EXHIBIT 10.11
AMENDMENT NO. 2 TO
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SECURITIES PURCHASE AGREEMENT
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This AMENDMENT No. 2 TO THE SECURITIES PURCHASE AGREEMENT, dated as of
March 11, 2003, (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, including hereby,
supplemented, or otherwise modified from time to time, the "Securities Purchase
Agreement") entered into among Greka as borrower, certain of 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.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Greka AM, Inc. ("Greka AM"), Greka and the Guarantors desire
to enter into a Note Purchase Agreement dated as of the date hereof, by and
among Greka AM, as borrower, and each of the entities listed as a guarantor on
the signature pages thereto, including Greka and certain of the Guarantors, as
guarantors, and each of the entities listed as a purchaser on the signature
pages thereto and Guggenheim Investment Management, LLC, as collateral agent, as
amended, supplemented or modified from time to time (the "Greka AM Note Purchase
Agreement"); and
WHEREAS, pursuant to Section 12.1(d) of the Securities Purchase
Agreement, the consent of the Required Holders is required for the execution by
Greka and certain of the Guarantors of the Greka AM Note Purchase Agreement and
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:
"Second Amendment Effective Date" shall have the meaning set forth in
Section 3(a).
"Greka AM Note Purchase Agreement" shall have the meaning set forth in
the Recitals.
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 Second
Amendment Effective Date, hereby amended as follows:
(a) Amendments to Article 1 (Definitions).
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(1) The definitions of "Greka AM", "Greka AM Debt", "Greka AM
Guaranty", "Greka AM Note Purchase Agreement" and "Greka AM Mortgages" are
respectively inserted immediately before the definition of "Guaranteed
Indebtedness", each to read in its entirety as follows:
"Greka AM Debt" shall mean all principal of and premium, if any, and
interest on, and all other amounts owing in respect of Indebtedness of
Greka AM, Inc., Greka and certain Guarantors outstanding under the Greka AM
Note Purchase Agreement.
"Greka AM Guaranty" shall mean that certain guaranty, dated as of the
Second Amendment Effective Date, executed by Greka AM, Inc. in favor of the
Collateral Agent, for the benefit of the Purchasers, in the form of Exhibit
A attached hereto.
"Greka AM Mortgages" shall mean the mortgages, dated as of the Second
Amendment Effective Date, executed by Greka AM, Inc. in favor or the
Collateral Agent for the benefit of the Purchasers with respect to the real
property of Greka AM, Inc.
"Greka AM Note Purchase Agreement" shall mean that certain Note
Purchase Agreement dated as of March 11, 2003, by and among Greka AM, Inc., as
borrower, Greka and certain other Guarantors, as guarantors, the purchasers
named therein and the collateral agent named therein, as the same may from time
to time be amended, modified or supplemented.
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(2) The definition of "Collateral Documents" is amended by
inserting at the end of such definition the following:
the Greka AM Guaranty and the Greka AM Mortgages.
(3) The definition of "Guarantor" is amended by deleting the
words "and Xxxxxx" at the end of such definition and inserting the following:
,Xxxxxx and Greka AM, Inc.
(4) The definition of "Notes" is amended by deleting the words
"and the Senior Subordinated Notes" at the end of such definition and inserting
the following:
,the Senior Subordinated Notes and the Additional Senior
Subordinated Notes
(5) The definition of "Purchasers" is amended by inserting
immediately after "each of the entities listed as a purchaser on the signature
pages hereto", the following:
and the Additional Senior Subordinated Purchasers
(6) The definitions of "Second Amendment" and "Second Amendment
Effective Date" are inserted immediately before the definition of "Second
Priority Collateral", to read in their entirety as follows:
"Second Amendment" shall mean the Second Amendment to the Securities
Purchase Agreement dated as of the Second Amendment Effective Date among
Greka, the Guarantors, Greka AM, Inc. and the Collateral Agent.
"Second Amendment Effective Date" shall mean March 11, 2003.
(7) The definition of "Total Debt" is deleted and replaced by
inserting a new definition thereof, to read in its entirety as follows:
"Total Debt" shall mean, as of any date, the GMAC Debt, the Greka AM
Debt, the Indebtedness evidenced by the Notes and the Indebtedness
described on Schedule 6.2(a).
