Exhibit 10.2
AMENDMENT NO.1 TO
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SECURITIES PURCHASE AGREEMENT
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This AMENDMENT No.1 TO THE SECURITIES PURCHASE AGREEMENT, dated as of
October 28, 2002, (this "Amendment") is entered into among Greka Energy
Corporation, a Colorado corporation, as borrower ("Greka"), Greka Integrated,
Inc., a Colorado corporation ("Greka Integrated"), and each of the entities
listed as a guarantor on the signature pages hereto, as guarantors (each a
"Guarantor" and collectively, the "Guarantors"), and each of the entities listed
as a purchaser on the signature pages hereto (individually, a "Required Holder"
and, collectively, the "Required Holders") and Guggenheim Investment Management,
LLC, as collateral agent (the "Collateral Agent"), and amends the Securities
Purchase Agreement dated as of June 26, 2002 (as amended hereby and as the same
may be further amended, supplemented, or otherwise modified from time to time,
the "Securities Purchase Agreement") entered into among Greka as borrower, the
Guarantors, each of the entities from time to time party thereto as purchasers
(individually, a "Purchaser" and, collectively, the "Purchasers") and the
Collateral Agent as collateral agent.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Greka has agreed (i) to issue and sell to certain of the
Purchasers, and such Purchasers have agreed to purchase from Greka, upon the
terms and conditions hereinafter provided, secured additional Senior
Subordinated Notes in the aggregate principal amount of $14,500,000 and (ii) to
issue to the Collateral Agent additional Warrants to purchase shares of Common
Stock of Greka;
WHEREAS, Greka has entered into a stock purchase agreement dated as of
September 12, 2002, as amended by a First Amendment dated as of September 27,
2002 and a Second Amendment dated as of October 22, 2002 (as the same may be
further amended, supplemented, or otherwise modified from time to time, the
"Windsor Acquisition Agreement"), with P.I. Holdings No.3, Inc. and P.I.
Holdings No.4 Inc., pursuant to which (i) Greka will acquire all of the
outstanding stock of Windsor Energy US Corporation ("Windsor") and (ii) Greka
CA, Inc. ("Greka CA") will acquire 0.25% of the partnership interests of ▇▇▇▇▇▇
Island Limited Partnership ("Rincon"); and
WHEREAS, pursuant to Section 12.1(d) of the Securities Purchase
Agreement, the consent of the Required Holders is required to modify the
Securities Purchase Agreement as requested by the Credit Parties;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
Section 1. DEFINITIONS
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As used in this Amendment, the following terms shall have the meanings
specified below:
"Amendment Effective Date" shall have the meaning set forth in Section
4(a).
All other terms shall have the meanings given thereto in the
Securities Purchase Agreement (as modified by Section 2(a)).
Section 2. AMENDMENTS.
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The Securities Purchase Agreement is, effective as of the Amendment
Effective Date, hereby amended as follows:
(a) Amendments to Article 1 (Definitions).
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(1) The definitions of "Additional Senior Subordinated Notes",
"Additional Senior Subordinated Purchasers" and "Additional Warrants" are
respectively inserted immediately before the definition of "Affiliate", each to
read in its entirety as follows:
"Additional Senior Subordinated Notes" shall mean the additional
secured senior subordinated notes in the aggregate principal amount of
$14,500,000 in the form of Exhibit A-3 hereto to be issued and sold by
Greka to certain of the Purchasers, upon the terms and conditions provided
herein.
"Additional Senior Subordinated Purchasers" shall mean, collectively,
all the Purchasers who hold Additional Senior Subordinated Notes.
"Additional Warrants" shall mean the additional warrants issued by
Greka to the Collateral Agent to purchase, upon the terms and conditions
provided herein, the aggregate number set forth in Schedule A hereto of
shares of Common Stock of Greka, in the form of Exhibit B.
(2) The definition of "Amendment Effective Date" is inserted
immediately before the definition of "Applicable Law", to read in its entirety
as follows:
"Amendment Effective Date" has the meaning set forth in Section 4(a)
of the First Amendment.
(3) The definition of "Cash Interest" is amended by deleting the
words `"Closing Date Rate" and' and inserting in replacement thereof, the
following:
"Interest Rate" and (except with respect to Additional Senior Subordinated
Notes).
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(4) The definition of "Collateral Documents" is amended by
inserting immediately before "and the Mortgages", the following:
the Rincon/Windsor Guaranty, the Rincon Pledge Agreement,.
(5) The definitions of "Compass Debt" and "Compass Loan
Documents" are respectively inserted immediately before the definition of
"Compensation", each to read in its entirety as follows:
"Compass Debt" shall mean all principal, interest and other amounts
outstanding from time to time owing by Windsor and ▇▇▇▇▇▇ (whether as principal
or surety) to Greka, as assigned to Greka by Compass Bank on or before the
Amendment Effective Date.
