Document:

Prepared by R.R. Donnelley Financial -- Securities Purchase Agreement

Table of Contents

 
 
 Exhibit 10.1 

 
 SECURITIES PURCHASE AGREEMENT 
  
 dated as of June 26, 2002 
  
 by and among 

 
 GREKA ENERGY CORPORATION, as BORROWER 
  
 and 
  
 THE OTHER ENTITIES PARTY HERETO, as GUARANTORS

  
 and 
  
 THE PURCHASERS PARTY HERETO 
  
 and 
  
 GUGGENHEIM INVESTMENT MANAGEMENT, LLC, as COLLATERAL AGENT 
  
 

Table of Contents

  
 
TABLE OF CONTENTS 
  
 SECURITIES PURCHASE AGREEMENT 
  
 
	 Section
 
	  	  	  	 Page
 

	 1
 	  	 
DEFINITIONS
 	  	 1
 
	 
	 2.
 	  	 
PURCHASE OF SECURITIES
 	  	 19
 
	 
	  	  	 2.1    
Purchase of Securities
 	  	 19
 
	 
	  	  	 2.2    
Closings
 	  	 20
 
	 
	  	  	 2.3    
Optional Prepayment
 	  	 20
 
	 
	  	  	 2.4    
Excess Cash Flow
 	  	 20
 
	 
	  	  	 2.5    
Annual Fees
 	  	 21
 
	 
	  	  	 2.6    
Collateral Monitoring Fee
 	  	 21
 
	 
	  	  	 2.7    
Repayment of Notes
 	  	 21
 
	 
	  	  	 2.8    
Use of Proceeds
 	  	 21
 
	 
	  	  	 2.9    
Interest on Notes
 	  	 21
 
	 
	  	  	 2.10  
Receipt of Payments
 	  	 22
 
	 
	  	  	 2.11  
Application of Payments
 	  	 22
 
	 
	  	  	 2.12  
Sharing of Payments
 	  	 23
 
	 
	  	  	 2.13  
Access
 	  	 23
 
	 
	  	  	 2.14  
Taxes
 	  	 24
 
	 
	  	  	 2.15  
Original Issue Discount
 	  	 25
 
	 
	 3.
 	  	 
CREATION OF SECURITY INTEREST
 	  	 25
 
	 
	  	  	 3.1    
Security Interest
 	  	 25
 
	 
	  	  	 3.2    
Representations Concerning the Collateral
 	  	 25
 
	 
	  	  	 3.3    
Covenants Concerning the Collateral
 	  	 26
 
	 
	  	  	 3.4    
Collection and Maintenance of Collateral and Records
 	  	 26
 
	 
	  	  	 3.5    
Delivery of Additional Documentation Required
 	  	 27
 
	 
	  	  	 3.6    
Power of Attorney
 	  	 27
 
	 
	  	  	 3.7    
Code and Other Remedies
 	  	 28
 
	 
	  	  	 3.8    
Deficiency
 	  	 29
 
	 
	  	  	 3.9    
Lien Priority and Subordination
 	  	 29
 
	 
	 4.
 	  	 
PURCHASERS’ REPRESENTATIONS AND WARRANTIES
 	  	 29
 
	 
	  	  	 4.1    
Investment Intention
 	  	 29
 
	 
	  	  	 4.2    
Accredited Investor 
 	  	 30
 

 
 

 i 

Table of Contents

  
 TABLE OF CONTENTS 
  
 SECURITIES PURCHASE AGREEMENT—(Continued) 
  
 
	 Section
 
	  	  	  	 Page
 

	 
	  	  	 4.3    
Restricted Securities
 	  	 30
 
	 
	  	  	 4.4    
Existence 
 	  	 30
 
	 
	  	  	 4.5    
Power; Authorization; Enforceable Obligations
 	  	 30
 
	 
	 5.
 	  	 
CREDIT PARTIES’ REPRESENTATIONS AND WARRANTIES
 	  	 30
 
	 
	  	  	 5.1    
Authorized and Outstanding Shares of Capital Stock
 	  	 30
 
	 
	  	  	 5.2    
Authorization and Issuance of the Securities
 	  	 31
 
	 
	  	  	 5.3    
Securities Laws
 	  	 31
 
	 
	  	  	 5.4    
Corporate Existence
 	  	 31
 
	 
	  	  	 5.5    
Subsidiaries
 	  	 32
 
	 
	  	  	 5.6    
Corporate Power; Authorization; Enforceable Obligations
 	  	 32
 
	 
	  	  	 5.7    
Financial Statements
 	  	 32
 
	 
	  	  	 5.8    
Ownership of Property
 	  	 33
 
	 
	  	  	 5.9    
Material Contracts; Indebtedness
 	  	 34
 
	 
	  	  	 5.10  
Environmental Protection
 	  	 34
 
	 
	  	  	 5.11  
Labor Matters
 	  	 35
 
	 
	  	  	 5.12  
Other Ventures
 	  	 36
 
	 
	  	  	 5.13  
Taxes
 	  	 36
 
	 
	  	  	 5.14  
No Litigation
 	  	 36
 
	 
	  	  	 5.15  
Brokers
 	  	 36
 
	 
	  	  	 5.16  
Employment Agreements
 	  	 37
 
	 
	  	  	 5.17  
Patents, Trademarks, Copyrights and Licenses
 	  	 37
 
	 
	  	  	 5.18  
No Material Adverse Effect
 	  	 37
 
	 
	  	  	 5.19  
ERISA
 	  	 37
 
	 
	  	  	 5.20  
SEC Documents
 	  	 39
 
	 
	  	  	 5.21  
Ordinary Course of Business 
 	  	 40
 
	 
	  	  	 5.22  
Insurance
 	  	 40
 
	 
	  	  	 5.23  
Compliance with Law
 	  	 40
 
	 
	  	  	 5.24  
Absence of Default 
 	  	 40
 
	 
	  	  	 5.25  
Agreements with Affiliates
 	  	 40
 
	 
	  	  	 5.26  
Gas Contracts
 	  	 41
 

 
 

 ii 

Table of Contents

  
 TABLE OF CONTENTS 
  
 SECURITIES PURCHASE AGREEMENT—(Continued) 
  
 
	 Section
 
	  	  	  	 Page
 

	 
	  	  	 5.27  
Refunds
 	  	 41
 
	 
	  	  	 5.28  
Minute Books 
 	  	 41
 
	 
	  	  	 5.29  
Full Disclosure
 	  	 41
 
	 
	 6.
 	  	 
COVENANTS
 	  	 41
 
	 
	  	  	 6.1    
Affirmative Covenants
 	  	 41
 
	 
	  	  	 (a)    
Books and Records
 	  	 41
 
	 
	  	  	 (b)    
Financial Statements, Reports, Certificates
 	  	 41
 
	 
	  	  	 (c)    
Communications with Accountants
 	  	 42
 
	 
	  	  	 (d)    
Maintenance of Existence, Conduct of Business and Operation of Properties
 	  	 42
 
	 
	  	  	 (e)    
Taxes
 	  	 43
 
	 
	  	  	 (f)     
Insurance
 	  	 43
 
	 
	  	  	 (g)    
Location of Inventory and Equipment
 	  	 45
 
	 
	  	  	 (h)    
Compliance with Laws
 	  	 45
 
	 
	  	  	 (i)     
Leases
 	  	 45
 
	 
	  	  	 (j)     
Environmental
 	  	 45
 
	 
	  	  	 (k)    
Transfer or Division Orders
 	  	 46
 
	 
	  	  	 (l)     
Disclosure Updates
 	  	 47
 
	 
	  	  	 (m)   
Board Observer
 	  	 47
 
	 
	  	  	 (n)    
Notices
 	  	 47
 
	 
	  	  	 (o)    
Employee Plans
 	  	 48
 
	 
	  	  	 (p)    
Roll Forward Reserve Reports
 	  	 49
 
	 
	  	  	 (q)    
Greka AM, Inc. and Calox, Inc.
 	  	 49
 
	 
	  	  	 (r)     
Dissolution of Subsidiaries
 	  	 49
 
	 
	  	  	 6.2    
Negative and Financial Covenants
 	  	 49
 
	 
	  	  	 (a)    
Indebtedness
 	  	 49
 
	 
	  	  	 (b)    
Liens
 	  	 50
 
	 
	  	  	 (c)    
Sales of Assets; Liquidation
 	  	 50
 
	 
	  	  	 (d)    
Mergers and Subsidiaries
 	  	 50
 
	 
	  	  	 (e)    
Change Name
 	  	 50
 

 
 

 iii 

Table of Contents

  
 TABLE OF CONTENTS 
  
 SECURITIES PURCHASE AGREEMENT—(Continued) 
  
 
	 Section
 
	  	  	  	 Page
 

	 
	  	  	 (f)     
Guarantee
 	  	 51
 
	 
	  	  	 (g)    
Nature of Business
 	  	 51
 
	 
	  	  	 (h)    
Prepayments
 	  	 51
 
	 
	  	  	 (i)     
Payments on Vintage Note
 	  	 51
 
	 
	  	  	 (j)     
Change of Control
 	  	 51
 
	 
	  	  	 (k)    
Consignments
 	  	 51
 
	 
	  	  	 (l)     
Distributions
 	  	 51
 
	 
	  	  	 (m)   
Accounting Methods
 	  	 52
 
	 
	  	  	 (n)    
Investments
 	  	 52
 
	 
	  	  	 (o)    
Transactions with Affiliates
 	  	 52
 
	 
	  	  	 (p)    
Suspension
 	  	 52
 
	 
	  	  	 (q)    
Loans and Advances
 	  	 52
 
	 
	  	  	 (r)     
Change in Location of Chief Executive Office; Inventory and Equipment with Bailees
 	  	 52
 
	 
	  	  	 (s)    
Receivables
 	  	 53
 
	 
	  	  	 (t)     
Financial Covenants
 	  	 53
 
	 
	  	  	 (u)    
Capital Expenditures.
 	  	 54
 
	 
	  	  	 (v)    
Management Compensation
 	  	 54
 
	 
	  	  	 (w)   
Amendments to Certificate of Incorporation and By-Laws
 	  	 54
 
	 
	 7.
 	  	 
CONDITIONS PRECEDENT
 	  	 54
 
	 
	  	  	 7.1    
Conditions Precedent
 	  	 54
 
	 
	  	  	 7.2    
Additional Conditions
 	  	 55
 
	 
	 8.
 	  	 
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
 	  	 56
 
	 
	  	  	 8.1    
Events of Default
 	  	 56
 
	 
	  	  	 8.2    
Remedies
 	  	 58
 
	 
	  	  	 8.3    
Waivers by the Credit Parties
 	  	 59
 
	 
	  	  	 8.4    
Right of Set-Off
 	  	 59
 
	 
	 9.
 	  	 
SUBORDINATION
 	  	 59
 
	 
	  	  	 9.1    
Note Subordinated to Senior Debt
 	  	 59
 
	 
	  	  	 9.2    
Priority and Payment Over of Proceeds in Certain Events 
 	  	 60
 

 
 

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Table of Contents

  
 TABLE OF CONTENTS 
  
 SECURITIES PURCHASE AGREEMENT—(Continued) 
  
 
	 Section
 
	  	  	  	 Page
 

	 
	  	  	 9.3    
Rights of Holders of Senior Debt Not To Be Impaired 
 	  	 61
 
	 
	  	  	 9.4    
Subrogation 
 	  	 61
 
	 
	  	  	 9.5    
Obligations of Company Unconditional
 	  	 62
 
	 
	  	  	 9.6    
Notice to Holders
 	  	 62
 
	 
	  	  	 9.7    
Right of Any Holder as Holder of Senior Debt 
 	  	 62
 
	 
	  	  	 9.8    
Reinstatement 
 	  	 63
 
	 
	 10.
 	  	 
INDEMNIFICATION
 	  	 63
 
	 
	 11.
 	  	 
COLLATERAL AGENT
 	  	 63
 
	 
	  	  	 11.1  
Collateral Agency Provisions
 	  	 63
 
	 
	 12.
 	  	 
MISCELLANEOUS
 	  	 66
 
	 
	  	  	 12.1  
Complete Agreement; Modification of Agreement; Sale of Interest 
 	  	 66
 
	 
	  	  	 12.2  
Fees and Expenses
 	  	 67
 
	 
	  	  	 12.3  
No Waiver by Purchaser
 	  	 68
 
	 
	  	  	 12.4  
Remedies
 	  	 68
 
	 
	  	  	 12.5  
Waiver of Jury Trial 
 	  	 68
 
	 
	  	  	 12.6  
Severability 
 	  	 68
 
	 
	  	  	 12.7  
Binding Effect; Benefits 
 	  	 68
 
	 
	  	  	 12.8  
Conflict of Terms 
 	  	 69
 
	 
	  	  	 12.9   
Governing Law 
 	  	 69
 
	 
	  	  	 12.10  
Notices
 	  	 69
 
	 
	  	  	 12.11  
Survival 
 	  	 70
 
	 
	  	  	 12.12  
Section and Other Headings 
 	  	 70
 
	 
	  	  	 12.13  
Counterparts 
 	  	 70
 
	 
	  	  	 12.14  
Publicity 
 	  	 70
 
	 
	  	  	 12.15  
Confidentiality. 
 	  	 70
 

 
 

 v 

Table of Contents

 
	 Schedules
 	 	  	 	  	  	  
	 
	 Schedule
 	 	 A
 	 	 —
 	  	 Purchasers and Allocations of Securities
 
	 Schedule
 	 	 B
 	 	 —
 	  	 Credit Parties
 
	 Schedule
 	 	 1
 	 	 —
 	  	 Oil and Gas Properties
 
	 Schedule
 	 	 2
 	 	 —
 	  	 Mortgages
 
	 Schedule
 	 	 5.1
 	 	 —
 	  	 Stock and Warrants
 
	 Schedule
 	 	 5.5
 	 	 —
 	  	 Subsidiaries and Organization
 
	 Schedule
 	 	 5.7
 	 	 —
 	  	 Financial Statements; Other Obligations
 
	 Schedule
 	 	 5.8
 	 	 —
 	  	 Ownership and Properties
 
	 Schedule
 	 	 5.9
 	 	 —
 	  	 Material Contracts and Indebtedness
 
	 Schedule
 	 	 5.10
 	 	 —
 	  	 Environmental Protection
 
	 Schedule
 	 	 5.12
 	 	 —
 	  	 Other Ventures
 
	 Schedule
 	 	 5.13
 	 	 —
 	  	 Taxes
 
	 Schedule
 	 	 5.14
 	 	 —
 	  	 Litigation
 
	 Schedule
 	 	 5.16
 	 	 —
 	  	 Employment Agreements
 
	 Schedule
 	 	 5.17
 	 	 —
 	  	 Patents, Trademarks, Etc.
 
