any successful wells we drill on the acreage. As of the acquisition date, there were no outstanding liabilities associated with WTL. We did not convey value to WPI or F-CO on the acquisition date or assume any liabilities; therefore, the fair value of the transaction was zero. We have allocated no value to the assets acquired from WTL and F-CO. WPI is controlled by William I. Lee, a director and stockholder, and F-CO is controlled by Peter L. Falb, a director and stockholder.

NOTE 5 – GEOGRAPHIC OPERATING SEGMENT INFORMATION

We have operations in only one industry segment, the oil and gas exploration and production industry. We have structured the Company along geographic operating segments or regions. As a result, we have reportable operations in the United States, France and Turkey. Geographic operating segment income tax expenses have been determined based on statutory rates existing in the various tax jurisdictions where we have oil and natural gas producing activities.

The following tables provide the geographic operating segment data required by Statement of Financial Accounting Standards No. 131, Disclosure about Segments of an Enterprise and Related Information. Operations in France and Turkey began when we completed our merger with Madison on December 31, 2001. Accordingly, we had operations in only the U.S. segment during the three- and nine-month periods ended September 30, 2001. Subsequent to December 31, 2001, we combined the “United States” and “Headquarters and Other” segments to more accurately reflect the way we analyze our operations.

7

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

															Three Months
															Ended
															September 30,
			Three Months Ended September 30, 2002												2001
			United States			France			Turkey			Total(1)			United States
			(in thousands)
Revenues:
	Oil and gas sales		$	2,670		$	2,382		$	748		$	5,800		$	2,719
	Gain (loss) on commodity derivatives			(446	)		(682	)		—			(1,128	)		454
	Lease bonuses and rentals			120			—			—			120			162
		Total revenues		2,344			1,700			748			4,792			3,335
Costs and expenses:
	Lease operating			601			997			236			1,834			780
	Exploration and acquisition			263			—			—			263			497
	Depreciation, depletion and amortization			678			466			284			1,428			662
	General and administrative			1,305			167			256			1,728			633
		Total costs and expenses		2,847			1,630			776			5,253			2,572
Operating income (loss)				(503	)		70			(28	)		(461	)		763
Other income (expense)
	Equity in losses of unconsolidated investments			(10	)		—			—			(10	)		(18	)
	Gain (loss) on sale of properties			(1,082	)		—			—			(1,082	)		115
	Loss on sale of marketable securities			—			—			—			—			(15	)
	Interest and other			31			180			6			217			42
	Interest expense			(475	)		(183	)		—			(658	)		(276	)
		Total other income (expense)		(1,536	)		(3	)		6			(1,533	)		(152	)
Net income (loss) before income taxes				(2,039	)		67			(22	)		(1,994	)		611
Provision (benefit) for income taxes				(828	)		—			—			(828	)		226
Net income (loss)			$	(1,211	)	$	67		$	(22	)	$	(1,166	)	$	385
Total assets			$	91,060		$	24,666		$	9,424		$	85,828		$	47,847

(1) Total consolidated assets reflect the effect of intersegment eliminations.

8

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

															Nine Months
															Ended
															September 30,
			Nine Months Ended September 30, 2002												2001
			United States			France			Turkey			Total(1)			United States
			(in thousands)
Revenues:
	Oil and gas sales		$	8,642		$	6,934		$	1,789		$	17,365		$	11,568
	Gain (loss) on commodity derivatives			(1,612	)		(1,950	)		—			(3,562	)		1,022
	Lease bonuses and rentals			621			—			—			621			488
		Total revenues		7,651			4,984			1,789			14,424			13,078
Costs and expenses:
	Lease operating			1,877			3,008			678			5,563			2,332
	Exploration and acquisition			712			—			—			712			997
	Depreciation, depletion and amortization			2,527			1,359			715			4,601			2,278
	General and administrative			4,393			417			587			5,397			1,960
		Total costs and expenses		9,509			4,784			1,980			16,273			7,567
Operating income (loss)				(1,858	)		200			(191	)		(1,849	)		5,511
Other income (expense)
	Equity in losses of unconsolidated investments			(74	)		—			—			(74	)		(173	)
	Gain (loss) on sale of properties			(2,117	)		—			—			(2,117	)		285
	Loss on sale of marketable securities			(1	)		—			—			(1	)		(10	)
	Interest and other			49			115			20			184			143
	Interest expense			(1,030	)		(487	)		—			(1,517	)		(975	)
		Total other income (expense)		(3,173	)		(372	)		20			(3,525	)		(730	)
Net income (loss) before income taxes				(5,031	)		(172	)		(171	)		(5,374	)		4,781
Provision (benefit) for income taxes				(1,861	)		—			—			(1,861	)		1,769
Net income (loss)			$	(3,170	)	$	(172	)	$	(171	)	$	(3,513	)	$	3,012
Total assets			$	91,060		$	24,666		$	9,424		$	85,828		$	47,847

(1) Total consolidated assets reflect the effect of intersegment eliminations.

9

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS

We utilize commodity derivative instruments as part of our risk management program. These transactions are generally structured as either swaps or collar contracts. A swap can be described as having the effect of an outright sale at a specific price. A collar has the effect of creating a sale only if a floor or ceiling price is exceeded. These instruments (i) reduce the effect of the price fluctuations of the commodities we produce and sell; (ii) support our annual capital budgeting and expenditure plans; (iii) protect the amounts required for servicing outstanding debt; and (iv) maximize the funds available under our existing credit facilities. The trading party that represents the other side of each of these transactions is known as a “counterparty.” The counterparty of our transactions is Coral Energy Holdings, L.P., an affiliate of Royal Dutch/Shell.

The following table lists our open natural gas derivative contracts as of September 30, 2002. All contracts are based on NYMEX pricing. We estimated the fair value of the option agreement at September 30, 2002, from quotes by the counterparty representing the amounts we would expect to receive or pay to terminate the agreements on that date. We estimated the fair value of the swap agreement based on the difference between the strike prices and the forward NYMEX prices for each determination period multiplied by the notional volume for each period.

					Notional						Fair Value –
					Volume per		Aggregate				Gain/(Loss)
Contract	Effective		Termination		Month		Volume		Strike Price		September 30,
Type	Date		Date		(MMBtu)(1)		(MMBtu)(1)		per MMBtu		2002
	November		December
Swap		2002		2002		80,000		160,000	$	3.059	$	(187,380	)
	January		December
		2003		2003		30,000		360,000	$	3.900	$	(58,710	)
	January		December
		2004		2004		50,000		600,000	$	3.920	$	23,150
Put	January		December
Option		2003		2003		80,000		960,000	$	3.250	$	180,668
	January		December
		2004		2004		50,000		600,000	$	3.250	$	176,764
Call	January		December
Option		2003		2003		80,000		960,000	$	4.850	$	(295,479	)
	January		December
		2004		2004		50,000		600,000	$	5.275	$	(152,975	)

(1) MMBtu — Million British thermal units.

10

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following table lists our open crude oil derivative contracts as of September 30, 2002. We estimated the fair value of the swap agreements based on the difference between the strike prices and the forward index prices for each determination period multiplied by the notional volume for each period.

					Notional					Fair Value –
					Volume per		Aggregate			Gain/(Loss)
Contract	Effective		Termination		Month		Volume		Strike Price	September
Type	Date		Date		(Bbls)		(Bbls)		per Bbl	30, 2002
WTI Crude	October		December
Swap		2002		2002		15,000		45,000	$22.480	$	(338,100	)
Brent Crude	October		December
Swap		2002		2002		37,500		112,500	$23.108	$	(641,475	)
Brent Crude	January		December						$21.00 Floor
Collar		2003		2003		20,000		240,000	$26.00 Ceiling	$	(124,800	)

NOTE 7 – LONG-TERM DEBT

On May 9, 2002, we amended our revolving credit facility with Bank of Texas (the “Texas Facility”). The amendment divided the amounts outstanding into two tranches. Tranche A amounted to $18,024,750, and Tranche B represented all amounts outstanding in excess of Tranche A. The amendment required that all amounts outstanding under Tranche B be repaid by July 15, 2002, and called for a monthly penalty of $50,000 if such amounts were not repaid by July 15, 2002. In connection with this amendment, we paid a fee of $100,000. On August 1, 2002, we amended the Texas Facility again. Under the terms of this amendment, Tranche A was increased to $20,000,000, and the due date for Tranche B was extended to November 1, 2002. Additionally, this amendment required no monthly penalty if all amounts under Tranche B were not repaid by November 1, 2002. In connection with this amendment, we paid a fee of $75,000. On September 23, 2002, we amended the Texas Facility for the fourth time. The fourth amendment eliminated the Tranches, set the borrowing base at $19,375,000 and calls for monthly principal payments of $150,000 through March 2003. There was no fee associated with this amendment. At September 30, 2002, there was $19,316,500 outstanding under the Texas Facility, and, in accordance with the amendment, we have included $900,000 under the current portion of long-term debt on the balance sheet.

NOTE 8 – LITIGATION

On September 18, 2002, we received a ruling from the American Arbitration Association related to the Trinidad Arbitration legal proceeding described in the Notes to Consolidated Financial Statements included in our December 31, 2001, Annual Report on Form 10-K. The arbitrator ruled that certain payments by Toreador’s subsidiary were delinquent, and, according to the terms of the partnership agreement, Toreador’s interest in Trinidad Exploration and Development, Ltd. (“TED”) has been reduced from 25% to 16.33%.

On August 7, 2002, we reached an agreement related to the Karak Petroleum legal proceeding described in the Notes to Consolidated Financial Statements included in our December 31, 2001, Annual Report on

11

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Form 10-K. Under the terms of the agreement, we will pay the plaintiffs $400,000 for full release of liability. Written documentation reflecting the foregoing was finalized on August 29, 2002. Prior to the agreement, we had no amounts accrued for this proceeding, which we assumed in the Madison merger. Because we had no amounts accrued for this contingency, and it existed prior to the date of the merger, we have adjusted our purchase price allocation by adding $400,000 to both goodwill and accounts payable and accrued liabilities. The agreement requires that we remit the $400,000 in two installments. The first installment of $50,000 was paid on August 29, 2002, and the remaining $350,000 must be paid by February 3, 2003.

NOTE 9 – EARNINGS PER COMMON SHARE

The following table reconciles the numerators and denominators of the basic and diluted earnings per ordinary share computation.

				Three Months Ended						Nine Months Ended
				September 30						September 30
				2002			2001			2002			2001
				(in thousands, except per share data)
Basic earnings per share
	Numerator:
		Net income (loss)		$	(1,166	)	$	385		$	(3,513	)	$	3,012
		Less: dividends on preferred shares			90			90			270			270
		Income (loss) available to common shares		$	(1,256	)	$	295		$	(3,783	)	$	2,742
	Denominator:
		Common shares outstanding			9,338			6,374			9,345			6,320
			Basic earnings per share	$	(0.13	)	$	0.05		$	(0.40	)	$	0.43
Diluted earnings per share
	Numerator:
		Net income (loss)		$	(1,166	)	$	385		$	(3,513	)	$	3,012
		Less: dividends on preferred shares			90			90			270			N/A	(1)
		Income (loss) available to common shares		$	(1,256	)	$	295		$	(3,783	)	$	3,012
	Denominator:
		Common shares outstanding			9,338			6,374			9,345			6,320
		Common stock options and warrants			N/A	(2)		208			N/A	(2)		248
		Conversion of preferred shares			N/A	(2)		N/A	(3)		N/A	(2)		1,000
		Conversion of debenture			N/A	(2)		—			N/A	(2)		—
					9,338			6,582			9,345			7,568
			Diluted earnings per share	$	(0.13	)	$	0.04		$	(0.40	)	$	0.40

(1)	Because we have assumed that the preferred shares were converted into common shares, there would have been no preferred dividends paid.
(2)	Due to the net loss for the three- and nine-month periods ended September 30, 2002, there were no dilutive shares.
(3)	Preferred shares were antidilutive for the three months ended September 30, 2001.

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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report may constitute “forward-looking” statements for purposes of the Securities Act of 1933, and the Securities Exchange Act of 1934 and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. When used in this report, the words “anticipates,” “estimates,” “plans,” “believes,” “continues,” “expects,” “projections,” “forecasts,” “intends,” “may,” “might,” “could,” “should,” and similar expressions are intended to be among the statements that identify forward-looking statements. Various factors that could cause the actual results, performance or achievements to differ materially from our expectations are disclosed in this report (“Cautionary Statements”), including, without limitation, those statements made in conjunction with the forward-looking statements included under the caption identified above and otherwise herein. All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by the Cautionary Statements.

LIQUIDITY AND CAPITAL RESOURCES

This section should be read in conjunction with Note 7 in the Notes to Consolidated Financial Statements included in this filing.

For the first nine months of 2002, cash flow from operations before working capital changes and including proceeds from the sale of properties and equipment was $10.0 million, compared with $6.0 million for the year-ago period. Cash flow from operations before working capital changes for the first nine months of 2002 was $5.7 million versus $5.4 million for the same period in 2001. We continually review the operating results of each of our properties. When we discover under performing properties, we attempt to liquidate them. During the nine months ended September 30, 2002, we received $4.3 million in proceeds from sales of property and equipment. We expect that cash flow provided by operating activities for the remaining three months of 2002 will be approximately $2.6 million.

We currently have two senior borrowing facilities. First, we have a revolving credit facility with Bank of Texas (the “Texas Facility”), which had permitted borrowings of $19.4 million at September 30, 2002. At September 30, 2002, we had borrowings outstanding under the Texas Facility of approximately $19.3 million. We will be required to make monthly principal payments of $150,000 under the Texas Facility through March 31, 2003, and accordingly, we have included $900,000 in the current portion of long-term debt on the balance sheet. On September 23, 2002, we entered into an amendment agreement with Bank of Texas that established the amounts of the permitted borrowings and the portion that we are required to pay by March 31, 2003.

We also have a revolving credit facility with Barclays Bank, Plc (the “Barclays Facility”). Under the Barclays Facility, we had $15.4 million outstanding at September 30, 2002. Barclays previously advised us that it intended to withdraw from the reserve-based lending business and to transfer the balance of its reserve-based loans to one or more third-party banking institutions Until a third-party lender assumes the facility, we will not be allowed to borrow any additional funds under the Barclays Facility. In the interim, we are required to make monthly principal payments of $300,000 until March 2003, and accordingly, we have included $1.8 million in the current portion of long-term debt on the balance sheet. During the first nine months of 2002, we used $4.8 million of our available cash flow to reduce the amounts outstanding under the Barclays Facility.

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During October 2002, we received approval from our Board of Directors and holders of a majority of our Series A Convertible Preferred Stock for the private placement of up to $4 million of additional preferred stock. The new series of preferred stock, Series A-1 Convertible Preferred Stock, is priced at $25.00 per share and has essentially the same terms as the Series A Convertible Preferred Stock. Each share of Series A-1 Convertible Preferred Stock is entitled to an annual 9% cash dividend payable quarterly and is convertible into 6.25 shares of our common stock. To date, we have sold 37,000 shares of Series A-1 Convertible Preferred Stock for aggregate proceeds of $925,000 and we anticipate continuing to accept subscriptions until December 31, 2002 for up to an aggregate of $4.0 million of Series A-1 Convertible Preferred Stock. We expect to use the net proceeds from the private placement to fund portions of our exploration and development program and for other general corporate purposes. We are offering this new series of preferred stock only to accredited investors in accordance with a private placement memorandum. The shares of Series A-1 Convertible Preferred Stock have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

We anticipate that our 2002 capital expenditures budget, excluding any acquisitions we may make, will be approximately $5.0 million. The actual amount will be determined by required exploratory and development drilling. We intend to fund our capital expenditures budget from operating cash flow, property sales, the proceeds of any financing we are able to secure, or a combination thereof. We will continue to focus most of our 2002 capital budget on prospects in our inventory as a result of the Madison merger. During 2002, we will continue to limit our activity in France to development drilling on our existing properties. In Trinidad we are participating in one exploratory well, and we expect to participate in another prior to year-end on the Southwest Cedros Peninsula. In Turkey, exploration work will continue on several projects, including the processing and interpretation of seismic data recently acquired in the Black Sea.

Dividends on our common stock may be declared and paid out of funds legally available when and as determined by our Board of Directors. Our policy is to hold and invest corporate funds in our ongoing operations, and, thus, we do not anticipate paying cash dividends on our common stock in the foreseeable future. In addition, under the terms of the Texas Facility, we are prohibited from paying dividends on the common stock without prior consent from Bank of Texas (other than dividends payable in shares of common stock). In addition, any declaration of dividends on our common stock must be approved by a majority of the holders of our Series A Convertible Preferred Stock and Series A-1 Convertible Preferred Stock.

Dividends on our Series A Convertible Preferred Stock are paid quarterly. Cash dividends totaling $90,000 and $270,000 were paid for the three- and nine-month periods ended September 30, 2002 and 2001, respectively. Future dividends will be paid in cash at a rate of $90,000 per calendar quarter. Assuming that we receive subscriptions for the full 160,000 shares of the Series A-1 Convertible Preferred Stock, we will pay total dividends of $180,000 per calendar quarter.

We believe that sufficient funds will be available from operating cash flow to meet anticipated capital requirements for fiscal 2002. The following table sets forth our contractual obligations at September 30, 2002 for the periods shown (dollars in thousands):

						Due Within
		Total		1 Year		2 – 3 Years		4 – 5 Years		After 5 Years
Debt		$	34,667	$	2,700	$	—	$	31,967	$	—
Leases			1,982		412		814		756		—
	Total	$	36,649	$	3,112	$	814	$	32,723	$	—

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CRITICAL ACCOUNTING POLICIES

Other than the adoption of Statement 144 discussed in Note 3 in the Notes to Consolidated Financial Statements included in this filing, we did not have any changes in our critical accounting policies or in our significant accounting estimates during the nine months ended September 30, 2002. Please see our Annual Report on Form 10-K for the year ended December 31, 2001, for a detailed discussion of our critical accounting policies.