"Compass Loan Documents" shall mean the Credit Agreement dated as of
March 13, 1998, among Compass Bank, ▇▇▇▇▇▇ and Windsor, the related promissory
note dated as of March 13, 1998 and all other agreements, documents and
instruments evidencing the Compass Debt and any Liens in respect thereof.
(6) The definition of "Credit Parties" is deleted and replaced by
inserting a new definition thereof, to read in its entirety as follows:
"Credit Parties" shall mean Greka and each Guarantor.
(7) The definition of "First Amendment" is inserted immediately
before the definition of "First Priority Collateral", to read in its entirety as
follows:
"First Amendment" shall mean the First Amendment to the
Securities Purchase Agreement dated as of October 28, 2002 among
Greka, the Guarantors, certain of the Purchasers constituting Required
Holders and the Collateral Agent, and which amends this Agreement as
of the Amendment Effective Date.
(8) The definition of "Greka CA" is inserted immediately before
the definition of "Guaranteed Indebtedness", to read in its entirety as follows:
"Greka CA" shall mean Greka CA, Inc., a Colorado corporation.
(9) The definition of "Guarantor" is amended by inserting at the
end of such definition the following:
and (except for the purposes of the definition of "Guaranty") Windsor,
Greka CA and ▇▇▇▇▇▇.
(10) The definition of "Mortgages" is amended by inserting at the
end of such definition the following:
and the ▇▇▇▇▇▇ Mortgage.
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(11) The definition of "Permitted Liens" is amended by inserting
immediately before clause (d) of such definition the following:
and Liens existing, as disclosed in writing to the Collateral Agent,
on the Amendment Effective Date which secure the Compass Debt and which have
been assigned to Greka by Compass Bank.
(12) The definitions of "▇▇▇▇▇▇", "▇▇▇▇▇▇ Mortgage", "Rincon
Pledge Agreement" and "▇▇▇▇▇▇/Windsor Guaranty" are respectively inserted
immediately before the definition of "Sanction/Embargo Programs", each to read
in its entirety as follows:
"Rincon" shall mean ▇▇▇▇▇▇ Island Limited Partnership, a Texas
Limited Partnership.
"▇▇▇▇▇▇ Mortgage" shall mean the mortgage, dated as of the
Amendment Effective Date, executed by Windsor (as General Partner of
▇▇▇▇▇▇) in favor of the Collateral Agent for the benefit of the
Additional Senior Subordinated Purchasers with respect to the oil and
gas and other real estate assets of Ricon.
"▇▇▇▇▇▇ Pledge Agreement" shall mean the Pledge Agreement, dated
as of the date hereof, executed by Windsor and Greka CA in favor of
the Collateral Agent, for the benefit of the Additional Senior
Subordinated Purchasers, pledging such Persons' equity interests in
▇▇▇▇▇▇, in the form of Exhibit E attached hereto.
"▇▇▇▇▇▇/Windsor Guaranty" shall mean that certain Guaranty, dated
as of the Amendment Effective Date, executed by ▇▇▇▇▇▇, ▇▇▇▇▇ CA and
Windsor in favor of the Collateral Agent, for the benefit of the
Additional Senior Subordinated Purchasers, in the form of Exhibit C-2
attached hereto.
(13) The definition of "Senior Subordinated Notes" is deleted and
replaced by inserting a new definition thereof, to read in its entirety as
follows:
"Senior Subordinated Notes" shall mean, collectively, the "Senior
Subordinated Notes", as defined in the Recitals to the Securities
Purchase Agreement, and (except for the purposes of Sections 2.1(b),
2.2(a), 2.8(a) and 2.15(a) and Schedule A, Exhibit A-2 and Annex A
hereto) the Additional Senior Subordinated Notes.
(14) The definition of "Warrants" is deleted and replaced by
inserting a new definition thereof, to read in its entirety as follows:
(15) "Warrants" shall mean, collectively, the "Warrants", as
defined in the Recitals to the Securities Purchase Agreement, and (except for
the purposes of Sections 2.1(c) and (d), 2.2(a), 2.8(a) and 2.15(a)) the
Additional Warrants.
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(16) The definitions of "Windsor", "Windsor Acquisition",
"Windsor Acquisition Documents" and "Windsor Note" are respectively inserted
immediately before the definition of "Zaca Field", each to read in its entirety
as follows:
"Windsor" shall mean Windsor Energy US Corporation, a Delaware
Corporation.
"Windsor Acquisition" shall mean the acquisition by Greka of all
the outstanding stock of Windsor and the other transactions
contemplated by the Windsor Acquisition Documents.
"Windsor Acquisition Documents" shall mean (i) the stock purchase
agreement dated as of September 12, 2002, as amended by a First
Amendment dated as of September 27, 2002 and a Second Amendment dated
as of October 22, 2002, among P.I. Holdings No.3, Inc. as seller, P.I.
