Exhibit 10.3

 

EXECUTION VERSION

 

WAIVER AND AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT

 

This WAIVER AND AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT (this
“Amendment”), is made and entered into this 8th day of June, 2012, by and among
ZAZA ENERGY CORPORATION, a Delaware corporation (the “Company”), and each of the
holders of Securities (as defined in the Securities Purchase Agreement) that is
a signatory to this Amendment.

 

RECITALS

 

1.             The Company and the holders of the Securities are parties to that
certain Securities Purchase Agreement dated February 21, 2012, as amended by a
letter agreement dated as of March 1, 2012 and a letter agreement dated as of
March 22, 2012 (as amended, the “Existing Securities Purchase Agreement”; and as
amended by this Amendment and as may be further amended, restated, supplemented
or otherwise modified from time to time, the “Securities Purchase Agreement”).

 

2.             Pursuant to the Existing Securities Purchase Agreement, the
Company issued, and the holders of Notes purchased, (i) the Company’s 8.00%
Senior Secured Notes due February 21, 2017, in the aggregate principal amount of
$100,000,000 (collectively, the “Notes”) and (ii) the Company’s warrants to
purchase 26,315,789 shares of the Company’s Common Stock.

 

3.             The Company has informed the holders of Securities that Defaults
and Events of Default as set forth on Schedule A attached hereto have occurred
and are continuing as of the date hereof (such Defaults and Events of Default
being referred to herein as the “Specified Defaults”).

 

4.             The Company has requested the holders of Securities to waive a
certain obligation of the Company under the Securities Purchase Agreement.

 

5.             The Company also desires to amend certain provisions of the
Existing Securities Purchase Agreement.

 

6.             The holders of the Securities have agreed to (a) waive the
Specified Defaults, (b) provide such waivers of such obligations, and (c) make
such amendments, in each case subject to the terms and conditions set forth in
this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby covenant and agree to
be bound as follows:

 

Section 1.              Capitalized Terms.  Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to them in the
Securities Purchase Agreement, unless the context otherwise requires.

 

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Section 2.              Amendments to Existing Securities Purchase Agreement. 
Subject to the satisfaction of the conditions precedent set forth in Section 3,
the Existing Securities Purchase Agreement is hereby amended as follows:

 

(a)           Paragraph 7(B)(2) of the Existing Securities Purchase Agreement is
hereby amended by (i) deleting “and” from the end of clause (xiv) of such
paragraph, (ii) deleting the period from the end of clause (xv) of such
paragraph and inserting “; and” therefor and (iii) adding the following new
clause (xvi) to such paragraph to read as follows:

 

“(xvi) (a) Debt owing by Toreador International to Toreador Energy France and
(b) Subordinated Debt owing by the Company or any Guarantor to Toreador
International in an aggregate principal amount not to exceed the aggregate
principal amount outstanding under clause (a) hereof.”

 

(b)           Paragraph 7(B) of the Existing Securities Purchase Agreement is
hereby amended by inserting a new paragraph 7(B)(12) at the end thereof to read
as follows:

 

“7B(12)  Hess Agreement, French Agreement and Other Asset Dispositions.  The
Company covenants that, notwithstanding the provisions of paragraph 7B(7) or any
other provision of this Agreement, without the prior written consent of the
Required Holders, the Company will not, and will not permit any Subsidiary to,
(i) amend, supplement, or otherwise modify any material term of the Hess
Agreement or the French Agreement or add any material term thereto or otherwise
terminate the Hess Agreement or the French Agreement, other than the Amendment
to EDA, (ii) enter into any settlement agreement (including, without limitation,
any termination of the Hess Agreement and/or the French Agreement) in respect of
any dispute with Hess arising from or otherwise relating to the Hess Agreement
and/or the French Agreement, or (iii) sell, lease, dispose of or otherwise
transfer (including, without limitation, by way of any farm-out, joint venture
or similar transaction) any assets of the Company or any of its Subsidiaries
(x) pursuant to or otherwise in connection with the settlement of any dispute
with Hess arising from or otherwise relating to the Hess Agreement and/or the
French Agreement; other than, in the case of clauses (ii) and (iii), the
settlement of de minimis disputes with Hess, (y) in respect of the French
Conventional Assets or (z) in respect of any of the Company’s or its
Subsidiaries’ Oil and Gas Properties located in the United States.”