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

The following tables present production and average unit prices and costs for the geographic segments indicated:

				Three Months Ended
				September 30
				2002		2001
Production
	Oil (MBbls):
		United States			56		71
		France			100		—
		Turkey			30		—
			Total		186		71
	Gas (MMcf):
		United States			472		392
		France			—		—
		Turkey			—		—
			Total		472		392
	MBOE:
		United States			135		136
		France			100		—
		Turkey			30		—
			Total		265		136
Average Price
	Oil ($/Bbl):
		United States			24.12		23.33
		France			23.75		—
		Turkey			24.87		—
			Total		24.04		23.33
	Gas ($/Mcf):
		United States			2.66		2.61
		France			—		—
		Turkey			—		—
			Total		2.66		2.61
	$/BOE:
		United States			19.34		19.64
		France			23.75		—
		Turkey			24.87		—
			Total		21.64		19.64

REVENUES

Oil and gas sales. Oil and gas sales increased by $3.1 million, or 113%, due to the operations of properties acquired in the Madison merger. Revenues attributable to the operations of the properties acquired in the Madison merger were approximately $3.1 million.

Gain (loss) on commodity derivatives. We utilize commodity derivative instruments as part of our risk management program. These transactions are generally structured as either swaps or collar contracts. A swap can be described as having the effect of an outright sale at a specific price. A collar has the effect of creating a sale only if a floor or ceiling price is exceeded. These instruments (i) reduce the effect of the price fluctuations of the commodities we produce and sell; (ii) support our annual capital budgeting and expenditure plans; (iii) protect the amounts required for servicing outstanding debt; and (iv) maximize the

15

funds available under our existing credit facilities. The trading party that represents the other side of each of these transactions is known as a “counterparty.” The counterparty of our transactions is Coral Energy Holdings, L.P., an affiliate of Royal Dutch/Shell. During the third quarter of 2002, we had an unrealized loss of approximately $304,000 related to our hedging activity, coupled with realized losses of approximately $824,000. During the third quarter of 2001, we had an unrealized loss of $98,000 and a realized gain of $552,000. As noted above, we have structured our commodity derivatives to reduce the effect of price fluctuations of the commodities we produce and sell. As a result, those derivatives decline in value as the underlying commodity prices rise. Any losses incurred on derivatives are offset by higher oil and gas sales revenues due to increases in underlying commodity prices. See Note 6 in the Notes to Consolidated Financial Statements included in this filing for more details.

Lease bonuses and rentals. Lease bonuses and rentals decreased $42,000, or 26%, due to a decrease in leasing activity since the second quarter of 2002 on the minerals we own in Mississippi.

EXPENSES

Lease operating. Lease operating expenses increased $1.1 million, or 135%, due to the operations of the properties we acquired in the Madison merger and are commensurate with the increase in operating revenue from the Madison properties. Higher lease operating expenses were offset by decreases in U.S. production taxes, a result of the decline in oil and gas sales prices discussed above. For the quarter, operating expenses associated with the properties acquired in the Madison merger amounted to $1.2 million.

Exploration and acquisition. Exploration and acquisition expense decreased $234,000, or 47%, due to decreased drilling activity compared with the same period in 2001.

Depletion, depreciation and amortization. DD&A increased $766,000, or 116%, primarily due to the depletion of the properties we acquired in the Madison merger. Depletion expense on the properties we acquired in the Madison merger was approximately $750,000.

General and administrative. General and administrative expenses increased $1.1 million, or 173%, during the third quarter. The majority of this increase was a result of the Madison merger; however, a significant portion of these expenses, approximately $318,000, is non-recurring items that are either transaction and transition costs or other expenses of a one-time nature. General and administrative expense of approximately $423,000 is directly attributable to the operation of our new French and Turkish properties. The balance represents the ongoing expense of the exploration staff that joined the Company as a result of the Madison merger; these individuals are engaged in U.S. and international work.

OTHER INCOME AND EXPENSE

Other income and expense resulted in a net charge to expenses of $1.5 million during the third quarter of 2002 versus $152,000 during the third quarter of 2001. Net expense increased $1.4 million, or 909%, primarily due to losses on property sales. We lost $1.1 million on property sales closed in the third quarter of 2002, compared with a property-sale gain of $115,000 in the third quarter of 2001. As a result of lower oil and gas prices, we elected to proceed with the sale of several non-economic, non-strategic properties rather than sustain continued operating losses on those properties. This is in keeping with our ongoing practice of systematically high-grading our base property holdings. The remainder of the increase consists of interest on the Barclays Facility and the convertible debenture; no interest on these facilities was paid in the year-ago quarter because we were not utilizing these financial facilities.

16

NET INCOME (LOSS) AVAILABLE TO COMMON SHARES

In the third quarter of 2002, we incurred a net loss of $1.3 million, compared with net income of $295,000 for the same period in 2001. Lower third-quarter 2002 results were due to losses on commodity derivatives, one-time transaction and transition costs related to the Madison merger, higher operating costs of the newly combined company after the addition of the Madison exploration staff, and losses on the sales of selected properties.

OTHER COMPREHENSIVE INCOME

This item should be read in conjunction with Note 2 in the Notes to Consolidated Financial Statements included in this filing.

The most significant element of comprehensive income, other than net income (loss), is foreign currency translation. The function currency of our operations in France is the Euro, and in Turkey the functional currency is the Turkish Lira. The exchange rates used to translate the financial position of those operations at September 30, 2002, were approximately US$ 0.99 per Euro and US$ 0.61 per million Turkish Lira. The Euro rate at June 30, 2002, was US$ 0.99 per Euro and US$ 0.64 per million Turkish Lira. These fluctuations caused an unrealized gain of $657,000 for the third quarter of 2002. No such charges existed during the third quarter of 2001 because we had no foreign operations during that period.

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

The following tables present production and average unit prices and costs for the geographic segments indicated:

				Nine Months Ended
				September 30
				2002		2001
Production
	Oil (MBbls):
		United States			191		223
		France			316		—
		Turkey			82		—
			Total		589		223
	Gas (MMcf):
		United States			1,437		1,238
		France			—		—
		Turkey			—		—
			Total		1,437		1,238
	MBOE:
		United States			430		429
		France			316		—
		Turkey			82		—
			Total		828		429
Average Price
	Oil ($/Bbl):
		United States			21.79		25.13
		France			21.98		—
		Turkey			21.74		—
			Total		21.88		25.13
	Gas ($/Mcf):
		United States			2.89		4.56
		France			—		—
		Turkey			—		—
			Total		2.89		4.56
	$/BOE:
		United States			19.31		26.19
		France			21.98		—
		Turkey			21.74		—
			Total		20.57		26.19

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REVENUES

Oil and gas sales. Oil and gas sales increased $5.8 million, or 50%, due to the operations of properties acquired in the Madison merger, but the increase was offset by decreases in the average realized prices received for domestic production. Revenues attributable to the operations of the properties acquired in the Madison merger were approximately $8.7 million. The average realized price per BOE we received for our U.S. production decreased $5.62, or 21%.

Gain (loss) on commodity derivatives. We utilize commodity derivative instruments as part of our risk management program. These transactions are generally structured as either swaps or collar contracts. A swap can be described as having the effect of an outright sale at a specific price. A collar has the effect of creating a sale only if a floor or ceiling price is exceeded. These instruments (i) reduce the effect of the price fluctuations of the commodities we produce and sell; (ii) support our annual capital budgeting and expenditure plans; (iii) protect the amounts required for servicing outstanding debt; and (iv) maximize the funds available under our existing credit facilities. The trading party that represents the other side of each of these transactions is known as a “counterparty.” The counterparty of our transactions is Coral Energy Holdings, L.P., an affiliate of Royal Dutch/Shell. During the first nine months of 2002, we had an unrealized loss related to our hedging activity of approximately $2.4 million and a realized loss of $1.2 million. During the first nine months of 2001, we had an unrealized gain of $329,000 and a realized gain of $693,000. The losses during the first nine months of 2002 are due to an increase in oil and gas prices between December 31, 2001, and September 30, 2002. As noted above, we have structured our commodity derivatives to reduce the effect of price fluctuations of the commodities we produce and sell. As a result, those derivatives decline in value as the underlying commodity prices rise. Any losses incurred on derivatives are offset by higher oil and gas sales revenues due to increases in underlying commodity prices. See Note 6 in the Notes to Consolidated Financial Statements included in this filing for more details.

Lease bonuses and rentals. Lease bonuses and rentals increased $133,000, or 27%, due to increases in leasing activity during the last quarter of 2001 and the first half of 2002, which was a result of several wildcat discoveries in and around the minerals we own in Mississippi.

EXPENSES

Lease operating. Lease operating expenses increased $3.2 million, or 139%, due to the operations of the properties we acquired in the Madison merger and are commensurate with the increase in operating revenue from the Madison properties. Higher lease operating expenses were offset by decreases in U.S. production taxes, which were a result of the decline in oil and gas sales prices discussed above. For the first nine months of 2002, operating expenses associated with the properties in the Madison merger amounted to $3.7 million.

Exploration and acquisition. Exploration and acquisition expense decreased $285,000, or 29%, due to a slow down in drilling activity, compared with the same period in 2001.

Depletion, depreciation and amortization. DD&A increased $2.3 million, or 102%, due to the depletion of the properties we acquired in the Madison merger. Also contributing to the increase was a higher depletion on U.S. properties, which was the result of nine months’ depletion on the Razorhawk and Anderson et al acquisitions we closed during the second and third quarters of 2001. Depletion expense on the properties we acquired from Madison was approximately $2.1 million.

18

General and administrative. General and administrative expenses increased $3.4 million, or 175%. The majority of this increase was the result of the acquisition of Madison; however, a significant portion of these expenses, approximately $818,000, is nonrecurring items that are either transaction and transition costs or other expenses of a one-time nature. General and administrative expense of approximately $1.0 million is directly attributable to the operation of our new French and Turkish properties. The balance represents the ongoing expense of the exploration staff that joined the Company as a result of the Madison merger; these individuals are engaged in U.S. and international work.

OTHER INCOME AND EXPENSE

Other income and expense resulted in a net charge to expenses of $3.5 million in the first nine months of 2002 versus $730,000 for the same period in 2001. Net expense increased $2.8 million, or 383%, primarily due to losses on property sales and increased interest expense. We incurred a $2.1 million loss on property sales closed in the first nine months of 2002, compared with a property-sale gain of $285,000 in the first nine months of 2001. As a result of lower oil and gas prices, we elected to proceed with the sale of several non-economic, non-strategic properties rather than sustain continued operating losses on those properties. This is in keeping with our ongoing practice of systematically high-grading our base property holdings. Interest expense increased as a result of the revolving credit balances assumed in the Madison merger.

NET INCOME (LOSS) AVAILABLE TO COMMON SHARES

In the first nine months of 2002, we incurred a net loss of $3.8 million, compared with net income of $2.7 million for the same period in 2001. Lower results for the first nine months of 2002 were due to decreased oil and gas prices compared with the first nine months of 2001, one-time transaction and transition costs related to the Madison merger, higher operating costs of the newly combined company after the addition of the Madison exploration staff, and losses on the sales of selected properties.

OTHER COMPREHENSIVE INCOME

This item should be read in conjunction with Note 2 in the Notes to Consolidated Financial Statements included in this filing.

The most significant element of comprehensive income, other than net income (loss), is foreign currency translation. The function currency of our operations in France is the Euro, and in Turkey the functional currency is the Turkish Lira. The exchange rates used to translate the financial position of those operations at September 30, 2002, were approximately US$ 0.99 per Euro and US$ 0.61 per million Turkish Lira. The Euro rate at December 31, 2001, was US$ 0.87 per Euro and US$ 0.69 per million Turkish Lira. These fluctuations caused an unrealized loss of $183,000 for the first nine months of 2002. No such charges existed during the first nine months of 2001 because we had no foreign operations during that period.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Other than the decline in the fair value of our commodity derivatives discussed in Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations, there have been no material changes from the information provided in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2001.

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ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. The term “disclosure controls and procedures” is defined in Rule 13a-14(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within required time periods. Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of a date within 90 days before the filing of this quarterly report, and they have concluded that as of that date, our disclosure controls and procedures were effective at ensuring that required information will be disclosed on a timely basis in our reports filed under the Exchange Act.

(b) Evaluation of Changes in Internal Controls. There were no significant changes to our internal controls or in other factors that could significantly affect our internal controls subsequent to the date of their evaluation by our Chief Executive Officer and our Chief Financial Officer, including any corrective actions with regard to significant deficiencies and material weaknesses.

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PART II. OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

Other than the outcome of the Trinidad Arbitration proceeding and the Karak Petroleum settlement agreement discussed in Note 8 in the Notes to Consolidated Financial Statements included in this filing, there have been no material changes to the information reported under Item 3 – Legal Proceedings of our Annual Report on Form 10-K for the year ended December 31, 2001.

From time to time, we are named as a defendant in other legal proceedings arising in the normal course of business. In our opinion, the final judgment, or settlement, if any, which may be awarded with any other suits or claims would not have a material adverse effect on our financial position.

ITEM 2 – CHANGES IN SECURITIES AND USE OF PROCEEDS – None

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES – None

ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS – None

ITEM 5 – OTHER INFORMATION – None

ITEM 6 – EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are included herein:

3.1	- -	Second Amended and Restated Bylaws of Toreador Resources Corporation (previously filed as Exhibit 3.2 to Toreador Resources Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, File No. 0-2517, and incorporated herein by reference)
3.2	- -	Certificate of Designation of Series A-1 Convertible Preferred Stock of Toreador Resources Corporation, dated October 30, 2002.
10.1	- -	Third Amendment to Loan Agreement dated August 7, 2002, between Toreador Resources Corporation, Toreador Exploration & Production Inc., Toreador Acquisition Corporation and Tormin, Inc. and Bank of Texas, National Association.
10.2	- -	Fourth Amendment to Loan Agreement dated September 30, 2002, between Toreador Resources Corporation, Toreador Exploration & Production Inc., Toreador Acquisition Corporation and Tormin, Inc. and Bank of Texas, National Association.
10.3	- -	Settlement Agreement dated June 28, 2002, and executed August 29, 2002, between Tullow Pakistan (Developments) Limited and Toreador Resources Corporation.

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(b) Reports on Form 8-K:

     On August 14, 2002, we filed a Current Report on Form 8-K dated August 14, 2002, with the Securities and Exchange Commission under Item 9. Regulation FD Disclosure to report certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Toreador’s Chief Executive and Financial Officers of the financial statements included in our Form 10-Q for the periods ended June 30, 2002.

     On September 23, 2002, we filed a Current Report on Form 8-K dated September 18, 2002, with the Securities and Exchange Commission under Item 5. Other Events to report the outcome of an arbitration hearing related to our investment in Trinidad Exploration and Development, Ltd and under Item 9. Regulation FD Disclosure to report the issuance of a press release.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TOREADOR RESOURCES CORPORATION, Registrant
November 13, 2002	/s/ G. Thomas Graves III
	G. Thomas Graves III President and Chief Executive Officer
November 13, 2002	/s/ Douglas W. Weir
	Douglas W. Weir Senior Vice President and Chief Financial Officer

22

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, G. Thomas Graves III, President and Chief Executive Officer of Toreador Resources Corporation certify that:

(1)	I have reviewed this quarterly report on Form 10-Q of Toreador Resources Corporation;
(2)	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
(3)	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operation and cash flows of the registrant as of, and for, the periods represented in this quarterly report;
(4)	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
(c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(5) The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

(6) The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 13, 2002

/s/ G. Thomas Graves III

G. Thomas Graves III
President and Chief Executive Officer
(Principal Executive Officer)

23

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Douglas W. Weir, Senior Vice President and Chief Financial Officer of Toreador Resources Corporation certify that:

(1)	I have reviewed this quarterly report on Form 10-Q of Toreador Resources Corporation;
(2)	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
(3)	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operation and cash flows of the registrant as of, and for, the periods represented in this quarterly report;
(4)	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
(c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(5) The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

(6) The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 13, 2002

/s/ Douglas W. Weir

Douglas W. Weir
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)

24

EXHIBITS INDEX

Exhibit Number		Description
3.1	- -	Second Amended and Restated Bylaws of Toreador Resources Corporation (previously filed as Exhibit 3.2 to Toreador Resources Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, File No. 0-2517, and incorporated herein by reference)
3.2	- -	Certificate of Designation of Series A-1 Convertible Preferred Stock of Toreador Resources Corporation, dated October 30, 2002.
10.1	- -	Third Amendment to Loan Agreement dated August 7, 2002, between Toreador Resources Corporation, Toreador Exploration & Production Inc., Toreador Acquisition Corporation and Tormin, Inc. and Bank of Texas, National Association.
10.2	- -	Fourth Amendment to Loan Agreement dated September 30, 2002, between Toreador Resources Corporation, Toreador Exploration & Production Inc., Toreador Acquisition Corporation and Tormin, Inc. and Bank of Texas, National Association.
10.3	- -	Settlement Agreement dated June 28, 2002, and executed August 29, 2002, between Tullow Pakistan (Developments) Limited and Toreador Resources Corporation.

