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EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement") by and among Toreador
Royalty Corporation, a Delaware corporation (the "Company"), and each of the
persons listed on the Schedule of Purchasers attached hereto. Such entities or
persons (and any other persons who become a party to this Agreement subsequent
to the date of this Agreement pursuant to Section 1.1) are each referred to
herein as a "Purchaser" and, collectively, as the "Purchasers".
The Company wishes to sell to each Purchaser, and each Purchaser wishes
to buy, on the terms and subject to the conditions set forth in this Agreement,
shares (the "Preferred Shares") of the Company's Series A Convertible Preferred
Stock, par value $1.00 per share (the "Preferred Stock"). The Preferred Shares
are convertible pursuant to the terms of a Certificate of Designation relating
to the Preferred Stock, the form of which is attached hereto as Exhibit A (the
"Certificate of Designation") into shares (the "Conversion Shares") of the
Company's Common Stock, par value $0.15625 per share (the "Common Stock").
Dividends on the Preferred Shares are payable, subject to the terms and
conditions of the Certificate of Designation, in cash or, at the Company's
option, shares of Preferred Stock (the "Dividend Payment Shares"). The Preferred
Shares, the Conversion Shares, and the Dividend Payment Shares are collectively
referred to herein as the "Securities".
The Company has agreed to effect the registration of the Conversion
Shares under the Securities Act of 1933, as amended (the "Securities Act"), upon
the occurrence of certain events set out in and pursuant to a Registration
Rights Agreement of even date herewith by and among the Company and the
Purchasers (the "Registration Rights Agreement"). The sale of the Preferred
Shares by the Company to the Purchasers will be effected in reliance upon the
exemption from securities registration afforded by the provisions of Regulation
D ("Regulation D"), as promulgated by the Securities and Exchange Commission
(the "Commission") under the Securities Act.
The Company and the Purchasers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
1.1 Agreement to Purchase and Sell. Upon the terms set forth herein,
the Company agrees to sell and each Purchaser agrees to purchase, the number of
Preferred Shares set forth below such Purchaser's name on the signature pages
hereof and at a purchase price equal to Twenty-Five Dollars ($25.00) times the
number of Preferred Shares purchased by such Purchaser (the "Purchase Price").
The Company may sell from time to time up to $4,000,000 of Preferred Shares,
provided, however, that at least $3,000,000 of Preferred Shares shall have been
purchased as of the date of the first sale of Preferred Shares pursuant to this
Agreement. Notwithstanding any provision of this Agreement to the contrary, the
Company may from time to time after the date of this Agreement sell, without any
consent or acknowledgment of the Purchasers signatory hereto, additional
Preferred Shares (not to exceed the $4,000,000 limitation set forth in the
preceding sentence) pursuant to the terms of this Agreement. Such additional
sales of Preferred Shares shall be accomplished through execution by such
Purchaser of a signature page to this Agreement and countersignature thereof by
the Company. Photocopies of such additional signature pages shall be delivered
to each other Purchaser. The closing of the purchase and sale of the
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Preferred Shares will be deemed to occur when this Agreement and the other
Transaction Documents (as defined below) have been executed and delivered by
the Company and each Purchaser (which delivery may be effected by facsimile
transmission), and full payment of the Purchase Price has been made by each
Purchaser by wire transfer or immediately available funds against physical
delivery by the Company of duly executed certificates representing the
Preferred Shares purchased by such Purchaser hereunder.
1.2 Certain Definitions. When used herein, (A) "business day" shall
mean any day on which the New York Stock Exchange and commercial banks in the
city of New York are open for business, (B) an "affiliate" of a party shall mean
any person or entity controlling, controlled by or under common control with
that party and (C) "control" shall mean, with respect to an entity, the ability
to direct the business, operations or management of such entity, whether through
an equity interest therein or otherwise.