	 Schedule
 	 	 5.18
 	 	 —
 	  	 Material Adverse Effect
 
	 Schedule
 	 	 5.19
 	 	 —
 	  	 ERISA
 
	 Schedule
 	 	 5.22
 	 	 —
 	  	 Insurance
 
	 Schedule
 	 	 5.25
 	 	 —
 	  	 Agreements with Affiliates
 
	 Schedule
 	 	 6.1(b)
 	 	 —
 	  	 Monthly Flash Reports
 
	 Schedule
 	 	 6.1(g)
 	 	 —
 	  	 Inventory
 
	 Schedule
 	 	 6.2(a)
 	 	 —
 	  	 Indebtedness
 
	 Schedule
 	 	 6.2(c)
 	 	 —
 	  	 Sales of Assets; Liquidation
 
	 Schedule
 	 	 6.2(f)
 	 	 —
 	  	 Guarantees
 
	 Schedule
 	 	 6.2(n)
 	 	 —
 	  	 Permitted Acquisitions
 
	 Schedule
 	 	 6.2(o)
 	 	 —
 	  	 Affiliate Transactions
 
	 Schedule
 	 	 6.2(t)
 	 	 —
 	  	 Crude run
 
	 
	 Exhibits
 	 	  	 	  	  	  
	 
	 Exhibit A-1
 	 	  	 	  	  	 Form of Senior Note
 
	 Exhibit A-2
 	 	  	 	  	  	 Form of Senior Subordinated Note
 
	 Exhibit B
 	 	  	 	  	  	 Form of Warrant
 
	 Exhibit C
 	 	  	 	  	  	 Form of Guaranty
 
	 Exhibit D
 	 	  	 	  	  	 Form of Opinion of Credit Parties’ Counsel
 
	 
	 Annexes
 	 	  	 	  	  	  
	 
	 Annex A
 	 	  	 	  	  	 Interest Rates
 
	 Annex B
 	 	  	 	  	  	 Asphalt Plant Description
 
	 Annex C
 	 	  	 	  	  	 Zaca Field Description
 
	 Annex D
 	 	  	 	  	  	 Ernst & Young, LLP Obligations
 

 
 

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Table of Contents

 EXECUTIVE COPY 
  
 SECURITIES PURCHASE AGREEMENT 
  
 SECURITIES PURCHASE AGREEMENT, dated as of June 26,
2002, by and 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 (Greka Integrated and each such entity, each a “Guarantor” and collectively, the “Guarantors”; each Guarantor individually, a “Credit Party” and collectively, the “Credit Parties”),
and each of the entities listed as a purchaser on the signature pages hereto (individually, a “Purchaser” and, collectively, the “Purchasers”) and Guggenheim Investment Management, LLC, as collateral agent (the “Collateral
Agent”). 
  
 W I T N E S S E T H : 
  
 WHEREAS, Greka has agreed to issue and sell to the Purchasers, and the Purchasers have agreed to purchase from Greka, upon the terms and conditions hereinafter provided,
secured Senior Notes in the aggregate principal amount of $25,000,000 in the form of Exhibit A-1 hereto (collectively, the “Senior Notes”); 
  
 WHEREAS, Greka has agreed to issue and sell to certain Purchasers, and such Purchasers have agreed to purchase from Greka, upon the terms and conditions hereinafter provided, secured Senior
Subordinated Notes in the aggregate principal amount of $5,000,000 in the form of Exhibit A-2 hereto (collectively, the “Senior Subordinated Notes”); 
  
 WHEREAS, Greka has agreed to issue to the Purchasers, upon the terms and conditions hereinafter provided, warrants to purchase Common Stock of Greka in the form of
Exhibit B attached hereto (the “Warrants”); and 
  
 NOW, THEREFORE, in consideration of the premises
and the covenants hereinafter contained, it is agreed as follows: 
  
 1.    
DEFINITIONS 
  
 “Additional Documents” shall have the meaning set forth in
Section 3.5. 
  
 “Additional Interest” shall mean (a) during the period commencing on the Closing Date and
ending on the date 5 Business days after the receipt by the Purchasers of the financial statements required to be delivered by Section 6.1(b) for the first full fiscal quarter ending after the Closing Date, with respect to any Note, a per annum rate
equal to the rate set forth on Annex A for such Note opposite the heading “Closing Date Rate” and (b) thereafter, as of any date of determination, with respect to any Note, a per annum rate equal to the rate set forth on Annex
A for such Note opposite the then applicable Leverage Ratio (determined for the period ending on the last day of the most 

Table of Contents

 recent fiscal quarter for which financial statements have been delivered pursuant to Section 6.1(b)). 
  
 Subsequent changes in the rate of Additional Interest resulting from a change in the Leverage Ratio shall become effective 5 Business Days
after delivery by Greka to the Purchasers of new financial statements pursuant to Section 6.1(b). Notwithstanding anything to the contrary set forth in this Agreement (including the then effective Leverage Ratio), if Greka shall fail to deliver such
financial statements within the time periods specified in Section 6.1(b), the rate of Additional Interest from and including the 46th day after the end of such fiscal quarter, to but not including the date Greka delivers to the Purchasers such
financial statements shall conclusively equal the highest rate of Additional Interest applicable to the respective Notes on Annex A hereto. 
  
 “Affiliate” shall mean, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, 5% or
more of the Stock having ordinary voting power in the election of directors of such Person, (ii) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person, (iii) each of such
Person’s officers, directors, joint venturers and partners, (iv) any trust or beneficiary of a trust of which such Person is the sole trustee or (v) any lineal descendants, ancestors, spouse or former spouses (as part of a marital dissolution)
of such Person (or any trust for the benefit of such Person). For the purpose of this definition, “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or otherwise. 
  
 “Agreement”
shall mean this Securities Purchase Agreement including all amendments, modifications and supplements hereto and any appendices, exhibits and schedules hereto or thereto, and shall refer to the Agreement as the same may be in effect at the time such
reference becomes operative. 
  
 “Applicable Law” shall mean, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or regulatory agencies applicable to such person, including, without limiting the foregoing, zoning ordinances and all Environmental Laws, and all orders, decisions,
judgments and decrees of all courts and arbitrators in proceedings or actions to which the Person in question is a party or by which it is bound. 
  
 “Asphalt Plant” shall mean that certain real property commonly referred to as the Santa Maria Asphalt Refinery in Santa Barbara County, California, as more particularly described on Annex
B hereto. 
  
 “Balance Sheet” shall have the meaning set forth in Section 5.7(a) hereof. 

 
 “Bank of Texas 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. 
 

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 outstanding under the Bank of Texas Loan Agreement as of the Closing Date minus any principal payments made in respect thereof and in any event
after the Closing Date not exceeding $8,000,000 in aggregate principal amount. 
  
 “Bank of Texas Loan
Agreement” shall mean the Loan Agreement dated March 1, 2001 between Greka AM, Inc., Greka, as guarantor and the Bank of Texas, N.A., as amended. 
  
 “Bankruptcy Code” shall mean the United States Bankruptcy Code, as in effect from time to time. 
  
 “Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of New York. 
  
 “Capital Expenditures” shall mean all cash payments for any fixed assets or improvements or for replacements, substitutions or
additions thereto, that have a useful life of more than one year and which are required to be capitalized under GAAP. 
  
 “Capital Lease” shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, either would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or otherwise be disclosed as a capital lease in a note to such balance sheet, other than, in the case of any Credit Party or a Subsidiary of any Credit Party, any such lease under
which such Credit Party or such Subsidiary is the lessor. 
  
 “Capitalized Lease Obligation” shall mean,
with respect to any Capital Lease, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease or otherwise be disclosed in a note to such
balance sheet. 
  
 “Cash Equivalents” shall mean (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof maturing within one year from the date of acquisition thereof; (ii) commercial paper maturing no more than one year from the date of creation thereof and at the time of
their acquisition having the highest rating obtainable from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc.; and (iii) certificates of deposit, maturing not more than one year from the date of creation thereof,
issued by commercial banks incorporated under the laws of the United States of America, each having combined capital, surplus and undivided profits of not less than $200,000,000 and having a rating of “A” or better by a nationally
recognized rating agency. 
  
 “Cash Interest” shall mean (a) during the period commencing on the Closing
Date and ending on the date 5 Business days after the receipt by the Purchasers of the financial statements required to be delivered by Section 6.1(b) for the first full fiscal quarter ending after the Closing Date, with respect to any Note, a per
annum rate 
 

 3 

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 equal to the rate set forth on Annex A for such Note opposite the heading “Closing Date Rate” and (b) thereafter, as of any
date of determination, with respect to any Note, a per annum rate equal to the rate set forth on Annex A for such Note opposite the then applicable Leverage Ratio (determined for the period ending on the last day of the most recent fiscal
quarter for which financial statements have been delivered pursuant to Section 6.1(b)). 
  
 Subsequent changes in the
rate of Cash Interest resulting from a change in the Leverage Ratio shall become effective 5 Business Days after delivery by Greka to the Purchasers of new financial statements pursuant to Section 6.1(b). Notwithstanding anything to the contrary set
forth in this Agreement (including the then effective Leverage Ratio), if Greka shall fail to deliver such financial statements within the time periods specified in Section 6.1(b), the rate of Cash Interest from and including the 46th day after the
end of such fiscal quarter, to but not including the date Greka delivers to the Purchasers such financial statements shall conclusively equal the highest rate of Cash Interest applicable to the respective Notes on Annex A hereto.

  
 “Change of Control” shall mean any of the following: (a) any person or group of persons (within the
meaning of the Exchange Act) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act) of 30% or more of the issued and outstanding shares of Common Stock of Greka; (b) any Credit Party
shall be a party to a merger or consolidation in which such Credit Party is not the survivor or in which such Credit Party’s stockholders immediately prior thereto own less than a majority of the outstanding voting stock of the survivor; (c)
any Credit Party shall have sold, leased or otherwise transferred all or substantially all of its assets; or (d) Greka shall fail to have beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act) of all of
the issued and outstanding shares of Common Stock of any Guarantor. 
  
 “Charges” shall mean all federal,
state, county, city, municipal, local, foreign or other governmental (including, without limitation, PBGC) taxes at the time due and payable, levies, assessments, charges, liens, claims or encumbrances upon or relating to (i) any Credit Party’s
or any of its Subsidiaries’ employees, payroll, income or gross receipts, (ii) any Credit Party’s or any of its Subsidiaries’ ownership or use of any of its assets, or (iii) any other aspect of any Credit Party’s or any of its
Subsidiaries’ business. 
  
 “Closing” shall have the meaning set forth in Section 2.2 hereof.

  
 “Closing Date” shall have the meaning set forth in Section 2.2 hereof. 
  
 “Closing Fee” shall mean a fee in an amount equal to 3.00% of the aggregate principal amount of the Notes purchased by the
Purchasers at the Closing, payable by Greka to the Purchasers (on a pro rata basis). 
  
 “COBRA” shall have
the meaning set forth in Section 5.19(m) hereof. 
 

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 “Code” shall mean the New York Uniform Commercial Code, as in effect from time to time. 

 
 “Collateral” shall mean, collectively, the First Priority Collateral and the Second Priority Collateral.

  
 “Collateral Access Agreement” shall mean a landlord waiver, bailee letter, or acknowledgement agreement
of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in the Inventory, in each case, in form and substance satisfactory to the Required Holders. 

 
 “Collateral Agent” shall have the meaning set forth in the first paragraph of this Agreement. 

 
 “Collateral Documents” shall mean the Guaranty, the Pledge Agreement and the Mortgages. 
  
 “Collections” shall mean all cash, checks, notes, instruments, and other items of payment (including insurance proceeds,
proceeds of cash sales, rental proceeds and tax refunds) of the Credit Parties. 
  
 “Common Stock” shall
mean the common stock, no par value, of Greka. 
  
 “Compensation” shall mean, with respect to any Person,
all payments and accruals commonly considered to be compensation, including, without limitation, all wages, salary, deferred payment arrangements, bonus payments and accruals, profit sharing arrangements, payments in respect of stock option or
phantom stock option or similar arrangements, stock appreciation rights or similar rights, incentive payments, pension or employment benefit contributions or similar payments, made to or accrued for the account of such Person or otherwise for the
direct or indirect benefit of such Person. 
  
 “Consolidated Net Interest Expense” shall mean, with respect
to any Person for any period, gross interest expense of such Person and its Subsidiaries for such period determined in conformity with GAAP (including, without limitation, interest expense paid to Affiliates of such Person), less the sum of
interest income and non-cash accretion expense and non-cash amortization for debt origination cost for such period, each determined on a consolidated basis and in accordance with GAAP for such Person and its Subsidiaries. 
  
 “Credit Party” shall have the meaning set forth in the first paragraph of this Agreement. 
  
 “Crude Run” shall mean, for any month, the number of average barrels of crude oil throughput at the Santa Maria refinery per
calendar day during such month. 
  
 “Customer” shall mean and includes the account debtor with respect to
any Receivable, the prospective purchaser of goods, services or both with respect to any 
 

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 contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with Greka or its
Subsidiaries, pursuant to which Greka or its Subsidiaries is to deliver any personal property or perform any services. 
  
 “Default” shall mean any event which, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default. 
  
 “Dispute” shall mean any claim asserted for nonpayment of Receivables, including, without limitation, any alleged defense, counterclaim, offset, dispute or other
claim (real or merely asserted) whether arising from or relating to the sale of goods or rendition of services or arising from or relating to any other transaction or occurrence. 
  
 “EBITDA” shall mean, with respect to any Person for any period, the result of (i) such Person’s and its Subsidiaries’ consolidated net earnings (or
loss), minus (ii) the aggregate amount of all extraordinary gains of such Person and its Subsidiaries for such period, plus (iii) the aggregate amount of all extraordinary losses, non-cash and non-recurring expenses, interest expense, income taxes,
and depreciation and amortization of such Person and its Subsidiaries for such period, as determined in accordance with GAAP. 
  
 “Environmental Actions” shall mean any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials from (a) any assets, properties, or businesses of any Credit Party or any predecessor in interest, (b) from adjoining properties
or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by any Credit Party or any predecessor in interest. 
  
 “Environmental Complaint” shall have the meaning set forth in Section 6.1(j). 
  
 “Environmental Law” shall mean any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy
or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, to the extent binding on Credit
Parties, relating to the environment, natural resources, employee health and safety, or Hazardous Materials, including, but not limited to, the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. § 9601 et
seq., the Resource Conservation and Recovery Act, 42. U.S.C. § 6901 et seq; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C., § 2601 et seq.; the
Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous Material Transportation Act, 49 
 

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 U.S.C. § 1801 et seq.; and the Occupational Safety and Health Act, 29 U.S.C. §651 et seq.; any state and local or
foreign counterparts or equivalents, in each case as amended from time to time. 
  