Holdings No.4, Inc. and Greka as purchaser, (ii) the ▇▇▇▇▇▇ Island
Acquisition Financial Assurance Program Proposal dated as of September
19, 2002 from IMA Environmental Insurance addressed to Greka and (iii)
each other agreement, document and instrument executed pursuant to any
of the foregoing.
"Windsor Notes" shall mean those unsecured non-interest bearing
notes in the aggregate principal amount of $1,545,000 issued by
Windsor.
(b) Amendments to Article 2 (Purchase of Securities).
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(1) Section 2.1 is hereby amended by inserting at the end of
that section, the following:
(e) Subject to the terms and conditions set forth in this
Agreement, the Additional Senior Subordinated Purchasers agree,
severally and not jointly, to purchase from Greka, and Greka agrees to
issue and sell to each such Additional Senior Subordinated Purchaser,
on the Amendment Effective Date, the Additional Senior Subordinated
Notes to be issued by Greka set forth opposite each such Additional
Senior Subordinated Purchaser's name on Schedule A hereto. The
aggregate principal amount of the Additional Senior Subordinated Notes
to be purchased on the Amendment Effective Date shall be $14,500,000,
and the aggregate purchase price therefor shall be $12,500,000, to be
paid by the Additional Senior Subordinated Purchasers as set forth on
Schedule A hereto.
(f) Subject to the terms and conditions set forth in this
Agreement Greka agrees to issue to the Collateral Agent, on the
Amendment Effective Date, Additional Warrants as set forth opposite
the Collateral Agent's name on Schedule A hereto, in an aggregate
amount set forth on Schedule A of shares of Common Stock. The
Collateral Agent hereby agrees to comply with provisions in the
Warrants issued to it that are applicable to it.
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(2) Section 2.2 is amended (i) by inserting in the first
line immediately before "The closing": (a); and (ii) by inserting at the end of
such section the following:
(b) The closing of the purchase and sale of the Additional Senior
Subordinated Notes and the Additional Warrants (the "Amendment Closing") shall
take place on the Amendment Effective Date at the offices of Weil, Gotshal &
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or such other place as shall
be mutually agreed to by the parties hereto. On the Amendment Effective Date,
Greka will deliver (i) to each Additional Senior Subordinated Purchaser, an
Additional Senior Subordinated Note each payable to such Additional Senior
Subordinated Purchaser against delivery by such Additional Senior Subordinated
Purchaser of the applicable purchase price therefor (as set forth on Schedule A
hereto), by wire transfer of funds in such amount to the account of Greka and
(ii) to the Collateral Agent, an Additional Warrant exercisable for the
applicable number of shares of Common Stock (as set forth on Schedule A hereto).
(3) Section 2.8 is amended (i) by inserting in the first
line immediately before "the Proceeds": (a); and (ii) by inserting at the end of
such section the following:
(b) The proceeds of the purchase price for the Additional Senior
Subordinated Notes shall be used on the Amendment Effective Date
solely as set forth on Schedule 2.8(b) to the First Amendment,
provided, however, that to the extent that such proceeds are not so
applied on the Amendment Effective Date, they shall be applied in
accordance with such Schedule 2.8(b) within 5 days of the Amendment
Effective Date and the failure to do so shall be an additional Event
of Default.
(c) Amendments to Article 3 (Security Interest).
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(1) Section 3.1 is deleted and replaced by a new Section
3.1, to read in its entirety as follows:
3.1 Security Interest To secure (a) in the case of each Credit
Party (except Windsor, Greka CA and ▇▇▇▇▇▇), the prompt payment to the
Purchasers of all Obligations, and (b) in the case of Windsor, ▇▇▇▇▇▇
and Greka CA, the prompt payment to the Additional Senior Subordinated
Purchasers of the Obligations respectively owed by Windsor, Greka CA
and ▇▇▇▇▇▇ each credit Party hereby assigns, pledges and grants to the
Collateral Agent, for the benefit of the Purchasers, a continuing
security interest in and to the Collateral, whether now owned or
existing or hereafter acquired or arising and wheresoever located
(whether or not the same is subject to Article 9 of the Code). All of
the Credit Parties' ledger sheets, files, records, books of account,
business papers and documents relating to the Collateral shall, until
delivered to or removed by the Collateral Agent, be kept by the Credit
Parties in trust for the Collateral Agent until all Obligations have
been paid in full. Each confirmatory assignment schedule or other form
of assignment hereafter executed by any Credit Party shall be deemed
to include the foregoing grant, whether or not the same appears
therein.
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(d) Amendments to Article 6 (Covenants).