EX-3.2 3 d01000exv3w2.txt EX-3.2 CERTIFICATE OF DESIGNATION OF SERIES A-1 EXHIBIT 3.2 CERTIFICATE OF DESIGNATION OF SERIES A-1 CONVERTIBLE PREFERRED STOCK OF TOREADOR RESOURCES CORPORATION Pursuant to Section 151 of the Delaware General Corporation Law Toreador Resources Corporation, a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies that the following resolutions were adopted by the Board of Directors of the Corporation pursuant to authority of the Board of Directors as required by Section 151 of the Delaware General Corporation Law. RESOLVED, that pursuant to the authority granted to the Board of Directors in accordance with the provisions of the Corporation's Restated Certificate of Incorporation, the Board of Directors hereby authorizes a series of the Corporation's previously authorized Preferred Stock, par value $1.00 per share (the "Preferred Stock"), and hereby states the designation and number of shares, and fixes the relative rights, preferences, privileges and restrictions thereof as follows: 1. DESIGNATION AND AMOUNT. The designation of this series, which consists of 160,000 shares (each such share being referred to herein as a "Preferred Share" and all such shares being collectively referred to as the "Preferred Shares") of Preferred Stock, is the Series A-1 Convertible Preferred Stock (the "Series A-1 Preferred Stock") and the face amount shall be Twenty-Five Dollars ($25.00) per share (the "Stated Value"). The Preferred Shares will be issued pursuant to the provisions of a Securities Purchase Agreement by and among the Corporation and the purchasers named therein (the "Securities Purchase Agreement"). 2. DIVIDENDS. (a) Dividend Rate; Payments. The holders (each, a "Holder" and collectively, the "Holders") of Preferred Shares shall be entitled to receive, to the extent permitted by applicable law, (i) in preference to the payment of any dividend on any class or series of Junior Securities (as defined below) and (ii) pari passu to the payment of any dividend on any class or series of Parity Securities (as defined below), cumulative dividends ("Dividends") on each Preferred Share in an amount equal to, on an annualized basis, the Stated Value of such Preferred Share times nine percent (9%). Dividends shall accrue and cumulate on each Preferred Share from the date of the original issuance thereof (the "Purchase Date") through the earlier to occur of (A) the payment thereof in accordance with the terms of this Section 2(a) and (B) the redemption or conversion of such Preferred Share in accordance with the terms hereof. Dividends shall be paid in cash. Accrued Dividends on each outstanding Preferred Share shall be payable in four quarterly installments on the last day of March, June, September and December of each year commencing December 31, 2002 unless earlier due and payable on a Conversion Date (as defined below) or a Redemption Date (as defined below) (each, a "Dividend Payment Date"). If, on any date, Dividends on any outstanding Preferred Shares have not been paid or declared by the Board of Directors in accordance with applicable law and set aside for payment with respect to all Dividend Payment Dates preceding such date, the aggregate amount of such Dividends shall be fully paid or declared and set aside for payment before any distribution, whether by way of dividend or otherwise, shall be declared, paid or set apart with respect to any Junior Securities on or after such date. (b) Delivery of Dividends. The Corporation shall mail the dividends declared by check to the Holder or its nominee postmarked no later than three (3) Business Days (as defined below) following the applicable Dividend Payment Date. 3. PRIORITY. (a) Payment upon Dissolution. (i) Upon the occurrence of (x) any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization or other similar proceedings in connection therewith, commenced by the Corporation or by its creditors, as such, or relating to its assets or (y) the dissolution or other winding up of the Corporation whether total or partial, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy proceedings, or (z) any assignment for the benefit of creditors or any marshalling of the material assets or material liabilities of the Corporation (each, a "Liquidation Event"), (i) no distribution shall be made to the holders of any shares of Junior Securities (as defined below) unless each Holder shall have received the Liquidation Preference (as defined below) with respect to each Preferred Share then held by such Holder and (ii) each Holder of the Preferred Shares shall receive the Liquidation Preference (as defined below) with respect to each Preferred Share then held by such Holder on a pari passu basis with any liquidation preference to be received by the holders of any Parity Securities. In the event that upon the occurrence of a Liquidation Event the assets available for distribution to the Holders of the Series A-1 Preferred Stock and the holders of all Parity Securities are insufficient to pay (i) the Liquidation Preference (as defined below) with respect to all of the outstanding Preferred Shares and the preferential amounts payable to the Holders and (ii) any liquidation preference with respect to all of the outstanding Parity Securities and the preferential amounts payable to such holders of the Parity Securities, the entire assets of the Corporation shall be distributed ratably among the outstanding Preferred Shares and the outstanding Parity Securities in proportion to the ratio that the preferential amount payable on each such share (which shall be the Liquidation Preference in the case of a Preferred Share and any liquidation preference per share due to any holders of the Parity Securities) bears to the aggregate preferential amount payable on all such Preferred Shares and shares of Parity Securities. (ii) The "Liquidation Preference" with respect to a Preferred Share shall mean an amount equal to the Stated Value of such Preferred Share (subject to ratable adjustment in the event of any stock split or combination of the Series A-1 Preferred Stock and to equitable adjustment in the event of a reclassification of the Series A-1 Preferred Stock or other similar event) plus any accrued and unpaid Dividends thereon. "Junior Securities" shall mean the Common Stock and all other capital stock of the Corporation, other than the Series A Convertible Preferred Stock or any other shares of Preferred Stock of the Corporation then outstanding that by their terms rank senior to or pari passu with the Series A-1 Preferred Stock as to redemption, the payment of dividends or distribution of assets upon a Liquidation Event or any other liquidation, dissolution or winding up of the Corporation. "Parity Securities" shall mean the Series A Convertible Preferred Stock and any shares of Preferred Stock of the Corporation then outstanding that by their terms rank pari passu with the Series A-1 Preferred Stock as to redemption, the payment of dividends or distribution of assets upon a Liquidation Event or any other liquidation, dissolution or winding up of the Corporation. -2- 4. CONVERSION. (a) Right to Convert. Each Holder shall have the right to convert, at any time and from time to time from and after the Purchase Date, all or any part of the Preferred Shares held by such Holder, unless previously redeemed, into such number of fully paid and non-assessable shares of Common Stock ("Conversion Shares") as is computed in accordance with the terms hereof (a "Conversion"). (b) Conversion Notice. In order to convert Preferred Shares, a Holder shall send by facsimile transmission, at any time prior to 5:00 p.m., central time, on the date on which such Holder wishes to effect such Conversion (the "Conversion Date"), (i) a notice of conversion (a "Conversion Notice"), in substantially the form of Exhibit A hereto, to the Corporation and to its designated transfer agent for the Common Stock (the "Transfer Agent") stating the number of Preferred Shares to be converted, the applicable Conversion Price (as defined below) and a calculation of the number of shares of Common Stock issuable upon such Conversion and (ii) a copy of the certificate or certificates representing the Preferred Shares being converted. The Holder shall thereafter send the original of the Conversion Notice and of such certificate or certificates to the Transfer Agent. The Corporation shall issue a new certificate for Preferred Shares in the event that less than all of the Preferred Shares represented by a certificate delivered to the Corporation in connection with a Conversion are converted. Except as otherwise provided herein, upon delivery of a Conversion Notice by a Holder in accordance with the terms hereof, such Holder shall, as of the applicable Conversion Date, be deemed for all purposes to be record owner of the Common Stock to which such Conversion Notice relates. In the case of a dispute between the Corporation and a Holder as to the calculation of the Conversion Price or the number of Conversion Shares or Dividend Payment Shares issuable upon a Conversion, the Corporation shall promptly issue to such Holder the number of Conversion Shares and Dividend Payment Shares that are not disputed and shall submit the disputed calculations to the Corporation's independent accountant within three (3) Business Days of receipt of such Holder's Conversion Notice. The Corporation shall cause such accountant to calculate the Conversion Price as provided herein and to notify the Corporation and such Holder of the results in writing no later than three (3) Business Days following the day on which it received the disputed calculations. The Corporation shall deliver the Conversion Shares and Dividend Payment Shares, if any, owed to a Holder pursuant to such accountant's calculations on or before the close of business on the third (3rd) Business Day following the Corporation's receipt of notice from such accountant of the results of its calculations. Such accountant's calculation shall be deemed conclusive absent manifest error. The fees of any such accountant shall be borne by the party whose calculations were most at variance with those of such accountant. (c) Number of Conversion Shares; Conversion Price. The number of Conversion Shares to be delivered by the Corporation pursuant to a Conversion shall be determined by dividing the aggregate Stated Value of the Preferred Shares to be converted by the Conversion Price (as defined herein) in effect on the applicable Conversion Date. Subject to adjustment as provided in Section 5 below, "Conversion Price" shall mean Four Dollars ($4.00). (d) Certain Definitions. "Trading Day" shall mean any day on which the Common Stock is traded on the Nasdaq National Market System or on the principal securities exchange or market located in the United States on which the Common Stock is then traded. "Business Day" means any day on which the New York Stock Exchange and commercial banks located in the City of New York are open for business. (e) Delivery of Common Stock Upon Conversion. Upon receipt of a Conversion Notice from a Holder pursuant to paragraph 4(b) above, the Corporation shall, no later than the close of business on (A) the later to occur of (i) the third (3rd) Business Day following the Conversion Date set forth in such Conversion Notice and (ii) the first Business Day following delivery of the original certificates, duly -3- endorsed, representing the Preferred Shares being converted pursuant thereto and (B) with respect to Conversion Shares which are disputed as described in paragraph 4(b) above, and required to be delivered by the Corporation pursuant to the accountant's calculations described therein, the date for delivery thereof specified in such paragraph 4(b) (the "Delivery Date"), issue and deliver or cause to be delivered to such Holder the number of Conversion Shares as shall be determined as provided herein. The Corporation shall effect delivery of Conversion Shares by delivering to the Holder or its nominee physical certificates representing such Conversion Shares, no later than the close of business on such Delivery Date. If any Conversion would create a fractional Conversion Share, such fractional Conversion Share shall be disregarded and, at the Corporation's sole discretion, either the number of Conversion Shares issuable upon such Conversion, in the aggregate, shall be the next higher number of Conversion Shares or the Corporation shall pay cash in an amount calculated by multiplying the amount of the fractional share times the Conversion Price for such Conversion. 5. ADJUSTMENTS TO CONVERSION PRICE. (a) Adjustment to Conversion Price Due to Stock Split, Stock Dividend, Etc. If, prior to the Conversion of all of the Preferred Shares, (A) the number of outstanding shares of Common Stock is increased by a stock split, a stock dividend on the Common Stock, a reclassification of the Common Stock, the distribution to holders of Common Stock as a class of rights or warrants entitling them to subscribe for or purchase Common Stock at less than the then current market price thereof (based upon the subscription or exercise price of such rights or warrants at the time of the issuance thereof) or other similar event, the Conversion Price shall be proportionately reduced, or (B) the number of outstanding shares of Common Stock is decreased by a reverse stock split, combination or reclassification of shares or other similar event, the Conversion Price shall be proportionately increased. In such event, the Corporation shall notify the Transfer Agent of such change on or before the effective date thereof. (b) Adjustment Due to Merger, Consolidation, Etc. If, prior to the Conversion of all of the Preferred Shares, there shall be any merger, consolidation, business combination, tender offer, exchange of shares, recapitalization, reorganization, redemption or other similar event, as a result of which shares of Common Stock shall be exchanged for or changed into the same or a different number of shares of the same or another class or classes of stock or securities of the Corporation or another entity (an "Exchange Transaction"), then such Holder shall (A) upon the consummation of such Exchange Transaction, have the right to receive, with respect to any shares of Common Stock then held by such Holder, or which such Holder is then entitled to receive pursuant to a Conversion Notice previously delivered by such Holder, (and without regard to whether such shares contain a restrictive legend or are freely-tradeable) the same amount and type of consideration (including without limitation, stock, securities and/or other assets) and on the same terms as a holder of shares of Common Stock would be entitled to receive in connection with the consummation of such Exchange Transaction (the "Exchange Consideration"), and (B) upon the Conversion of Preferred Shares occurring subsequent to the consummation of such Exchange Transaction, the Exchange Consideration which such Holder would have been entitled to receive in connection with such Exchange Transaction had such shares been converted immediately prior to such Exchange Transaction, and in any such case appropriate provisions shall be made with respect to the rights and interests of such Holder to the end that the provisions hereof (including, without limitation, provisions for the adjustment of the Conversion Price and of the number of shares issuable upon a Conversion) shall thereafter be applicable as nearly as may be practicable in relation to any securities thereafter deliverable upon the Conversion of such Preferred Shares. The Corporation shall not effect any Exchange Transaction unless (i) it first gives to each Holder twenty (20) days prior written notice of such Exchange Transaction (an "Exchange Notice"), and makes a public announcement of such event at the same time that it gives such notice and (ii) the resulting successor or acquiring entity (if not the Corporation) assumes by written instrument the obligations of the Corporation hereunder, including the terms of this subparagraph 5(b), and under the Securities Purchase Agreement and the Registration Rights Agreement described in the Securities Purchase Agreement (the "Registration Rights Agreement"). -4- (c) Distribution of Assets. If the Corporation shall declare or make any distribution of cash, evidences of indebtedness or other securities or assets (other than cash dividends or distributions payable out of earned surplus or net profits for the current or the immediately preceding year), or any rights to acquire any of the foregoing, to holders of Common Stock as a partial liquidating dividend, by way of return of capital or otherwise, including any dividend or distribution in shares of capital stock of a subsidiary of the Corporation (collectively, a "Distribution"), then, upon a Conversion by a Holder occurring after the record date for determining stockholders entitled to such Distribution, the Conversion Price for Preferred Shares not converted prior to the record date of a Distribution shall be reduced to a price determined by decreasing the Conversion Price in effect immediately prior to the record date of the Distribution by an amount equal to the fair market value of the assets so distributed with respect to each share of Common Stock, such fair market value to be determined by an investment banking firm selected by the Corporation. (d) No Fractional Shares. If any adjustment under this Section would create a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and, at the Corporation's sole discretion, either the number of shares of Common Stock issuable upon Conversion shall be the next higher number of shares or the Corporation shall pay in cash an amount calculated by multiplying the amount of the fractional share times the Conversion Price for such Conversion. 6. OPTIONAL REDEMPTION BY CORPORATION. (a) Optional Redemption. Any time on or after November 1, 2007, the Corporation shall have the right to redeem, in whole or in part, Preferred Shares outstanding at the Optional Redemption Price (as defined below) (an "Optional Redemption"), to the extent permitted by applicable law and so long as (A) the Corporation shall have sufficient cash available on the Optional Redemption Date to effect such Optional Redemption and (B) the Corporation shall have delivered to each Holder at least fifteen (15) Trading Days' prior written notice (an "Optional Redemption Notice") specifying the date on which such Optional Redemption is to be effected (the "Optional Redemption Date") and the amount of the Optional Redemption Price payable to such Holder. If the Corporation should elect to redeem less than all of the Preferred Shares outstanding, the Corporation shall select those Preferred Shares to be redeemed by lot. Nothing contained herein shall limit a Holder's right to convert its Preferred Shares at any time prior to the Optional Redemption Date. (b) Optional Redemption Price. In the event of an Optional Redemption on or after November 1, 2007, the Optional Redemption Price to be paid to a Holder shall be the Liquidation Preference of the Preferred Shares then held by such Holder multiplied by (i) 1.05 if the Optional Redemption Date is on or after November 1, 2007 but before November 1, 2008, (iv) 1.04 if the Optional Redemption Date is on or after November 1, 2008 but before November 1, 2009, (iii) 1.03 if the Optional Redemption Date is on or after November 1, 2009 but before November 1, 2010, (iv) 1.02 if the Optional Redemption Date is on or after November 1, 2010 but before November 1, 2011, (v) 1.01 if the Optional Redemption Date is on or after November 1, 2011 but before November 1, 2012, or (vi) 1.00 if the Optional Redemption Date is on or after November 1, 2012, plus in all cases, accrued and unpaid Dividends through and including the Optional Redemption Date. -5- (c) Payment of Optional Redemption Price. Upon the redemption of a Preferred Share, payment of the Optional Redemption Price, which shall be in the form of a Corporation check, to the Holder thereof will be effected simultaneously with the return of such share by such Holder to the Corporation. To the extent the Corporation shall redeem less than all of the Preferred Shares outstanding, the Corporation shall also deliver certificates evidencing the unredeemed Preferred Shares in addition to the Optional Redemption Price. 7. MISCELLANEOUS. (a) Transfer of Preferred Shares. A Holder may sell or transfer all or any portion of the Preferred Shares to any person or entity as long as such sale or transfer is the subject of an effective registration statement under the Securities Act or is exempt from registration thereunder and otherwise is made in accordance with the terms of the Securities Purchase Agreement. From and after the date of such sale or transfer, the transferee thereof shall be deemed to be a Holder. Upon any such sale or transfer, the Corporation shall, promptly following the return of the certificate or certificates representing the Preferred Shares that are the subject of such sale or transfer, issue and deliver to such transferee a new certificate in the name of such transferee. (b) Notices. Except as otherwise provided herein, any notice, demand or request required or permitted to be given pursuant to the terms hereof, the form or delivery of which notice, demand or request is not otherwise specified herein, shall be in writing and shall be deemed given (i) when delivered personally or by verifiable facsimile transmission on or before 5:00 p.m., central time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to an overnight courier and (iii) on the third Business Day after deposit in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed to the parties as follows: If to the Corporation: Toreador Resources Corporation 4809 Cole Avenue, Suite 108 Dallas, Texas 75205 Attn.: Chief Executive Officer Fax: 214-559-3933 and if to any Holder, to such address for such Holder as shall be designated by such Holder in writing to the Corporation. (c) Lost or Stolen Certificate. Upon receipt by the Corporation of evidence of the loss, theft, destruction or mutilation of a certificate representing Preferred Shares, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Corporation, and upon surrender and cancellation of such certificate if mutilated, the Corporation shall execute and deliver to the Holder a new certificate identical in all respects to the original certificate. (d) No Voting Rights. Except as provided by applicable law and paragraph 7(e) below, the Holders of the Preferred Shares shall have no voting rights with respect to the business, management or affairs of the Corporation. The Corporation shall provide each Holder with prior notification of each meeting of stockholders (and copies of proxy statements and other information sent to such stockholders). -6- (e) Protective Provisions. (A) So long as shares of Series A-1 Preferred Stock are outstanding, the Corporation shall not, without first obtaining the approval of the Holders of a majority of the then outstanding shares of Series A-1 Preferred Stock: (i) alter or change the rights, preferences or privileges of the Series A-1 Preferred Stock or any other capital stock of the Corporation so as to affect adversely the Series A-1 Preferred Stock; (ii) create any new class or series of capital stock having a preference over the Series A-1 Preferred Stock as to redemption, the payment of dividends or distribution of assets upon a Liquidation Event or any other liquidation, dissolution or winding up of the Corporation; (iii) increase the authorized number of shares of Preferred Stock; (iv) re-issue any shares of Series A-1 Preferred Stock which have been converted in accordance with the terms hereof; or (v) declare, pay or make any provision for any cash dividend or distribution with respect to the Common Stock of the Corporation. (B) If the Corporation fails to pay dividends in respect of four quarterly dividend periods, Holders of a majority of the then outstanding shares of the Series A-1 Preferred Stock would be entitled, acting separately as a class, to elect one person to the Board of Directors of the Corporation. Upon the taking of such action, the maximum authorized number of members of the Board of Directors shall automatically increase by one person so elected, and the vacancy so created shall be filled by the person elected pursuant to this subparagraph (B). A director elected by the holders of Series A-1 Preferred Stock pursuant to this subparagraph (B) shall serve until his successor is duly elected and qualified, until his removal or until his term terminates as provided below. Such a director may be removed without cause at any time by action, and only by such action, of the holders of shares of Series A-1 Preferred Stock. If the office of a director elected pursuant to this subparagraph (B) becomes vacant by reason of death, resignation, retirement, disqualification, removal from office or otherwise, such vacancy may be filled by the action, and only by such action, of the holders of shares of Series A-1 Preferred Stock. At such time as the event of default giving rise to this right to elect a director has been cured, such right shall terminate, the term of any director elected pursuant to this subparagraph (B) shall terminate and the maximum number of authorized members of the Board of Directors shall decrease automatically to the maximum number of authorized members of the Board of Directors in effect immediately before any action was taken pursuant hereto. -7- IN WITNESS WHEREOF, the Corporation has executed this Certificate of Designation as of the 30th day of October, 2002. TOREADOR RESOURCES CORPORATION By: /s/ G. Thomas Graves III -------------------------------------------- Name: G. Thomas Graves III Title: President and Chief Executive Officer -8- EXHIBIT A NOTICE OF CONVERSION The undersigned hereby elects to convert shares of Series A-1 Convertible Preferred Stock (the "Preferred Stock"), represented by stock certificate No(s). (the "Preferred Stock Certificates"), into shares of common stock ("Common Stock") of Toreador Resources Corporation (the "Company") according to the terms and conditions of the Certificate of Designation relating to the Preferred Stock (the "Certificate of Designation"), as of the date written below. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Certificate of Designation. [ ] (check box if shares of Common Stock have been resold) The undersigned represents that the shares of Common Stock to be issued by the Company hereby have been resold or transferred by the undersigned in accordance with the provisions of the prospectus included in the Registration Statement. Date of Conversion: --------------------------------------- Number of Shares of Preferred Stock to be Converted: -------------------------- Applicable Conversion Price: ------------------------------ Number of Shares of Common Stock to be Issued: -------------------------------- Amount of Dividend Accrued through the Conversion Date: ------------------------------------------ Name of Holder: ----------------------------------- Address: ------------------------------------------ Signature: ---------------------------------------- Name: Title: -9- EX-10.1 4 d01000exv10w1.txt EX-10.1 3RD AMENDMENT TO LOAN AGREEMENT EXHIBIT 10.1 BANK OF TEXAS, N.A. 5956 Sherry Lane, Suite 1100 Dallas, Texas 75225 August 7, 2002 TOREADOR RESOURCES CORPORATION TOREADOR EXPLORATION & PRODUCTION INC. TOREADOR ACQUISITION CORPORATION TORMIN, INC. 4809 Cole Avenue, Suite 108 Dallas, Texas 75205 Re: Third Amendment to Loan Agreement Ladies and Gentlemen: This letter (this "Amendment") amends the loan agreement dated February 16, 2001, among TOREADOR RESOURCES CORPORATION, a Delaware corporation, TOREADOR EXPLORATION & PRODUCTION INC., a Texas corporation, TOREADOR ACQUISITION CORPORATION, a Delaware corporation, and TORMIN, INC., a Delaware corporation (collectively "Borrowers"), and BANK OF TEXAS, NATIONAL ASSOCIATION ("Bank"), a national banking association, as amended by the First Amendment dated November 8, 2001, and a Second Amendment dated May 9, 2002 (the "Loan Agreement"). Capitalized terms below have the meanings assigned in the Loan Agreement. 1. Borrowing Base, Tranches, and Rates. (a) Effective as of the date of this Amendment, Bank has set the Borrowing Base at $21,850,000.00, and Bank has set the MCR at $150,000 per month, until reset by Bank in connection with the next redetermination of the Borrowing Base. The next scheduled redetermination of the Borrowing Base will be November 1, 2002. The amount of Tranche A as of the date of this Amendment is $20,000,000.00. (b) The first three sentences of Subsection (ii) of Section 1(a) of the Loan Agreement are amended to modify the interest rates and thus to read as follows: "(ii) Until Tranche B is paid in full, all amounts owed on the Revolving TOREADOR RESOURCES CORPORATION, et al August 7, 2002 Page 2 of 6 Note shall bear interest from the date advanced until paid or until default or maturity at a fluctuating rate equal to the sum of the Stated Rate, plus one percent (1.0%), but subject to the default rate set forth in the Revolving Note. After Tranche B is paid in full, all amounts owed on the Revolving Loan shall bear interest from the date advanced until paid or until default or maturity at the rates elected by Borrowers from the following options under the terms of the Revolving Note: (i) the difference between the Stated Rate less the Applicable Margin, or (ii) the sum of the LIBOR Rate plus the LIBOR Spread. The Applicable Margin and the LIBOR Spread will vary as set forth below based on the ratio, expressed as a percentage, of (i) the sum of the average principal balance owing on the Revolving Note for the prior quarter, plus the face amount of all outstanding Letters of Credit, to (ii) the then-current Borrowing Base:

% of Borrowing Base Applicable Margin LIBOR Spread ----------------------------------------------------------------- Greater than or equal to 85% 0.25% 2.75% Between 75% and 85% inclusive 1.00% 2.00% Less than 75% 1.25% 1.75% . . . ."

(c) Subsection (b) of Section 1 of the Loan Agreement is amended to change the Borrowing Base and to extend the due date for Tranche B and thus to read as follows: "(b) Subject to the terms and conditions of the Loan Agreement, Borrowers may borrow, repay, and reborrow on a revolving basis from time to time during the period commencing on the date hereof and continuing through 11:00 a.m. (Dallas, Texas time) on February 16, 2006 (the "Termination Date"), such amounts as Borrowers may request under the Revolving Loan; provided, however, the total principal amount outstanding at any time shall not exceed the lesser of (i) the aggregate sums permitted under the Borrowing Base, which is set at $21,850,000.00 as of the date of this Amendment, (ii) after November 1, 2002, the aggregate sums permitted under Tranche A, or (iii) $75,000,000. Notwithstanding any provision in the Loan Agreement or the Revolving Note to the contrary, all amounts outstanding on Tranche B must be paid in full on or before November 1, 2002; and all sums advanced under the Revolving Loan, together with all accrued but unpaid interest thereon, shall be due and payable in full on the Termination Date." (d) Notwithstanding any provisions to the contrary in the Loan Agreement or the Revolving Note, until Tranche B is paid in full, all amounts owed on the Revolving Note shall bear interest from the date advanced until paid or until default or maturity at a fluctuating rate equal to the sum of the Stated Rate, plus one percent (1.0%), but subject to the default rate set forth in the Revolving Note. TOREADOR RESOURCES CORPORATION, et al August 7, 2002 Page 3 of 6 2. Letter of Credit Fees. The last sentence of Subsection (d) of Section 1 of the Loan Agreement is amended to change the fees for Letters of Credit and thus to read as follows: "Borrowers agree to pay to Bank a Letter of Credit fee equal to (i) $500 issuing fee per Letter of Credit, due at issuance, plus (ii) until Tranche B is paid in full, three and three quarters percent (3.75%) per annum, or plus (iii) after Tranche B is paid in full, the percentages per annum shown below, calculated on the aggregated stated amount of each Letter of Credit for the stated duration thereof (computed on the basis of actual days elapsed as of each year consisted of 360 days), payable quarterly in arrears on the last day of each calendar quarter. The annual Letter of Credit fee will vary as set forth below based on the ratio, expressed as a percentage, of (i) the sum of the average principal balance owing on the Revolving Note for the prior quarter, plus the face amount of all outstanding Letters of Credit, to (ii) the then-current Borrowing Base:

% of Borrowing Base Letter of Credit Fee ---------------------------------------------------------------- Greater than or equal to 85% 2.75% Between 75% and 85% inclusive 2.00% Less than 75% 1.75%"