 

(c)           The definition of “ZaZa LLC Members” in paragraph 12B of the
Existing Securities Purchase Agreement is hereby amended and restated to read as
follows:

 

““ZaZa LLC Members” shall mean, collectively, Blackstone Oil & Gas, LLC, Omega
Energy, LLC and Lara Energy, Inc., each of which held limited liability company
membership interests of ZaZa LLC immediately prior to the consummation of the
Merger and Contribution.”

 

(d)           Paragraph 12B of the Existing Securities Purchase Agreement is
hereby amended by adding the following new definitions in their proper
alphabetical order to read as follows:

 

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““Amendment to EDA” means that certain Amendment to Exploration and Development
Agreement dated as of June 8, 2012, between Hess Corporation and ZaZa LLC.”

 

““First Amendment” means that certain Waiver and Amendment No. 1 to Securities
Purchase Agreement dated June 8, 2012, by and among the Company and each of the
holders of Securities that is a party thereto.”

 

““First Amendment Date” shall mean June 8, 2012.”

 

““French Agreement” shall mean the Investment Agreement, dated May 20, 2010,
between Toreador Energy France S.C.S. and Hess Oil France S.A.S., as amended by
that amendment dated May 18, 2011.”

 

““French Conventional Assets” shall mean the Charmottes, Saint Firmin and
Chateaurenard concessions awarded by the French state to ZaZa Energy France SAS
(fka Toreador Energy France SAS).”

 

““Hess” shall mean Hess Corporation and its Affiliates.”

 

Section 3.              Effectiveness of Amendments and Waivers.  The waivers in
Section 5 and the amendments in Sections 2(b), (c) and (d) of this Amendment
shall become effective, and shall be deemed to be in effect upon satisfaction of
conditions (a), (d), (e), (f) and (g) below, and the amendment in
Section 2(a) of this Amendment shall become effective, and shall be deemed to be
in effect upon satisfaction of all of the following conditions:

 

(a)           Amendment.  Execution and delivery of this Amendment by the
Company and the Required Holders, and execution and delivery of the Guarantor
Acknowledgement attached hereto by the Guarantors.

 

(b)           Intercompany Debt Documents.  Receipt by the holders of the
Securities of a copy of the fully executed loan documents evidencing the loan
from Toreador Energy France to Toreador International.

 

(c)           Subordinated Debt Documents.  Receipt by the holders of the
Securities of a copy of the fully executed subordinated loan documents
evidencing the loan from Toreador International to the Company and the fully
executed subordination agreement with respect to such Subordinated Debt in form
and substance satisfactory to the Required Holders.

 

(d)           Amendment and Restatement of Subordination Agreement.  Receipt by
the holders of the Securities of a copy of the amendment and restatement of the
Subordination Agreement executed by the Subordinated Creditors (as such term is
defined therein) and the Required Holders and otherwise in form and substance
satisfactory to the Required Holders.

 

(e)           Heads of Agreement.  Receipt by the holders of the Securities of a
copy of the fully executed Heads of Agreement dated as of June 8, 2012, among
Hess Corporation, Hess Oil France S.A.S., the Company, ZaZa LLC, and ZaZa Energy
France S.A.S. (formerly known as Toreador Energy France S.A.S.), a copy of which
is attached as Exhibit 1 to the Amendment Term Sheet (as defined below).

 

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(f)            Expenses.  The Company shall have paid the reasonable fees and
disbursements of the holders of the Securities’ special counsel in accordance
with Section 10 below.

 

(g)           Amendment to Exploration and Development Agreement.  The Company
shall have delivered an executed copy of the Amendment to EDA, a copy of which
is attached hereto as Exhibit B.