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(1) Section 6.1(b)(iii) is deleted and replaced by inserting
a new Section 6.1(b)(iii), to read in its entirety as follows:
(iii) monthly (with respect to the month then most recently
ended): (w) flash reports containing information contained in Schedule
6.1(b) hereto (including with respect to ▇▇▇▇▇▇), (x) average sales
prices of crude oil produced by fields operated by the Credit Parties
and sold to non-affiliates of the Credit Parties, (y) balance sheets
and the related statements of income covering Greka's and its
Subsidiaries' and Greka Integrated's and its Subsidiaries' operations
during each such month, which have been internally prepared by Greka
and Greka Integrated in accordance with GAAP, and (z) the calculation
of Maximum Total Debt to EBITDA for Greka and its Subsidiaries for the
12-month period up to the month most recently ended.
(2) Section 6.1(q) is deleted and replaced by inserting a
new Section 6.1(q), to read in its entirety as follows:
(q) Greka AM, Inc. and Calox, Inc. (1) If, at any time, any
assets of Calox, Inc. are not subject to Liens pursuant to the Bank of
Texas Loan Agreement and the KSI Funding Loan Agreement (which term
includes, for the purposes of this Agreement, any refinancing thereof
by International Publishing Holding Inc., such assets shall thereupon
be transferred to one of the Credit Parties and all documents or
instruments that the Collateral Agent may request in its reasonable
discretion, in form and substance satisfactory to the Collateral
Agent, to perfect the Collateral Agent's Liens in such transferred
assets shall be delivered to the Collateral Agent. (2) If, at any
time, any assets of Greka AM, Inc. are not subject to Liens pursuant
to the Bank of Texas Loan Agreement, Greka AM shall execute and
deliver to the Collateral Agent a ▇▇▇▇▇▇/Windsor Guaranty and a
Guaranty (provided that such Guaranty shall be subordinated to such
▇▇▇▇▇▇ Windsor Guaranty) and shall grant Liens over all of its assets
to secure its Obligations under the ▇▇▇▇▇▇/Windsor Guaranty and shall
deliver to the Collateral Agent all such documents and instruments as
the Collateral Agent may request in its reasonable discretion, in form
and substance satisfactory to the Collateral Agent, to perfect the
Collateral Agent's Liens in such assets.
Greka shall not permit or cause Greka AM, Inc. or Calox, Inc. to
create, incur, assume, guarantee, or otherwise become or remain
directly or indirectly, liable with respect to (i) any Indebtedness,
except Permitted Indebtedness, the Bank of Texas Debt and Indebtedness
under the KSI Funding Loan Agreement not exceeding an amount equal to
$6,000,000 aggregate principal amount minus any principal payments
made in respect thereof after the Closing Date or (ii) any Lien except
Liens described in clauses (a), (b) and (c) through (n) of the
definition of Permitted Liens and any Liens pursuant to the Bank of
Texas Loan Agreement and the KSI Funding Loan Agreement.
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(2) Section 6.2(t) is deleted and replaced by inserting a new
Section 6.2(t), to read in its entirety as follows:
(t) Financial Covenants. Fail to maintain:
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(i) Maximum Tangible Net Worth Ratio. A Tangible Net Worth
Ratio, measured on the last day of each fiscal quarter after the
date hereof, of not more than 1.5:1.00 ;
(ii) Fixed Charge Coverage Ratio. A Fixed Charge Coverage
Ratio, measured on a fiscal quarter-end basis for the 12-month
period ending each fiscal quarter after the date hereof, of not
less than 1.0:1.00.
(iii) Minimum Interest Coverage Ratio. An Interest Coverage
Ratio, measured on a fiscal quarter-end basis for the 12-month
period ending on June 30, 2003 and each fiscal quarter
thereafter, of not less than the ratios set forth below for the
corresponding fiscal quarter:
Fiscal Quarter Ending Ratio
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June 30, 2003 1.50:1.00
September 30, 2003 1.75:1.00
December 31, 2003 and
each fiscal quarter thereafter 2.00:1.00
(iv) Minimum EBITDA. EBITDA for Greka and its Subsidiaries
for the period commencing on the Closing Date and ending on each
of the following dates to be not less than the amount set forth
below for the corresponding period:
Period Ending Amount
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June 30, 2002 $2,100,000
September 30, 2002 $4,800,000
December 31, 2002 $8,300,000
March 31, 2003 $10,300,000
(v) Maximum Total Debt to EBITDA. As at June 30, 2003 and
on the last day of each fiscal quarter thereafter, a ratio of
Total Debt as of each such date to EBITDA for Greka and its
Subsidiaries for the 12- month period ending as of each such date
of not less than the ratio set forth below for the corresponding
fiscal quarter:
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Fiscal Quarter Ending Ratio
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June 30, 2003 4.75:1.00
September 30, 2003 4.50:1.00
December 31, 2003 4.00:1.00
March 31, 2003 and
each fiscal quarter thereafter 3.75:1.00
(vi) Minimum Crude Run and Crude Oil Production. (x) A Crude
Run, measured on a month-end basis, equal to at least the number
of barrels for the corresponding month specified in Schedule
6.2(t) to the First Amendment or (y) crude oil received at the
Santa ▇▇▇▇▇ refinery from production by properties owned or
leased by Greka, measured on a month-end basis, equal to at least
the number of barrels for the corresponding month specified in
Schedule 6.2(t) to the First Amendment; provided, however, that
non-compliance with the minimum Crude Run for any one month in
any Fiscal Year other than Fiscal Year 2002 shall not be a
Default or Event of Default hereunder so long as Greka provides
the Collateral Agent with at least 30 days prior notice of any
such potential non-compliance.