3. Distributions to Madison Oil Company. Subsection (k) of Section 6 of the Loan Agreement is amended to restrict distributions to Madison Oil Company and thus to read as follows: "(k) Not make any loans, advances, dividends, or other distributions to any party, including without limitation, shareholders, officers, directors, subsidiaries, and affiliates, and any profit sharing or retirement plan, except so long as there is not a default under this Loan Agreement or any other Loan Documents, (i) Borrowers may distribute to their shareholders an amount not to exceed $100,000 in the aggregate, and (ii) Borrowers may distribute amounts to Madison Oil Company or its subsidiaries only with Bank's prior written consent; and not purchase, acquire, redeem, or retire any stock of Borrowers; and not permit any transaction or contract with any affiliates or related parties, except at arms length and on market terms." 4. Fees. In connection with this Amendment and the extension of Tranche B, Borrowers agree to pay to Bank an amendment fee in the amount of $75,000.00. All fees are non-refundable and earned by Bank upon execution of this Amendment. 5. Collateral. (a) As security for the Notes, Borrowers previously executed the Security Documents. Borrowers ratify and confirm the Security Documents, acknowledge that they are valid, subsisting, and binding, and agree that the Security Documents secure payment of the Notes and Loans. TOREADOR RESOURCES CORPORATION, et al August 7, 2002 Page 4 of 6 (b) As additional security for the Notes, Toreador Exploration & Production Inc. will execute and deliver a Deed of Trust and Security Agreement in Proper Form, covering oil and gas properties located in Meade County, Kansas. This additional deed of trust will constitute one of the "Security Documents" as defined in the Loan Agreement. 6. Conditions Precedent. (a) The obligation of Bank to make any further advance on the Revolving Loan is subject to Borrower's satisfaction, in Bank's sole discretion, of the following conditions precedent: (1) the negotiation, execution, and delivery of Loan Documents in Proper Form, including, but not limited to, the following: (i) this Amendment; and (ii) the Kansas Deed of Trust. (2) satisfactory evidence that Bank holds perfected liens and security interests in all collateral for the Loans, subject to no other liens or security interests. (3) there being no order or injunction or other pending or threatened litigation in which there is a reasonable possibility, in Bank's judgment, of a decision which could materially adversely affect the ability of Borrowers to perform under the Loan Documents. (4) Bank shall have completed and approved a review of title to, and the status of the environmental condition of, Borrower's oil and gas properties, and the results of such review shall be acceptable to Bank in its sole discretion. (5) Bank's receipt and review, with results satisfactory to Bank and its counsel, of information regarding litigation, tax, accounting, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership, and contingent liabilities of Borrowers and any subsidiaries. (b) Bank will not be obligated to make any advance on the Loans, if, prior to the time that a loan or advance is made, (i) there has been any material adverse change in any Borrowers' financial condition since the most-recent financial statements furnished to Bank, (ii) any representations or warranties made by any Borrowers in the Loan Agreement or the other Loan Documents is untrue or incorrect as of the date of the advance or loan, (iii) Bank has not received all Loan Documents appropriately executed by Borrowers and all other proper parties, (iv) Bank has requested that Borrowers execute additional loan or security documents and those documents have not yet been properly executed, delivered, and recorded, or (v) an Event of Default has occurred. TOREADOR RESOURCES CORPORATION, et al August 7, 2002 Page 5 of 6 7. Confirmations. Borrowers hereby represent to Bank that all representations and warranties of Borrowers set forth in Section 5 of the Loan Agreement are true and correct as of the date of execution of this Amendment; and that Borrowers are in compliance as of the date of execution of this Amendment with all covenants set forth in Section 6 of the Loan Agreement, all financial covenants set forth in Section 7 of the Loan Agreement, and all reporting requirements set forth in Section 8 of the Loan Agreement. 8. Validity and Defaults. The Loan Agreement, as amended, remains in full force and effect. Borrowers acknowledge that the Loan Agreement, the Notes, and the Security Documents are valid, subsisting, and binding upon Borrowers; no uncured breaches or defaults exist under the Loan Agreement, as amended; and no event has occurred or circumstance exists which, with the passing of time or giving of notice, will constitute a default or breach under the Loan Agreement, as amended. Borrowers ratify the Loan Agreement, as amended. 9. Fax Provision. This Amendment and the related Loan Documents may be executed in counterparts, and Bank is authorized to attach the signature pages from the counterparts to copies for Bank and Borrowers and filing counterparts. At Bank's option, this Amendment and the related Loan Documents may also be executed by Borrowers in remote locations with signature pages faxed to Bank. Borrowers agree that the faxed signatures are binding upon Borrowers, and Borrowers further agree to promptly deliver the original signatures for this Amendment and the related Loan Documents by overnight mail or expedited delivery. It will be an Event of Default if they fail to promptly deliver all required original signatures. 10. Captions. Captions are for convenience only and should not be used in interpreting this Amendment. 11. Final Agreement. (a) In connection with the Loans, Borrowers and Bank have executed and delivered this Amendment and the Loan Documents (collectively the "Written Loan Agreement"). (b) It is the intention of Borrowers and Bank that this paragraph be incorporated by reference into each of the Loan Documents. Borrowers and Bank each warrant and represent that their entire agreement with respect to the Loans is contained within the Written Loan Agreement, and that no agreements or promises have been made by, or exist by or among, Borrowers and Bank that are not reflected in the Written Loan Agreement. TOREADOR RESOURCES CORPORATION, et al August 7, 2002 Page 6 of 6 (c) THE LOAN AGREEMENT, AS AMENDED, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. If the foregoing correctly sets forth your understanding of our agreement, please sign and return one copy of this letter. Yours very truly, BANK OF TEXAS, NATIONAL ASSOCIATION By: /s/ Timothy E. Merrell ----------------------------------------- Timothy E. Merrell, Senior Vice President Agreed on this 7th day of August, 2002: BORROWERS: TOREADOR RESOURCES CORPORATION By: /s/ Douglas W. Weir ------------------------------------- Douglas W. Weir, Vice President TOREADOR EXPLORATION & PRODUCTION INC. By: /s/ Douglas W. Weir ------------------------------------- Douglas W. Weir, Vice President TOREADOR ACQUISITION CORPORATION By: /s/ Douglas W. Weir ------------------------------------- Douglas W. Weir, Vice President TORMIN, INC. By: /s/ Douglas W. Weir ------------------------------------- Douglas W. Weir, Vice President Exhibits: None EX-10.2 5 d01000exv10w2.txt EX-10.2 4TH AMENDMENT TO LOAN AGREEMENT EXHIBIT 10.2 BANK OF TEXAS, N.A. 5956 Sherry Lane, Suite 1100 Dallas, Texas 75225 September 23, 2002 TOREADOR RESOURCES CORPORATION TOREADOR EXPLORATION & PRODUCTION INC. TOREADOR ACQUISITION CORPORATION TORMIN, INC. 4809 Cole Avenue, Suite 108 Dallas, Texas 75205 Re: Fourth Amendment to Loan Agreement Ladies and Gentlemen: This letter (this "Amendment") amends the loan agreement dated February 16, 2001, among TOREADOR RESOURCES CORPORATION, a Delaware corporation, TOREADOR EXPLORATION & PRODUCTION INC., a Texas corporation, TOREADOR ACQUISITION CORPORATION, a Delaware corporation, and TORMIN, INC., a Delaware corporation (collectively "Borrowers"), and BANK OF TEXAS, NATIONAL ASSOCIATION ("Bank"), a national banking association, as amended by the First Amendment dated November 8, 2001, a Second Amendment dated May 9, 2002, and a Third Amendment dated August 1, 2002 (the "Loan Agreement"). Capitalized terms below have the meanings assigned in the Loan Agreement. 1. Borrowing Base, Tranches, and Rates. (a) Effective as of the date of this Amendment, Bank has set the Borrowing Base at $19,375,000.00, and the MCR will continue at $150,000 per month, until reset by Bank in connection with the next redetermination of the Borrowing Base. The next scheduled redetermination of the Borrowing Base will be March 1, 2003. (b) Subsection (a) of Section 1 of the Loan Agreement is amended to eliminate the tranches and to modify the interest rates and thus to read as follows: "(a) Subject to the terms and conditions set forth in the Loan Agreement Toreador Resources Corporation, et al September 23, 2002 Page 2 of 5 and the other agreements, instruments, and documents executed and delivered in connection with the Loan Agreement (collectively the "Loan Documents"), Bank agrees to make a revolving loan in the face amount of $75,000,000.00 to Borrowers (the "Revolving Loan") on the terms set forth in the Revolving Promissory Note attached as Exhibit A to this Amendment (the "Revolving Note"), for the purposes set forth in the Loan Agreement. All amounts owed on the Revolving Loan shall bear interest from the date advanced until paid or until default or maturity at a fluctuating rate equal to the sum of the Stated Rate (as defined below), plus one percent (1.0%), but subject to the default rate set forth in the Revolving Note. The "Stated Rate" shall be equal to the greater of (i) the rate of interest per annum then most recently established by JP MORGAN CHASE BANK as its "prime rate" on commercial loans, or (ii) the sum of the rate of interest, then most recently published by The Wall Street Journal as the "federal funds" rate for reserves traded among commercial banks for overnight use, plus one half of one percent (0.5 %), both as published in the Money Rates section of The Wall Street Journal." (c) Subsection (b) of Section 1 of the Loan Agreement is amended to change the Borrowing Base and to eliminate the tranches and thus to read as follows: "(b) Subject to the terms and conditions of the Loan Agreement, Borrowers may borrow, repay, and reborrow on a revolving basis from time to time during the period commencing on the date hereof and continuing through 11:00 a.m. (Dallas, Texas time) on February 16, 2006 (the "Termination Date"), such amounts as Borrowers may request under the Revolving Loan; provided, however, the total principal amount outstanding at any time shall not exceed the lesser of (i) the aggregate sums permitted under the Borrowing Base, which is set at $19,375,000.00 as of the date of this Amendment, or (ii) $75,000,000. All sums advanced under the Revolving Loan, together with all accrued but unpaid interest thereon, shall be due and payable in full on the Termination Date." (d) Notwithstanding any provisions to the contrary in the Loan Agreement or the Revolving Note, until Bank agrees otherwise in writing, all amounts owed on the Revolving Note shall be treated as a "Stated Rate Balance" as defined in the Revolving Note and shall bear interest from the date advanced until paid or until default or maturity at a fluctuating rate equal to the sum of the Stated Rate, plus one percent (1.0%), but subject to the default rate set forth in the Revolving Note. 2. Collateral. (a) As security for the Notes, Borrowers previously executed the Security Documents. Borrowers ratify and confirm the Security Documents, acknowledge that they are valid, subsisting, and binding, and agree that the Security Documents secure payment of the Notes and Loans. Toreador Resources Corporation, et al September 23, 2002 Page 3 of 5 (b) As additional security for the Notes, Toreador Exploration & Production Inc. will execute and deliver a Deed of Trust and Security Agreement in Proper Form, covering oil and gas properties located in Meade County, Kansas. This additional deed of trust will constitute one of the "Security Documents" as defined in the Loan Agreement. 3. Conditions Precedent. (a) The obligation of Bank to make any further advance on the Revolving Loan is subject to Borrower's satisfaction, in Bank's sole discretion, of the following conditions precedent: (1) the negotiation, execution, and delivery of Loan Documents in Proper Form, including, but not limited to, the following: (i) this Amendment; (ii) Revolving Note; (iii) Borrowing Resolutions; and (iv) the Kansas Deed of Trust. (2) satisfactory evidence that Bank holds perfected liens and security interests in all collateral for the Loans, subject to no other liens or security interests. (3) there being no order or injunction or other pending or threatened litigation in which there is a reasonable possibility, in Bank's judgment, of a decision which could materially adversely affect the ability of Borrowers to perform under the Loan Documents. (4) Bank shall have completed and approved a review of title to, and the status of the environmental condition of, Borrower's oil and gas properties, and the results of such review shall be acceptable to Bank in its sole discretion. (5) Bank's receipt and review, with results satisfactory to Bank and its counsel, of information regarding litigation, tax, accounting, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership, and contingent liabilities of Borrowers and any subsidiaries. (b) Bank will not be obligated to make any advance on the Loans, if, prior to the time that a loan or advance is made, (i) there has been any material adverse change in any Borrowers' financial condition since the most-recent financial statements furnished to Bank, (ii) any representations or warranties made by any Borrowers in the Loan Agreement or the other Loan Documents is untrue or incorrect as of the date of the advance or loan, (iii) Bank has not received all Loan Documents appropriately executed Toreador Resources Corporation, et al September 23, 2002 Page 4 of 5 by Borrowers and all other proper parties, (iv) Bank has requested that Borrowers execute additional loan or security documents and those documents have not yet been properly executed, delivered, and recorded, or (v) an Event of Default has occurred. 4. Confirmations. Borrowers hereby represent to Bank that all representations and warranties of Borrowers set forth in Section 5 of the Loan Agreement are true and correct as of the date of execution of this Amendment; and that Borrowers are in compliance as of the date of execution of this Amendment with all covenants set forth in Section 6 of the Loan Agreement, all financial covenants set forth in Section 7 of the Loan Agreement, and all reporting requirements set forth in Section 8 of the Loan Agreement. 5. Validity and Defaults. The Loan Agreement, as amended, remains in full force and effect. Borrowers acknowledge that the Loan Agreement, the Notes, and the Security Documents are valid, subsisting, and binding upon Borrowers; no uncured breaches or defaults exist under the Loan Agreement, as amended; and no event has occurred or circumstance exists which, with the passing of time or giving of notice, will constitute a default or breach under the Loan Agreement, as amended. Borrowers ratify the Loan Agreement, as amended. 6. Fax Provision. This Amendment and the related Loan Documents may be executed in counterparts, and Bank is authorized to attach the signature pages from the counterparts to copies for Bank and Borrowers and filing counterparts. At Bank's option, this Amendment and the related Loan Documents may also be executed by Borrowers in remote locations with signature pages faxed to Bank. Borrowers agree that the faxed signatures are binding upon Borrowers, and Borrowers further agree to promptly deliver the original signatures for this Amendment and the related Loan Documents by overnight mail or expedited delivery. It will be an Event of Default if they fail to promptly deliver all required original signatures. 7. Captions. Captions are for convenience only and should not be used in interpreting this Amendment. 8. Final Agreement. (a) In connection with the Loans, Borrowers and Bank have executed and delivered this Amendment and the Loan Documents (collectively the "Written Loan Agreement"). (b) It is the intention of Borrowers and Bank that this paragraph be incorporated by reference into each of the Loan Documents. Borrowers and Bank each warrant and represent that their entire agreement with respect to the Loans is contained within the Written Loan Agreement, and that no agreements or promises have been made by, or exist by or among, Borrowers and Bank that are not reflected in the Written Loan Agreement. (c) THE LOAN AGREEMENT, AS AMENDED, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. Toreador Resources Corporation, et al September 23, 2002 Page 5 of 5 If the foregoing correctly sets forth your understanding of our agreement, please sign and return one copy of this letter. Yours very truly, BANK OF TEXAS, NATIONAL ASSOCIATION By: /s/ Timothy E. Merrell --------------------------------- Timothy E. Merrell, Senior Vice President Agreed on this 23rd day of September, 2002: BORROWERS: TOREADOR RESOURCES CORPORATION By: /s/ Douglas W. Weir -------------------------------------- Douglas W. Weir, Vice President TOREADOR EXPLORATION & PRODUCTION INC. By: /s/ Douglas W. Weir -------------------------------------- Douglas W. Weir, Vice President TOREADOR ACQUISITION CORPORATION By: /s/ Douglas W. Weir -------------------------------------- Douglas W. Weir, Vice President TORMIN, INC. By: /s/ Douglas W. Weir -------------------------------------- Douglas W. Weir, Vice President Exhibits: A - Revolving Note EX-10.3 6 d01000exv10w3.txt EX-10.3 SETTLEMENT AGREEMENT EXHIBIT 10.3 THIS AGREEMENT MADE AS OF THE 28th DAY OF JUNE, 2002 BETWEEN: TULLOW PAKISTAN (DEVELOPMENTS) LIMITED (hereinafter referred to as the "Creditor") --and-- TOREADOR RESOURCES CORPORATION (hereinafter referred to as the "Debtor") WHEREAS the Creditor has commenced proceedings against Trans-Dominion Energy Corporation and others in Action No. 9901-16339; in the Court of Queen's Bench of Alberta, Judicial Centre of Calgary, (the "Action"); AND WHEREAS Trans-Dominion Energy Corporation subsequently amalgamated with Madison Oil Company to form the amalgamated corporation Madison Oil Company; AND WHEREAS Madison Oil Company subsequently amalgamated with Toreador Resources Corporation, a body corporate having a place of business in the City or Dallas, in the State of Texas, United States of America, to form the amalgamated corporation Toreador Resources Corporation, the "Debtor" herein; AND WHEREAS the Creditor and the Debtor have agreed to terms of compromise of the matters in dispute in the Action, as set out herein; NOW THEREFORE in consideration of the covenants set out herein the parties hereto covenant and agree as follows: -2- 1. The matters set forth in the preamble to this Agreement, above, are acknowledged to be true. 2. The Debtor shall pay to Macleod Dixon LLP, in trust for the Creditor the sum of FIFTY THOUSAND DOLLARS ($50,000.00) in United States funds at the time of execution of this Agreement, which funds shall be releaseable from trust immediately. 3. The Debtor shall pay to the Creditor the further sum of THREE HUNDRED AND FIFTY THOUSAND DOLLARS ($350,000.00) in United States funds no later than February 3, 2003. Such funds shall be paid to Macleod Dixon LLP (Attention: Andrew R. Robertson) ("counsel for the Creditor") in trust under trust conditions providing that it shall not be released to the Creditor until a Discontinuance of Action No. 9901-16339 has been filed at the Court of Queen's Bench of Alberta and the executed Release described below bas been provided to the Debtor's counsel. 4. Upon the receipt, no later than February 3, 2003, by counsel for the Creditor of the funds required herein to be paid, the Creditor shall instruct such legal counsel to file promptly a Discontinuance of Action in the Action and deliver promptly to Code Hunter LLP (Attention: David de Vlieger) a filed copy of the said Discontinuance and an executed Release in the form attached hereto as SCHEDULE "A". The Debtor shall instruct Code Hunter LLP to consent to the said Discontinuance without costs payable to any party. 5. In the event that the Debtor does not pay the funds requited on or before February 3, 2003, then the parties agree that the Creditor may discontinue the Action as against Karak Petroleum Pakistan Ltd. and thereafter the proceedings in the Action shall continue according to the schedule set out on the draft Consent Order attached hereto as SCHEDULE "B", and the Debtor and Creditor hereby instruct their legal counsel to consent irrevocably, immediately upon execution of this Agreement, to the said Consent Order and that the Consent Order shall be held by counsel for the Creditor until February 4, 2003 on the following terms: -3- (a) If the sum of THREE HUNDRED AND FIFTY THOUSAND DOLLARS ($350,000.00) (as well as the initial FIFTY THOUSAND DOLLARS ($50,000) (U.S. Funds) is not paid on or before February 3, 2003, the Order may be presented to the Court for signature and entry, and (b) If the said sum is paid on or before February 3, 2003, then the Order shall not be used. 6. If the Creditor discontinues the Action as against Karak Petroleum Pakistan Ltd., such discontinuance shall be without prejudice to the respective legal positions of the parties to this Agreement. 7. This Agreement shall be governed by the laws of Alberta and, as applicable, the laws of Canada. IN WITNESS WHEREOF the parties have executed this Agreement, in counterpart and by facsimile, as of the date first set out above. TULLOW PAKISTAN (DEVELOPMENTS) LIMITED Per: /s/ Graham Martin, Director --------------------------------------------- TOREADOR RESOURCES CORPORATION Per: /s/ G. Thomas Graves III, President and CEO --------------------------------------------- SCHEDULE "A" RELEASE KNOW ALL PERSONS BY THESE PRESENTS that TULLOW PAKISTAN (DEVELOPMENTS) LIMITED, being a body corporate incorporated in Jersey, Channel Islands, having its registered office at Channel House, Green Street, St. Helier, Jersey in the City of London, in the United Kingdom of Great Britain and Northern Ireland, for and in consideration of the sum of FOUR HUNDRED THOUSAND DOLLARS ($400,000.00) in United States Currency, paid by or on behalf of TOREADOR RESOURCES CORPORATION, the receipt and sufficiency whereof being hereby acknowledged, does hereby remise and release, and does forever discharge TOREADOR RESOURCES CORPORATION, as well as TRANS-DOMINION ENERGY CORPORATION and TRANS-DOMINION HOLDING LTD. as well as their successors and assigns (collectively referred to herein as the "RELEASEES"), of and from all actions, causes of action, suits, debts, dues, sums of money, claims and demands whatsoever at law or in equity which it ever had, or now has, or which it, or its successors or assigns hereafter can, shall, or may have against the RELEASEES, or any of them, in relation to any matter or matters or claims whatsoever, including any matter or matters or claims which arise out of or are in any way connected with: (a) the matters referred to and alleged in the pleadings filed in Action Number 9901-16339 in the Court of Queen's Bench of Alberta, Judicial Centre of Calgary, (b) that Joint Operating Agreement made the 21st day of July, 1987 between Ranger Oil Limited, Sabre Petroleum Limited and Oil & Gas Development Corporation, as amended and assigned. TULLOW PAKISTAN (DEVELOPMENTS) LIMITED acknowledges that the taking of this Release shall not be construed as an admission of any liability on the part of any of the RELEASEES. IN WITNESS WHEREOF the undersigned has executed this Release by its officer duly authorized in that behalf as of this ___th day of ___________, 200_. TULLOW PAKISTAN (DEVELOPMENTS) LIMITED Per: ---------------------------------------- SCHEDULE "B" Action No. 9901-16339 IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL CENTRE OF CALGARY BETWEEN: TULLOW PAKISTAN (DEVELOPMENTS) LIMITED Plaintiff -and- TRANS-DOMINION ENERGY CORPORATION, TRANS-DOMINION HOLDING LTD. AND KARAK PETROLEUM PAKISTAN LTD. Defendants BEFORE THE HONOURABLE ) At the Courthouse, in the City of Calgary, JUSTICE ) in the Province of Alberta, on _________, IN CHAMBERS ) the ___ day of _________, 2003 CONSENT ORDER UPON the application of Counsel for the Plaintiff; AND UPON noting the consent endorsed thereon by Counsel for the Defendant, Trans-Dominion Energy Corporation and Trans-Dominion Holding Ltd.; AND UPON BEING ADVISED that the Defendant, Karak Petroleum Pakistan Ltd., is in bankruptcy proceedings in the Isle of Man, British Isles; IT IS HEREBY ORDERED as follows: 1. The Defendant Trans-Dominion Energy Corporation shall provide answers to all undertakings given by its representative at Examinations for Discovery no later than Friday, February 14, 2003. 2. Examinations for Discovery by both Plaintiff and Defendants on matters arising out of undertakings shall be completed on or before March 31, 2003. 3. A pre-trial conference shall be arranged for the first date following March 31, 2003 as is convenient to the Court's schedule as well as counsel for the Plaintiff and the Defendant, Trans-Dominion Energy Corporation and Trans-Dominion Holding Ltd. 4. The Plaintiff's discontinuance of its claim against Karak Petroleum Pakistan Ltd. shall be without prejudice to its claim against the remaining Defendants. 5. The parties are given leave to return to the Court for any further Order as may be necessary to achieve the expeditious trial of this matter. ----------------------------------------- J.C.Q.B.A Entered this ___ day of ____________, 2002 - ----------------------------------------- Clerk of the Court CONSENTED TO this __day of July, 2002. MACLEOD DIXON LLP Per: ----------------------------------- Andrew R. Robertson Solicitors for the Plaintiff CODE HUNTER LLP Per: ----------------------------------- David de Vlieger Solicitors for the Defendants, Trans-Dominion Energy Corporation and Trans-Dominion Holding Ltd. Action No. 9901-16339 - -------------------------------------------------------------------------------- IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL CENTRE OF CALGARY - -------------------------------------------------------------------------------- BETWEEN: TULLOW PAKISTAN (DEVELOPMENTS) LIMITED Plaintiff -and- TRANS-DOMINION ENERGY CORPORATION, TRANS-DOMINION HOLDING LTD. AND KARAK PETROLEUM PAKISTAN LTD. Defendants - -------------------------------------------------------------------------------- CONSENT ORDER - -------------------------------------------------------------------------------- Macleod Dixon LLP Barristers & Solicitors 3700, 400 - Third Avenue SW Calgary, Alberta T2P 4H2 Andrew R. Robertson Telephone: 267-8287 Telecopier: 264-5973 File No. 169951 -----END PRIVACY-ENHANCED MESSAGE-----

EX-3.2

                                                                     EXHIBIT 3.2


                           CERTIFICATE OF DESIGNATION

                                       OF

                     SERIES A-1 CONVERTIBLE PREFERRED STOCK

                                       OF

                         TOREADOR RESOURCES CORPORATION


                         Pursuant to Section 151 of the
                        Delaware General Corporation Law


         Toreador Resources Corporation, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies
that the following resolutions were adopted by the Board of Directors of the
Corporation pursuant to authority of the Board of Directors as required by
Section 151 of the Delaware General Corporation Law.

         RESOLVED, that pursuant to the authority granted to the Board of
Directors in accordance with the provisions of the Corporation's Restated
Certificate of Incorporation, the Board of Directors hereby authorizes a series
of the Corporation's previously authorized Preferred Stock, par value $1.00 per
share (the "Preferred Stock"), and hereby states the designation and number of
shares, and fixes the relative rights, preferences, privileges and restrictions
thereof as follows:

1.       DESIGNATION AND AMOUNT.

         The designation of this series, which consists of 160,000 shares (each
such share being referred to herein as a "Preferred Share" and all such shares
being collectively referred to as the "Preferred Shares") of Preferred Stock, is
the Series A-1 Convertible Preferred Stock (the "Series A-1 Preferred Stock")
and the face amount shall be Twenty-Five Dollars ($25.00) per share (the "Stated
Value"). The Preferred Shares will be issued pursuant to the provisions of a
Securities Purchase Agreement by and among the Corporation and the purchasers
named therein (the "Securities Purchase Agreement").

2.       DIVIDENDS.

         (a) Dividend Rate; Payments. The holders (each, a "Holder" and
collectively, the "Holders") of Preferred Shares shall be entitled to receive,
to the extent permitted by applicable law, (i) in preference to the payment of
any dividend on any class or series of Junior Securities (as defined below) and
(ii) pari passu to the payment of any dividend on any class or series of Parity
Securities (as defined below), cumulative dividends ("Dividends") on each
Preferred Share in an amount equal to, on an annualized basis, the Stated Value
of such Preferred Share times nine percent (9%). Dividends shall accrue and
cumulate on each Preferred Share from the date of the original issuance thereof
(the "Purchase Date") through the earlier to occur of (A) the payment thereof in
accordance with the terms of this Section 2(a) and (B) the redemption or
conversion of such Preferred Share in accordance with the terms hereof.
Dividends shall be paid in cash. Accrued Dividends on each outstanding Preferred
Share shall be payable in four quarterly installments on the last day of March,
June, September and December of each year commencing December 31, 2002 unless
earlier due and payable on a Conversion Date (as defined below) or a Redemption
Date (as defined below) (each, a "Dividend Payment Date"). If, on any date,
Dividends on any outstanding Preferred Shares have not been paid or declared by
the Board of Directors in






accordance with applicable law and set aside for payment with respect to all
Dividend Payment Dates preceding such date, the aggregate amount of such
Dividends shall be fully paid or declared and set aside for payment before any
distribution, whether by way of dividend or otherwise, shall be declared, paid
or set apart with respect to any Junior Securities on or after such date.