 

Section 4.              Representations and Warranties.  To induce the holders
of the Securities to enter into this Amendment, the Company hereby represents
and warrants to each of the holders of Securities that:

 

(a)           the execution, delivery and performance of this Amendment has been
duly authorized by all requisite corporate authority or other action on the part
of the Company and this Amendment has been duly executed and delivered by the
Company, and this Amendment constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms;

 

(b)           each of the representations and warranties set forth in the
Securities Purchase Agreement and the other Transaction Documents are true and
correct in all material respects as of the date hereof, except to the extent
that such representations and warranties expressly relate to an earlier date, in
which case such representations and warranties shall have been true and correct
in all material respects as of such earlier date and except as set forth on
Schedule 4(b) hereto;

 

(c)           The Company is unable to receive a report from its independent
public accountants not subject to any “going concern” qualification in respect
of the Company’s financial statements for the fiscal year ending December 31,
2011 as described on Schedule 4(c) hereto.

 

(d)           After giving effect to the transactions contemplated hereby, no
Default or Event of Default has occurred and is continuing as of the date
hereof; and

 

(e)           no events have taken place and no circumstances exist at the date
hereof which would give any Credit Party a basis to assert a defense, offset or
counterclaim to any claim of any holder of a Security with respect to the
obligations of the Credit Parties.

 

Section 5.              Waiver of the Specified Defaults.  (a) Subject to the
satisfaction of the applicable conditions specified in Section 3 and the
delivery to the holders of the Securities of the financial information described
on Schedule B no later than June 29, 2012, each of the holders of Securities
hereby waives the Specified Defaults described in paragraphs 1, 2 and 3 on
Schedule A attached hereto; provided that such waivers shall cease to be
effective, and such Specified Defaults shall be reinstated and be deemed to be
continuing, if the Company fails to provide to the holders of the Securities the
financial information described on Schedule B by June 29, 2012; (b) subject to
the satisfaction of the applicable conditions specified in Section 3, each of
the holders of Securities hereby waives the Specified Default described in
paragraph 4 on Schedule A attached hereto; provided that such waiver shall cease
to be effective, and such Specified Default shall be reinstated and be deemed to
be continuing, if the Company fails to make the May 21, 2012 interest payment
within one Business Day after the date hereof; and (c)

 

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for purposes of paragraph 7 of the Securities Purchase Agreement, each and every
reference to “Event of Default” in such paragraph shall be treated and deemed as
if none of the Specified Defaults have been waived and remain outstanding for
purposes of complying with the negative covenants contained therein until the
financial information described on Schedule B has been provided to the holders
of the Securities and the interest payment due and owing on May 21, 2012 has
been made.  These waivers shall not extend beyond the terms expressly set forth
herein, nor impair any right or power accruing to the holders of Securities with
respect to any other Default or Event of Default or any Default or Event of
Default which occurs after the date hereof.  Nothing contained herein shall be
deemed to imply any willingness of the holders of Securities to agree to, or
otherwise prejudice any rights of the holders of Securities with respect to, any
similar waiver that may be requested by the Company.

 

Section 6.              Amendment Term Sheet and Hess Corporation Settlement
Term Sheet.  The Company acknowledges and agrees that it cannot consummate the
terms of a settlement of its dispute with Hess and effect the Asset Dispositions
in connection therewith without the prior written consent of the Required
Holders.  In connection with the settlement of such dispute with Hess, the
Company agrees (a) to enter into documentation in form and substance reasonably
satisfactory the Required Holders to evidence the proposed amendments to the
Transaction Documents as more particularly described on Exhibit A hereto (the
“Amendment Term Sheet”) on or before July 31, 2012, (b) to negotiate and enter
into (and cause its applicable Subsidiaries to enter into) the Division
Agreement and the other Definitive Agreements (as each such term is defined in
the Heads of Agreement, collectively, the “HOA Definitive Agreements”) in
accordance with the terms of the Heads of Agreement on or before July 31, 2012,
provided that the terms of the HOA Definitive Agreements are in form and
substance reasonably satisfactory to the Required Holders, and (c) to consummate
the transactions contemplated by the HOA Definitive Agreements no later than
September 28, 2012, and the Company acknowledges and agrees that the failure to
comply with the terms of this Section 6 shall constitute an Event of Default
under the Securities Purchase Agreement.  By their execution hereof, the
Required Holders hereby consent to the transactions described in the Heads of
Agreement, provided that the HOA Definitive Agreements are in form and substance
reasonably satisfactory to the Required Holders.