(e) Amendments to Article 9 (Subordination).
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(1) Article 9 is amended by inserting a new Section 9.9 at
the end thereof, to read in its entirety as follows:
9.9 Subordination of Compass Debt. (a) Greka and each other
Credit Party hereby agrees that the Compass Debt is hereby
subordinated to all of the Obligations with respect to the
Additional Senior Subordinated Notes, and that, following the
occurrence of a Bankruptcy Event (as defined below) for so long
as such Bankruptcy Event is continuing, the Compass Debt
(including all principal, interest and other amounts outstanding
with respect thereto) shall not be paid in whole or in part until
such Obligations (including all post-petition interest thereon,
whether or not an allowed claim in the relevant bankrupcty
proceeding) have been paid in full and the Loan Documents are
terminated and of no further force or effect. No Credit Party
shall accept any payment of or on account of any Compass Debt at
any time in contravention of the foregoing. Upon the occurrence
and during the continuance of an Event of Default, no payment of
principal or interest shall be made with respect to the Compass
Debt. Each payment on the Compass Debt received in violation of
any of the provisions hereof shall be deemed to have been
received by such Credit Party as trustee for the Additional
Senior Subordinated Purchasers and shall be paid over to the
Collateral Agent immediately on account of such Obligations, but
without otherwise affecting in any manner such Credit Party's
liability therefor. Each Credit Party agrees to file all claims
against the relevant issuer or guarantor of the Compass Debt in
any bankruptcy or other proceeding in which the filing of claims
is required by law in respect of any Compass Debt, and the
Collateral Agent shall be entitled to all of such Credit Party's
rights thereunder. If for any reason a Credit Party fails to file
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such claim at least ten Business Days prior to the last date on
which such claim should be filed, such Credit Party hereby
irrevocably appoints the Collateral Agent as its true and lawful
attorney-in-fact and is hereby authorized to act as
attorney-in-fact in such Credit Party's name to file such claim
or, in the Collateral Agent's discretion, to assign such claim to
and cause proof of claim to be filed in the name of the
Collateral Agent or its nominee. In all such cases, whether in
administration, bankruptcy or otherwise, the person or persons
authorized to pay such claim shall pay to the Collateral Agent
the full amount payable on the claim in the proceeding, and, to
the full extent necessary for that purpose, each Credit Party
hereby assigns to the Collateral Agent all of such Credit Party's
rights to any payments or distributions to which such Credit
Party otherwise would be entitled. If the amount so paid is
greater than such Credit Party's liability hereunder, the
Collateral Agent shall pay the excess amount to the party
entitled thereto. In addition, each Credit Party hereby
irrevocably appoints the Collateral Agent as its attorney-in-fact
to exercise all of such Credit Party's voting rights in
connection with any bankruptcy proceeding or any plan for the
reorganization of each issuer of the Compass Debt. For the
purposes of this Section 9.9, "Bankruptcy Event" shall mean any
of the events specified in Sections 8.1(g) or (h) with respect to
either Windsor, ▇▇▇▇▇▇ or both of them.
(b) Each of Greka and the other Credit Parties hereby agrees
that all Liens on collateral of Windsor and ▇▇▇▇▇▇ that it may
have which secure the Compass Debt (the "Compass Liens") are
hereby fully subordinated to the Liens of the Collateral Agent
under the Loan Documents with respect to such collateral,
regardless of the order or priority of perfection thereof. Until
the Obligations have been paid in full and the Loan Documents are
terminated and of no further force or effect, the Credit Parties
shall take no action with respect to, nor exercise any remedies
under such Liens or against the collateral subject thereto, other
than to file UCC Financing Statements as may be necessary to
maintain the perfection of the Compass Liens. In such regard, no
Credit Party shall send any notices to account debtors of Windsor
or ▇▇▇▇▇▇, warehouseman's, landlords, or to other third parties
notifying such parties of the Compass Liens without the express
written consent of the Collateral Agent. Each Credit Party agrees
that, in the event that the Collateral Agent (pursuant to the
exercise of remedies or in its administration as Collateral
Agent) wishes to release from its Liens any collateral or part
thereof which is subject to Compass Liens, the Credit Parties
shall provide to the Collateral Agent, forthwith upon its
request, releases of such collateral or part thereof from the
Compass Liens. In the event that any Credit Party shall be in
receipt of any proceeds from the Compass Liens, it shall hold
such proceeds in trust for the Additional Senior Subordinated
Purchasers and the Collateral Agent and shall immediately deliver
such proceeds to the Collateral Agent.