         (b) Delivery of Dividends. The Corporation shall mail the dividends
declared by check to the Holder or its nominee postmarked no later than three
(3) Business Days (as defined below) following the applicable Dividend Payment
Date.

3.       PRIORITY.

         (a)      Payment upon Dissolution.

                  (i) Upon the occurrence of (x) any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or other similar
proceedings in connection therewith, commenced by the Corporation or by its
creditors, as such, or relating to its assets or (y) the dissolution or other
winding up of the Corporation whether total or partial, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy proceedings,
or (z) any assignment for the benefit of creditors or any marshalling of the
material assets or material liabilities of the Corporation (each, a "Liquidation
Event"), (i) no distribution shall be made to the holders of any shares of
Junior Securities (as defined below) unless each Holder shall have received the
Liquidation Preference (as defined below) with respect to each Preferred Share
then held by such Holder and (ii) each Holder of the Preferred Shares shall
receive the Liquidation Preference (as defined below) with respect to each
Preferred Share then held by such Holder on a pari passu basis with any
liquidation preference to be received by the holders of any Parity Securities.
In the event that upon the occurrence of a Liquidation Event the assets
available for distribution to the Holders of the Series A-1 Preferred Stock and
the holders of all Parity Securities are insufficient to pay (i) the Liquidation
Preference (as defined below) with respect to all of the outstanding Preferred
Shares and the preferential amounts payable to the Holders and (ii) any
liquidation preference with respect to all of the outstanding Parity Securities
and the preferential amounts payable to such holders of the Parity Securities,
the entire assets of the Corporation shall be distributed ratably among the
outstanding Preferred Shares and the outstanding Parity Securities in proportion
to the ratio that the preferential amount payable on each such share (which
shall be the Liquidation Preference in the case of a Preferred Share and any
liquidation preference per share due to any holders of the Parity Securities)
bears to the aggregate preferential amount payable on all such Preferred Shares
and shares of Parity Securities.

                  (ii) The "Liquidation Preference" with respect to a Preferred
Share shall mean an amount equal to the Stated Value of such Preferred Share
(subject to ratable adjustment in the event of any stock split or combination of
the Series A-1 Preferred Stock and to equitable adjustment in the event of a
reclassification of the Series A-1 Preferred Stock or other similar event) plus
any accrued and unpaid Dividends thereon. "Junior Securities" shall mean the
Common Stock and all other capital stock of the Corporation, other than the
Series A Convertible Preferred Stock or any other shares of Preferred Stock of
the Corporation then outstanding that by their terms rank senior to or pari
passu with the Series A-1 Preferred Stock as to redemption, the payment of
dividends or distribution of assets upon a Liquidation Event or any other
liquidation, dissolution or winding up of the Corporation. "Parity Securities"
shall mean the Series A Convertible Preferred Stock and any shares of Preferred
Stock of the Corporation then outstanding that by their terms rank pari passu
with the Series A-1 Preferred Stock as to redemption, the payment of dividends
or distribution of assets upon a Liquidation Event or any other liquidation,
dissolution or winding up of the Corporation.





                                      -2-


4.       CONVERSION.

         (a) Right to Convert. Each Holder shall have the right to convert, at
any time and from time to time from and after the Purchase Date, all or any part
of the Preferred Shares held by such Holder, unless previously redeemed, into
such number of fully paid and non-assessable shares of Common Stock ("Conversion
Shares") as is computed in accordance with the terms hereof (a "Conversion").

         (b) Conversion Notice. In order to convert Preferred Shares, a Holder
shall send by facsimile transmission, at any time prior to 5:00 p.m., central
time, on the date on which such Holder wishes to effect such Conversion (the
"Conversion Date"), (i) a notice of conversion (a "Conversion Notice"), in
substantially the form of Exhibit A hereto, to the Corporation and to its
designated transfer agent for the Common Stock (the "Transfer Agent") stating
the number of Preferred Shares to be converted, the applicable Conversion Price
(as defined below) and a calculation of the number of shares of Common Stock
issuable upon such Conversion and (ii) a copy of the certificate or certificates
representing the Preferred Shares being converted. The Holder shall thereafter
send the original of the Conversion Notice and of such certificate or
certificates to the Transfer Agent. The Corporation shall issue a new
certificate for Preferred Shares in the event that less than all of the
Preferred Shares represented by a certificate delivered to the Corporation in
connection with a Conversion are converted. Except as otherwise provided herein,
upon delivery of a Conversion Notice by a Holder in accordance with the terms
hereof, such Holder shall, as of the applicable Conversion Date, be deemed for
all purposes to be record owner of the Common Stock to which such Conversion
Notice relates. In the case of a dispute between the Corporation and a Holder as
to the calculation of the Conversion Price or the number of Conversion Shares or
Dividend Payment Shares issuable upon a Conversion, the Corporation shall
promptly issue to such Holder the number of Conversion Shares and Dividend
Payment Shares that are not disputed and shall submit the disputed calculations
to the Corporation's independent accountant within three (3) Business Days of
receipt of such Holder's Conversion Notice. The Corporation shall cause such
accountant to calculate the Conversion Price as provided herein and to notify
the Corporation and such Holder of the results in writing no later than three
(3) Business Days following the day on which it received the disputed
calculations. The Corporation shall deliver the Conversion Shares and Dividend
Payment Shares, if any, owed to a Holder pursuant to such accountant's
calculations on or before the close of business on the third (3rd) Business Day
following the Corporation's receipt of notice from such accountant of the
results of its calculations. Such accountant's calculation shall be deemed
conclusive absent manifest error. The fees of any such accountant shall be borne
by the party whose calculations were most at variance with those of such
accountant.

         (c) Number of Conversion Shares; Conversion Price. The number of
Conversion Shares to be delivered by the Corporation pursuant to a Conversion
shall be determined by dividing the aggregate Stated Value of the Preferred
Shares to be converted by the Conversion Price (as defined herein) in effect on
the applicable Conversion Date. Subject to adjustment as provided in Section 5
below, "Conversion Price" shall mean Four Dollars ($4.00).

         (d) Certain Definitions. "Trading Day" shall mean any day on which the
Common Stock is traded on the Nasdaq National Market System or on the principal
securities exchange or market located in the United States on which the Common
Stock is then traded. "Business Day" means any day on which the New York Stock
Exchange and commercial banks located in the City of New York are open for
business.

         (e) Delivery of Common Stock Upon Conversion. Upon receipt of a
Conversion Notice from a Holder pursuant to paragraph 4(b) above, the
Corporation shall, no later than the close of business on (A) the later to occur
of (i) the third (3rd) Business Day following the Conversion Date set forth in
such Conversion Notice and (ii) the first Business Day following delivery of the
original certificates, duly





                                      -3-


endorsed, representing the Preferred Shares being converted pursuant thereto and
(B) with respect to Conversion Shares which are disputed as described in
paragraph 4(b) above, and required to be delivered by the Corporation pursuant
to the accountant's calculations described therein, the date for delivery
thereof specified in such paragraph 4(b) (the "Delivery Date"), issue and
deliver or cause to be delivered to such Holder the number of Conversion Shares
as shall be determined as provided herein. The Corporation shall effect delivery
of Conversion Shares by delivering to the Holder or its nominee physical
certificates representing such Conversion Shares, no later than the close of
business on such Delivery Date. If any Conversion would create a fractional
Conversion Share, such fractional Conversion Share shall be disregarded and, at
the Corporation's sole discretion, either the number of Conversion Shares
issuable upon such Conversion, in the aggregate, shall be the next higher number
of Conversion Shares or the Corporation shall pay cash in an amount calculated
by multiplying the amount of the fractional share times the Conversion Price for
such Conversion.

5.       ADJUSTMENTS TO CONVERSION PRICE.

         (a) Adjustment to Conversion Price Due to Stock Split, Stock Dividend,
Etc. If, prior to the Conversion of all of the Preferred Shares, (A) the number
of outstanding shares of Common Stock is increased by a stock split, a stock
dividend on the Common Stock, a reclassification of the Common Stock, the
distribution to holders of Common Stock as a class of rights or warrants
entitling them to subscribe for or purchase Common Stock at less than the then
current market price thereof (based upon the subscription or exercise price of
such rights or warrants at the time of the issuance thereof) or other similar
event, the Conversion Price shall be proportionately reduced, or (B) the number
of outstanding shares of Common Stock is decreased by a reverse stock split,
combination or reclassification of shares or other similar event, the Conversion
Price shall be proportionately increased. In such event, the Corporation shall
notify the Transfer Agent of such change on or before the effective date
thereof.

         (b) Adjustment Due to Merger, Consolidation, Etc. If, prior to the
Conversion of all of the Preferred Shares, there shall be any merger,
consolidation, business combination, tender offer, exchange of shares,
recapitalization, reorganization, redemption or other similar event, as a result
of which shares of Common Stock shall be exchanged for or changed into the same
or a different number of shares of the same or another class or classes of stock
or securities of the Corporation or another entity (an "Exchange Transaction"),
then such Holder shall (A) upon the consummation of such Exchange Transaction,
have the right to receive, with respect to any shares of Common Stock then held
by such Holder, or which such Holder is then entitled to receive pursuant to a
Conversion Notice previously delivered by such Holder, (and without regard to
whether such shares contain a restrictive legend or are freely-tradeable) the
same amount and type of consideration (including without limitation, stock,
securities and/or other assets) and on the same terms as a holder of shares of
Common Stock would be entitled to receive in connection with the consummation of
such Exchange Transaction (the "Exchange Consideration"), and (B) upon the
Conversion of Preferred Shares occurring subsequent to the consummation of such
Exchange Transaction, the Exchange Consideration which such Holder would have
been entitled to receive in connection with such Exchange Transaction had such
shares been converted immediately prior to such Exchange Transaction, and in any
such case appropriate provisions shall be made with respect to the rights and
interests of such Holder to the end that the provisions hereof (including,
without limitation, provisions for the adjustment of the Conversion Price and of
the number of shares issuable upon a Conversion) shall thereafter be applicable
as nearly as may be practicable in relation to any securities thereafter
deliverable upon the Conversion of such Preferred Shares. The Corporation shall
not effect any Exchange Transaction unless (i) it first gives to each Holder
twenty (20) days prior written notice of such Exchange Transaction (an "Exchange
Notice"), and makes a public announcement of such event at the same time that it
gives such notice and (ii) the resulting successor or acquiring entity (if not
the Corporation) assumes by written instrument the obligations of the
Corporation hereunder, including the terms of this subparagraph 5(b), and under
the Securities Purchase Agreement and the Registration Rights Agreement
described in the Securities Purchase Agreement (the "Registration Rights
Agreement").




                                      -4-


         (c) Distribution of Assets. If the Corporation shall declare or make
any distribution of cash, evidences of indebtedness or other securities or
assets (other than cash dividends or distributions payable out of earned surplus
or net profits for the current or the immediately preceding year), or any rights
to acquire any of the foregoing, to holders of Common Stock as a partial
liquidating dividend, by way of return of capital or otherwise, including any
dividend or distribution in shares of capital stock of a subsidiary of the
Corporation (collectively, a "Distribution"), then, upon a Conversion by a
Holder occurring after the record date for determining stockholders entitled to
such Distribution, the Conversion Price for Preferred Shares not converted prior
to the record date of a Distribution shall be reduced to a price determined by
decreasing the Conversion Price in effect immediately prior to the record date
of the Distribution by an amount equal to the fair market value of the assets so
distributed with respect to each share of Common Stock, such fair market value
to be determined by an investment banking firm selected by the Corporation.

         (d) No Fractional Shares. If any adjustment under this Section would
create a fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and, at the
Corporation's sole discretion, either the number of shares of Common Stock
issuable upon Conversion shall be the next higher number of shares or the
Corporation shall pay in cash an amount calculated by multiplying the amount of
the fractional share times the Conversion Price for such Conversion.

6.       OPTIONAL REDEMPTION BY CORPORATION.

         (a) Optional Redemption. Any time on or after November 1, 2007, the
Corporation shall have the right to redeem, in whole or in part, Preferred
Shares outstanding at the Optional Redemption Price (as defined below) (an
"Optional Redemption"), to the extent permitted by applicable law and so long as
(A) the Corporation shall have sufficient cash available on the Optional
Redemption Date to effect such Optional Redemption and (B) the Corporation shall
have delivered to each Holder at least fifteen (15) Trading Days' prior written
notice (an "Optional Redemption Notice") specifying the date on which such
Optional Redemption is to be effected (the "Optional Redemption Date") and the
amount of the Optional Redemption Price payable to such Holder. If the
Corporation should elect to redeem less than all of the Preferred Shares
outstanding, the Corporation shall select those Preferred Shares to be redeemed
by lot. Nothing contained herein shall limit a Holder's right to convert its
Preferred Shares at any time prior to the Optional Redemption Date.

         (b) Optional Redemption Price. In the event of an Optional Redemption
on or after November 1, 2007, the Optional Redemption Price to be paid to a
Holder shall be the Liquidation Preference of the Preferred Shares then held by
such Holder multiplied by (i) 1.05 if the Optional Redemption Date is on or
after November 1, 2007 but before November 1, 2008, (iv) 1.04 if the Optional
Redemption Date is on or after November 1, 2008 but before November 1, 2009,
(iii) 1.03 if the Optional Redemption Date is on or after November 1, 2009 but
before November 1, 2010, (iv) 1.02 if the Optional Redemption Date is on or
after November 1, 2010 but before November 1, 2011, (v) 1.01 if the Optional
Redemption Date is on or after November 1, 2011 but before November 1, 2012, or
(vi) 1.00 if the Optional Redemption Date is on or after November 1, 2012, plus
in all cases, accrued and unpaid Dividends through and including the Optional
Redemption Date.





                                      -5-


         (c) Payment of Optional Redemption Price. Upon the redemption of a
Preferred Share, payment of the Optional Redemption Price, which shall be in the
form of a Corporation check, to the Holder thereof will be effected
simultaneously with the return of such share by such Holder to the Corporation.
To the extent the Corporation shall redeem less than all of the Preferred Shares
outstanding, the Corporation shall also deliver certificates evidencing the
unredeemed Preferred Shares in addition to the Optional Redemption Price.

7.       MISCELLANEOUS.

         (a) Transfer of Preferred Shares. A Holder may sell or transfer all or
any portion of the Preferred Shares to any person or entity as long as such sale
or transfer is the subject of an effective registration statement under the
Securities Act or is exempt from registration thereunder and otherwise is made
in accordance with the terms of the Securities Purchase Agreement. From and
after the date of such sale or transfer, the transferee thereof shall be deemed
to be a Holder. Upon any such sale or transfer, the Corporation shall, promptly
following the return of the certificate or certificates representing the
Preferred Shares that are the subject of such sale or transfer, issue and
deliver to such transferee a new certificate in the name of such transferee.

         (b) Notices. Except as otherwise provided herein, any notice, demand or
request required or permitted to be given pursuant to the terms hereof, the form
or delivery of which notice, demand or request is not otherwise specified
herein, shall be in writing and shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission on or before 5:00 p.m.,
central time, on a Business Day or, if such day is not a Business Day, on the
next succeeding Business Day, (ii) on the next Business Day after timely
delivery to an overnight courier and (iii) on the third Business Day after
deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed to the parties as follows:

                  If to the Corporation:

                  Toreador Resources Corporation
                  4809 Cole Avenue, Suite 108
                  Dallas, Texas 75205

                  Attn.:   Chief Executive Officer
                  Fax:     214-559-3933

and if to any Holder, to such address for such Holder as shall be designated by
such Holder in writing to the Corporation.

         (c) Lost or Stolen Certificate. Upon receipt by the Corporation of
evidence of the loss, theft, destruction or mutilation of a certificate
representing Preferred Shares, and (in the case of loss, theft or destruction)
of indemnity or security reasonably satisfactory to the Corporation, and upon
surrender and cancellation of such certificate if mutilated, the Corporation
shall execute and deliver to the Holder a new certificate identical in all
respects to the original certificate.

         (d) No Voting Rights. Except as provided by applicable law and
paragraph 7(e) below, the Holders of the Preferred Shares shall have no voting
rights with respect to the business, management or affairs of the Corporation.
The Corporation shall provide each Holder with prior notification of each
meeting of stockholders (and copies of proxy statements and other information
sent to such stockholders).




                                      -6-


         (e)      Protective Provisions.

                  (A) So long as shares of Series A-1 Preferred Stock are
outstanding, the Corporation shall not, without first obtaining the approval of
the Holders of a majority of the then outstanding shares of Series A-1 Preferred
Stock:

                           (i) alter or change the rights, preferences or
privileges of the Series A-1 Preferred Stock or any other capital stock of the
Corporation so as to affect adversely the Series A-1 Preferred Stock;

                           (ii) create any new class or series of capital stock
having a preference over the Series A-1 Preferred Stock as to redemption, the
payment of dividends or distribution of assets upon a Liquidation Event or any
other liquidation, dissolution or winding up of the Corporation;

                           (iii) increase the authorized number of shares of
Preferred Stock;

                           (iv) re-issue any shares of Series A-1 Preferred
Stock which have been converted in accordance with the terms hereof; or

                           (v) declare, pay or make any provision for any cash
dividend or distribution with respect to the Common Stock of the Corporation.

