LOAN AND GUARANTEE AGREEMENT

Article/

Section

Item

Page No.

ARTICLE I

2

Definitions and Interpretation

2

Section 1.01.

Definitions

2

Section 1.02.

Financial Calculations

32

Section 1.03.

Interpretation

32

Section 1.04.

Business Day Adjustment

33

ARTICLE II

33

The Facility

33

Section 2.01.

The Facility

33

Section 2.02.

Facility Procedure and Rollover

34

Section 2.03.

Interest

35

Section 2.04.

Change in Interest Period

37

Section 2.05.

Default Rate Interest

37

Section 2.06.

Repayment

38

Section 2.07.

Prepayment and Mandatory Prepayment

38

Section 2.08.

Fees

41

Section 2.09.

Currency and Place of Payments

42

Section 2.10.

Allocation of Partial Payments

43

Section 2.11.

Increased Costs

43

Section 2.12.

Unwinding Costs

43

Section 2.13.

Suspension or Cancellation by IFC

44

Section 2.14.

Cancellation by the Borrowers

45

Section 2.15.

Taxes

45

Section 2.16.

Expenses

45

Section 2.17.

Limitation of Liability

47

ARTICLE III

47

Guarantee

47

Section 3.01.

Guarantee

47

Section 3.02.

Indemnity

48

Section 3.03.

Continuing Guarantee

48

Section 3.04.

No Set-off

48

Section 3.05.

Taxes

48

Section 3.06.

Currency and Place of Payment

49

Article/

Section

Item

Page No.

Section 3.07.

Certificate Conclusive

50

Section 3.08.

Allocation

50

Section 3.09.

Waivers and Defenses

50

Section 3.10.

Immediate Recourse

51

Section 3.11.

Non-Competition

51

Section 3.12.

Bankruptcy or Liquidation of Company

52

Section 3.13.

Appropriation of Monies

52

Section 3.14.

Reinstatement

52

Section 3.15.

Additional Security

53

Section 3.16.

Limitation of Liability

53

ARTICLE IV

53

Representations and Warranties

53

Section 4.01.

Representations and Warranties of Each Obligor

53

Section 4.02.

Representations and Warranties of Madison Oil and Toreador France

57

Section 4.03.

IFC Reliance

58

ARTICLE V

58

Conditions of Disbursement

58

Section 5.01.

Conditions of First Disbursement

58

Section 5.02.

Conditions of All Disbursements

60

Section 5.03.

Additional Conditions of the first A Loan

63

Section 5.04.

Certification

64

Section 5.05

Conditions for IFC Benefit

64

ARTICLE VI

64

Particular Covenants

64

Section 6.01.

Affirmative Covenants

64

Section 6.02.

Negative Covenants

70

Section 6.03.

Reporting Requirements

77

Section 6.04.

Insurance

80

ARTICLE VII

83

Events of Default

83

Section 7.01.

Acceleration after Default

83

Article/

Section

Item

Page No.

Section 7.02.

Events of Default

84

Section 7.03.

Bankruptcy

87

ARTICLE VIII

87

Miscellaneous

87

Section 8.01.

Saving of Rights

87

Section 8.02.

Notices

88

Section 8.03.

English Language

89

Section 8.04.

Term of Agreement

89

Section 8.05.

Applicable Law and Jurisdiction

90

Section 8.06.

Disclosure of Information

91

Section 8.07.

Indemnification

92

Section 8.08.

Successors and Assignees

92

Section 8.09.

Amendments, Waivers and Consents

93

Section 8.10.

Counterparts

93

Article/

Section

Item

Page No.

ANNEX A

96

PROJECT COST AND FINANCIAL PLAN

96

ANNEX B

97

KEY AUTHORIZATIONS

97

ANNEX C

99

INSURANCE REQUIREMENTS

99

ANNEX D

102

PROHIBITED ACTIVITIES

102

SCHEDULE 1

104

FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY

104

SCHEDULE 2

106

FORM OF REQUEST FOR LOANS

106

SCHEDULE 3

109

FORM OF LOAN RECEIPT

109

SCHEDULE 4

110

FORM OF SERVICE OF PROCESS LETTER

110

SCHEDULE 5

112

IFC BASE CASE ASSUMPTIONS

112

SCHEDULE 6

115

FORM OF LETTER TO COMPANY’S AUDITORS

115

SCHEDULE 7

117

INFORMATION TO BE INCLUDED IN QUARTERLY AND ANNUAL REVIEW OF OPERATIONS

117

SCHEDULE 8

123

GROUP OWNERSHIP

123

"A Loan"