(f) Amendments to Exhibits and Schedules.
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(1) Schedule A (Purchasers and Allocations of Securities) to
the Securities Purchase Agreement is hereby deleted and replaced by the
corresponding Schedule A to this Amendment.
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(2) The Exhibits to the Securities Purchase Agreement are
hereby amended by inserting (i) an additional Exhibit A-3 (Form of Additional
Senior Subordinated Note), immediately before Exhibit B, in the form of Exhibit
A-3 to this Amendment, (ii) an additional Exhibit C-2 (Form of ▇▇▇▇▇▇/Windsor
Guaranty), immediately before Exhibit D, in the form of Exhibit C-2 to this
Amendment and (iii) an additional Exhibit E (Form of ▇▇▇▇▇▇ Pledge Agreement),
immediately after Exhibit D, in the form of Exhibit E to this Agreement.
(3) Annex A (Interest Rates) to the Securities Purchase
Agreement is hereby deleted and replaced by the corresponding Annex A to this
Amendment.
Section 3. FEES.
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Greka hereby agrees to pay to the Collateral Agent, on the Amendment
Effective Date, a closing fee equal to $375,000.
Section 4. CONDITIONS PRECEDENT TO EFFECTIVENESS.
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(a) Amendment Effective Date. This Amendment shall become effective as
of the date hereof on the date on which the following conditions precedent have
been satisfied (the "Amendment Effective Date"):
(1) The Collateral Agent shall have received on or before
the Amendment Effective Date all of the following, all of which shall be in form
and substance satisfactory to the Collateral Agent, in sufficient originally
executed copies for each of the Purchasers:
(i) this Amendment executed by the Credit
Parties and Purchasers constituting the
Required Holders;
(ii) the Additional Senior Subordinated Notes
and the Additional Warrants executed by
Greka;
(iii) an Acknowledgment, substantially in the
form of Exhibit A attached hereto and
executed by each Guarantor;
(iv) an amendment to the Pledge Agreement
providing for a pledge by Greka in favor
of the Collateral Agent of all the
outstanding stock of Windsor, together
with all stock certificates and executed
blank stock powers with respect thereto;
(v) all approvals, licenses, consents and
authorizations required in connection
with this Amendment and the Windsor
Acquisition;
(vi) amendments to each of the existing
Mortgages and a fully signed "date-down"
endorsement (dated as of the Amendment
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Effective Date), issued by the Lawyers
Title Insurance Corporation with respect
to Policy Number 3020306A showing no new
Liens encumbering the insured property
since the issuance of such policy;
(vii) the ▇▇▇▇▇▇/Windsor Guaranty, the ▇▇▇▇▇▇
Pledge and the ▇▇▇▇▇▇ Mortgage each
respectively executed by Windsor, Greka
CA and ▇▇▇▇▇▇ in favor of the Collateral
Agent;
(viii) certified complete, accurate and up to
date copies of the Windsor Acquisition
Documents, the Compass Loan Documents
and the Windsor Note;
(ix) (a) with respect to Greka, Windsor,
Greka CA and ▇▇▇▇▇▇: certified board
resolutions authorizing the
transactions, and execution and delivery
of all documents, contemplated hereby
and by the Windsor Acquistion Documents,
and (y) with respect to Windsor, Greka
CA and ▇▇▇▇▇▇: Good Standing
Certificates certified charters and
officer's/secretary's certificates
(including, where relevant, certificates
of no change), each substantially in the
form provided pursuant to the Securities
Purchase Agreement;
(x) an updated legal opinion of Greka's
in-house counsel with respect to Greka,
Windsor, Greka CA and ▇▇▇▇▇▇, addressing
matters substantially similar to those
included in her legal opinion provided
pursuant to the Securities Purchase
Agreement.
(xi) an updated President's Certificate with
respect to all Credit Parties,
substantially in the form provided
pursuant to the Securities Purchase
Agreement.