(8) The definition of "Bank of Texas Debt" is deleted.
(b) Amendments to Article 6 (Covenants).
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(1) Section 6.1(q) is hereby deleted in its entirety and shall
have no further force or effect.
(2) A new Section 6.1(s) is herby inserted immediately following
Section 6.1(r) as follows:
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(s) Minimum Capital Expenditures. Collectively with all Credit
Parties, make Capital Expenditures, measured on a Fiscal Year-end basis for the
12-month period ending December 31, 2003, of at least $10,000,000.
(3) Section 6.2 (a) is amended by inserting a new subsection (7)
at the end of such Section:
(7) the Greka AM Debt.
(4) Section 6.2 (b) is amended by inserting the words "and the
Liens existing as of the Second Amendment Effective Date and securing the Greka
AM Debt" immediately before the words "; provided, however".
(5) Section 6.2 (f) is amended by inserting a new subsection (iv)
at the end of that Section as follows:
and (iv) pursuant to the Greka AM Guaranty.
(6) Section 6.2 (h) is amended by inserting a new subsection
(iii) at the end of that Section as follows:
and (iii) the Greka AM Debt.
(7) 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:
(i) Maximum Tangible Net Worth Ratio. A Tangible Net Worth Ratio,
measured on the last day of each fiscal quarter after the Second
Amendment Effective Date, 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 Second Amendment Effective Date, 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 December 31, 2003 and each fiscal quarter thereafter, of not
less than 2.00:1.00.
(iv) Minimum EBITDA. (A) EBITDA for Greka and its Subsidiaries
for the period commencing on the Second Amendment Effective Date and
ending on each of the following dates to be not less than the amount
set forth below for the corresponding period:
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Period Ending Amount
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March 31, 2003 $ 2,000,000
June 30, 2003 $ 6,000,000
September 30, 2003 $12,000,000
December 31, 2003 $17,500,000
and thereafter EBITDA for Greka and its Subsidiaries,
measured on a fiscal quarter-end basis for the 12-month period ending
on March 31, 2004 and each fiscal quarter thereafter, to be not less
than $20,000,000.
(v) Maximum Total Debt to EBITDA. On the last day of each fiscal
quarter after December 31, 2003, 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 more than 3.90:1.00.
(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 Second
Amendment or (y) crude oil produced from all properties owned or
leased by Greka or any of its Subsidiaries, 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 Second 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.
(8) Section 6.2(u) is deleted and replaced by inserting a new
Section 6.2(u), to read in its entirety as follows:
(u) Capital Expenditures. Make Capital Expenditures, collectively
with all Credit Parties, measured on a Fiscal Year-end basis for the
12-month period ending each Fiscal Year after the Second Amendment
Effective Date, in excess of the amounts stated on Schedule 6.2(t) to
the Second Amendment for the corresponding types of assets described
on Schedule 6.2(t) to the Second Amendment and for the corresponding
status of the GMAC Debt; provided, however, that proceeds from any
asset sales permitted under Section 6.2(c) may be used to make Capital
Expenditures so long as such proceeds are used within 90 days of any
such asset sale.
SECTION 3. CONDITIONS PRECEDENT TO EFFECTIVENESS.
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(a) Amendment Effective Date. This Amendment shall become effective on
the date on which the following conditions precedent have been satisfied (the
"Second Amendment Effective Date"):
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(1) The Collateral Agent shall have received on or before the
Second 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) an Acknowledgment, substantially in the form of Exhibit A
attached hereto and executed by each Guarantor;
(iii) an amendment to the Pledge Agreement providing for a pledge
by Greka in favor of the Collateral Agent of all the
outstanding stock of Greka AM, Inc. together with all stock
certificates and executed blank stock power with respect
thereto;
(iv) the Greka AM Guaranty.
(v) an Intercreditor Agreement duly executed by the Collateral
Agent and the collateral agent under the Greka AM Note
Purchase Agreement, in the form of Exhibit B attached
hereto.
(vi) the Greka AM Mortgages.