the principal amount of each borrowing under the A Loan Facility or, as the context requires, the principal amount outstanding of that borrowing; provided that for avoidance of doubt, and in accordance with Section 2.02(c) hereof, on each Interest Payment Date all A Loans (including Rollover Loans) outstanding prior to such Interest Payment Date shall (to the extent not repaid and subject to the fulfillment of the conditions for the making of each Rollover Loan set forth in Section 5.02 ( Conditions of All Disbursements ) and Section 5.04 ( Certification )) be rolled over into a single A Loan on such Interest Payment Date;

"A Loan Facility"

the facility specified in Section 2.01(a)(i) ( Loan Procedure and Rollover ) or, as the context requires, its principal amount from time to time outstanding thereunder;

"A Loan Interest Rate"

for any Interest Period, the rate at which interest is payable on each A Loan during that Interest Period, determined in accordance with Section 2.03 ( Interest ) and, if applicable, Section 2.04 ( Change in Interest Period );

"Accounting Standards"

United States Generally Accepted Accounting Principles promulgated by the Financial Accounting Standards Board ("FASB"), together with pronouncements thereon from time to time by FASB and applied on a consistent basis;

"Accounts Agreements"

upon execution, the French Accounts Agreement, the Turkish Accounts Agreement and the Romanian Accounts Agreement;

"Additional Compensation"

as of the date of any calculation, an amount equal to:

(i)

(A)

US$10,000,000 (except in respect of any calculation made in respect of the payments due after December 15, 2014, in which case such number shall be US$5,000,000); divided by

(B)

the product of two (2) and Adjusted Tangible Net Worth in respect of the immediately preceding Financial Year;

multiplied by

(ii)

EBITDAX for the Company in respect of the immediately preceding Financial Year;

"Adjusted Financial Debt"

Financial Debt on a Consolidated Basis, excluding any Financial Debt incurred in respect of the Existing Convertible Senior Notes;

"Adjusted Tangible Net Worth"

as of the date of any calculation:

(i)

Tangible Net Worth of the Company as at December 31, 2005 as reflected in its audited annual financial statements for Financial Year 2005; plus

(ii)

the positive or negative amount of net income in any subsequent Financial Year as reflected in the annual audited financial statements of the Company for that Financial Year; provided that for the purpose of this definition, any income derived from any revaluation of assets, disposal of assets or other extraordinary gains shall not be counted in net income; less

(iii)

the amount of any dividend or distribution made by the Company in the Financial Year referred to in (ii) above,

as such calculation is determined by the Auditors and agreed by IFC;

"Affiliate"

with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person (for purposes of this definition, "control" means the power to direct the management or policies of a Person, directly or indirectly, whether through the ownership of shares or other securities, by contract or otherwise, provided that the direct or indirect ownership of fifty one per cent (51%) or more of the voting share capital of a Person shall be deemed to constitute control of that Person, and "controlling" and "controlled" have corresponding meanings);

"Annual Monitoring Report"

the annual monitoring report setting out the specific social, environmental and developmental impact information to be provided by the Company in respect of the Project, which form shall be in form and substance satisfactory to IFC, and as such form may be amended or supplemented from time to time with IFC’s consent;

"Applicable Margin"

(i)

with respect to the A Loan, two percent (2%) per annum; and

(ii)

with respect to the C Loan:

(x)

one point five percent (1.5%) per annum, until the date of disbursement of the first A Loan; and

(y)

zero point five percent (0.5%) per annum, on and after the date of disbursement of the first A Loan;

"Auditors"

Grant Thornton or such other firm that the Company appoints from time to time as its auditors pursuant to Section 6.01(e) (Affirmative Covenants);

"Authority"

any national, supranational, regional or local government or governmental, administrative, fiscal, judicial, or government-owned body, department, commission, authority, tribunal, agency or entity, or central bank (or any Person, whether or not government owned and howsoever constituted or called, that exercises the functions of a central bank);