(xii) UCC-1 financing statements (including
fixture filings with respect to the
▇▇▇▇▇▇ Mortgage) reflecting Windsor,
Greka CA and ▇▇▇▇▇▇, respectively, as
the debtor in favor of Collateral Agent
for the benefit of the Additional Senior
Subordinated Purchasers;
(xiii) a sources and uses statement, showing
the sources and application of all funds
on the Amendment Effective Date;
(xiv) evidence that Windsor and ▇▇▇▇▇▇ shall
have no Indebtedness or Liens
outstanding other than (w) the Windsor
Notes, which shall be non-recourse to
▇▇▇▇▇▇, (x) the Compass Debt and Liens
under the Compass Loan Documents,
12
assigned to Greka, (y) Liens which are
Permitted Liens and (z) Indebtedness and
Liens arising under the Loan Documents;
(xv) UCC Termination Statements and other
evidence that, immediately upon the
advance of the proceeds of the
Additional Senior Subordinated Notes,
the Vintage Note and all other
Indebtedness to be refinanced with such
proceeds shall be paid in full and all
Liens with respect thereto shall be
released.
(xvi) evidence that the Windsor Acquisition
has completed, or will complete
simultaneously with the purchase of the
Additional Senior Subordinated Notes, in
accordance with the Windsor Acquisition
Documents (without any material
amendment or waiver thereto); and
(xvii) the written consent of International
Publishing Holdings ("IPH") with respect
to Greka AM, Inc. and the matters set
forth in Section 6.1(q), as amended
hereby, substantially in the form
approved by the Collateral Agent.
(xviii) such additional documentation as the
Collateral Agent or the Required Holders
may reasonably require.
(2) Each of the representations and warranties made by the
Credit Parties in or pursuant to the Securities Purchase Agreement, as amended
by this Amendment, and the other Loan Documents to which any Credit Party is a
party or by which any Credit Party is bound, shall be true and correct in all
material respects, and deemed made by each Credit Party, on and as of the
Amendment Effective Date (other than representations and warranties in any such
Loan Document which expressly speak as of a different date, which shall be true
and correct in all material respects as of such date).
(3) All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Amendment shall be satisfactory in all respects in form and
substance to the Collateral Agent.
(4) No Event of Default or Default shall have occurred and
be continuing on the Amendment Effective Date.
Section 5. CONSENTS.
---------
(a) The Required Holders hereby consent, as of the Amendment
Effective Date, to the consummation of the Windsor Acquisition.
(b) Greka, as holder of the Compass Debt, hereby consents to the
granting of any and all guaranties and Liens by Windsor and ▇▇▇▇▇▇ pursuant to
the Loan Documents.
13
Section 6. REPRESENTATIONS AND WARRANTIES.
-------------------------------
Each Credit Party hereby represents and warrants to the
Purchasers that;
(a) as of the date hereof and after giving effect to the terms of
this Amendment, no Event of Default or Default under the Securities Purchase
Agreement shall have occurred and be continuing;
(b) all of the representations and warranties of such Credit
Party contained in Article 5 of the Securities Purchase Agreement and in any
other Loan Document continue to be true and correct in all material respects as
of the date of execution hereof, as though made on and as of such date (other
than representations and warranties in any such Loan Document which expressly
speak as of a different date, which shall be true and correct in all material
respects as of such date);
(c) as of the Amendment Effective Date, Windsor and ▇▇▇▇▇▇ have
no Indebtedness or Liens outstanding other than (w) the Windsor Notes, which are
non-recourse to ▇▇▇▇▇▇, in the aggregate principal amount of $1,545,000, (x) the
Compass Debt in the aggregate principal amount of $53,965,920. and Liens under
the Compass Loan Documents, assigned to Greka, (y) Indebtedness comprising
ordinary course trade payables and Liens which are Permitted Liens and (z)
Indebtedness and Liens arising under the Loan Documents;
(d) the financial statements previously delivered by Greka to the
Collateral Agent with respect to Windsor and ▇▇▇▇▇▇ have been prepared in
conformity with GAAP consistently applied throughout the periods involved and
present fairly in all material respects the financial position of Windsor and
▇▇▇▇▇▇; and
(e) after giving effect to this Amendment, consummation of the
Windsor Acquisition will constitute a Permitted Acquisition.
SECTION 7. COVENANTS.
----------
Greka and each other Credit Party covenants and agrees that:
(a) If requested by the Collateral Agent within thirty days of
the Amendment Effective Date, the Credit Parties shall use all commercially
reasonably efforts to obtain promptly such landlord and other consents in form
and substance reasonably acceptable to the Collateral Agent as may be required
by it in connection with ▇▇▇▇▇▇ Mortgage; and
(b) The Credit Parties shall deliver to the Collateral Agent not
later than thirty days following the Amendment Effective Date UCC and real
estate lien reports showing that the only Liens recorded against Windsor and
▇▇▇▇▇▇ are in favor of (i) the Collateral Agent, under the Loan Documents, (ii)
Greka, under the Compass Loan Documents and (iii) PAC Leasing in respect of its
equipment lease outstanding on the Amendment Effective Date.
14
Section 8. REFERENCE TO AND EFFECT ON LOAN DOCUMENTS.