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser, solely with respect to him or it, hereby makes the
following representations and warranties to the Company and agrees with the
Company that, as of the date of this Agreement:
2.1 Authorization; Enforceability. If an entity, such Purchaser is
duly and validly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization with full power and
authority to purchase the Preferred Shares and to execute and deliver this
Agreement. This Agreement and the Registration Rights Agreement have been duly
and validly authorized, executed and delivered by or on behalf of such
Purchaser. This Agreement constitutes such Purchaser's valid and legally binding
obligation, enforceable in accordance with its terms.
2.2 Accredited Investor; Investment Intent. Such Purchaser is an
accredited investor as that term is defined in Rule 501(a) of Regulation D, and
is acquiring the Preferred Shares solely for his or its own account for
investment purposes as a principal and not with a present view to the public
resale or distribution of all or any part thereof, except pursuant to sales that
are exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act; provided, however that in making such
representation, such Purchaser does not agree to hold the Securities for any
minimum or specific term and reserves the right to sell, transfer or otherwise
dispose of the Securities at any time in accordance with the provisions of this
Agreement and with Federal and state securities laws applicable to such sale,
transfer or disposition.
2.3 Information. The Company has provided such Purchaser with
information regarding the business, operations and financial condition of the
Company, and has granted to such Purchaser the opportunity to ask questions of
and receive answers from representatives of the Company, its officers,
directors, employees and agents concerning the Company and materials relating to
the terms and conditions of the purchase and sale of the Preferred Shares
hereunder. Such Purchaser understands that his or its investment in the
Preferred Shares involves a high degree of risk. Such Purchaser has sought such
accounting, legal and tax advice as he or it has considered necessary to make an
informed investment decision with respect to his or its acquisition of the
Preferred Shares.
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2.4 Limitations on Disposition. Such Purchaser acknowledges that,
except as provided in the Registration Rights Agreement, the Securities have not
been and are not being registered under the Securities Act and may not be
transferred or resold without registration under the Securities Act or unless
pursuant to an exemption therefrom.
2.5 Legend. Such Purchaser understands that the certificates
representing the Securities will bear at issuance a restrictive legend in
substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, and may
not be offered or sold unless a registration statement under the
Securities Act and applicable state securities laws shall have
become effective with regard thereto, or an exemption from
registration under the Securities Act and applicable state
securities laws is available in connection with such offer or
sale. Such securities are issued subject to the provisions of (i)
the Certificate of Designation relating to the Series A
Convertible Preferred Stock of Toreador Royalty Corporation (the
"Company"), (ii) a Securities Purchase Agreement by and among the
Company and the Purchasers signatory thereto (collectively, the
"Purchasers") and (iii) a Registration Rights Agreement by and
among the Company and the Purchasers."
Notwithstanding the foregoing, it is agreed that, as long as
(A) the resale or transfer (including without limitation a pledge) of any of the
Securities is registered pursuant to an effective registration statement, (B)
such Securities can be sold pursuant to Rule 144 under the Securities Act ("Rule
144") and a registered broker dealer provides to the Company a customary
broker's Rule 144 letter and such Purchaser delivers to the Company a customary
seller's representation letter and a copy of any Form 144 which may have been
required to be filed by such Holder pursuant to Rule 144, or (C) such Securities
are eligible for resale under Rule 144(k), such Securities shall be issued
without any legend or other restrictive language and, with respect to Securities
upon which such legend is stamped, the Company shall issue new certificates
without such legend to the holder upon request.
2.6 No Governmental Review. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
2.7 Residency. Such Purchaser is a resident of that state or
jurisdiction specified on the Purchaser's signature page to this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby makes the following representations and warranties
to each Purchaser and agrees with such Purchaser that, as of the date of this
Agreement:
3.1 Organization, Good Standing and Qualification. Each of the
Company and its subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and
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authority to carry on its business as now conducted. Each of the Company and its
subsidiaries is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure so to qualify would have a material
adverse effect on the consolidated business or financial condition of the
Company and its subsidiaries taken as a whole. The term "subsidiaries" shall
mean entities in which the Company has an equity interest of 50% or greater.