"Authorization"

any consent, registration, filing, agreement, notarization, certificate, license, approval, permit, authority or exemption from, by or with any Authority, whether given by express action or deemed given by failure to act within any specified time period and all corporate, creditors’ and shareholders’ approvals or consents;

"Authorized Representative"

in respect of any Obligor, any natural person who is duly authorized by the relevant Obligor to act on its behalf for the purposes specified in, and, in respect of the Company and each Borrower, whose name and a specimen of whose signature appear on, the Certificate of Incumbency and Authority most recently delivered by such Person to IFC;

"Available Amount"

the lesser of:

(i)

(A)

the C Loan in an amount not to exceed $10,000,000, plus

(B)

the Maximum Facility Amount, as cancelled in accordance with Section 2.13

(Suspension or Cancellation by IFC) or Section 2.14 ( Suspension or Cancellation by the Borrowers ), or as reduced in accordance with Section 2.06(b) ( Repayment ) from time to time; and

(ii)

the Borrowing Base Amount,

minus:

(1

)

the amount of any outstanding Loans under the Facility; and

(2

)

in relation to any proposed Loan (other than a Rollover Loan), the amount of any Loans that have been requested by the Borrowers and are due to be made under the Facility on or before the date of the proposed Loan;

"Availability Period"

(i

)

with respect to the A Loan Facility, the period from the date of this Agreement to June 30, 2011; and

(ii)

with respect to the C Loan Facility, the period from the date of this Agreement to June 30, 2007;

"Borrowing Base Amount"

for the relevant Calculation Period:

(i

)

the Loan-Life NPV; divided by

(ii)

(A)

1.2 for Financial Years 2006 and 2007;

(B)

1.3 for Financial Year 2008; and

(C)

1.4 for Financial Year 2009 and thereafter;

"Borrowing Base Assets"

all oil and gas assets (including concessions) with respect to which the Company or any of the other

Obligors has from time to time any Proved Reserves determined in accordance with the Reserves Criteria, and, includes for avoidance of doubt, any assets in France, Hungary, Turkey, Romania and the United States of America, which are, more fully described in the most current Reserves Certification;

"Business Day"

a day when banks are open for business in New York, New York or, solely for the purpose of determining the applicable Interest Rate other than pursuant to Section 2.03 (d) (ii) ( Interest ), London, England;

"C Loan"

the principal amount of the C Loan Facility or, as the context requires, the principal amount outstanding of that facility;

"C Loan Facility"

the facility specified in Section 2.01(a)(ii) ( The Facility ) or, as the context requires, its principal amount from time to time outstanding;

"C Loan Interest Rate"

for any Interest Period, the rate at which interest is payable on the C Loan during that Interest Period, determined in accordance with Section 2.03 ( Interest ) and, if applicable, Section 2.04 ( Change in Interest Period );

"Calculation Period"

for any calculation, a period of four (4) consecutive quarters most recently ended prior to the event requiring the calculation for which financial statements have been or should have been delivered to IFC pursuant to Section 6.03 ( Reporting Requirements );

"CAO"

Compliance Advisor Ombudsman, the independent accountability mechanism for IFC that impartially responds to environmental and social concerns of affected communities and aims to enhance outcomes;

"CAO’s Role"

(i)

to respond to complaints by persons who have been or are likely to be directly affected by the social or environmental impacts of IFC projects; and

(ii)

to oversee audits of IFC’s social and environmental performance, particularly in relation to sensitive projects, and to ensure compliance with IFC’s social and environmental policies, guidelines, procedures and systems;

"Certificate of Incumbency and Authority"

a certificate provided to IFC by each of the Company and the Borrowers in the form of Schedule 1;

"Charter"

with respect to any Obligor, the memorandum and articles of association, statutes, or other constitutive document of such Obligor;

"Change of Control"

any of the following circumstances:

(i)

any Obligor sells, transfers, pledges or otherwise disposes of any shares held by it in another Obligor as of the date hereof, other than a transfer from such Obligor to another Obligor; or

(ii)

Control of any Obligor is otherwise transferred without IFC’s prior written consent, other than a transfer of Control to another Obligor; or