 “Environmental Liabilities
and Costs” shall mean all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including, without limitation, all fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim, suit, action or demand by any person or entity, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute or common law (including, without limitation, any thereof arising under any Environmental Law, permit, order or agreement with any Governmental Authority) and which
relate to any health or safety condition regulated under any Environmental Law or in connection with any other environmental matter or spill or the presence of or Release of a Hazardous Material or threatened Release of any Hazardous Material.

  
 “Environmental Lien” shall mean any Lien in favor of any Governmental Authority for Environmental
Liabilities and Costs. 
  
 “Equipment” shall mean all of Credit Parties’ now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles (including motor vehicles), tools, parts, goods (other than consumer goods, farm products, or Inventory),
wherever located, including all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing. 
  
 “ERISA” shall mean the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time and any regulations promulgated thereunder.

  
 “ERISA Affiliate” shall mean, with respect to any Credit Party, any trade or business (whether or not
incorporated) under common control with such Credit Party and which, together with such Credit Party, are treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC, excluding the Purchasers and each other person
which would not be an ERISA Affiliate if the Purchasers did not own any issued and outstanding shares of Stock of such Credit Party. 
  
 “Event of Default” shall have the meaning set forth in Section 8.1 hereof. 
  
 “Excess Cash Flow” shall mean, for any fiscal period, the result of (i) Greka and its Subsidiaries’ EBITDA less (ii) the cash portion of all Capital Expenditures made by Greka and its Subsidiaries during such period
and permitted hereunder, less (iii) all payments of principal and interest actually made by Greka and its Subsidiaries in respect of any Indebtedness during such period, less (iv) all cash taxes actually paid by 
 

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 Greka and its Subsidiaries during such period, less (without duplication) (v) all cash payments paid by Greka and its Subsidiaries under Capital
Leases. 
  
 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and all rules and
regulations promulgated thereunder. 
  
 “Facility” shall have the meaning set forth in Section 5.10(a)
hereof. 
  
 “Fair Market Value” shall mean, with respect to any asset or property of a Person, the price
which could be negotiated in an arm’s length free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. 
  
 “Financial Subordinated Debt” shall mean any Indebtedness of Santa Maria permitted to be incurred hereunder which is
subordinated to the Obligations with respect to the Senior Notes and the Senior Subordinated Notes upon terms and conditions satisfactory to the Required Holders in their sole discretion. 
  
 “First Priority Collateral” shall mean all of each Credit Party’s now or hereafter acquired right, title, and interest in and to each of the following (but
excluding the Second Priority Collateral): 
  
 (a)  Receivables, 
  
 (b)  Inventory, 
  
 (c)  Deposit Accounts, 
  
 (d)  Documents, 
  
 (e)  General
Intangibles, 
  
 (f)  Instruments, 
  

(g)  Investment Property, 
  
 (h)  Chattel Paper, 
  
 (i)  Oil
and Gas Properties, 
  
 (j)  Equipment, 
  
 (k)  all goods and personal property of such Credit Party, whether tangible or intangible and wherever located,

  
 (l)  all books and records pertaining to the property described in this definition of
“First Priority Collateral”, and 
 

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 (m)  the proceeds and products, whether tangible or
intangible of any of the foregoing, including proceeds of insurance covering any or all of the foregoing, and any and all tangible or intangible property resulting from the sale, exchange, collection, or other disposition of any of the foregoing, or
any portion thereof or interest therein, and the proceeds thereof. All capitalized terms used in this definition and not defined in this Agreement shall have the respective meanings assigned to such terms in the Code. 
  
 “Fiscal Year” shall mean the twelve month period ending December 31. Subsequent changes of the fiscal year of any Credit Party
shall not change the term “Fiscal Year” unless the Required Holders shall consent in writing to such changes. 
  
 “Fixed Charge Coverage Ratio” shall mean, for any period, the ratio of (i) Santa Maria’s EBITDA for such period, to (ii) the sum of (A) all principal of Indebtedness of Santa Maria scheduled to be paid or prepaid
during such period (not including prepayments of revolving advances under the GMAC Loan Agreement unless such prepayments are accompanied by a reduction of the revolving commitment thereunder and not including the final scheduled payment of the GMAC
Debt or the Obligations at the Maturity Date), plus (B) Consolidated Net Interest Expense of Santa Maria for such period, plus (C) all amounts paid or payable by Santa Maria on Capitalized Lease Obligations having a scheduled due date
during such period plus (D) all cash amounts paid in respect of Capital Expenditures of Santa Maria during such period. 
  
 “GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time, except that for purposes of the financial covenants contained in Section 6.2(t) hereof, GAAP shall
be as in effect on the date of the most recent Financials and shall be applied in a manner consistent therewith. 
  
 “General Intangibles” shall mean all of the Credit Parties’ now owned or hereafter acquired right, title, and interest with respect to “general intangibles” as that term is defined in the Code (including
payment intangibles, contract rights, rights to payment, proprietary rights, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trademarks, servicemarks, copyrights, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing arrangements, infringement claims, computer programs, information contained on
computer disks or tapes, software, literature, reports, catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and tax refund claims), and any and all supporting obligations in respect thereof. 
  
 “GMAC Debt” shall mean all principal of and premium, if any, and interest on, and all other amounts owing in respect of
Indebtedness Greka and certain Guarantors outstanding under the GMAC Loan Agreement not exceeding $10,000,000 in aggregate principal amount. 
 

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 “GMAC Loan Agreement” shall mean that certain First Amended and
Restated Loan and Security Agreement dated as of November 30, 1999 by and among certain Guarantors and GMAC Commercial Credit LLC, as amended. 
  
 “Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government. 
  
 “Greka” shall have the
meaning set forth in the first paragraph of this Agreement. 
  
 “Guaranteed Indebtedness” shall mean, as to
any Person, any obligation of such Person guaranteeing any Indebtedness, lease, dividend, or other obligation (“primary obligations”) of any other Person (the “primary obligor”) in any manner including, without limitation, any
obligation or arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to advance or supply funds            (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against loss in
respect thereof. 
  
 “Guarantor” shall have the meaning set forth in the first paragraph of this Agreement.

  
 “Guaranty” shall mean that certain Guaranty, dated as of the Closing Date, executed by the Guarantors
in favor of the Collateral Agent, for the benefit of the Purchasers, in the form of Exhibit C attached hereto. 
  
 “Hazardous Discharge” shall have the meaning set forth in Section 6.1(j). 
  
 “Hazardous Material” shall mean any substance, material or waste, whether solid, liquid or gaseous, that is classified, characterized or otherwise regulated as hazardous, toxic, pollutant, contaminant or words of similar
meaning or effect under the Environmental Laws and shall include without limitation any asbestos, polychlorinated biphenyls, radioactive substances, methane, petroleum and petroleum products or wastes. 
  
 “Indebtedness” of any Person shall mean (i) all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers’ acceptances, whether or not matured, but not including obligations to trade
creditors incurred in the ordinary course of business), (ii) all obligations evidenced by notes, bonds, debentures or similar instruments, (iii) all 
 

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 indebtedness created or arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all Capital Lease Obligations, (v) all
Guaranteed Indebtedness, (vi) all Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, (vii) all liabilities under Title IV of ERISA, and (viii) all
indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), or pursuant to any sale-leaseback transaction. 
  
 “Interest Coverage Ratio” shall mean, for any period, the ratio of Greka and its Subsidiaries’ EBITDA during such period to the Consolidated Net Interest Expense of Greka and its Subsidiaries during such period.

  
 “Interest Payment Date” shall have the meaning assigned to such term in Section 2.9(a) hereof.

  
 “Inventory” shall mean all Credit Parties’ now owned or hereafter acquired right, title, and
interest with respect to inventory, including goods held for sale or lease or to be furnished under a contract of service, goods that are leased by a Credit Party as lessor, goods that are furnished by a Credit Party under a contract of service, and
raw materials, work in process, or materials used or consumed in a Credit Party’s business. 
  
 “Investment” shall mean, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide accounts arising from the sale of goods or rendition of services in the ordinary course of business consistent with past
practice), purchases or other acquisitions for consideration of Indebtedness or Stock, and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. 
  
 “IRC” shall mean the Internal Revenue Code of 1986, as amended, and any successor thereto. 
  
 “IRS” shall mean the Internal Revenue Service, or any successor thereto. 
  

“KSI Funding Loan Agreement” shall mean the Loan and Security Agreement dated April 2, 2002 between Greka AM, Inc. and KSI Funding, Inc. 

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 “Leverage Ratio” shall mean, with respect to any Person for any period,
the ratio of (a) all Indebtedness of such Person and its Subsidiaries, on a consolidated basis, as of the last day of such period to (b) EBITDA of such Person and its Subsidiaries, on a consolidated basis, for such period. 
  
 “Lien” shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest as to assets owned by the relevant Person under the Uniform Commercial Code or comparable
law of any jurisdiction). 
  
 “Loan Documents” shall mean this Agreement, the Notes, the Collateral
Documents and all other agreements, instruments, documents and certificates, including, without limitation, pledges, powers of attorney, consents, assignments, contracts, notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, and delivered to the Collateral Agent or the Purchasers in connection with this Agreement or the transactions contemplated hereby, other than the Warrants. 
  
 “Material Adverse Effect” shall mean a material adverse effect on (i) the business, assets, operations, prospects or financial
or other condition of the Credit Parties and their Subsidiaries, taken as a whole, or (ii) Greka’s or the Credit Parties’, taken as a whole, ability to pay the Obligations in accordance with the terms hereof and the other Loan Documents.

  
 “Material Contracts” shall mean (i) all of each Credit Party’s and its Subsidiaries’
contracts, agreements, leases or other instruments to which such Credit Party or its Subsidiaries is a party or by which such Credit Party, its Subsidiaries or their properties are bound, which involve annual payments by or to such Credit Party or
its Subsidiaries of more than $1,000,000 or which are filed as exhibits to any filing with the SEC, (ii) all of each Credit Party’s and its Subsidiaries’ loan agreements, credit agreements, indentures, mortgages, deeds of trust, pledge and
security agreements, factoring agreements, conditional sales contracts, letters of credit or other debt instruments involving principal amounts of more than $1,000,000, (iii) all material operating or capital leases for equipment which involve
annual payments by or to such Credit Party or its Subsidiaries of more than $1,000,000 to which any Credit Party or any of its Subsidiaries is a party, (iv) all non-competition and similar agreements to which any Credit Party or any of its
Subsidiaries is a party, (v) all contracts for the employment of any officer or employee, (vi) all consulting agreements, (vii) any guarantees by any Credit Party or any of its Subsidiaries, (viii) all distributor and sales agency agreements and
(ix) all other material contracts not made in the ordinary course of business. 
  
 “Maturity Date” shall
mean June 26, 2004. 
 

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 “Maximum Lawful Rate” shall have the meaning set forth in Section
2.9(d) hereof. 
  
 “Mortgages” shall mean, collectively, the mortgages in favor of the Collateral Agent
dated as of the Closing Date for the properties described on Schedule 2. 
  
 “Multiemployer Plan” shall
mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, and to which any Credit Party, any of its Subsidiaries or any ERISA Affiliate is making, is obligated to make, has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them. 
  
 “Notes” shall mean, collectively, the
Senior Notes and the Senior Subordinated Notes. 
  
 “Obligations” shall mean all amounts owing by the
Credit Parties to the Purchasers (and any of their respective assignees) pursuant to any of the Loan Documents, including all principal, interest, fees, expenses, attorneys’ fees and any other sum payable by the Credit Parties under any of the
Loan Documents. 
  
 “Oil and Gas Properties” shall mean all of the Credit Parties’ oil and natural gas
or other reserves and oil and gas rights located on or under or in any manner related to the premises described in Schedule 1 hereto (including without limitation any such reserves or rights acquired pursuant to the Vintage Acquisition Agreement)
and any other oil and natural gas or other reserves and oil and gas rights hereafter acquired by any Credit Party. 
  
 “PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor thereto. 
  
 “Pension Plan” shall have the meaning set forth in Section 5.19(a) hereof. 
  
 “Permitted Acquisitions” shall mean the acquisitions of one or more of the oil and gas properties listed on Schedule 6.2(n) hereto. 
  
 “Permitted Indebtedness” shall mean, with respect to any Credit Party, (i) taxes or assessments or other governmental charges or levies, either not yet due and
payable or to the extent that nonpayment thereof is permitted by the terms of this Agreement or would not have a Material Adverse Effect; (ii) obligations under workmen’s compensation, unemployment insurance, social security or public liability
laws or similar legislation; (iii) bids, tenders, contracts (other than contracts for the payment of money) or leases to which any Credit Party or any of its Subsidiaries is a party as lessee made in the ordinary course of business; (iv) public or
statutory obligations of any Credit Party or any of its Subsidiaries; (v) all deferred taxes; (vi) trade payables in the ordinary course of business; and (vii) all unfunded pension fund and other employee benefit plan obligations and liabilities but
only to the extent permitted to remain unfunded under applicable law. 
 

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 “Permitted Liens” shall mean (a) Liens in favor of the Senior
Purchasers, (b) Liens in favor of the Subordinated Purchasers, (c) Liens existing on the date hereof in and to the Second Priority Collateral and securing the GMAC Debt, (d) Liens in favor of Vintage Petroleum California, Inc. existing on the date
hereof in and to the Asphalt Plant and Zaca Field, (e) Liens for unpaid taxes that either (i) are not yet delinquent, (ii) would not have a Material Adverse Effect, or (iii) do not constitute an Event of Default hereunder and are the subject of
Permitted Protests, (f) Liens set forth on Schedule  5.8, (g) the interests of lessors under operating leases, (h) purchase money Liens or the interests of lessors under Capital Leases to the extent that such Liens or interests secure
Permitted Purchase Money Indebtedness and so long as such Lien attaches only to the asset purchased or acquired and the proceeds thereof, (i) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of Credit Parties’ business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,
(j) Liens arising from deposits made in connection with obtaining worker’s compensation or other unemployment insurance, social security and other similar laws (k) Liens or deposits to secure performance of bids, tenders, or leases incurred in
the ordinary course of Credit Parties’ business and not in connection with the borrowing of money, (l) Liens granted as security for surety, performance or appeal bonds in connection with obtaining such bonds in the ordinary course of Credit
Parties’ business, (m) Liens resulting from any judgment or award that is not an Event of Default hereunder, and (n) with respect to any real property, easements, exceptions, reservations, encroachments, restrictions, rights of way, zoning
restrictions and other similar title policy exceptions or encumbrances that do not materially interfere with or impair the use or operation thereof by Credit Parties. 
  
 “Permitted Protest” shall mean the right of the applicable Credit Party to protest any Lien (other than any such Lien that secures the Obligations), taxes (other
than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by the applicable Credit Party in good faith, and (c) the Required Holders are satisfied in their reasonable discretion that, while any such protest is pending, there will be no impairment of
the enforceability, validity, or priority of any of the Purchasers’ Liens. 
  