(vii) certified board resolutions of Greka AM, Inc. authorizing
the transactions, and execution and delivery of all
documents, contemplated hereby and a Good Standing
Certificate, certified charters and officer's/secretary's
certificates of Greka AM, Inc., each substantially in the
form provided pursuant to the Securities Purchase
Agreement;
(viii) a legal opinion of Greka's in-house counsel with respect to
Greka AM, Inc., addressing matters substantially similar to
those included in her legal opinion provided pursuant to
the Securities Purchase Agreement.
(ix) an updated President's Certificate with respect to all
Credit Parties, substantially in the form provided pursuant
to the Securities Purchase Agreement.
(x) UCC-1 financing statements reflecting Greka AM, Inc. as the
debtor in favor of the Collateral Agent for the benefit of
the Purchasers;
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(xi) 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, including the amended Schedules attached hereto 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 Second 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 Second Amendment Effective Date.
SECTION 4. CONSENT.
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(a) The Required Holders hereby consent, as of the Second
Amendment Effective Date, to the incurrence of the Greka AM Debt and the
consummation of all of the transactions contemplated by the Greka AM Note
Purchase Agreement and the documents executed in connection therewith.
(b) Each Required Holder hereby approves and ratifies all Loan
Documents entered into by the Collateral Agent pursuant to this Amendment.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
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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; and
(b) all of the representations and warranties of such Credit Party
contained in Article 5 of the Securities Purchase Agreement, as amended by the
amended Schedules attached hereto, 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);
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SECTION 6. ACKNOWLEDGEMENTS.
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Greka AM, Inc. and each other Credit Party hereby acknowledge and
agree that Greka AM Inc. shall, by executing this Amendment, be a Credit Party
under the Securities Purchase Agreement as of the Second Amendment Effective
Date, grant to the Collateral Agent a security interest on all Collateral and
shall have all of the other obligations and benefits of a "Credit Party"
specified in the Securities Purchase Agreement.
Section 7. REFERENCE TO AND EFFECT ON LOAN DOCUMENTS.
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(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 8. FEES, COSTS AND EXPENSES.
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(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 9. EXECUTION IN COUNTERPARTS.
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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.
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SECTION 10. AFFIRMATION OF GUARANTIES AND SECURITY.
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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 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.
SECTION 11. GOVERNING LAW.
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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]
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CREDIT PARTIES:
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GREKA ENERGY CORPORATION
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
GREKA INTEGRATED, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
SANTA XXXXX REFINING COMPANY
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
GREKA REALTY, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
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[Signature Page To Amendment No. 2 To Securities Purchase Agreement]
GREKA SMV, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
SABA PETROLEUM COMPANY
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
SABA PETROLEUM, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
WINDSOR ENERGY US CORPORATION
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
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XXXXXX ISLAND LIMITED PARNERSHIP
By: WINDSOR ENERGY US CORPORATION,
its General Partner
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
GREKA CA, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
GREKA AM, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
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COLLATERAL AGENT:
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Guggenheim Investment Management,
LLC, as Collateral Agent
By:
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Name: Xxxx Xxxxxx
Title: Managing Director
REQUIRED HOLDERS
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NORTH AMERICAN COMPANY FOR
LIFE AND HEALTH INSURANCE
as a Required Holder
By:
--------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
MIDLAND NATIONAL LIFE INSURANCE
COMPANY
as a Required Holder
By:
--------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
MAGMA CDO LTD.
as a Required Holder
By:
--------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
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FORTWIRTH CDO LTD.
as a Required Holder
By:
--------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
XXXXX STREET CBO 1998-1, LTD.
as a Required Holder
By:
--------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
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EXHIBIT A TO
AMENDMENT NO. 2 TO
SECURITIES PURCHASE AGREEMENT
ACKNOWLEDGEMENT
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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. 2 to the Securities Purchase Agreement 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:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
SANTA XXXXX REFINING COMPANY
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
GREKA REALTY, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
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GREKA SMV, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
SABA PETROLEUM COMPANY
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
SABA PETROLEUM, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
WINDSOR ENERGY US CORPORATION
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
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XXXXXX ISLAND LIMITED PARNERSHIP
By: WINDSOR ENERGY US CORPORATION,
its General Partner
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
GREKA CA, INC.
By:__________________________
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
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