                  (B) If the Corporation fails to pay dividends in respect of
four quarterly dividend periods, Holders of a majority of the then outstanding
shares of the Series A-1 Preferred Stock would be entitled, acting separately as
a class, to elect one person to the Board of Directors of the Corporation. Upon
the taking of such action, the maximum authorized number of members of the Board
of Directors shall automatically increase by one person so elected, and the
vacancy so created shall be filled by the person elected pursuant to this
subparagraph (B). A director elected by the holders of Series A-1 Preferred
Stock pursuant to this subparagraph (B) shall serve until his successor is duly
elected and qualified, until his removal or until his term terminates as
provided below. Such a director may be removed without cause at any time by
action, and only by such action, of the holders of shares of Series A-1
Preferred Stock. If the office of a director elected pursuant to this
subparagraph (B) becomes vacant by reason of death, resignation, retirement,
disqualification, removal from office or otherwise, such vacancy may be filled
by the action, and only by such action, of the holders of shares of Series A-1
Preferred Stock. At such time as the event of default giving rise to this right
to elect a director has been cured, such right shall terminate, the term of any
director elected pursuant to this subparagraph (B) shall terminate and the
maximum number of authorized members of the Board of Directors shall decrease
automatically to the maximum number of authorized members of the Board of
Directors in effect immediately before any action was taken pursuant hereto.



                                      -7-



         IN WITNESS WHEREOF, the Corporation has executed this Certificate of
Designation as of the 30th day of October, 2002.


TOREADOR RESOURCES CORPORATION



By:      /s/ G. Thomas Graves III
         --------------------------------------------
         Name:    G. Thomas Graves III
         Title:   President and Chief Executive Officer



                                      -8-






                                                                       EXHIBIT A
                              NOTICE OF CONVERSION

The undersigned hereby elects to convert shares of Series A-1 Convertible
Preferred Stock (the "Preferred Stock"), represented by stock certificate No(s).
(the "Preferred Stock Certificates"), into shares of common stock ("Common
Stock") of Toreador Resources Corporation (the "Company") according to the terms
and conditions of the Certificate of Designation relating to the Preferred Stock
(the "Certificate of Designation"), as of the date written below. Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Certificate of Designation.

[ ] (check box if shares of Common Stock have been resold) The undersigned
represents that the shares of Common Stock to be issued by the Company hereby
have been resold or transferred by the undersigned in accordance with the
provisions of the prospectus included in the Registration Statement.

                    Date of Conversion:
                                       ---------------------------------------

                    Number of Shares of
                    Preferred Stock to be Converted:
                                                    --------------------------

                    Applicable Conversion Price:
                                                ------------------------------

                    Number of Shares of
                    Common Stock to be Issued:
                                              --------------------------------

                    Amount of Dividend
                    Accrued through the
                    Conversion Date:
                                    ------------------------------------------


                            Name of Holder:
                                           -----------------------------------

                            Address:
                                    ------------------------------------------


                            Signature:
                                      ----------------------------------------
                                      Name:
                                      Title:



                                      -9-

EX-10.1

                                                                    EXHIBIT 10.1
                               BANK OF TEXAS, N.A.
                          5956 Sherry Lane, Suite 1100
                               Dallas, Texas 75225




August 7, 2002



TOREADOR RESOURCES CORPORATION
TOREADOR EXPLORATION & PRODUCTION INC.
TOREADOR ACQUISITION CORPORATION
TORMIN, INC.
4809 Cole Avenue, Suite 108
Dallas, Texas 75205

         Re:      Third Amendment to Loan Agreement

Ladies and Gentlemen:

         This letter (this "Amendment") amends the loan agreement dated February
16, 2001, among TOREADOR RESOURCES CORPORATION, a Delaware corporation, TOREADOR
EXPLORATION & PRODUCTION INC., a Texas corporation, TOREADOR ACQUISITION
CORPORATION, a Delaware corporation, and TORMIN, INC., a Delaware corporation
(collectively "Borrowers"), and BANK OF TEXAS, NATIONAL ASSOCIATION ("Bank"), a
national banking association, as amended by the First Amendment dated November
8, 2001, and a Second Amendment dated May 9, 2002 (the "Loan Agreement").
Capitalized terms below have the meanings assigned in the Loan Agreement.

         1. Borrowing Base, Tranches, and Rates. (a) Effective as of the date of
this Amendment, Bank has set the Borrowing Base at $21,850,000.00, and Bank has
set the MCR at $150,000 per month, until reset by Bank in connection with the
next redetermination of the Borrowing Base. The next scheduled redetermination
of the Borrowing Base will be November 1, 2002. The amount of Tranche A as of
the date of this Amendment is $20,000,000.00.

                  (b) The first three sentences of Subsection (ii) of Section
1(a) of the Loan Agreement are amended to modify the interest rates and thus to
read as follows:

                           "(ii) Until Tranche B is paid in full, all amounts
         owed on the Revolving




TOREADOR RESOURCES CORPORATION, et al
August 7, 2002
Page 2 of 6


         Note shall bear interest from the date advanced until paid or until
         default or maturity at a fluctuating rate equal to the sum of the
         Stated Rate, plus one percent (1.0%), but subject to the default rate
         set forth in the Revolving Note. After Tranche B is paid in full, all
         amounts owed on the Revolving Loan shall bear interest from the date
         advanced until paid or until default or maturity at the rates elected
         by Borrowers from the following options under the terms of the
         Revolving Note: (i) the difference between the Stated Rate less the
         Applicable Margin, or (ii) the sum of the LIBOR Rate plus the LIBOR
         Spread. The Applicable Margin and the LIBOR Spread will vary as set
         forth below based on the ratio, expressed as a percentage, of (i) the
         sum of the average principal balance owing on the Revolving Note for
         the prior quarter, plus the face amount of all outstanding Letters of
         Credit, to (ii) the then-current Borrowing Base:



                  % of Borrowing Base              Applicable Margin   LIBOR Spread
                  -----------------------------------------------------------------
                                                                 
                  Greater than or equal to 85%           0.25%            2.75%
                  Between 75% and 85% inclusive          1.00%            2.00%
                  Less than 75%                          1.25%            1.75% . . . ."


                  (c) Subsection (b) of Section 1 of the Loan Agreement is
amended to change the Borrowing Base and to extend the due date for Tranche B
and thus to read as follows:

                           "(b) Subject to the terms and conditions of the Loan
         Agreement, Borrowers may borrow, repay, and reborrow on a revolving
         basis from time to time during the period commencing on the date hereof
         and continuing through 11:00 a.m. (Dallas, Texas time) on February 16,
         2006 (the "Termination Date"), such amounts as Borrowers may request
         under the Revolving Loan; provided, however, the total principal amount
         outstanding at any time shall not exceed the lesser of (i) the
         aggregate sums permitted under the Borrowing Base, which is set at
         $21,850,000.00 as of the date of this Amendment, (ii) after November 1,
         2002, the aggregate sums permitted under Tranche A, or (iii)
         $75,000,000. Notwithstanding any provision in the Loan Agreement or the
         Revolving Note to the contrary, all amounts outstanding on Tranche B
         must be paid in full on or before November 1, 2002; and all sums
         advanced under the Revolving Loan, together with all accrued but unpaid
         interest thereon, shall be due and payable in full on the Termination
         Date."

                  (d) Notwithstanding any provisions to the contrary in the Loan
Agreement or the Revolving Note, until Tranche B is paid in full, all amounts
owed on the Revolving Note shall bear interest from the date advanced until paid
or until default or maturity at a fluctuating rate equal to the sum of the
Stated Rate, plus one percent (1.0%), but subject to the default rate set forth
in the Revolving Note.






TOREADOR RESOURCES CORPORATION, et al
August 7, 2002
Page 3 of 6


         2. Letter of Credit Fees. The last sentence of Subsection (d) of
Section 1 of the Loan Agreement is amended to change the fees for Letters of
Credit and thus to read as follows:

                  "Borrowers agree to pay to Bank a Letter of Credit fee equal
         to (i) $500 issuing fee per Letter of Credit, due at issuance, plus
         (ii) until Tranche B is paid in full, three and three quarters percent
         (3.75%) per annum, or plus (iii) after Tranche B is paid in full, the
         percentages per annum shown below, calculated on the aggregated stated
         amount of each Letter of Credit for the stated duration thereof
         (computed on the basis of actual days elapsed as of each year consisted
         of 360 days), payable quarterly in arrears on the last day of each
         calendar quarter. The annual Letter of Credit fee will vary as set
         forth below based on the ratio, expressed as a percentage, of (i) the
         sum of the average principal balance owing on the Revolving Note for
         the prior quarter, plus the face amount of all outstanding Letters of
         Credit, to (ii) the then-current Borrowing Base:



                  % of Borrowing Base                         Letter of Credit Fee
                  ----------------------------------------------------------------
                                                           
                  Greater than or equal to 85%                      2.75%
                  Between 75% and 85% inclusive                     2.00%
                  Less than 75%                                     1.75%"


         3. Distributions to Madison Oil Company. Subsection (k) of Section 6 of
the Loan Agreement is amended to restrict distributions to Madison Oil Company
and thus to read as follows:

                  "(k) Not make any loans, advances, dividends, or other
         distributions to any party, including without limitation, shareholders,
         officers, directors, subsidiaries, and affiliates, and any profit
         sharing or retirement plan, except so long as there is not a default
         under this Loan Agreement or any other Loan Documents, (i) Borrowers
         may distribute to their shareholders an amount not to exceed $100,000
         in the aggregate, and (ii) Borrowers may distribute amounts to Madison
         Oil Company or its subsidiaries only with Bank's prior written consent;
         and not purchase, acquire, redeem, or retire any stock of Borrowers;
         and not permit any transaction or contract with any affiliates or
         related parties, except at arms length and on market terms."

         4. Fees. In connection with this Amendment and the extension of Tranche
B, Borrowers agree to pay to Bank an amendment fee in the amount of $75,000.00.
All fees are non-refundable and earned by Bank upon execution of this Amendment.

         5. Collateral. (a) As security for the Notes, Borrowers previously
executed the Security Documents. Borrowers ratify and confirm the Security
Documents, acknowledge that they are valid, subsisting, and binding, and agree
that the Security Documents secure payment of the Notes and Loans.







TOREADOR RESOURCES CORPORATION, et al
August 7, 2002
Page 4 of 6


                  (b) As additional security for the Notes, Toreador Exploration
& Production Inc. will execute and deliver a Deed of Trust and Security
Agreement in Proper Form, covering oil and gas properties located in Meade
County, Kansas. This additional deed of trust will constitute one of the
"Security Documents" as defined in the Loan Agreement.

         6. Conditions Precedent. (a) The obligation of Bank to make any further
advance on the Revolving Loan is subject to Borrower's satisfaction, in Bank's
sole discretion, of the following conditions precedent:

                           (1) the negotiation, execution, and delivery of Loan
Documents in Proper Form, including, but not limited to, the following:

                                    (i) this Amendment; and

                                    (ii) the Kansas Deed of Trust.

                           (2) satisfactory evidence that Bank holds perfected
liens and security interests in all collateral for the Loans, subject to no
other liens or security interests.

                           (3) there being no order or injunction or other
pending or threatened litigation in which there is a reasonable possibility, in
Bank's judgment, of a decision which could materially adversely affect the
ability of Borrowers to perform under the Loan Documents.

                           (4) Bank shall have completed and approved a review
of title to, and the status of the environmental condition of, Borrower's oil
and gas properties, and the results of such review shall be acceptable to Bank
in its sole discretion.

                           (5) Bank's receipt and review, with results
satisfactory to Bank and its counsel, of information regarding litigation, tax,
accounting, insurance, pension liabilities (actual or contingent), real estate
leases, material contracts, debt agreements, property ownership, and contingent
liabilities of Borrowers and any subsidiaries.

                  (b) Bank will not be obligated to make any advance on the
Loans, if, prior to the time that a loan or advance is made, (i) there has been
any material adverse change in any Borrowers' financial condition since the
most-recent financial statements furnished to Bank, (ii) any representations or
warranties made by any Borrowers in the Loan Agreement or the other Loan
Documents is untrue or incorrect as of the date of the advance or loan, (iii)
Bank has not received all Loan Documents appropriately executed by Borrowers and
all other proper parties, (iv) Bank has requested that Borrowers execute
additional loan or security documents and those documents have not yet been
properly executed, delivered, and recorded, or (v) an Event of Default has
occurred.







TOREADOR RESOURCES CORPORATION, et al
August 7, 2002
Page 5 of 6

         7. Confirmations. Borrowers hereby represent to Bank that all
representations and warranties of Borrowers set forth in Section 5 of the Loan
Agreement are true and correct as of the date of execution of this Amendment;
and that Borrowers are in compliance as of the date of execution of this
Amendment with all covenants set forth in Section 6 of the Loan Agreement, all
financial covenants set forth in Section 7 of the Loan Agreement, and all
reporting requirements set forth in Section 8 of the Loan Agreement.

         8. Validity and Defaults. The Loan Agreement, as amended, remains in
full force and effect. Borrowers acknowledge that the Loan Agreement, the Notes,
and the Security Documents are valid, subsisting, and binding upon Borrowers; no
uncured breaches or defaults exist under the Loan Agreement, as amended; and no
event has occurred or circumstance exists which, with the passing of time or
giving of notice, will constitute a default or breach under the Loan Agreement,
as amended. Borrowers ratify the Loan Agreement, as amended.

         9. Fax Provision. This Amendment and the related Loan Documents may be
executed in counterparts, and Bank is authorized to attach the signature pages
from the counterparts to copies for Bank and Borrowers and filing counterparts.
At Bank's option, this Amendment and the related Loan Documents may also be
executed by Borrowers in remote locations with signature pages faxed to Bank.
Borrowers agree that the faxed signatures are binding upon Borrowers, and
Borrowers further agree to promptly deliver the original signatures for this
Amendment and the related Loan Documents by overnight mail or expedited
delivery. It will be an Event of Default if they fail to promptly deliver all
required original signatures.

         10. Captions. Captions are for convenience only and should not be used
in interpreting this Amendment.

         11. Final Agreement. (a) In connection with the Loans, Borrowers and
Bank have executed and delivered this Amendment and the Loan Documents
(collectively the "Written Loan Agreement").

                  (b) It is the intention of Borrowers and Bank that this
paragraph be incorporated by reference into each of the Loan Documents.
Borrowers and Bank each warrant and represent that their entire agreement with
respect to the Loans is contained within the Written Loan Agreement, and that no
agreements or promises have been made by, or exist by or among, Borrowers and
Bank that are not reflected in the Written Loan Agreement.






TOREADOR RESOURCES CORPORATION, et al
August 7, 2002
Page 6 of 6

                  (c) THE LOAN AGREEMENT, AS AMENDED, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

         If the foregoing correctly sets forth your understanding of our
agreement, please sign and return one copy of this letter.

                                      Yours very truly,

                                      BANK OF TEXAS, NATIONAL ASSOCIATION


                                  By: /s/ Timothy E. Merrell
                                      -----------------------------------------
                                      Timothy E. Merrell,
                                      Senior Vice President

Agreed on this 7th day of August, 2002:

BORROWERS:

TOREADOR RESOURCES CORPORATION


By:      /s/ Douglas W. Weir
         -------------------------------------
         Douglas W. Weir, Vice President

TOREADOR EXPLORATION & PRODUCTION INC.


By:      /s/ Douglas W. Weir
         -------------------------------------
         Douglas W. Weir, Vice President

TOREADOR ACQUISITION CORPORATION


By:      /s/ Douglas W. Weir
         -------------------------------------
         Douglas W. Weir, Vice President

TORMIN, INC.


By:      /s/ Douglas W. Weir
         -------------------------------------
         Douglas W. Weir, Vice President


Exhibits:
None

EX-10.2

                                                                    EXHIBIT 10.2

                               BANK OF TEXAS, N.A.
                          5956 Sherry Lane, Suite 1100
                               Dallas, Texas 75225




September 23, 2002



TOREADOR RESOURCES CORPORATION
TOREADOR EXPLORATION & PRODUCTION INC.
TOREADOR ACQUISITION CORPORATION
TORMIN, INC.
4809 Cole Avenue, Suite 108
Dallas, Texas 75205

         Re:      Fourth Amendment to Loan Agreement

Ladies and Gentlemen:

         This letter (this "Amendment") amends the loan agreement dated February
16, 2001, among TOREADOR RESOURCES CORPORATION, a Delaware corporation, TOREADOR
EXPLORATION & PRODUCTION INC., a Texas corporation, TOREADOR ACQUISITION
CORPORATION, a Delaware corporation, and TORMIN, INC., a Delaware corporation
(collectively "Borrowers"), and BANK OF TEXAS, NATIONAL ASSOCIATION ("Bank"), a
national banking association, as amended by the First Amendment dated November
8, 2001, a Second Amendment dated May 9, 2002, and a Third Amendment dated
August 1, 2002 (the "Loan Agreement"). Capitalized terms below have the meanings
assigned in the Loan Agreement.

1. Borrowing Base, Tranches, and Rates. (a) Effective as of the date of this
Amendment, Bank has set the Borrowing Base at $19,375,000.00, and the MCR will
continue at $150,000 per month, until reset by Bank in connection with the next
redetermination of the Borrowing Base. The next scheduled redetermination of the
Borrowing Base will be March 1, 2003.