 “Permitted Purchase Money
Indebtedness” shall mean, as of any date of determination, Purchase Money Indebtedness in an aggregate amount outstanding at any one time not in excess of $3,000,000. 
  
 “Person” shall mean any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

 

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 “Plan” shall have the meaning set forth in Section 5.19(a) hereof.

  
 “Pledge Agreement” shall mean the Pledge Agreement, dated as of the date hereof, executed by Greka,
Greka Integrated and Saba Petroleum Company in favor of the Collateral Agent, for the benefit of the Purchasers, pledging such Persons’ equity interests in the other Credit Parties. 
  
 “Purchase Money Indebtedness” shall mean Indebtedness (other than the Obligations, the GMAC Debt and the Indebtedness under the Vintage Note, but including
Capitalized Lease Obligations), incurred at the time of, or within 60 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof. 
  

“Purchaser” shall have the meaning set forth in the first paragraph of this Agreement and shall include any permitted assignee of a Note in accordance with
Section 12.1 hereof. 
  
 “Receivables” shall mean all of Credit Parties’ now owned or hereafter
acquired accounts and contract rights, instruments, insurance proceeds, documents, chattel paper, letters of credit and Credit Parties’ rights to receive payment thereunder, any and all rights to the payment or receipt of money or other forms
of consideration of any kind at any time now or hereafter owing or to be owing to Credit Parties, all proceeds thereof and all files in which Credit Parties has any interest whatsoever containing information identifying or pertaining to any of
Credit Parties’ Receivables, together with all of Credit Parties’ rights to any merchandise which is represented thereby, and all Credit Parties’ rights, title, security and guaranties with respect to each Receivable, including,
without limitation, all rights of stoppage in transit, replevin and reclamation and all rights as an unpaid vendor. 
  
 “Release” shall mean, with respect to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration, in each case, of any Hazardous Material into the
environment or into or out of any property owned by such Person, including the movement of Hazardous Material through or in the air, soil, surface water, ground water or property. 
  
 “Remedial Action” shall mean all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment,
(c) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (d) conduct any other actions authorized by 42 U.S.C. § 9601. 
  
 “Required Holders” shall mean Persons who hold at least a majority of the outstanding principal amount of the Notes. 
 

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 “Retained Goods” shall have the meaning set forth in Section 3.3(e)
hereof. 
  
 “Retiree Welfare Plan” shall refer to any Welfare Plan providing for continuing coverage or
benefits for any participant or any beneficiary of a participant after such participant’s termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole expense of the participant or
the beneficiary of the participant. 
  
 “Sanction/Embargo Programs” shall mean economic and other sanctions
and embargo program restrictions promulgated by the government of the United States of America or any office or agency thereof including but not limited to the President and the Office of Foreign Assets Control of the Treasury Department, or either
of them. 
  
 “Santa Maria” shall mean Santa Maria Refining Company. 
  
 “SEC” shall mean the U.S. Securities and Exchange Commission, or any successor thereto. 
  
 “Second Priority Collateral” shall mean, collectively, all of Santa Maria’s now or hereafter acquired right, title, and
interest in and to each of the following: 
  
 (a)  Inventory; 
  
 (b)  Receivables; 
  
 (c)  General Intangibles as they relate to Inventory and Receivables; 
  
 (d)  all of its books, records, ledgercards, files, correspondence, computer programs, tapes, disks and related data processing software (owned by
it or in which it has an interest) which at any time evidence or contain information relating to (a), (b) and (c) above or are otherwise necessary or helpful in the collection thereof or realization thereupon; 
  
 (e)  all of its documents of title, policies and certificates of insurance, securities, chattel paper, other
documents or instruments evidencing or pertaining to (a), (b) and (c) above; and 
  
 (f)  all products and proceeds of (a), (b), (c), (d) and (e) above (including, but not limited to, all claims to items referred to in (a), (b), (c), (d) and (e) above) and all claims of Santa Maria against third parties for
(x) (i) loss of, damage to, or destruction of, and (ii) payments due or to become due under leases, rentals and hires of, any or all of (a), (b), (c), (d) and (e) above and (y) proceeds payable under, or unearned premiums with respect to, policies
of insurance in whatever form. 
  
 “Securities” shall mean, collectively, the Notes and the Warrants.

 

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 “Securities Act” shall mean the Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder. 
  
 “Senior Notes” shall have the meaning set forth in
the Recitals. 
  
 “Senior Purchasers” shall mean, collectively, all the Purchasers who hold Senior Notes.

  
 “Senior Subordinated Notes” shall have the meaning set forth in the Recitals. 
  
 “Settlement Date” shall mean two (2) Business Days after the day on which the applicable Receivable is actually collected.

  
 “Solvent” shall mean, with respect to any Person, that the value of the assets of such Person (both at
fair value and present fair saleable value) is, on the date of determination, greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as of such date and that, as of such date, such Person is
able to pay all liabilities of such Person as such liabilities mature and does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. 
  
 “Stock” shall mean all shares, options, warrants, general or limited partnership interests, limited liability company membership interest, participations or other
equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including, without limitation, common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act). 
  
 “Subordinated Purchasers” shall mean, collectively, all the Purchasers who hold Senior Subordinated Notes. 
  
 “Subsidiary” shall mean, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding Stock having ordinary voting
power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person and/or one or more Subsidiaries of such Person, and (b) any partnership or other entity in which such Person and/or one or more Subsidiaries of such
Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%. 
 

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 “Tangible Net Worth” shall mean, as at a particular date, (a) the
aggregate amount of all tangible assets of Santa Maria as may be properly classified as such in accordance with GAAP consistently applied excluding such other assets as are properly classified as intangible assets under GAAP, less (b) the aggregate
amount of all liabilities of Santa Maria. 
  
 “Tangible Net Worth Ratio” shall mean, as of any date, the
ratio of (a) the Total Liabilities as of such date to (b) the sum of (i) Tangible Net Worth as of such date and (ii) Financial Subordinated Debt as of such date. 
  
 “Taxes” shall have the meaning set forth in Section 2.14(a) hereof. 
  
 “Total Debt” shall mean, as of any date, the GMAC Debt, the Bank of Texas Debt, the Indebtedness under the KSI Funding Loan Agreement and the Vintage Note, the Indebtedness evidenced by the Notes and the Indebtedness
described on Schedule 6.2(a). 
  
 “Total Liabilities” shall mean, at any date, all obligations of Santa
Maria which in conformity with GAAP would be included in determining total liabilities as shown on the liabilities side of a balance sheet of Santa Maria at such date, and in any event includes all Indebtedness of Santa Maria at such date, whether
or not the same would be so shown. 
  
 “Transaction Documents” shall mean this Agreement, the Notes, the
Collateral Documents and the Warrants. 
  
 “Vintage Note” shall mean that certain Promissory Note in an
aggregate principal amount not exceeding $6 million, dated as of the date hereof, executed by Greka SMV, Inc. and payable to Vintage Petroleum California, Inc. and in form and substance satisfactory to the Purchasers. 
  
 “Vintage Acquisition Agreement” shall mean the Asset Sale Agreement, dated as of May 31, 2001, between Vintage Petroleum
California, Inc. and Greka SMV, Inc. 
  
 “Warrants” shall have the meaning set forth in the Recitals.

  
 “Welfare Plan” shall mean any welfare plan, as defined in Section 3(1) of ERISA, which is maintained or
contributed to by any Credit Party, any of its Subsidiaries or any ERISA Affiliate. 
  
 “Withdrawal
Liability” shall mean, at any time, the aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA, and any increase in contributions pursuant to Section 4243 of ERISA with respect to all Multiemployer Plans. 

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 “Zaca Field” shall mean that certain real property commonly referred to
as the Zaca Field in Santa Barbara County, California, as more particularly described on Annex C hereto. 
  
 References to this “Agreement” shall mean this Securities Purchase Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement
as the same may be in effect at the time such reference becomes operative. 
  
 Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP consistently applied. That certain terms or computations are explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing. The words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole, including the Exhibits and Schedules hereto, as the same may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. 
  
 2.    
PURCHASE OF SECURITIES 
  
 2.1.  
Purchase of Securities.    (a)  Subject to the terms and conditions set forth in this Agreement, the Purchasers agree, severally and not jointly, to purchase from Greka, and Greka agrees to
issue and sell to each such Purchaser, on the Closing Date, the Senior Notes to be issued by Greka set forth opposite each such Purchaser’s name on Schedule A on the signature pages hereto. The aggregate principal amount of the Senior
Notes to be purchased on the Closing Date, and the aggregate purchase price therefor, shall be $25,000,000. 
  
 (b)  Subject to the terms and conditions set forth in this Agreement, certain Purchasers agree, severally and not jointly, to purchase from Greka, and Greka agrees to issue and sell to each such Purchaser, on the Closing
Date, the Senior Subordinated Notes to be issued by Greka set forth opposite each such Purchaser’s name on Schedule A hereto. The aggregate principal amount of the Senior Subordinated Notes to be purchased on the Closing Date, and the
aggregate purchase price therefor, shall be $5,000,000. 
  
 (c)  Subject to the terms and conditions set
forth in this Agreement, the Purchasers agree, severally and not jointly, to purchase from Greka, and Greka agrees to issue to each Purchaser, on the Closing Date, Warrants to be issued by Greka set forth opposite each such Purchaser’s name on
Schedule A hereto, for an aggregate number of shares of Common Stock equal to the number specified on Schedule A hereto. Each 
 

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 Purchaser hereby agrees to comply with provisions in the Warrants issued to it that are applicable to it. 
  
 (d)  Subject to the terms and conditions set forth in this Agreement, Greka agrees to issue to the Collateral Agent, on the
Closing Date, Warrants to be issued by Greka as set forth on Schedule A hereto. 
  
 2.2  
Closings.    The closing of the purchase and sale of the Securities (the “Closing”) shall take place on June 26, 2002 or such date and time as shall be mutually agreed to by the parties
hereto (the “Closing Date”) at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York, or such other place as shall be mutually agreed to by the parties hereto. On the Closing Date, Greka will deliver to each
Purchaser (i) a Senior Note and, if such Purchaser is purchasing Senior Subordinated Notes, a Senior Subordinated Note, each payable to such Purchaser against delivery by such 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, (ii) a Warrant exercisable for the applicable number of shares of Common Stock (as set forth on Schedule A hereto), and (iii) such Purchaser’s
pro rata share of the Closing Fee (based on such Purchaser’s pro rata share of the Notes purchased at the Closing). On the Closing Date, Greka will deliver to the Collateral Agent a Warrant exercisable for the applicable number of shares of
Common Stock (as set forth on Schedule A hereto). 
  
 2.3  
Optional Prepayment.    Greka shall have the right, on 10 days prior notice to the Purchasers, to voluntarily prepay all or any portion (in multiples of not less than $500,000 or the amount
outstanding on the Senior Notes or the Subordinated Notes, as applicable and on a pro rata basis among each of the Senior Notes and Senior Subordinated Notes, as applicable) of the Senior Notes or the Senior Subordinated Notes, without premium or
penalty. Each prepayment shall be accompanied by the payment of accrued and unpaid Additional Interest on the amount being prepaid with respect to the applicable Note and all accrued and unpaid Cash Interest with respect to the applicable Note, each
through the date of payment; provided, however, that the Senior Subordinated Notes may not be prepaid so long as any Senior Note remains outstanding. 
  
 2.4  
Excess Cash Flow.    Greka shall make, on a quarterly basis within 50 days of the end of the fiscal quarter ending June 30, 2002, and each fiscal quarter thereafter, a mandatory prepayment in respect
of the Senior Notes (on a pro rata basis among each of the Senior Notes) in an amount equal to the percentage of the Excess Cash Flow for such fiscal quarter equal to the percentage below corresponding to the applicable Leverage Ratio for Greka and
its Subsidiaries for such fiscal quarter: 
  
 
	 Leverage Ratio
 
	  	 %
 
	 
	 4:1 or greater
 	  	 100
 	 %
 
	 > 3:1 and < 4:1
 	  	 50
 	 %
 
	 3:1 or less
 	  	 0
 	 %
 

 
 

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 No mandatory prepayment shall be required under this Section 2.4 if the prepayment amount calculated pursuant to this Section 2.4 is less than
$100,000. 
  
 2.5  
Annual Fees.    (a)  If any Obligations are outstanding with respect to the Senior Notes or the Senior Subordinated Notes on the first anniversary of the Closing Date, Greka shall, on such
anniversary date, pay to the Purchasers holding Senior Notes or the Purchasers holding Senior Subordinated Notes, as applicable, a maintenance fee in an amount equal to the product of (a) .015 times (b) the original aggregate principal amount of the
Senior Notes or the Senior Subordinated Notes, as the case may be, purchased on the Closing Date. 
  
 (b)  If any amounts are outstanding under the Bank of Texas Loan Agreement or the KSI Funding Loan Agreement on the first anniversary of the Closing Date, Greka shall, on such anniversary date, pay to the Purchasers a fee
in an amount equal to the product of (a) .01 times (b) the then outstanding aggregate principal amount of the Notes. 
  
 2.6  
Collateral Monitoring Fee.    So long as any Obligations are outstanding, Greka shall, on the first day of each calendar month, pay to the Collateral Agent a collateral monitoring fee of $10,000 for
such month. 
  
 2.7  
Repayment of Notes.    Greka promises to repay the entire unpaid principal amount of, and any unpaid and accrued Cash Interest and Additional Interest on, the Notes on the Maturity Date.

  
 2.8  
Use of Proceeds.    The proceeds of the purchase price hereunder at the Closing shall be used solely to (i) repay all of the outstanding term Indebtedness under the GMAC Loan Agreement, (ii) pay a
portion of the purchase price for certain assets to be acquired from Vintage Petroleum California, Inc. in accordance with the Vintage Acquisition Agreement, (iii) pay related transaction costs and fees and (iv) for working capital needs of the
Credit Parties. 
  
 2.9  
Interest on Notes.    (a) Greka shall pay Cash Interest on the Notes to each Purchaser, monthly in arrears on the first day of each calendar month commencing on August 1, 2002 through the date of
repayment in full (each, an “Interest Payment Date”), on such Purchaser’s ratable share of the aggregate principal amount of the Notes. The unpaid principal balance of the Notes shall also bear Additional Interest, which shall be
compounded on each Interest Payment Date and shall be payable in cash on the earlier of (i) any prepayment of the Notes (as to the Notes and the amount prepaid), other than pursuant to Section 2.4, and (ii) the Maturity Date. 

 
 (b)  If any payment on any Note becomes due and payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate for such Note during such extension. 
 

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 (c)  So long as any Event of Default shall be continuing, the rate of
Cash Interest applicable to the Notes shall each be increased by 2% per annum above the rate of Cash Interest otherwise applicable to the Notes. 
  