 

Section 7.              Transaction Document.  This Amendment shall be deemed to
constitute a Transaction Document for all purposes under the Securities Purchase
Agreement.

 

Section 8.              Effect of Amendment.  Except as set forth expressly
herein, all terms of the Securities Purchase Agreement shall be and remain in
full force and effect.  The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the
holders of Notes under the Securities Purchase Agreement, nor constitute a
waiver of any provision of the Securities Purchase Agreement, except as
expressly provided herein.  Any and all notices, requests, certificates and
other instruments executed and delivered after the execution and delivery of
this Amendment may refer to the Securities Purchase Agreement without making
specific reference to this Amendment, but nevertheless all such references shall
include this Amendment unless the context otherwise requires.

 

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Section 9.              Release.

 

(a)           In consideration of the agreements of the holders of Securities
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each Credit Party, on behalf of
itself and its successors, assigns, and other legal representatives, hereby
absolutely, unconditionally and irrevocably releases, remises and forever
discharges each holder of Securities, and its successors and assigns, and its
present and former shareholders, partners, members, managers, consultants,
affiliates, subsidiaries, divisions, predecessors, directors, officers,
attorneys, employees, agents and other representatives, and all persons acting
by, through, under or in concert with any of them (each holder of Securities and
all such other Persons being hereinafter referred to collectively as the
“Releasees” and individually as a “Releasee”) of and from all demands, actions,
causes of action, suits, covenants, contracts, controversies, agreements,
promises, sums of money, accounts, bills, reckonings, damages and any and all
other claims, counterclaims, defenses, recoupment, rights of setoff, demands and
liabilities whatsoever (individually, a “Claim” and collectively, “Claims”) of
every name and nature, known or unknown, contingent or mature, suspected or
unsuspected, both at law and in equity, which any Credit Party or any of its
respective successors, assigns, or other legal representatives may now or
hereafter own, hold, have or claim to have against the Releasees or any of them
for, upon, or by reason of any circumstance, action, cause or thing whatsoever
which arises at any time on or prior to the day and date of this Amendment,
including, without limitation, for or on account of, or in relation to, or in
any way in connection with the Securities Purchase Agreement, or any of the
other Transaction Documents or transactions thereunder or related thereto.

 

(b)           Each Credit Party understands, acknowledges and agrees that the
release set forth above may be pleaded as a full and complete defense and may be
used as a basis for an injunction against any action, suit or other proceeding
which may be instituted, prosecuted or attempted in breach of the provisions of
such release.

 

(c)           Each Credit Party agrees that no fact, event, circumstance,
evidence or transaction which could now be asserted or which may hereafter be
discovered shall affect in any manner the final, absolute and unconditional
nature of the release set forth above.

 

(d)           In entering into this Amendment, each Credit Party has consulted
with, and has been represented by, legal counsel and expressly disclaims any
reliance on any representations, acts or omissions by any of the Releasees and
hereby agrees and acknowledges that the validity and effectiveness of the
release set forth above does not depend in any way on any such representations,
acts and/or omissions or the accuracy, completeness or validity hereof.  The
provisions of this Section shall survive the termination of this Amendment and
the other Transaction Documents and the payment in full of the Notes.

 

(e)           Each Credit Party acknowledges and agrees that the release set
forth above may not be changed, amended, waived, discharged or terminated
orally.

 

Section 10.            Fees and Expenses.  The Company agrees to pay on demand
all reasonable costs and expenses of the holders of the Securities (including
the reasonable fees and expenses of the holders of the Securities’ special
counsel) in connection with the preparation,

 

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negotiation, execution and delivery of the Amendment as provided in paragraph
13B(1) of the Securities Purchase Agreement, whether or not the amendments in
Section 2 and/or the waivers in Section 5 hereof become effective.  Nothing in
this Section shall limit the Company’s obligations pursuant to paragraph
13B(1) of the Securities Purchase Agreement.

 

Section 11.            Governing Law.  THIS AMENDMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE INTERNAL LAW OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF
THE LAW OF SUCH STATE THAT WOULD PERMIT THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.