(iii)

any of the Obligors ceases to be the Operator of the respective Borrowing Base Assets of which it is the Operator as of the date hereof (except (A) in Turkey where TPAO may take operatorship over certain of the concessions listed in the most recent Reserve Certification, and (B) for a sale or

transfer permitted under Section 6.02 (o) ( Negative Covenants )); or

(iv)

the board of directors at any date of the Company shall cease to consist of a majority of directors who have continued in such capacity for at least one (1) year as of such date;

"Consolidated" or "Consolidated Basis"

(with respect to any financial statements to be provided, or any financial calculation to be made, under or for the purposes of this Agreement and any other Transaction Document) the method referred to in Section 1.02 (c) ( Financial Calculations ); and the entities whose accounts are to be consolidated are the Company and all of its Subsidiaries or other entities which are required to be consolidated in accordance with the Accounting Standards;

"Contingent Facility Amount"

fifteen million Dollars ($15,000,000);

"Contract Assignment(s)"

the instrument or instruments pursuant to which the relevant Obligors grant to IFC a first ranking security interest in all of their respective rights, interests and benefits under certain gas sales agreements, marketing agreements and oil sales agreement identified therein, and all warranties, guarantees and undertakings issued thereunder, together with the notices and acknowledgements and consents in the forms attached thereto, which instrument shall be in form and substance satisfactory to IFC;

"Control"

the power to direct the management or policies of a Person, directly or indirectly, whether through the ownership of shares or other securities, by contract or otherwise, provided that the direct or indirect ownership of fifty-one per cent (51%) or more of the voting share capital of a Person is deemed to

constitute control of that Person, and "Controlling" and "Controlled" have corresponding meanings;

"Corrective Action Plan"

the plan dated November 3, 2006, a copy of which is attached hereto as an annex to ESRS setting out specific social and environmental measures to be undertaken by the Company and certain of the Obligors, to enable the Project to be in compliance with the Performance Standards, as such action plan may be amended or supplemented from time to time with IFC’s consent;

"Derivative Transaction"

any swap agreement, cap agreement, collar agreement, futures contract, forward contract or similar arrangement with respect to interest rates, currencies or commodity prices;

"Discount Rate"

ten per cent (10%) per annum;

"Dollars" and "$"

the lawful currency of the United States of America;

"EBITDA"

in respect of any period, earnings before interest, taxes, depreciation and amortization;

"EBITDAX"

in respect of any period, earnings before interest, taxes, depreciation, amortization, and expensed exploration expenditures (and for the avoidance of doubt, EBITDAX excludes any write-off of exploration costs);

"Environmental and Social

Manager"

a technically qualified Person, satisfactory to IFC, appointed by the Obligors pursuant to Section 6.01(q) ( Affirmative Covenants );

"Environmental, Health and Safety

Guidelines"

IFC Guidelines for Oil and Gas Developments (Offshore) (December 2000), IFC Occupational Health and Safety Guidelines (June 2003), and World Bank Guidelines for Oil and Gas Development (Onshore) (July 1998) copies of

which have been delivered to, and receipt of which have been acknowledged by, the Company by letter dated November 3, 2006, which guidelines are incorporated herein by reference;

"Event of Default"

any one of the events specified in Section 7.02 ( Events of Default );

"ESRS"

the Environmental and Social Review Summary dated November 3, 2006 and the Corrective Action Plan attached thereto prepared by IFC and approved by the Obligors;

"Existing Convertible Senior

Notes"

5% Convertible Senior Notes due October 1, 2025, issued by Toreador Resources Corporation in an aggregate principal amount of eighty six million and two hundred and fifty thousand Dollars ($86,250,000);

"Facility"

together, the facilities described in Section 2.01 ( The Facility ) comprising the A Loan Facility and the C Loan Facility;

"Final Maturity Date"

June 15, 2015;

"Financial Debt"

with respect to any Person:

(i)

any indebtedness of such Person for borrowed money;

(ii)

the outstanding principal amount of any bonds, debentures, notes, loan stock, commercial paper, acceptance credits, bills or promissory notes drawn, accepted, endorsed or issued by such Person;

(iii)

any indebtedness of such Person for the deferred purchase price of assets or services (except trade accounts incurred and payable in the ordinary course of business to trade creditors within ninety (90) days of the date

they are incurred and which are not more than thirty (30) days overdue);