 (d)  Notwithstanding anything to the contrary set forth in this Section 2.9, if at any time until payment in full of the Notes, the interest rate payable on any Notes exceeds the highest rate
of interest permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto (the “Maximum Lawful Rate”), then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable on such Notes shall be equal to the Maximum Lawful Rate; provided, however, that if at any time thereafter the interest rate payable on such Notes is less than the Maximum Lawful Rate, Greka shall
continue to pay interest thereunder at the Maximum Lawful Rate until such time as the total interest received by the Purchasers is equal to the total interest which they would have received had the interest rate on such Notes been (but for the
operation of this paragraph) the applicable interest rate payable since the Closing Date. Thereafter, the interest rate payable on such Notes shall be the applicable interest rate pursuant to clauses (a) through (c) above unless and until such rate
again exceeds the Maximum Lawful Rate, in which event this paragraph shall again apply. In no event shall the total interest received by any Purchaser for any Notes pursuant to the terms hereof exceed the amount which it could lawfully have received
for such Notes had the interest due hereunder for such Notes been calculated for the full term thereof at the Maximum Lawful Rate. In the event the Maximum Lawful Rate is calculated pursuant to this paragraph, such interest shall be calculated at a
daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made. In the event that a court of competent jurisdiction, notwithstanding the provisions of this Section 2.9(d), shall make a final
determination that a Purchaser has received interest hereunder or under any of the Loan Documents in excess of the Maximum Lawful Rate, such Purchaser shall, to the extent permitted by applicable law, promptly apply such excess first to any Cash
Interest due or accrued and not yet paid under the Notes, then to any Additional Interest due or accrued and not yet paid under the Notes, then to the outstanding principal of the Notes, then to other unpaid Obligations and thereafter shall refund
any excess to Greka or as a court of competent jurisdiction may otherwise order. 
  
 2.10  
Receipt of Payments.    Greka shall make each payment under the Notes not later than 5:00 P.M. (New York City time) on the day when due in lawful money of the United States of America in immediately
available funds to each Purchaser’s respective depository bank in the United States as designated by such Purchaser from time to time for deposit in such Purchaser’s depositary account. For purposes only of computing interest under the
Notes, all payments shall be applied by each Purchaser to the Notes on the day payment has been credited by such Purchaser’s depository bank to such Purchaser’s account in immediately available funds. 
  
 2.11  
Application of Payments.    Subject to Section 9, all payments hereunder shall be applied in the following order: (i) then due and payable or accrued Cash Interest payments on the Notes; (ii) then
due and payable fees and expenses; 
 

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 (iii) then due and payable or accrued Additional Interest payments on the Notes; (iv) then outstanding
principal of the Notes; (v) then other unpaid Obligations; provided, however, that payments pursuant to Section 2.4 shall be applied only to the Senior Notes, in the same order as described above; provided, further,
however, that Section 6.2(c) shall govern the application of proceeds of the sale or other disposition of the Asphalt Plant, and any other proceeds of Collateral shall first be applied to the Obligations with respect to the Senior Notes and
then to the Obligations with respect to the Senior Subordinated Notes. 
  
 2.12  
Sharing of Payments.    If any holder of the Notes or a portion thereof shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on
account of the Notes held by it in excess of its ratable share of payments on account of the Notes, held by all holders thereof, such holder shall forthwith purchase from each other holder of Notes, as applicable, such participations in the Note
held by it as shall be necessary to cause such purchasing holder to share the excess payment ratably with each other holder of Notes; provided, however, that if all or any portion of such excess payment is thereafter recovered from
such purchasing holder, such purchase shall be rescinded and such holder shall repay to the purchasing holder the purchase price to the extent of such recovery together with an amount equal to such holder’s ratable share (according to the
proportion of (i) the amount of such holder’s required repayment to (ii) the total amount so recovered from the purchasing holder) of any interest or other amount paid or payable by the purchasing holder in respect of the total amount so
recovered. Greka agrees that any holder so purchasing a participation from another holder pursuant to this Section 2.12 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to
such participation as fully as if such holder were the direct creditor of Greka in the amount of such participation. Greka further agrees to make all payments on the Notes to all holders thereof on a pro rata basis, based on the principal amount of
the Notes held by each. 
  
 2.13  
Access.    Each of (i) the Collateral Agent, any of its officers, employees and/or agents and (ii) one representative designated by the Purchasers which are not Affiliates of the Collateral Agent
shall have the right, exercisable no more than once per fiscal quarter upon 30 days notice to Greka (except that during the continuance of an Event of Default, no such limit on the number of visits shall apply and only 48 hours notice shall be
required with respect to visits of administrative offices and only 7 days notice shall be required with respect to visits of operational sites) during normal business hours to visit and inspect the properties and facilities of Greka and its
Subsidiaries, including, without limitation, the Collateral, and to inspect, audit and make extracts from all of Greka and its Subsidiaries’ records, files, corporate books and books of account and to discuss the affairs, finances and accounts
of Greka and its Subsidiaries with the principal officers of the respective Person. In addition, Ernst & Young, LLP and any of its officers, employees and/or agents (or any other Person engaged by the Collateral Agent to perform the obligations
described on Annex C hereto) shall have the right, exercisable during normal business hours, to inspect, audit and make extracts from 
 

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 all of Greka and its Subsidiaries’ records, files, corporate books and books of account and to discuss the affairs, finances and accounts
of Greka and its Subsidiaries with the principal officers of the respective Person, and to perform all the actions described on Annex B hereto. The Collateral Agent and each other Person granted rights pursuant to this Section agree to be
escorted by a Greka employee while on Greka’s premises. Greka shall deliver any document or instrument reasonably necessary for the Collateral Agent or any other Person granted rights pursuant to this Section, as such Person may request, to
obtain records from any service bureau maintaining records for Greka and its Subsidiaries. Greka shall instruct its and its Subsidiaries’ banking and other financial institutions to make available to the Collateral Agent and each other Person
granted rights pursuant to this Section such information and records as such Person may reasonably request. All reasonable expenses incurred by the Collateral Agent or its agents or the designee described in clause (ii) above in exercising its
respective rights pursuant to this Section 2.13 shall be paid by Greka. Any Person exercising the rights pursuant to this Section 2.13 shall be subject to the confidentiality obligation set forth in Section 12.15. 
  
 2.14  
Taxes.    (a) Any and all payments by Greka hereunder or under the Notes shall be made, in accordance with this Section 2.14, free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of the respective Purchaser, by the jurisdiction under the laws of which such
Purchaser is organized or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If Greka shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under the Notes to any Purchaser, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.14) such Purchaser receives an amount equal to the sum it would have received had no such deductions been made, (ii) Greka shall make such deductions, and (iii) Greka shall pay the full amount deducted to
the relevant taxing or other authority in accordance with applicable law. 
  
 (b)  In addition, Greka
agrees to pay any present or future stamp or documentary taxes or any other sales, transfer, exercise, mortgage recording or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or from the
execution, sale, transfer, delivery or registration of, or otherwise with respect to, any of the Transaction Documents (hereinafter referred to as “Other Taxes”). 
  
 (c)  Greka shall indemnify each Purchaser for the full amount of Taxes or Other Taxes (including without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.14) paid by such Purchaser and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the date such Purchaser makes written demand therefor. 
 

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 (d)  Within 30 days after the date of any payment of Taxes, Greka shall
furnish to each Purchaser the original or a certified copy of a receipt evidencing payment thereof. 
  
 (c)  Without prejudice to the survival of any other agreement of any Credit Party hereunder, the agreements and obligations of Greka contained in this Section 2.14 shall survive the payment in full of the Notes.

  
 2.15  
Original Issue Discount.    The Credit Parties and the Purchasers acquiring the Warrants hereby acknowledge and agree that the Warrants are part of an investment unit within the meaning of Section
1273(c)(2) of the IRC, which includes the Notes being purchased by such Purchasers. Notwithstanding anything to the contrary contained herein, the Credit Parties and such Purchasers hereby further acknowledge and agree that for United States
federal, state and local income tax purposes the “issue price” of the Warrants, the Senior Notes and the Senior Subordinated Notes under Section 1273(b) of the IRC shall equal $900,000, $24,250,000 and $4,850,000, respectively. The Credit
Parties and such Purchasers agree to use the foregoing issue prices for all income tax purposes with respect to this transaction. 
  
 3.    
CREATION OF SECURITY INTEREST 
  
 3.1  
Security Interest.    To secure the prompt payment to the Purchasers of the Obligations, 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.

  
 3.2  
Representations Concerning the Collateral.    The Credit Parties represent and warrant: 
  
 (a)  all Receivables (i) represent complete bona fide transactions which require no further act under any circumstances on any Credit Party’s part to make such Receivables payable by the
respective Customers, (ii) to the best of the Credit Parties’ knowledge, are not subject to any present, future or contingent Disputes; and (iii) do not represent bill and hold sales, consignment sales, guaranteed sales, sale or return or other
similar understandings or obligations of any Affiliate or Subsidiary of any Credit Party; 
  
 (b)  the Credit Parties have no knowledge of any fact or circumstance not disclosed to the Purchasers which would impair the validity or collectibility of any 
 

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 Receivable other than Receivables not exceeding $500,000 in aggregate amount and that all documents in connection with
each Receivable are genuine; and 
  
 (c)  in the event any amounts due and owing from any
Customer to any Credit Party on any Receivable shall become subject to any Dispute, or to any other adjustment, such Credit Party agrees that it shall promptly provide the Collateral Agent with notice thereof. The Credit Parties further agree that
they shall also notify the Collateral Agent promptly of all returns and credits in respect of any Receivables, which notice shall specify the Receivables affected. 
  
 3.3  
Covenants Concerning the Collateral.    The Credit Parties covenant that they shall: 
  
 (a)  place notations upon their respective books of account and any financial statement prepared by them to disclose the Collateral Agent’s security interest in the Collateral;

  
 (b)  defend the Collateral against the claims and demands of all parties; 

 
 (c)  not extend the payment terms of any Receivable without prompt notice thereof to the Collateral
Agent; 
  
 (d)  perform all other steps reasonably requested by the Collateral Agent to
create and maintain in the Collateral Agent’s favor, for the benefit of the Purchasers, a valid perfected security interest in all Collateral in accordance with the priorities set forth in Section 3.9 hereof; and 
  
 (e)  promptly provide the Collateral Agent with duplicate originals of all credits which any Credit Party issues
to its Customers with respect to any Receivable and immediately notify the Collateral Agent of any merchandise returns or Disputes with respect to any Receivable. The Credit Parties shall settle all Disputes at no cost or expense to the Collateral
Agent. Should the Collateral Agent so elect, upon the occurrence of any Event of Default, the Collateral Agent may at any time in its discretion: (i) withdraw any Credit Party’s authority to issue credits to its Customers with respect to any
Receivable without the Collateral Agent’s prior written consent; (ii) litigate Disputes with respect to any Receivable or settle them directly with Customers on terms acceptable to the Collateral Agent; or (iii) direct any Credit Party to set
aside and identify as the Collateral Agent’s property any returned or repossessed merchandise or other goods which by sale resulted in Receivables theretofore assigned to the Collateral Agent (“Retained Goods”). All Retained Goods
(and the proceeds thereof) shall be (A) held by the Credit Parties in trust for the Collateral Agent, (B) subject to the Collateral Agent’s security interest hereunder, and (C) disposed of only in accordance with the Collateral Agent’s
express written instructions. 
  
 3.4  
Collection and Maintenance of Collateral and Records.    The Collateral Agent may at any time verify the Receivables utilizing an audit control 
 

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 company or any other agent of the Collateral Agent. The Collateral Agent or the Collateral Agent’s
designee may notify Customers, at any time after a Default or Event of Default, at the Collateral Agent’s sole discretion, of the Collateral Agent’s security interest in Receivables, collect them directly and charge the collection costs
and expenses to Greka, but, if requested by the Collateral Agent, the Credit Parties shall instruct all of their Customers to make payments on account of Receivables to an account under the Collateral Agent’s dominion and control at such bank
as the Collateral Agent may designate. To the extent any Credit Party receives any payments on account of Receivables, it shall hold such payments for the Collateral Agent’s benefit in trust as the Collateral Agent’s trustee and
immediately deliver them to the Collateral Agent in their original form with all necessary endorsements or, as directed by the Collateral Agent, deposit such payments as directed by the Collateral Agent. All of the Credit Parties’ invoices
shall bear the terms stated on the applicable customer order. The Credit Parties shall provide the Collateral Agent, as requested by the Collateral Agent, such other schedules, documents and/or information regarding the Collateral as the Collateral
Agent may reasonably require. 
  
 3.5  
Delivery of Additional Documentation Required.    At any time upon the request of the Collateral Agent, the Credit Parties shall execute and deliver to the Collateral Agent, any and all financing
statements, original financing statements in lieu of continuation statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, and all other documents (the “Additional Documents”) that the
Collateral Agent may request in its reasonable discretion, in form and substance satisfactory to the Collateral Agent, to perfect and continue perfected or better perfect the Collateral Agent’s Liens in the Collateral (whether now owned or
hereafter arising or acquired) and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, each Credit Party authorizes the Collateral Agent to
execute any such Additional Documents in the applicable Credit Party’s name and authorizes the Collateral Agent to file such executed Additional Documents in any appropriate filing office. 
  

3.6  
Power of Attorney.    Each Credit Party hereby irrevocably makes, constitutes, and appoints the Collateral Agent (and any of the Collateral Agent’s officers, employees, or agents designated by
the Collateral Agent) as such Credit Party’s true and lawful attorney, with power to (a) if such Credit Party refuses to, or fails timely to execute and deliver any of the documents described in Section 3.5, sign the name of such Credit Party
on any of the documents described in Section 3.5, (b) at any time that an Event of Default has occurred and is continuing, sign such Credit Party’s name on any invoice or bill of lading relating to the Collateral, drafts against Customers, or
notices to Customers, (c) send requests for verification of Receivables, (d) endorse such Credit Party’s name on any Collection item that may come into the any Purchaser’s possession, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under such Credit Party’s policies of liability insurance and other insurance covering any Collateral and make all determinations and decisions with respect 
 

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 to such policies of insurance, and (f) at any time that an Event of Default has occurred and is
continuing, settle and adjust Disputes respecting the Receivables, chattel paper, or general intangibles directly with Customers, for amounts and upon terms that the Collateral Agent determines to be reasonable, and the Collateral Agent may cause to
be executed and delivered any documents and releases that the Collateral Agent determines to be necessary. The appointment of the Collateral Agent as each Credit Party’s attorney, and each and every one of its rights and powers, being coupled
with an interest, is irrevocable until all of the Obligations have been fully and finally repaid and performed. 
  