 

Section 12.            Severability.  Whenever possible, each provision of this
Amendment and any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be interpreted in such manner as
to be effective, valid and enforceable under the applicable law of any
jurisdiction, but, if any provision of this Amendment or any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be held to be prohibited, invalid or unenforceable under the
applicable law, such provision shall be ineffective in such jurisdiction only to
the extent of such prohibition, invalidity or unenforceability, without
invalidating or rendering unenforceable the remainder of such provision or the
remaining provisions of this Amendment or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto in such
jurisdiction, or affecting the effectiveness, validity or enforceability of such
provision in any other jurisdiction.

 

Section 13.            Counterparts.  This Amendment may be executed by one or
more of the parties hereto in any number of separate counterparts, each of which
shall be deemed an original and all of which, taken together, shall be deemed to
constitute one and the same instrument.  Delivery of an executed counterpart of
this Amendment by facsimile transmission or by electronic mail in pdf form shall
be as effective as delivery of a manually executed counterpart hereof.

 

Section 14.            Binding Nature.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

 

Section 15.            Entire Understanding.  The Securities Purchase Agreement,
together with this Amendment, set forth the entire understanding of the parties
with respect to the matters set forth herein, and shall supersede any prior
negotiations or agreements, whether written or oral, with respect thereto.

 

Section 16.            Headings.  The headings of the sections of this Amendment
are inserted for convenience only and shall not be deemed to constitute a part
of this Amendment.

 

Section 17.            Required Holders.  Each of the undersigned holders of
Securities represents and warrants (as to itself only) to the Company that it
has not sold any of its Notes or Warrants.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the date and year first above written.

 

 

 

ZAZA ENERGY CORPORATION

 

 

 

 

 

 

 

By:

/s/ Todd Brooks

 

Name:

Todd Brooks

 

Title:

President

 

 

 

 

 

 

 

MSDC ZEC INVESTMENTS, LLC

 

 

 

 

 

 

 

By:

/s/ Marcello Liquori

 

Name:

Marcello Liquori

 

Title:

Vice President

 

 

 

 

 

 

 

SENATOR SIDECAR MASTER FUND LP

 

By:

Senator Investment Group LP, its investment manager

 

 

 

 

 

 

 

 

 

By:

/s/ Evan Gartenlaub

 

 

Name:

Evan Gartenlaub

 

 

Title:

General Counsel

 

 

 

 

 

 

 

 

 

O-CAP OFFSHORE MASTER FUND, L.P.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

O-CAP PARTNERS, L.P.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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CAPITAL VENTURES INTERNATIONAL

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

TALARA MASTER FUND, LTD.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

BLACKWELL PARTNERS, LLC

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

PERMAL TALARA LTD.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

WINMILL INVESTMENTS LLC

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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GUARANTOR ACKNOWLEDGEMENT

 

Each of the undersigned hereby acknowledges and agrees to the terms of the
Waiver and Amendment No. 1 to Securities Purchase Agreement, dated June 8, 2012
(the “Amendment”), including, without limitation, Section 9 of the Amendment,
amending that certain Securities Purchase Agreement, dated February 21, 2012, as
amended (as amended, the “Securities Purchase Agreement”), among ZaZa Energy
Corporation, a Delaware corporation and the holders of Securities party
thereto.  Each of the undersigned hereby confirms that the Guaranty Agreement to
which the undersigned are a party remains in full force and effect after giving
effect to the Amendment and continues to be the valid and binding obligation of
each of the undersigned, enforceable against each of the undersigned in
accordance with its terms.

 

Capitalized terms used herein but not defined are used as defined in the
Securities Purchase Agreement.

 

Dated June 8, 2012.

 

 

ZAZA HOLDINGS, INC.,

 

a Delaware corporation

 

 

 

 

 

 

 

By:

/s/ Todd Brooks

 

Name:

Todd Brooks

 

Title:

Vice President

 

 

 

 

ZAZA ENERGY, LLC,

 

a Texas limited liability company

 

 

 

 

 

 

 

By:

/s/ Todd Brooks

 

Name:

Todd Brooks

 

Title:

Manager

 

 

 

 

TOREADOR RESOURCES CORPORATION,

 

a Delaware corporation

 

 

 

 

 

 

 

By:

/s/ Tony Vermeire

 

Name:

Tony Vermeire

 

Title:

President

 

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