3.2 Authorization; Consents. The Company has the requisite corporate
power and authority to enter into and perform its obligations under (i) this
Agreement, (ii) the Registration Rights Agreement and (iii) all other
agreements, documents, certificates or other instruments delivered by the
Company contemporaneously herewith (the instruments described in (i), (ii) and
(iii) being collectively referred to herein as the "Transaction Documents"), to
execute and perform its obligations under the Certificate of Designation, to
issue and sell the Preferred Shares to such Purchaser in accordance with the
terms hereof, to issue the Conversion Shares upon conversion of the Preferred
Shares in accordance with the Certificate of Designation, and to issue the
Dividend Payment Shares in accordance with the Certificate of Designation. All
corporate action on the part of the Company by its officers, directors and
stockholders necessary for (A) the authorization, execution and delivery of, and
the performance by the Company of its obligations under, the Transaction
Documents and (B) the authorization, execution and filing of, and the
performance by the Company of its obligations under, the Certificate of
Designation has been taken, and no further consent or authorization of the
Company, its Board of Directors, its stockholders, any governmental agency or
organization (other than such approval as may be required under the Securities
Act and applicable state securities laws in respect of the Registration Rights
Agreement), or any other person or entity is required (pursuant to any rule of
the National Association of Securities Dealers, Inc., other than with respect to
the listing of the Conversion Shares on the Nasdaq National Market System, or
otherwise).
3.3 Enforcement. The Transaction Documents and the Certificate of
Designation constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except as such
enforcement may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors' rights generally, (ii) general principles of equity
and (iii) as to indemnification under the Securities Act or Exchange Act,
principles of public policy.
3.4 Disclosure Documents; Agreements; Financial Statements; Other
Information. The Company has filed with the Commission: (i) the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, (ii) Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998 and September
30, 1998, (iii) all Current Reports on Form 8-K required to be filed with the
Commission since December 31, 1997 and (iv) the Company's definitive Proxy
Statement for its 1998 Annual Meeting of Stockholders (collectively, the
"Disclosure Documents"). Each Disclosure Document, as of the date of the filing
thereof with the Commission, conformed in all material respects to the
requirements of the Exchange Act, and the rules and regulations thereunder and,
as of the date of such filing, such Disclosure Document did not contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the Disclosure
Documents complied as to form in all material respects with applicable
accounting
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requirements and the published rules and regulations of the Commission with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied at the times and
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end adjustments).
3.5 Valid Issuance. The Preferred Shares are duly authorized and,
when issued, sold and delivered in accordance with the terms hereof, (i) will be
duly and validly issued, fully paid and nonassessable, free and clear of any
taxes, liens, claims, preemptive or similar rights or encumbrances imposed by or
through the Company, (ii) based in part upon the representations of such
Purchaser in this Agreement, will be issued, sold and delivered in compliance
with all applicable Federal and state securities laws and (iii) will be entitled
to all of the rights, preferences and privileges set forth in the Certificate of
Designation. The Conversion Shares are duly authorized and reserved for issuance
and, when issued upon conversion of the Preferred Shares in accordance with the
terms of the Certificate of Designation, will be duly and validly issued, fully
paid and nonassessable, free and clear of any taxes, liens, claims, preemptive
or similar rights or encumbrances imposed by or through the Company. The
Dividend Payment Shares are duly authorized and, upon the issuance thereof in
accordance with the terms of the Certificate of Designation, will be duly and
validly issued, fully paid and nonassessable, free and clear of any taxes,
liens, claims, preemptive or similar rights or encumbrances imposed by or
through the Company.