 3.7  
Code and Other Remedies.    During the continuance of an Event of Default, the Collateral Agent may exercise, in addition to all other rights and remedies granted to them in this Agreement and in
any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code or any other applicable law. Without limiting the generality of the foregoing, the Collateral Agent,
without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Credit Party or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Collateral Agent or any
Purchaser or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Collateral Agent shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Credit Party, which right or
equity is hereby waived and released. Each Credit Party further agrees, at the Collateral Agent’s request, to assemble the Collateral and make it available to the Collateral Agent at places which the Collateral Agent shall reasonably select,
whether at such Credit Party’s premises or elsewhere. The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to this Section 3.7, after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Collateral Agent and the Purchasers hereunder, including reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Obligations, in accordance with the terms of this Agreement, and only after such application and after the payment by the Collateral Agent of any other amount required by any provision of law,
need the Collateral Agent account for the surplus, if any, to any Credit Party. To the extent permitted by applicable law, each Credit Party waives all claims, damages and demands it may acquire against the Collateral Agent or any Purchaser arising
out of the exercise by them of any rights hereunder, except for such claims, damages and demands resulting from the Collateral Agent’s or any Purchaser’s gross negligence or willful misconduct. If any notice of a proposed sale or other

 

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 disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition. 
  
 3.8  
Deficiency.    Each Credit Party shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Collateral Agent or any Purchaser to collect such deficiency. 
  
 3.9  
Lien Priority and Subordination.    The Collateral Agent, for the benefit of the Senior Purchasers, shall have a first priority Lien on the First Priority Collateral, free and clear of all Liens and
subject only to Permitted Liens described in clauses (b) and (d) through (n) of the definition of Permitted Liens except that any Liens described in clause (b) of the definition of Permitted Liens and clause (d) of the definition of Permitted Liens
with respect to the Zaca Field shall be junior to the Lien in favor of the Senior Purchasers in the First Priority Collateral and any Liens described in clause (d) of the definition of Permitted Liens with respect to the Asphalt Plant shall be
junior to the Lien in favor of the Senior Purchasers in the First Priority Collateral to the extent such First Priority Collateral secures $14.3 million of principal of the Senior Notes (together with interest, fees, and expenses related thereto).
The Collateral Agent, for the benefit of the Subordinated Purchasers, shall have a Lien on the First Priority Collateral, free and clear of all Liens and subject only to Permitted Liens described in clauses (a) and (d) through (n) of the definition
of Permitted Liens except that Liens described in clause (d) of the definition of Permitted Liens with respect to the Zaca Field shall be junior to the Lien in favor of the Subordinated Purchasers. The Collateral Agent, for the benefit of the Senior
Purchasers, shall have a Lien on the Second Priority Collateral, free and clear of all Liens and subject only to Permitted Liens described in clauses (b), (c) and (e) through (n) of the definition of Permitted Liens, except that any Liens described
in clause (b) of the definition of Permitted Liens shall be junior to the Lien in favor of the Senior Purchasers in the Second Priority Collateral. The Collateral Agent, for the benefit of the Subordinated Purchasers, shall have a Lien on the Second
Priority Collateral, free and clear of all Liens and subject only to Permitted Liens described in clauses (a), (c) and (e) through (n) of the definition of Permitted Liens. 
  
 4.    
PURCHASERS’ REPRESENTATIONS AND WARRANTIES 
  
 Each Purchaser, severally and not
jointly, makes the following representations and warranties to Greka, each and all of which shall survive the execution and delivery of this Agreement and the closings hereunder: 
  
 4.1  
Investment Intention.    Such Purchaser is purchasing the Securities for its own account, for investment purposes and not with a view to the distribution thereof. Such Purchaser will not, directly
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of the Securities (or solicit any offers to buy, purchase, or otherwise acquire any of the Securities), except in compliance with the Securities Act and any other
applicable law. 
 

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 4.2  
Accredited Investor.    Such Purchaser is an “accredited investor” (as that term is defined in Rule 501 of Regulation D under the Securities Act) and by reason of its business and
financial experience, it has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of the prospective investment, is able to bear the economic risk of such investment and
is able to afford a complete loss of such investment. 
  
 4.3  
Restricted Securities.    Each Purchaser understands that the Securities it is purchasing may be characterized as “restricted securities” under the federal securities laws inasmuch as they
are being acquired from Greka in a transaction not involving a public offering and that under such laws and applicable regulations such Securities may be resold without registration under the Securities Act, only in certain limited circumstances. In
this connection, such Purchaser represents that it is familiar with Rule 144 of the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. 
  
 4.4  
Existence.    Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the state of its organization. 
  

4.5  
Power; Authorization; Enforceable Obligations.    The execution, delivery and performance by such Purchaser of this Agreement and the other Transaction Documents to be executed by it: (i) are within
such Purchaser’s corporate or other power; (ii) have been duly authorized by all necessary corporate or other action; (iii) are not in contravention of any provision of such Purchaser’s certificate of incorporation or by-laws or other
organizational documents; and (iv) will not violate any law or regulation, or any order or decree of any court or governmental instrumentality binding on such Purchaser. This Agreement and the other Transaction Documents to which such Purchaser is a
party have each been duly executed and delivered by such Purchaser and constitute the legal, valid and binding obligations of such Purchaser, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). 
  
 5.
    
CREDIT PARTIES’ REPRESENTATIONS AND WARRANTIES 
  
 Each Credit Party, jointly and
severally, makes the following representations and warranties to each Purchaser, each and all of which shall survive the execution and delivery of this Agreement and the Closing hereunder: 
  
 5.1  
Authorized and Outstanding Shares of Capital Stock.    After giving effect to the Closing, the authorized capital stock of Greka consists of 50,000,000 shares of common stock, no par value, of which
4,698,872 shares are issued and outstanding. All of such issued and outstanding shares are validly issued, fully paid and non-assessable. Except as set forth on Schedule 5.1, (i) there is no existing option, 
 

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 warrant, call, commitment or other agreement to which Greka is a party requiring, and there are no convertible securities of Greka outstanding
which upon conversion would require, the issuance of any additional shares of Stock of Greka or other securities convertible into shares of equity securities of Greka, and (ii) there are no agreements to which Greka is a party with respect to the
voting or transfer of the Stock of Greka. There are no stockholders’ preemptive rights or rights of first refusal or other similar rights with respect to the issuance of Stock by Greka. True and correct copies of the certificate of
incorporation and by-laws of Greka have been delivered to each Purchaser. Greka is the record and beneficial owner of all issued and outstanding shares of capital stock of Greka Integrated and any right to acquire the same. 
  
 5.2  
Authorization and Issuance of the Securities.    The issuance of the Securities has been duly authorized by all necessary corporate action on the part of Greka and, upon delivery of the Securities
against payment in accordance with the terms hereof, the Securities will have been validly issued, free and clear of all pledges, liens, encumbrances and preemptive rights. The issuance of shares of Common Stock upon exercise of the Warrants has
been duly authorized by all necessary corporate action on the part of Greka and, when issued upon such exercise, such Common Stock will have been validly issued and fully paid and non-assessable. Greka has duly reserved that number of shares of
Common Stock equal to the aggregate number specified on Schedule A hereto for issuance pursuant to the terms of the Warrants. 
  
 5.3  
Securities Laws.    In reliance on the investment representations contained in Sections 4.1 and 4.2 hereof, the offer, issuance, sale and delivery of the Securities, as provided in this Agreement,
are exempt from the registration requirements of the Securities Act and all applicable state securities laws, and are otherwise in compliance with such laws. Neither Greka nor any Person acting on their behalf has taken or will take any action
(including, without limitation, any offering of any securities of Greka under circumstances which would require the integration of such offering with the offering of the Securities under the Securities Act and the rules and regulations of the SEC
thereunder) which might subject the offering, issuance or sale of the Securities to the registration requirements of Section 5 of the Securities Act. 
  
 5.4  
Corporate Existence.    Each of the Credit Parties, (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of its incorporation, as set forth on
Schedule 5.5; (ii) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification (except for
jurisdictions in which such failure to so qualify or to be in good standing would not have a Material Adverse Effect); (iii) has the requisite corporate power and authority and the legal right to own, pledge, mortgage or otherwise encumber and
operate its properties, to lease the property it operates under lease, and to conduct its business as now being conducted and as proposed to be conducted; and (iv) has, or has applied for, all material licenses, permits, consents or approvals from
or by, and has made all material filings with, and has given all material notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct. 
 

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 5.5.  
Subsidiaries.    There currently exist no Subsidiaries of Greka other than as set forth on Schedule 5.5 hereto, which sets forth such Subsidiaries, together with their respective
jurisdictions of organization, and the authorized and outstanding capital Stock of each such Subsidiary, by class and number and percentage of each class owned by Greka or any other Person. There are no options, warrants, rights to purchase or
similar rights covering capital Stock for any such Subsidiary. 
  
 5.6  
Corporate Power; Authorization; Enforceable Obligations.    The execution, delivery and performance by each Credit Party of this Agreement, the other Transaction Documents to which each is a party
and all instruments and documents to be delivered by each Credit Party, and the consummation of the other transactions contemplated by any of the foregoing: (i) are within such Credit Party’s corporate power and authority; (ii) have been duly
authorized by all necessary or proper corporate action; (iii) are not in contravention of any provision of such Credit Party’s certificate of incorporation or by-laws; (iv) will not violate any law or regulation, or any order or decree of any
court or governmental instrumentality; (v) will not conflict with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Credit Party or any of its Subsidiaries is a party or by which such Credit Party, any of its Subsidiaries or any of their property is bound; (vi) will not result in the creation or imposition of any Lien upon any of the
property of such Credit Party or any of its Subsidiaries other than Permitted Liens; and (vii) do not require the consent or approval of, or any filing with, any Governmental Authority or any other Person (except to the extent previously obtained or
made). At or prior to the Closing Date, each of this Agreement and the other Transaction Documents shall have been duly executed and delivered by each Credit Party thereto and each shall then constitute a legal, valid and binding obligation of such
Credit Party, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject,
as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). 
  
 5.7  
Financial Statements.    (a)   The audited consolidated balance sheets of Greka and its Subsidiaries and Greka Integrated and its Subsidiaries as at December 31, 2001, and the related
consolidated statements of income and cash flows for the year then ended, with the opinion thereon of a nationally known accounting firm acceptable to the Required Holders, and the unaudited consolidated balance sheet of Greka and its Subsidiaries
and Greka Integrated and its Subsidiaries as at March 31, 2002 (the “Balance Sheet”) and the related unaudited consolidated statements of income, and cash flows for the three months then ended, copies of which have previously been
delivered to each Purchaser, have been, except as noted therein, prepared in conformity with GAAP consistently applied throughout the periods involved and present fairly in all material respects the consolidated financial position of Greka and its
Subsidiaries and Greka Integrated and its Subsidiaries, as applicable, as at the dates thereof, and the 
 

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 consolidated results of their operations and cash flows for the periods then ended, subject, in the case of the interim financial statements, to
normal year-end audit adjustments. Each Credit Party is, and after giving effect to the transaction contemplated hereby will be, Solvent. 
  
 (d)  Except as set forth on Schedule 5.7, no Credit Party nor any of its Subsidiaries has any material obligations, contingent or otherwise, including, without limitation, liabilities for Charges, long-term
leases or unusual forward or long-term commitments which are not reflected in the Balance Sheet, other than those incurred since December 31, 2001, in the ordinary course of business. 
  
 (c)  Except as set forth on Schedule 5.7, no dividends or other distributions have been declared, paid or made upon any shares of capital Stock of any
Credit Party, nor have any shares of capital Stock of any Credit Party been redeemed, retired, purchased or otherwise acquired for value by any Credit Party since December 31, 2001. 
  
 5.8  
Ownership of Property.    (a) Except as set forth on Schedule 5.8, neither Credit Party nor any of its Subsidiaries owns any material interest in real estate. Each Credit Party and its
Subsidiaries has good and marketable and insurable fee simple title to its owned real property, free and clear of all Liens. Each Credit Party and its Subsidiaries has valid and marketable leasehold interests in the leases described on Schedule
5.8 hereto, and, except as set forth on Schedule 5.8, good and marketable title to, or valid leasehold interests in, all of its other properties and assets free and clear of all Liens, except Permitted Liens. 
  
 (b)  All material real property leased by each Credit Party and its Subsidiaries is set forth on Schedule 5.8. Each of
such leases is valid and enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject,
as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity)) and is in full force and effect.
The Credit Parties have made available or delivered to each Purchaser true and complete copies of each of such material leases set forth on Schedule 5.8 and all documents affecting the rights or obligations of the Credit Parties or any of
their Subsidiaries, including, without limitation, any non-disturbance and recognition agreements, subordination agreements, attornment agreements and agreements regarding the term or rental of any of the leases. Except as set forth on Schedule
5.8, none of the Credit Parties, any of its Subsidiaries nor, to its knowledge, any other party to any such lease is in default of its obligations thereunder or has delivered or received any notice of default under any such lease, nor has any
event occurred which, with the giving of notice, the passage of time or both, would constitute a default under any such lease. 
  
 (c)  Except as disclosed on Schedule 5.8, no Credit Party or its Subsidiaries is obligated under or a party to, any option, right of first refusal or any other 
 

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 contractual right to purchase, acquire, sell, assign or dispose of any real property owned or leased by such Credit Party or such Subsidiary.

  
 5.9  
Material Contracts; Indebtedness.    Schedule 5.9 contains a true, correct and complete list and description of all Material Contracts. Each Material Contract is a valid and binding agreement
of a Credit Party or its Subsidiaries (as the case may be) enforceable against such Credit Party or such Subsidiary in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)), and none of the Credit Parties nor any of its Subsidiaries has any knowledge that any Material Contract is not a valid and binding agreement against the other parties thereto. Each Credit
Party and each of its Subsidiaries has fulfilled or is complying with all obligations required pursuant to the Material Contract to have been performed by such Credit Party or such Subsidiary on its part. Except as set forth in Schedule 5.9,
none of the Credit Parties nor any of its Subsidiaries is in default or breach, nor to such Credit Party’s or such Subsidiary’s knowledge, is any third party in default or breach under, or with respect to, any Material Contract. Except as
set forth on Schedule 5.9, none of the Credit Parties nor any of its Subsidiaries has any Indebtedness or Liens on its assets except Permitted Indebtedness and Permitted Liens, respectively. 
  