                  (b) Subsection (a) of Section 1 of the Loan Agreement is
amended to eliminate the tranches and to modify the interest rates and thus to
read as follows:

                  "(a) Subject to the terms and conditions set forth in the Loan
         Agreement









Toreador Resources Corporation, et al
September 23, 2002
Page 2 of 5

         and the other agreements, instruments, and documents executed and
         delivered in connection with the Loan Agreement (collectively the "Loan
         Documents"), Bank agrees to make a revolving loan in the face amount of
         $75,000,000.00 to Borrowers (the "Revolving Loan") on the terms set
         forth in the Revolving Promissory Note attached as Exhibit A to this
         Amendment (the "Revolving Note"), for the purposes set forth in the
         Loan Agreement. All amounts owed on the Revolving Loan shall bear
         interest from the date advanced until paid or until default or maturity
         at a fluctuating rate equal to the sum of the Stated Rate (as defined
         below), plus one percent (1.0%), but subject to the default rate set
         forth in the Revolving Note. The "Stated Rate" shall be equal to the
         greater of (i) the rate of interest per annum then most recently
         established by JP MORGAN CHASE BANK as its "prime rate" on commercial
         loans, or (ii) the sum of the rate of interest, then most recently
         published by The Wall Street Journal as the "federal funds" rate for
         reserves traded among commercial banks for overnight use, plus one half
         of one percent (0.5 %), both as published in the Money Rates section of
         The Wall Street Journal."

                  (c) Subsection (b) of Section 1 of the Loan Agreement is
amended to change the Borrowing Base and to eliminate the tranches and thus to
read as follows:

                           "(b) Subject to the terms and conditions of the Loan
         Agreement, Borrowers may borrow, repay, and reborrow on a revolving
         basis from time to time during the period commencing on the date hereof
         and continuing through 11:00 a.m. (Dallas, Texas time) on February 16,
         2006 (the "Termination Date"), such amounts as Borrowers may request
         under the Revolving Loan; provided, however, the total principal amount
         outstanding at any time shall not exceed the lesser of (i) the
         aggregate sums permitted under the Borrowing Base, which is set at
         $19,375,000.00 as of the date of this Amendment, or (ii) $75,000,000.
         All sums advanced under the Revolving Loan, together with all accrued
         but unpaid interest thereon, shall be due and payable in full on the
         Termination Date."

                  (d)      Notwithstanding any provisions to the contrary in the
                           Loan Agreement or the Revolving Note, until Bank
                           agrees otherwise in writing, all amounts owed on the
                           Revolving Note shall be treated as a "Stated Rate
                           Balance" as defined in the Revolving Note and shall
                           bear interest from the date advanced until paid or
                           until default or maturity at a fluctuating rate equal
                           to the sum of the Stated Rate, plus one percent
                           (1.0%), but subject to the default rate set forth in
                           the Revolving Note.

2. Collateral. (a) As security for the Notes, Borrowers previously executed the
Security Documents. Borrowers ratify and confirm the Security Documents,
acknowledge that they are valid, subsisting, and binding, and agree that the
Security Documents secure payment of the Notes and Loans.






Toreador Resources Corporation, et al
September 23, 2002
Page 3 of 5


                  (b) As additional security for the Notes, Toreador Exploration
& Production Inc. will execute and deliver a Deed of Trust and Security
Agreement in Proper Form, covering oil and gas properties located in Meade
County, Kansas. This additional deed of trust will constitute one of the
"Security Documents" as defined in the Loan Agreement.

3. Conditions Precedent. (a) The obligation of Bank to make any further advance
on the Revolving Loan is subject to Borrower's satisfaction, in Bank's sole
discretion, of the following conditions precedent:

                           (1) the negotiation, execution, and delivery of Loan
Documents in Proper Form, including, but not limited to, the following:

                                    (i)      this Amendment;

                                    (ii)     Revolving Note;

                                    (iii)    Borrowing Resolutions; and

                                    (iv)     the Kansas Deed of Trust.

                           (2) satisfactory evidence that Bank holds perfected
liens and security interests in all collateral for the Loans, subject to no
other liens or security interests.

                           (3) there being no order or injunction or other
pending or threatened litigation in which there is a reasonable possibility, in
Bank's judgment, of a decision which could materially adversely affect the
ability of Borrowers to perform under the Loan Documents.

                           (4) Bank shall have completed and approved a review
of title to, and the status of the environmental condition of, Borrower's oil
and gas properties, and the results of such review shall be acceptable to Bank
in its sole discretion.

                           (5) Bank's receipt and review, with results
satisfactory to Bank and its counsel, of information regarding litigation, tax,
accounting, insurance, pension liabilities (actual or contingent), real estate
leases, material contracts, debt agreements, property ownership, and contingent
liabilities of Borrowers and any subsidiaries.

                  (b) Bank will not be obligated to make any advance on the
Loans, if, prior to the time that a loan or advance is made, (i) there has been
any material adverse change in any Borrowers' financial condition since the
most-recent financial statements furnished to Bank, (ii) any representations or
warranties made by any Borrowers in the Loan Agreement or the other Loan
Documents is untrue or incorrect as of the date of the advance or loan, (iii)
Bank has not received all Loan Documents appropriately executed







Toreador Resources Corporation, et al
September 23, 2002
Page 4 of 5


by Borrowers and all other proper parties, (iv) Bank has requested that
Borrowers execute additional loan or security documents and those documents have
not yet been properly executed, delivered, and recorded, or (v) an Event of
Default has occurred.

4. Confirmations. Borrowers hereby represent to Bank that all representations
and warranties of Borrowers set forth in Section 5 of the Loan Agreement are
true and correct as of the date of execution of this Amendment; and that
Borrowers are in compliance as of the date of execution of this Amendment with
all covenants set forth in Section 6 of the Loan Agreement, all financial
covenants set forth in Section 7 of the Loan Agreement, and all reporting
requirements set forth in Section 8 of the Loan Agreement.

5. Validity and Defaults. The Loan Agreement, as amended, remains in full force
and effect. Borrowers acknowledge that the Loan Agreement, the Notes, and the
Security Documents are valid, subsisting, and binding upon Borrowers; no uncured
breaches or defaults exist under the Loan Agreement, as amended; and no event
has occurred or circumstance exists which, with the passing of time or giving of
notice, will constitute a default or breach under the Loan Agreement, as
amended. Borrowers ratify the Loan Agreement, as amended.

6. Fax Provision. This Amendment and the related Loan Documents may be executed
in counterparts, and Bank is authorized to attach the signature pages from the
counterparts to copies for Bank and Borrowers and filing counterparts. At Bank's
option, this Amendment and the related Loan Documents may also be executed by
Borrowers in remote locations with signature pages faxed to Bank. Borrowers
agree that the faxed signatures are binding upon Borrowers, and Borrowers
further agree to promptly deliver the original signatures for this Amendment and
the related Loan Documents by overnight mail or expedited delivery. It will be
an Event of Default if they fail to promptly deliver all required original
signatures.

7. Captions. Captions are for convenience only and should not be used in
interpreting this Amendment.

8. Final Agreement. (a) In connection with the Loans, Borrowers and Bank have
executed and delivered this Amendment and the Loan Documents (collectively the
"Written Loan Agreement").

                  (b) It is the intention of Borrowers and Bank that this
paragraph be incorporated by reference into each of the Loan Documents.
Borrowers and Bank each warrant and represent that their entire agreement with
respect to the Loans is contained within the Written Loan Agreement, and that no
agreements or promises have been made by, or exist by or among, Borrowers and
Bank that are not reflected in the Written Loan Agreement.

                  (c)      THE LOAN AGREEMENT, AS AMENDED, REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.





Toreador Resources Corporation, et al
September 23, 2002
Page 5 of 5


         If the foregoing correctly sets forth your understanding of our
agreement, please sign and return one copy of this letter.

                                         Yours very truly,

                                         BANK OF TEXAS, NATIONAL ASSOCIATION


                                         By:  /s/ Timothy E. Merrell
                                              ---------------------------------
                                              Timothy E. Merrell,
                                              Senior Vice President

Agreed on this 23rd day of September, 2002:

BORROWERS:

TOREADOR RESOURCES CORPORATION


By:      /s/ Douglas W. Weir
         --------------------------------------
         Douglas W. Weir, Vice President

TOREADOR EXPLORATION & PRODUCTION INC.


By:      /s/ Douglas W. Weir
         --------------------------------------
         Douglas W. Weir, Vice President

TOREADOR ACQUISITION CORPORATION


By:      /s/ Douglas W. Weir
         --------------------------------------
         Douglas W. Weir, Vice President

TORMIN, INC.


By:      /s/ Douglas W. Weir
         --------------------------------------
         Douglas W. Weir, Vice President




Exhibits:

A - Revolving Note

EX-10.3

                                                                    EXHIBIT 10.3

                           THIS AGREEMENT MADE AS OF
                           THE 28th DAY OF JUNE, 2002



BETWEEN:



                     TULLOW PAKISTAN (DEVELOPMENTS) LIMITED
                   (hereinafter referred to as the "Creditor")



                                     --and--



                         TOREADOR RESOURCES CORPORATION
                    (hereinafter referred to as the "Debtor")

         WHEREAS the Creditor has commenced proceedings against Trans-Dominion
Energy Corporation and others in Action No. 9901-16339; in the Court of Queen's
Bench of Alberta, Judicial Centre of Calgary, (the "Action");

         AND WHEREAS Trans-Dominion Energy Corporation subsequently amalgamated
with Madison Oil Company to form the amalgamated corporation Madison Oil
Company;

         AND WHEREAS Madison Oil Company subsequently amalgamated with Toreador
Resources Corporation, a body corporate having a place of business in the City
or Dallas, in the State of Texas, United States of America, to form the
amalgamated corporation Toreador Resources Corporation, the "Debtor" herein;

         AND WHEREAS the Creditor and the Debtor have agreed to terms of
compromise of the matters in dispute in the Action, as set out herein;

         NOW THEREFORE in consideration of the covenants set out herein the
parties hereto covenant and agree as follows:




                                      -2-


1.       The matters set forth in the preamble to this Agreement, above, are
         acknowledged to be true.

2.       The Debtor shall pay to Macleod Dixon LLP, in trust for the Creditor
         the sum of FIFTY THOUSAND DOLLARS ($50,000.00) in United States funds
         at the time of execution of this Agreement, which funds shall be
         releaseable from trust immediately.

3.       The Debtor shall pay to the Creditor the further sum of THREE HUNDRED
         AND FIFTY THOUSAND DOLLARS ($350,000.00) in United States funds no
         later than February 3, 2003. Such funds shall be paid to Macleod Dixon
         LLP (Attention: Andrew R. Robertson) ("counsel for the Creditor") in
         trust under trust conditions providing that it shall not be released to
         the Creditor until a Discontinuance of Action No. 9901-16339 has been
         filed at the Court of Queen's Bench of Alberta and the executed Release
         described below bas been provided to the Debtor's counsel.

4.       Upon the receipt, no later than February 3, 2003, by counsel for the
         Creditor of the funds required herein to be paid, the Creditor shall
         instruct such legal counsel to file promptly a Discontinuance of Action
         in the Action and deliver promptly to Code Hunter LLP (Attention: David
         de Vlieger) a filed copy of the said Discontinuance and an executed
         Release in the form attached hereto as SCHEDULE "A". The Debtor shall
         instruct Code Hunter LLP to consent to the said Discontinuance without
         costs payable to any party.

5.       In the event that the Debtor does not pay the funds requited on or
         before February 3, 2003, then the parties agree that the Creditor may
         discontinue the Action as against Karak Petroleum Pakistan Ltd. and
         thereafter the proceedings in the Action shall continue according to
         the schedule set out on the draft Consent Order attached hereto as
         SCHEDULE "B", and the Debtor and Creditor hereby instruct their legal
         counsel to consent irrevocably, immediately upon execution of this
         Agreement, to the said Consent Order and that the Consent Order shall
         be held by counsel for the Creditor until February 4, 2003 on the
         following terms:


                                      -3-


         (a)      If the sum of THREE HUNDRED AND FIFTY THOUSAND DOLLARS
                  ($350,000.00) (as well as the initial FIFTY THOUSAND DOLLARS
                  ($50,000) (U.S. Funds) is not paid on or before February 3,
                  2003, the Order may be presented to the Court for signature
                  and entry, and

         (b)      If the said sum is paid on or before February 3, 2003, then
                  the Order shall not be used.

6.       If the Creditor discontinues the Action as against Karak Petroleum
         Pakistan Ltd., such discontinuance shall be without prejudice to the
         respective legal positions of the parties to this Agreement.

7.       This Agreement shall be governed by the laws of Alberta and, as
         applicable, the laws of Canada.

         IN WITNESS WHEREOF the parties have executed this Agreement, in
counterpart and by facsimile, as of the date first set out above.

                     TULLOW PAKISTAN (DEVELOPMENTS) LIMITED

                             Per: /s/ Graham Martin, Director
                                  ---------------------------------------------

                             TOREADOR RESOURCES CORPORATION

                             Per: /s/ G. Thomas Graves III, President and CEO
                                  ---------------------------------------------






                                  SCHEDULE "A"

                                     RELEASE

         KNOW ALL PERSONS BY THESE PRESENTS that TULLOW PAKISTAN (DEVELOPMENTS)
LIMITED, being a body corporate incorporated in Jersey, Channel Islands, having
its registered office at Channel House, Green Street, St. Helier, Jersey in the
City of London, in the United Kingdom of Great Britain and Northern Ireland, for
and in consideration of the sum of FOUR HUNDRED THOUSAND DOLLARS ($400,000.00)
in United States Currency, paid by or on behalf of TOREADOR RESOURCES
CORPORATION, the receipt and sufficiency whereof being hereby acknowledged, does
hereby remise and release, and does forever discharge TOREADOR RESOURCES
CORPORATION, as well as TRANS-DOMINION ENERGY CORPORATION and TRANS-DOMINION
HOLDING LTD. as well as their successors and assigns (collectively referred to
herein as the "RELEASEES"), of and from all actions, causes of action, suits,
debts, dues, sums of money, claims and demands whatsoever at law or in equity
which it ever had, or now has, or which it, or its successors or assigns
hereafter can, shall, or may have against the RELEASEES, or any of them, in
relation to any matter or matters or claims whatsoever, including any matter or
matters or claims which arise out of or are in any way connected with:

         (a)      the matters referred to and alleged in the pleadings filed in
                  Action Number 9901-16339 in the Court of Queen's Bench of
                  Alberta, Judicial Centre of Calgary,

         (b)      that Joint Operating Agreement made the 21st day of July, 1987
                  between Ranger Oil Limited, Sabre Petroleum Limited and Oil &
                  Gas Development Corporation, as amended and assigned.

         TULLOW PAKISTAN (DEVELOPMENTS) LIMITED acknowledges that the taking of
this Release shall not be construed as an admission of any liability on the part
of any of the RELEASEES.

         IN WITNESS WHEREOF the undersigned has executed this Release by its
officer duly authorized in that behalf as of this ___th day of ___________,
200_.

                     TULLOW PAKISTAN (DEVELOPMENTS) LIMITED

                     Per:
                             ----------------------------------------








                                  SCHEDULE "B"



                                                           Action No. 9901-16339

                    IN THE COURT OF QUEEN'S BENCH OF ALBERTA
                           JUDICIAL CENTRE OF CALGARY



BETWEEN:



                     TULLOW PAKISTAN (DEVELOPMENTS) LIMITED

                                                                       Plaintiff

                                      -and-



         TRANS-DOMINION ENERGY CORPORATION, TRANS-DOMINION HOLDING LTD.
                        AND KARAK PETROLEUM PAKISTAN LTD.

                                                                      Defendants


BEFORE THE HONOURABLE             )   At the Courthouse, in the City of Calgary,
JUSTICE                           )   in the Province of Alberta, on _________,
IN CHAMBERS                       )   the ___ day of _________, 2003



                                  CONSENT ORDER



         UPON the application of Counsel for the Plaintiff; AND UPON noting the
consent endorsed thereon by Counsel for the Defendant, Trans-Dominion Energy
Corporation and Trans-Dominion Holding Ltd.; AND UPON BEING ADVISED that the
Defendant, Karak Petroleum Pakistan Ltd., is in bankruptcy proceedings in the
Isle of Man, British Isles; IT IS HEREBY ORDERED as follows:





1.       The Defendant Trans-Dominion Energy Corporation shall provide answers
         to all undertakings given by its representative at Examinations for
         Discovery no later than Friday, February 14, 2003.

2.       Examinations for Discovery by both Plaintiff and Defendants on matters
         arising out of undertakings shall be completed on or before March 31,
         2003.

3.       A pre-trial conference shall be arranged for the first date following
         March 31, 2003 as is convenient to the Court's schedule as well as
         counsel for the Plaintiff and the Defendant, Trans-Dominion Energy
         Corporation and Trans-Dominion Holding Ltd.

4.       The Plaintiff's discontinuance of its claim against Karak Petroleum
         Pakistan Ltd. shall be without prejudice to its claim against the
         remaining Defendants.

5.       The parties are given leave to return to the Court for any further
         Order as may be necessary to achieve the expeditious trial of this
         matter.

                                    -----------------------------------------
                                    J.C.Q.B.A

Entered this ___ day of ____________, 2002

- -----------------------------------------
Clerk of the Court

CONSENTED TO this __day of July, 2002.

MACLEOD DIXON LLP

Per:
         -----------------------------------
         Andrew R. Robertson
         Solicitors for the Plaintiff

CODE HUNTER LLP

Per:
         -----------------------------------
         David de Vlieger
         Solicitors for the Defendants,
         Trans-Dominion Energy Corporation
         and Trans-Dominion Holding Ltd.






Action No. 9901-16339
- --------------------------------------------------------------------------------

                          IN THE COURT OF QUEEN'S BENCH
                                   OF ALBERTA
                           JUDICIAL CENTRE OF CALGARY

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

BETWEEN:

                                 TULLOW PAKISTAN
                             (DEVELOPMENTS) LIMITED

                                                                       Plaintiff

                                      -and-

                              TRANS-DOMINION ENERGY
                           CORPORATION, TRANS-DOMINION
                                  HOLDING LTD.
                               AND KARAK PETROLEUM
                                  PAKISTAN LTD.

                                                                      Defendants

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

                                  CONSENT ORDER

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







                                Macleod Dixon LLP
                             Barristers & Solicitors
                           3700, 400 - Third Avenue SW
                            Calgary, Alberta T2P 4H2

                               Andrew R. Robertson
                               Telephone: 267-8287
                              Telecopier: 264-5973

                                 File No. 169951