(iv)

non-contingent obligations of such Person to reimburse any other Person for amounts paid by that Person under a letter of credit or similar instrument (excluding any letter of credit or similar instrument issued for the account of such Person with respect to trade accounts incurred and payable in the ordinary course of business to trade creditors within ninety (90) days of the date they are incurred and which are not more than thirty (30) days overdue);

(v)

the amount of any obligation of such Person in respect of any Financial Lease;

(vi)

amounts raised by such Person under any other transaction having the financial effect of a borrowing and which would be classified as a borrowing under the Accounting Standards;

(vii)

the amount of the obligations of such Person under derivative transactions entered into in connection with the protection against or benefit from fluctuation in any rate or price (but only the net amount owing by such Person after marking the relevant derivative transactions to market);

(viii)

any premium payable by such Person on a mandatory redemption or replacement of any of the foregoing items;

(ix)

all indebtedness of the types described in the foregoing items secured by a lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person;

(x)

all obligations of such Person to pay a specified purchase price for goods and services, whether or not delivered or accepted (i.e., take or pay or similar obligations);

(xi)

any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, any liability of such Person under any sale and leaseback transactions that do not create a liability on the balance sheet of such Person, any obligation under a "synthetic lease" or any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person; and

(xii)

the amount of any obligation in respect of any guarantee or indemnity for any of the foregoing items incurred by any other Person;

"Financial Lease"

any lease or hire purchase contract which would, under the Accounting Standards, be treated as a finance or capital lease;

"Financial Plan"

the proposed sources of financing for the Project as set out in Annex A ( Project Cost and Financial Plan );

"Financial Year"

the accounting year of the Obligors commencing each year on January 1 and ending on the following December 31, or such other period as any Obligor, with IFC’s consent, from time to time designates as its accounting year;

"Financing Documents"

together:

(i)

this Agreement; and

(ii)

the Security Documents;

"French Accounts Agreement"

the agreement or agreements between certain of the Obligors, IFC and an account bank in France acceptable to IFC providing for the establishment of accounts in France into which all of the revenues of Madison Oil and/or Toreador France will be deposited, and the Reserve Account, and security over such accounts in favour of IFC, which agreement shall be in a form and substance satisfactory to IFC;

"Gas Prices"

in respect of any Obligor in any jurisdiction:

(i)

if such Obligor has entered into any Long Term Contracts, as of any date, the lower of (A) the average of contracted price determined in accordance with such Long Term Contracts and (B) the World Bank Group forecast Oil Equivalent Price; and

(ii)

if such Obligor has not entered into any Long Term Contract, as of any date, the lower of (A) such Obligor’s average gas sale price in the prior four (4) quarters and (B) the World Bank forecast Oil Equivalent Price;

"Gas Sales Agreements"

together, the Romania Gas Sales Agreement and, upon execution, the Turkish Gas Sales Agreement;

"Guarantee"

the Guarantors’ guarantee of the Guaranteed Obligations, as set forth in Article III;

"Guaranteed Obligations"

all present and future Obligations of the Borrowers;

"Guarantors"

each entity identified as a Guarantor in the introductory paragraph of this Agreement (including the Borrowers in the capacity of Guarantor);

"IFC Base Case Assumptions"

the economic and technical assumptions and principles used in respect of the IFC Base Case, as

set forth in Schedule 5 and as applied in a manner acceptable to IFC;

"Increased Costs"

the amount certified in an Increased Costs Certificate to be the net incremental costs of, or reduction in return to, IFC in connection with the making or maintaining of the Loans that result from:

(i)

any change in any applicable law or regulation or directive (whether or not having the force of law) or in its interpretation or application by any Authority charged with its administration; or

(ii)

compliance with any request from, or requirement of, any central bank or other monetary or other Authority;

which, in either case, after the date of this Agreement:

(A)

imposes, modifies or makes applicable any reserve, special deposit or similar requirements against assets held by, or deposits with or for the account of, or loans made by, IFC;

(B)

imposes a cost on IFC as a result of IFC having made the Loans or reduces the rate of return on the overall capital of IFC that it would have achieved, had IFC not made the Loans;