 5.10  
Environmental Protection.    (a) Except as set forth on Schedule 5.10, (i) all real property owned, leased or otherwise operated by each Credit Party and its Subsidiaries (each, a
“Facility”) is free of contamination from any Hazardous Materials, the presence of which could result in Environmental Liabilities and Costs in excess of more than $500,000 with respect to any one such event or $1,000,000 in the aggregate,
(ii) none of the Credit Parties nor any of its Subsidiaries has caused or suffered to occur any Release at, or under any current or formally owned Facility and, to the knowledge of any Credit Party, no Release has occurred at any current or former
Facility, except in either case, Releases which would not reasonably be expected to result in the Credit Parties and its Subsidiaries incurring Environmental Liabilities and Costs in excess of $500,000 with respect to any one such event or
$1,000,000 in the aggregate, (iii) each Credit Party and each of its Subsidiaries and each Facility and the operations thereon have been and are in compliance with Environmental Laws, except for noncompliance that would not reasonably be expected to
result in any Credit Party and its Subsidiaries incurring Environmental Liabilities and Costs in excess of $500,000 with respect to any one such event or $1,000,000 in the aggregate; (iv) each Credit Party and each of its Subsidiaries has obtained,
or has applied for, currently maintains and is in full compliance with and in good standing under all permits, licenses, or other authorizations required under Environmental Laws except where the failure to obtain, maintain or comply with such
Environmental Permits is not reasonably expected to result in any Credit Party or any Subsidiary incurring Environmental Liabilities and Costs in excess of $1,000,000 with respect to any one such event or $1,000,000 in the aggregate and none of

 

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 the Credit Parties nor any of its Subsidiaries has any knowledge of any proceedings to substantially modify or to revoke any such permit, (v)
there are no investigations, proceedings or litigation pending or, to any Credit Party’s or its Subsidiaries’ knowledge, threatened affecting or against such Credit Party, any of its Subsidiaries or the Facilities alleging noncompliance
with or potential liability under Environmental Laws, (vi) except for communications in connection with the matters listed on Schedule 5.10, none of the Credit Parties nor any of its Subsidiaries has received any communication or notice
(including, without limitation, requests for information) indicating the potential of Environmental Liabilities and Costs against such Credit Party or its Subsidiaries, which has not been resolved, and (vii) none of the Credit Parties nor any of its
Subsidiaries is aware of any facts, circumstances or conditions that could result in the Credit Parties or its Subsidiaries incurring unbudgeted Environmental Liabilities and Costs in excess of $500,000 with respect to any one such event and
$1,000,000 in the aggregate. 
  
 (b)  Each of the Credit Parties has provided Purchasers with copies of any
material environmental assessments, audits, inspections or similar reports relating to the Credit Parties and their respective Subsidiaries and all real estate owned, operated or leased by or for any Credit Party or any of its Subsidiaries.

  
 5.11  
Labor Matters.    (a) There are no strikes or other labor disputes against any Credit Party or any of its Subsidiaries pending or, to such Credit Party’s or its Subsidiaries’ knowledge,
threatened. Hours worked by and payment made to employees of such Credit Party’s and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters. All payments due from each
Credit Party and each of its Subsidiaries on account of employee health and welfare insurance have been paid or accrued as a liability on the books of such Credit Party or such Subsidiary. There is no organizing activity involving any Credit Party
or any of its Subsidiaries pending or, to such Credit Party’s or its Subsidiaries’ knowledge, threatened by any labor union or group of employees. There are no representation proceedings pending or, to any Credit Party’s or its
Subsidiaries’ knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of any Credit Party or its Subsidiaries has made a pending demand for recognition. There are no complaints or charges
against any Credit Party or any of its Subsidiaries pending or, to such Credit Party’s or its Subsidiaries’ knowledge, threatened to be filed with any federal, state, local or foreign court, governmental agency or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or termination of employment by such Credit Party’s or any of its Subsidiaries of any individual. 
  
 (b)  Neither Credit Party nor any of its Subsidiaries is, or during the five years preceding the date hereof was, a party to any labor or collective bargaining
agreement and there are no labor or collective bargaining agreements which pertain to employees of any Credit Party or its Subsidiaries. 
 

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 5.12  
Other Ventures.    Except as set forth on Schedule 5.12, none of the Credit Parties nor any of its Subsidiaries is engaged in any joint venture or partnership with any other Person.

  
 5.13  
Taxes.    Except as set forth on Schedule 5.13, all material federal, state, local and foreign tax returns, reports and statements required to be filed by each Credit Party and its
Subsidiaries have been timely filed with the appropriate Governmental Authority and all such returns, reports and statements are true, correct and complete in all material respects. All Charges and other impositions due and payable for the periods
covered by such returns, reports and statements have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof, or any such fine, penalty, interest, late charge or loss has been paid.
Proper and accurate amounts have been withheld by such Credit Party and its Subsidiaries from its employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable federal,
state, local and foreign law and such withholdings have been timely paid to the respective governmental agencies. No Credit Party nor any of its Subsidiaries has executed or filed with the IRS or any other Governmental Authority any agreement or
other document extending, or having the effect of extending, the period for assessment or collection of any Charges. No tax audits or other administrative or judicial proceedings are pending or threatened with regard to any Charges for which any
Credit Party or its Subsidiary may be liable and no assessment of Charges is proposed against any Credit Party or its Subsidiary. No Credit Party nor any of its Subsidiaries has filed a consent pursuant to IRC Section 341(f) or agreed to have IRC
Section 341(f)(2) apply to any dispositions of subsection (f) assets (as such term is defined in IRC Section 341(f)(4)). None of the property owned by any Credit Party or any of its Subsidiaries is property which such Credit Party is required to
treat as being owned by any other Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in effect immediately prior to the enactment of the Tax Reform Act of 1986 or is “tax-exempt use
property” within the meaning of IRC Section 168(h). No Credit Party nor any of its Subsidiaries has agreed or has been requested to make any adjustment under IRC Section 481(a) by reason of a change in accounting method or otherwise. No Credit
Party nor any of its Subsidiaries has any obligation under any written tax sharing agreement. 
  
 5.14  
No Litigation.    Except as disclosed on Schedule 5.14, no action, claim or proceeding is now pending or, to the knowledge of any Credit Party or its Subsidiaries, threatened against such
Credit Party or any of its Subsidiaries, at law, in equity or otherwise, before any court, board, commission, agency or instrumentality of any federal, state, or local government or of any agency or subdivision thereof, or before any arbitrator or
panel of arbitrators, which if adversely determined would result in a Material Adverse Effect or a judgment for the payment of money in excess of $10,000. 
  
 5.15  
Brokers.    Except for Durham Capital Corp., no broker or finder acting on behalf of any Credit Party or any of its Subsidiaries brought about the consummation of the transactions contemplated
pursuant to this Agreement and neither 
 

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 such Credit Party nor any of its Subsidiaries has any obligation to any Person in respect of any finder’s or brokerage fees (or any similar
obligation) in connection with the transactions contemplated by this Agreement. The Credit Parties are solely responsible for the payment of all such finder’s or brokerage fees. 
  
 5.16  
Employment Agreements.    Except as set forth on Schedule 5.16, there are no employment, consulting or management agreements covering management of any Credit Party or any of its
Subsidiaries. 
  
 5.17  
Patents, Trademarks, Copyrights and Licenses.    Each Credit Party and each of its Subsidiaries owns all licenses, patents, patent applications, copyrights, service marks, trademarks and
registrations and applications for registration thereof, and trade names necessary to continue to conduct its business as heretofore conducted by it and now being conducted by it, each of which is listed, together with Patent and Trademark Office or
Copyright Office application or registration numbers, where applicable, on Schedule 5.17. To such Credit Party’s knowledge, such Credit Party and each of its Subsidiaries conducts its businesses without infringement or claim of
infringement of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of others, except as set forth on Schedule 5.17. To such Credit Party’s knowledge, there is no
infringement by others of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of such Credit Party’s or any of its Subsidiaries, except as set forth on Schedule 5.17.

  
 5.18  
No Material Adverse Effect.    Except as set forth on Schedule 5.18, no event has occurred since December 31, 2001 which has had or could be reasonably expected to have a Material Adverse
Effect. 
  
 5.19  
ERISA.    (a) Schedule 5.19 sets forth: (i) all “employee benefit plans”, as defined in Section 3(3) of ERISA, and any other employee benefit arrangements or payroll practices,
including, without limitation, severance pay, sick leave, vacation pay, salary continuation for disability, consulting or other compensation agreements, retirement, deferred compensation, bonus, stock purchase, hospitalization, medical insurance,
life insurance and scholarship programs (the “Plans”) maintained by any Credit Party and any of its Subsidiaries or to which such Credit Party or any its Subsidiaries contributed or is obligated to contribute thereunder, and (ii) all
“employee pension plans”, as defined in Section 3(2) of ERISA (the “Pension Plans”), maintained by such Credit Party, any of its Subsidiaries or any of its ERISA Affiliates to which such Credit Party, any of its Subsidiaries or
any of its ERISA Affiliates contributed or is obligated to contribute thereunder. 
  
 (b)  No Purchaser
will have (i) any obligation to make any contribution to any Multiemployer Plan or (ii) any withdrawal liability from any such Multiemployer Plan under Section 4201 of ERISA which it would not have had if it had not purchased the Securities from the
Credit Parties at the Closing in accordance with the terms of this Agreement. 
 

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 (c)  The Pension Plans intended to be qualified under Section 401 of
the IRC are so qualified and the trusts maintained pursuant thereto are exempt from federal income taxation under Section 501 of the IRC, and nothing has occurred with respect to the operation of the Pension Plans which could cause the loss of such
qualification or exemption or the imposition of any liability, penalty, or tax under ERISA or the IRC. 
  
 (d)  All contributions required by law or pursuant to the terms of the Plans (without regard to any waivers granted under Section 412 of the IRC) to any funds or trusts established thereunder or in connection therewith have
been made by the due date thereof (including any valid extension) and no accumulated funding deficiencies exist in any of the Pension Plans. 
  
 (e)  There is no “amount of unfunded benefit liabilities” as defined in Section 4001(a)(18) of ERISA in any of the respective Pension Plans. Each of the respective Pension Plans are
fully funded in accordance with the actuarial assumptions used by the PBGC to determine the level of funding required in the event of the termination of the Pension Plan and all benefit liabilities do not exceed the assets of such Pension Plans.

  
 (f)  There has been no “reportable event” as that term is defined in Section 4043 of ERISA
and the regulations thereunder with respect to the Pension Plans which would require the giving of notice, or any event requiring disclosure under Sections 4041(c)(3)(C), 4063(a) or 4068(f) of ERISA. 
  
 (g)  There is no material violation of ERISA with respect to the filing of applicable reports, documents, and notices regarding
the Plans with the Secretary of Labor and the Secretary of the Treasury or the furnishing of such documents to the participants or beneficiaries of the Plans. 
  
 (h)  True, correct and complete copies of the following documents, with respect to each of the Plans, have been made available or delivered to each Purchaser by each Credit Party: (A) any
plans and related trust documents, and amendments thereto, (B) the most recent Forms 5500 (including any schedules thereto) and the most recent actuarial valuation report, if any, (C) the last IRS determination letter, (D) summary plan descriptions,
(E) written communications to employees relating to the Plans and (F) written descriptions of all non-written agreements relating to the Plans. 
  
 (i)  here are no pending actions, claims or lawsuits which have been asserted or instituted against the Plans, the assets of any of the trusts under such Plans or the Plan sponsor or the Plan
administrator, or against any fiduciary of the Plans with respect to the operation of such Plans (other than routine benefit claims), nor does any Credit Party or any of its Subsidiaries have knowledge of facts which could form the basis for any
such claim or lawsuit. 
 

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 (j)  All amendments and actions required to bring the Plans into
conformity in all material respects with all of the applicable provisions of ERISA and other applicable laws have been made or taken except to the extent that such amendments or actions are not required by law to be made or taken until a date after
the Closing Date. 
  
 (k)  The Plans have been maintained, in all material respects, in accordance with
their terms and with all provisions of ERISA (including rules and regulations thereunder) and other applicable Federal and state law, and no Credit Party nor any of its Subsidiaries or “party in interest” or “disqualified person”
with respect to the Plans has engaged in a “prohibited transaction” within the meaning of Section 4975 of the IRC or Section 406 of ERISA. 
  
 (l)  None of the Credit Parties, any of their Subsidiaries or any ERISA Affiliate has terminated any Pension Plan, or incurred any outstanding liability under Section 4062 of ERISA to the
PBGC, or to a trustee appointed under Section 4042 of ERISA. 
  
 (m)  None of the Credit Parties, any of
their Subsidiaries or any ERISA Affiliate maintains retired life and retired health insurance plans which are Welfare Plans and which provide for continuing benefits or coverage for any participant or any beneficiary of a participant except as may
be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and at the expense of the participant or the participant’s beneficiary. Each Credit Party, all of its Subsidiaries and all ERISA
Affiliates which maintain a Welfare Plan have complied with the notice and continuation requirements of COBRA and the regulations thereunder. 
  
 (n)  None of the Credit Parties, any of their Subsidiaries or any ERISA Affiliate has contributed or been obligated to contribute to a Multiemployer Plan as of the Closing. 

 
 (o)  None of the Credit Parties, any of their Subsidiaries or any ERISA Affiliate has withdrawn in a complete or
partial withdrawal from any Multiemployer Plan prior to the Closing Date, nor has any of them incurred any liability due to the termination or reorganization of a Multiemployer Plan. 
  
 (p)  None of the Credit Parties, any of their Subsidiaries, any ERISA Affiliate or any organization to which any Credit Party is a successor or parent
corporation, within the meaning of Section 4069(b) of ERISA, has engaged in any transaction, within the meaning of Section 4069 of ERISA. 
  
 5.20  
SEC Documents.     Greka has made available to each Purchaser a true and complete copy of each report, schedule, registration statement and definitive proxy statement filed by Greka with the SEC
since December 31, 2000 and prior to the date of this Agreement (the “SEC Documents”), which are all the documents (other than preliminary material) that either of them was required to file with the SEC since such date. As of their
respective dates, the SEC Documents complied in all material respects 
 

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 with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such SEC Documents, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. 
  
 5.21  
Ordinary Course of Business.     Except as set forth on Schedule 5.7 hereto or in response to the events described therein, since December 31, 2001, each Credit Party and each of its
Subsidiaries has conducted its operations only in the ordinary course of business consistent with past practice. 
  
 5.22  
Insurance.    Schedule 5.22 hereto contains a complete and correct list of all policies of insurance of any kind or nature covering any Credit Party and its Subsidiaries, including, without
limitation, policies of life, fire, theft, employee fidelity and other casualty and liability insurance, indicating the type of coverage, name of insured, the insurer, the premium, the expiration date of each policy and the amount of coverage, and
such policies are in full force and effect. Complete and correct copies of each such policy have been furnished or made available to each Purchaser. Such policies are in amounts customary for the industry in which the Credit Parties and their
Subsidiaries operate. 
  
 5.23  
Compliance with Law.    Each Credit Party and its Subsidiaries are in compliance with all Applicable Law, except where the failure to be in compliance would not have a Material Adverse Effect.

  
 5.24  
Absence of Default.    Each Credit Party and its Subsidiaries are in material compliance in all respects with all of the provisions of their respective certificates of incorporation and by-laws (or
the equivalent thereof), and no event has occurred or failed to occur (including, without limitation, any matter which could create a default hereunder by cross-default) which has not been remedied or waived, the occurrence or non-occurrence of
which constitutes, (i) a Default or (ii) a default by such Credit Party or any of its Subsidiaries under any indenture, agreement or other instrument relating to Indebtedness of such Credit Party or any of its Subsidiaries in the amount of
$1,000,000 or more in the aggregate, any material license, or any judgment, decree or order to which such Credit Party or any of its Subsidiaries is a party or by which such Credit Party or any of its Subsidiaries or any of their respective
properties may be bound or affected. 
  