------------------------------------------
(a) Upon the effectiveness of this Amendment, on and after the date
hereof, each reference in the Securities Purchase Agreement to "this Agreement",
"hereunder", "hereof" or words of like import, and each reference in the other
Loan Documents to the Securities Purchase Agreement, shall mean and be a
reference to the Securities Purchase Agreement as amended hereby.
(b) The table of contents of the Securities Purchase Agreement shall
be updated to incorporate the changes effected by this Amendment.
(c) Except as specifically provided herein, all of the terms of the
Securities Purchase Agreement and all other Loan Documents shall remain
unchanged and in full force and effect.
(d) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Purchaser or the Collateral Agent under the Securities
Purchase Agreement or any of the Loan Documents, nor constitute a waiver of any
provision of the Securities Purchase Agreement or any of the Loan Documents.
(e) This Amendment constitutes a Loan Document.
Section 9. FEES, COSTS AND EXPENSES.
-------------------------
(a) The Credit Parties agree to pay on demand in accordance with the
terms of Section 12.2 of the Securities Purchase Agreement all costs and
expenses of the Collateral Agent in connection with the preparation,
reproduction, execution and delivery of this Amendment and all other Loan
Documents entered into in connection herewith, including the reasonable fees and
out-of-pocket expenses of counsel for the Collateral Agent with respect thereto.
SECTION 10. EXECUTION IN COUNTERPARTS.
--------------------------
This Amendment may be executed and delivered in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which taken together shall constitute one and the same original agreement.
Section 11. AFFIRMATION OF GUARANTIES AND SECURITY.
---------------------------------------
Each of the Guarantors hereby consents to the terms of this Amendment
in its capacity as a guarantor under the Securities Purchase Agreement and each
other Loan Document to which it is a party and agrees that the Obligations shall
include all those Obligations which arise from time to time pursuant to the
Additional Senior Subordinated Notes, this Amendment and each other Loan
Document and that the terms of this Amendment shall not otherwise affect in any
way its respective obligations and liabilities thereunder or under any other
Loan Document to which it is a party, all of which obligations and liabilities
shall remain in full force and effect and each of which are hereby reaffirmed.
15
SECTION 12. CONSENTS.
---------
Each Required Holder and each Additional Senior Subordinated Purchaser
hereby approves and ratifies all Loan Documents entered into by the Collateral
Agent pursuant to this Amendment and in particular agrees to be bound (to the
extent applicable to it) by the provisions of the letter agreement dated as of
the Amendment Effective Date among the Collateral Agent, IPH, Greka and Greka
AM, Inc.
Section 13. GOVERNING LAW.
--------------
This Amendment shall be interpreted, and the rights and liabilities of
the parties determined, in accordance with the internal law of the State of New
York.
[SIGNATURE PAGES FOLLOW]
16
SIGNATURES
CREDIT PARTIES:
GREKA ENERGY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
WINDSOR ENERGY US CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
▇▇▇▇▇▇ ISLAND LIMITED PARNERSHIP
By: WINDSOR ENERGY US CORPORATION,
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
GREKA CA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
17
COLLATERAL AGENT:
-----------------
Guggenheim Investment Management,
LLC,
as Collateral Agent
By:
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
REQUIRED HOLDERS
----------------
NORTH AMERICAN COMPANY FOR
LIFE AND HEALTH INSURANCE
as a Required Holder
By:
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
MIDLAND NATIONAL LIFE INSURANCE
COMPANY
as a Required Holder
By:
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
18
ADDITIONAL SENIOR
-----------------
SUBORDINATED PURCHASERS:
------------------------
MAGMA CDO LTD.
as an Additional Senior
Subordinated Purchaser
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
FORTWIRTH CDO LTD.
as an Additional Senior
Subordinated Purchaser
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇ STREET CBO 1998-1, LTD.
as an Additional Senior
Subordinated Purchaser
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
19
EXHIBIT A TO
AMENDMENT NO. 1 TO
SECURITIES PURCHASE AGREEMENT
ACKNOWLEDGEMENT
---------------
Reference is hereby made to the Guaranty and each Loan Document (each
as respectively defined in the Securities Purchase Agreement) to which each of
the undersigned is a party. Each of the undersigned hereby consents to the terms
of the foregoing Amendment No. 1 to the Securities Purchase Agreement and agrees
that the "Obligations" shall include (without limitation) all those Obligations
which arise from time to time pursuant to the Additional Senior Subordinated
Notes, and agrees that the terms thereof shall not affect in any way its
obligations and liabilities under the undersigned's Guaranty or any other Loan
Document, all of which obligations and liabilities shall remain in full force
and effect and each of which is hereby reaffirmed.
GREKA INTEGRATED, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
SANTA ▇▇▇▇▇ REFINING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
GREKA REALTY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
20
GREKA SMV, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
SABA PETROLEUM COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
SABA PETROLEUM, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chief Executive
Officer and Chairman
21