3.6 No Conflict with Other Instruments. Neither the Company nor any
of its subsidiaries is in violation of any provisions of its charter, Bylaws or
any other governing document as amended and in effect on and as of the date
hereof or in default (and no event has occurred which, with notice or lapse of
time or both, would constitute a default) under any provision of any instrument
or contract to which it is a party or by which it is bound, or of any provision
of any Federal or state judgment, writ, decree, order, statute, rule or
governmental regulation applicable to the Company, which would have a material
adverse effect on the consolidated business or financial condition of the
Company and its subsidiaries taken as a whole. The (i) execution, delivery and
performance of this Agreement and the other Transaction Documents, (ii)
execution and filing of the Certificate of Designation, and (iii) consummation
of the transactions contemplated hereby and thereby (including without
limitation, the issuance of the Preferred Shares, and the reservation for
issuance and issuance of the Conversion Shares, and the Dividend Payment Shares)
will not result in any such violation or be in conflict with or constitute, with
or without the passage of time and giving of notice, either a default under any
such provision, instrument or contract or an event which results in the creation
of any lien, charge or encumbrance upon any assets of the Company or of any of
its subsidiaries, which violation, conflict, default, lien, charge or
encumbrance would have a material adverse affect on the consolidated business or
financial condition of the Company and its subsidiaries taken as a whole, or the
triggering of any preemptive or anti-dilution rights or rights of first refusal
or first offer on the part of holders of the Company's securities.
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4. COVENANTS OF THE COMPANY.
4.1 Corporate Existence. The Company shall, so long as any Purchaser
or any affiliate of such Purchaser beneficially owns any Securities, maintain
its corporate existence in good standing and shall pay all taxes owed by it when
due except for taxes which the Company reasonably disputes or as to which the
failure to pay could not reasonably be expected to have a material adverse
effect on the consolidated business or financial condition of the Company and
its subsidiaries taken as a whole.
4.2 Provision of Information. Upon written request, the Company shall
provide each Purchaser with copies of its annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and proxy statements and other
materials sent to stockholders, in each such case promptly after the filing
thereof with the Commission, until the conversion or redemption of all of the
Preferred Shares held by such Purchaser.
4.3 Form D; Blue-Sky Qualification. The Company agrees to file a
Form D with respect to the Securities as required under Regulation D. The
Company shall, on or before the Closing, take such action as is necessary to
qualify the Preferred Shares for sale under applicable state or "blue-sky" laws
or obtain an exemption therefrom.
4.4 Reporting Status. As long as any Purchaser or any affiliate of
such Purchaser beneficially owns any Securities and until the date on which any
of the foregoing may be sold to the public pursuant to Rule 144(k) (or any
successor rule or regulation), (i) the Company shall timely file with the
Commission all reports required to be so filed pursuant to the Exchange Act and
(ii) the Company shall not terminate its status as an issuer required by the
Exchange Act to file reports thereunder even if the Exchange Act or the rules or
regulations thereunder would permit such termination.
4.5 Reservation of Common Stock. The Company shall at all times have
authorized and reserved for issuance, free from any preemptive rights, solely
for the purpose of effecting conversions of the Preferred Shares hereunder, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all of the Preferred Shares in full.
4.6 Use of Proceeds. The Company shall use the proceeds from the sale
of the Preferred Shares for general corporate purposes only, in the ordinary
course of its business and consistent with past practice and shall not use such
proceeds to make a loan to any employee, officer or director of the Company or
to repurchase or pay a dividend on shares of Common Stock.
4.7 Quotation on Nasdaq. The Company shall (i) promptly following the
Closing, take such action as may be necessary to include the Conversion Shares
on the Nasdaq National Market System, and (ii) use its best efforts to maintain
the designation and quotation, or listing, of the Common Stock on the Nasdaq
National Market System, the Nasdaq Small Cap Market, the New York Stock Exchange
or the American Stock Exchange.
5. MISCELLANEOUS.
5.1 Survival; Severability. The representations, warranties,
covenants and indemnities made by the parties herein shall survive the closing
of this Agreement
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notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon, provided that the representations and warranties
contained herein shall survive for two (2) years following the date of this
Agreement. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that in such case the parties shall negotiate in good faith
to replace such provision with a new provision which is not illegal,
unenforceable or void, as long as such new provision does not materially change
the economic benefits of this Agreement to the parties.
5.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. The Purchaser may assign its
rights and obligations hereunder, in connection with any private sale or
transfer of the Preferred Shares in accordance with the terms hereof, as long
as, as a condition precedent to such transfer, the transferee executes an
acknowledgment agreeing to be bound by the applicable provisions of this
Agreement, in which case the term "Purchaser" shall be deemed to refer to such
transferee as though such transferee were an original signatory hereto. The
Company may not assign it rights or obligations under this Agreement.
5.3 Independent Nature of Purchasers' Obligations and Rights.
The obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered herewith, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of the Certificate of Designation,
this Agreement or the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any proceeding
for such purpose.
5.4 No Reliance; Representations by Purchasers. Each party
acknowledges that (i) it has such knowledge in business and financial matters as
to be fully capable of evaluating this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby, (ii) it is not
relying on any advice or representation of the other party in connection with
entering into this Agreement, the other Transaction Documents or such
transactions (other than the representations made in this Agreement or the other
Transaction Documents), (iii) it has not received from such party any assurance
or guarantee as to the merits (whether legal, regulatory, tax, financial or
otherwise) of entering into this Agreement or the other Transaction Documents or
the performance of its obligations hereunder and thereunder, and (iv) it has
consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisors to the extent that it has deemed necessary, and has
entered into this Agreement and the other Transaction Documents based
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on its own independent judgment and on the advice of its advisors as it has
deemed necessary, and not on any view (whether written or oral) expressed by
such party.
5.5 Injunctive Relief. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to each Purchaser
and that the remedy or remedies at law for any such breach will be inadequate
and agrees, in the event of any such breach, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate and
specific performance of such obligations without the necessity of showing
economic loss.
5.6 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed under the laws of the State of Texas without regard to
the conflict of laws provisions thereof. Each party hereby irrevocably submits
to the non-exclusive jurisdiction of the state and federal courts sitting in the
City of Dallas, Dallas County, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.
5.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
5.8 Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
5.9 Notices. Any notice, demand or request required or
permitted to be given by any party to any other party pursuant to the terms of
this Agreement shall be in writing and shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
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 a nationally-recognized 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 Company:
Toreador Royalty Corporation
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn.: Chief Executive Officer
Fax: (000) 000-0000
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with a copy to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
and if to any Purchaser, to such address for such Purchaser as shall appear on
the signature page hereof executed by such Purchaser, or as shall be designated
by such Purchaser in writing to the Company.
5.10 Expenses. The Company and each Purchaser shall pay all
costs and expenses that it incurs in connection with the negotiation, execution,
delivery and performance of this Agreement.
5.11 Entire Agreement; Amendments. This Agreement and the
other Transaction Documents constitute the entire agreement between the parties
with regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended except pursuant to a written instrument executed by
the Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then outstanding, and no provision hereof may be waived other than by a written
instrument signed by the party against whom enforcement of any such waiver is
sought.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
PURCHASER NAME:
By: /s/ XXXXXXX X. XXX
--------------------------------------- Dated December 7, 1998
Name: Xxxxxxx X. Xxx
Title:
ADDRESS:
0000 Xxxx Xxxxxx
--------------------------------------
Xxxxxx, Xxxxx 00000
--------------------------------------
Tel: 000-000-0000
---------------------------------
Fax: 000-000-0000
---------------------------------
Dollar Amount of Series A Preferred Stock to be Purchased: $ 1,000,000
----------------
Accepted this 16th day of December 1998.
TOREADOR ROYALTY CORPORATION
By: /s/ G. XXXXXX XXXXXX III
---------------------------------------------------
Name: G. Xxxxxx Xxxxxx III
Title: President and Chief Executive Officer
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SCHEDULE OF PURCHASERS
PURCHASE PRICE OF
PURCHASER NAME ADDRESS SERIES A PREFERRED STOCK
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