 5.25  
Agreements with Affiliates.    Except for agreements or arrangements with Affiliates wherein any Credit Party or one or more of its Subsidiaries provides services to such Affiliates for fair
consideration or which are set forth on Schedule 5.25 hereto, neither Credit Party nor any of its Subsidiaries has (i) any written agreements or binding arrangements of any kind with any Affiliate or (ii) any management or consulting
agreements of any kind with any Affiliate. 
 

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 5.26  
Gas Contracts.    No Credit Party (i) is obligated in any material respect by virtue of any prepayment made under any contract containing a “take-or-pay” or “prepayment”
provision or under any similar agreement to deliver hydrocarbons produced from or allocated to any Oil and Gas Properties at some future date without receiving full payment therefor at the time of delivery, and (ii) has not produced gas, in any
material amount, subject to, and neither any Credit Party nor any of the Oil and Gas Properties is subject to, balancing rights of third parties or balancing duties under governmental requirements, except as to such matters for which such Credit
Party has established monetary reserves adequate in amount to satisfy such obligations and has segregated such reserves from other accounts. 
  
 5.27  
Refunds.    No orders of, proceedings pending before, or other governmental requirements of, the Federal Energy Regulatory Commission, or any other similar state or federal regulatory body or
governmental authority exist which could result in any Credit Party being required to refund any material portion of the proceeds received or to be received from the sale of hydrocarbons constituting part of the Oil and Gas Properties. 

 
 5.28  
Minute Books.    The minute books of each Credit Party, as previously made available to each Purchaser, accurately reflect all formal corporate action of the stockholders and Board of Directors of
such Credit Party. 
  
 5.29  
Full Disclosure.    No information contained in this Agreement, any other Transaction Document, the Financials or any written statement furnished by or on behalf of any Credit Party pursuant to the
terms of this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which made. 

 
 6.    
COVENANTS 
  
 6.1  
Affirmative Covenants.    Each Credit Party, jointly and severally, covenants and agrees that from and after the date hereof (except as otherwise provided herein, or unless the Required Holders have
given their prior written consent) so long as the Notes are outstanding, it shall: 
  
 (a)  
Books and Records.    Keep adequate records and books of account with respect to its business activities, and the Collateral, in which proper entries reflecting all of its financial transactions are
made, in accordance with GAAP. 
  
 (b)  
Financial Statements, Reports, Certificates.    Provide to each Purchaser: 
  
 (i)  as soon as available, but in any event within 90 days (or, if such Person has filed a Form 12b-25 filing extension with the SEC, 105 days) after the end of each Fiscal Year, Greka’s
and its Subsidiaries’ and Greka Integrated’s and its 
 

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 Subsidiaries’ balance sheet as at the end of such Fiscal Year and the related statements of income, retained
earnings and statement of cash flow for such Fiscal Year, setting forth in comparative form the figures as at the end of and for the previous Fiscal Year, which shall have been reported on by independent certified public accountants acceptable to
the Required Holders and shall be accompanied by an unqualified audit report issued by such independent certified public accountants; 
  
 (ii)  as soon as available, but in any event within 45 days (or, if such Person has filed a Form 12b-25 filing extension with the SEC, 50 days) after the close of each quarter except the
fourth quarter, and upon request by the Required Holders with respect to the fourth quarter, the balance sheet as at the end of such quarter and the related statements of income, retained earnings and statement of cash flow for such quarter covering
Greka’s and its Subsidiaries’ and Greka Integrated’s and its Subsidiaries’ operations during such period, which have been internally prepared by Greka and Greka Integrated. All financial statements required by this Section 6.1(b)
shall be prepared in accordance with GAAP, subject to year end adjustments in the case of quarterly statements. At the times the financial statements are furnished pursuant to this Section 6.1(b), a certificate of Greka’s President or Chief
Financial Officer shall be delivered to the Purchasers stating that, based on an examination sufficient to enable him to make an informed statement, no Default or Event of Default exists, or, if such is not the case, specifying such Default or Event
of Default and its nature, when it occurred, whether it is continuing and the steps being taken by Greka with respect to such event. 
  
 (iii)  monthly flash reports containing information contained on Schedule 6.1(b) hereto. 
  
 (iv)  by January 31 of each Fiscal Year commencing with Fiscal Year 2003, a month by month projected operating budget and cash flow for such
Fiscal Year (including an income statement for each month and a balance sheet as at the end of the last month in each fiscal quarter), such projections to be accompanied by a certificate signed by Greka’s President or Chief Financial Officer to
the effect that such projections have been prepared on the basis of sound financial planning practice consistent with past budgets and financial statements and that such officer has no reason to question the reasonableness of any material
assumptions on which such projections were prepared. 
  
 (c)  
Communications with Accountants.    Permit the Purchasers, upon reasonable notice and with a representative of Greka present, to communicate directly with its independent certified public
accountants and tax advisors and authorize those accountants to disclose to the Purchasers any and all financial statements and other supporting financial documents and schedules including copies of any management letter with respect to the
business, financial condition and other affairs of the Credit Parties and their Subsidiaries. 
  
 (d)  
Maintenance of Existence, Conduct of Business and Operation of Properties.    (i) Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence,
and its rights and franchises, (ii) at all times 
 

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 maintain, preserve and protect all of its patents, trademarks and trade names, and preserve all the remainder of its
material assets, in use or useful in the conduct of its business and keep the same in good repair, working order and condition (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, all needful and proper
repairs, renewals and replacements, betterments and improvements thereto consistent with industry practices, and (iii) operate or, to the extent that the right of operation is vested in others, will exercise its best efforts to require the operator
to operate the Oil and Gas Properties and all wells drilled thereon and that may hereafter be drilled thereon, continuously and in good workmanlike manner in accordance with the best usage of the field and in accordance with all laws of the United
States of America and the state in which such property is situated, as well as all rules, regulations and laws of any governmental agency having jurisdiction to regulate the manner in which the operation of such property shall be carried on, and
will comply with all terms and conditions of the Leases such Credit Party now holds and each assignment or contract obligating such Credit Party in any way with respect to the Oil and Gas Property; but nothing herein shall be construed to empower
any Credit Party to bind the Purchasers to any contract or obligation or render the Purchasers in any way responsible or liable for bills or obligations incurred by any Credit Party. 
  
 (e)  
Taxes.    Cause all assessments and taxes, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against the Credit Parties or any of their assets to be paid in
full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. The Credit Parties shall pay all transfer, excise or similar
taxes (not including income or franchise taxes) in connection with the issuance, sale, delivery or transfer by the Credit Parties to Purchasers of the Securities, and shall indemnify and save Purchasers harmless without limitation as to time against
any and all liabilities with respect to such taxes. The Credit Parties shall not be responsible for any taxes in connection with the transfer of the Securities by the holder thereof. The obligations of the Credit Parties under this Section 6.1(e)
shall survive the payment, prepayment or redemption of the Notes and the termination of this Agreement. 
  
 (f)  
Insurance.    At its own cost and expense in amounts and with carriers acceptable to the Purchasers, (i) keep all its insurable properties and properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to the Credit Parties’
including, without limitation, business interruption insurance; (ii) maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to the Credit Parties’ insuring against larceny, embezzlement or other
criminal misappropriation of insured’s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of the Credit Parties either directly or through authority to draw upon such funds or to
direct generally the disposition of such assets; (iii) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (iv) maintain all 
 

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 such workers’ compensation or similar insurance as may be required under the laws of any state or jurisdiction in
any Credit Party is engaged in business; (v) furnish the Collateral Agent with (x) copies of all policies within 5 days after any expiration date and evidence of the maintenance of such policies at least 15 days before any expiration date, and (y)
appropriate loss payable endorsements in form and substance satisfactory to the Required Holders, naming the Collateral Agent as loss payee for the benefit of the Purchasers and providing that as to the Purchasers the insurance coverage shall not be
impaired or invalidated by any act or neglect of any Credit Party and the insurer will provide the Collateral Agent with at least 30 days notice prior to cancellation. The Credit Parties shall instruct the insurance carriers that in the event of any
loss thereunder, the carriers shall make payment for such loss to the Collateral Agent and not to the Credit Parties and the Collateral Agent jointly. If any insurance losses are paid by check, draft or other instrument payable to the Credit Parties
and the Collateral Agent jointly, the Collateral Agent may endorse any Credit Party’s name thereon and do such other things as the Collateral Agent may deem advisable to reduce the same to cash. The Collateral Agent is hereby authorized to
adjust and compromise claims. The Collateral Agent shall permit the Credit Parties to use any loss recoveries received by the Collateral Agent upon any such insurance to acquire replacement assets useful in one or more of the Credit Parties’
businesses or to effect repairs on any asset that suffers such loss. If the Credit Parties do not use such loss recoveries in such manner within 90 days of the Collateral Agent’s receipt of such loss recoveries, such loss recoveries received by
the Collateral Agent shall be applied first to the Obligations with respect to the Senior Notes and then to the Obligations with respect to the Senior Subordinated Notes; provided, however, that loss recoveries in respect of the Second
Priority Collateral received by Collateral Agent shall be applied to the Obligations in the same manner described above, subject to the terms of the GMAC Loan Agreement. Notwithstanding the foregoing, to the extent that any insurance proceeds
received by the Collateral Agent do not belong to the Credit Parties or result from the loss of property of the Credit Parties which is not Collateral, the Collateral Agent will return such proceeds to the Credit Parties. Any surplus shall be paid
by the Collateral Agent to the Credit Parties or applied as may be otherwise required by law. Any deficiency thereon shall be paid by the Credit Parties to the Purchasers, on demand. 
 

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 (g)  
Location of Inventory and Equipment.    Keep the Inventory and Equipment only at the locations identified on Schedule 6.1(g); provided, however, that the Credit Parties may
amend Schedule 6.1(g) with respect to the location of Inventory so long as such amendment occurs by written notice to the Collateral Agent not less than 30 days prior to the date on which the Inventory is moved to such new location, so long
as such new location is within the continental United States, and so long as, at the time of such written notification, the applicable Credit Party provides any financing statements necessary to perfect and continue perfected the Purchasers’
Liens on such assets and also provides to the Collateral Agent a Collateral Access Agreement; provided, further that the Credit Parties may move to, and keep in, China certain Equipment identified on Schedule 6.1(g).

  
 (h)  
Compliance with Laws.    (i) Comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, including without limitation the Fair Labor Standards
Act, the Americans With Disabilities Act and Sanction/Embargo Programs, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Effect and (ii) maintain a system to assure and monitor continued compliance with all applicable Environmental Laws and Sanction/Embargo Programs, which system shall include periodic reviews of such compliance.

  
 (i)  
Leases.    Pay when due all rents and other amounts payable under any leases to which any Credit Party is a party or by which any Credit Party’s properties and assets are bound, unless such
payments are the subject of a Permitted Protest. 
  
 (j)  
Environmental.    (i) In the event that any Credit Party obtains, gives or receives notice of any material release or threat of Release of any Hazardous Materials on its property at concentrations
exceeding those allowed by Environmental Laws or that need to be reported to a Governmental Authority (any such event being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of a material violation, request for
information or notification that it is potentially responsible for Environmental Liabilities and Costs, demand letter or complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of any Environmental
Laws affecting its property or it’s interest therein (any of the foregoing is referred to herein as an “Environmental Complaint”) from any Governmental Authority or Person, then the Credit Parties shall, within 5 Business Days, give
written notice of same to the Purchasers detailing facts and circumstances of which any Credit Party is aware giving rise to the Hazardous Discharge or Environmental Complaint and periodically inform the Purchasers of the status of the matter. Such
information is to be provided to allow the Purchasers to protect their security interest in the Collateral and is not intended to create nor shall it create any obligation upon the Purchasers with respect thereto. 
  
 (ii)  The Credit Parties shall respond promptly to any Hazardous Discharge or Environmental Complaint and take
all necessary action in order to comply with the Environmental Laws and safeguard the health and safety of any Person and to 
 

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 avoid subjecting the Collateral to any lien, charge, claim or encumbrance. If the Credit Parties shall fail to respond
promptly to any Hazardous Discharge or Environmental Complaint or the Credit Parties shall fail to comply with any of the requirements of any Environmental Laws, the Required Holders may, but without the obligation to do so, for the sole purpose of
protecting the Purchasers’ interest in the Collateral: (A) give such notices or (B) enter onto the Credit Parties’ property (or authorize third parties to enter onto such property) and take such actions as the Required Holders (or such
third parties as directed by the Required Holders) deem reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge or Environmental Complaint. All reasonable costs and expenses directly
incurred by the Purchasers (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines and penalties, together with interest thereon from
the date expended at the default rate of interest hereunder shall be paid upon demand by the Credit Parties, and until paid shall be added to and become a part of the Obligations secured by the Liens created by the terms of this Agreement or any
other agreement between the Purchasers and the Credit Parties. 
  
 (iii)  The Credit
Parties shall defend and indemnify the Purchasers and hold the Purchasers harmless from and against all loss, liability, damage and expense, claims, costs, fines, penalties, including attorney’s and consulting fees, and any Environmental
Liabilities and Costs suffered or incurred by the Purchasers under or on account of (A) any Environmental Laws, including, without limitation, the assertion of any Environmental Lien, with respect to any Hazardous Discharge, the presence of any
Hazardous Materials affecting Credit Party’s or Subsidiary’s property, whether or not the same originates or emerges from Credit Party’s property or any contiguous real estate, including any loss of value of the Collateral as a result
of the foregoing except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of the Purchasers, and (B) any Sanction/Embargo Program. The Credit Parties’
obligations under this Section 6.1(j) (A) shall arise upon the discovery of the presence of any Hazardous Materials on any Credit Party’s property, whether or not any Governmental Authority has taken or threatened any action in connection with
the presence of any Hazardous Materials, and (B) on failure to comply with any Sanction/Embargo Program. The Credit Parties’ obligation and the indemnification hereunder shall survive the termination of this Agreement. 
  
 (iv)  For purposes of this Section 6.1(j) all references to the Credit Parties’ property shall be deemed to
include all of the Credit Parties’ right, title and interest in and to all their owned and/or leased premises; 
  
 (k)  
Transfer or Division Orders.    Upon the Collateral Agent’s request, each Credit Party will execute and deliver written notices of assignments to any persons, corporations or other entities
owing or which may in the future owe to such Credit Party monies or accounts arising in connection with (a) any oil, gas or mineral production from all or any portion of the Oil and Gas Properties; (b) any gas contracts, processing contracts or
other contracts relating to all or any portion of the Oil and Gas Properties; or (c) the operation of or production from all or any portion of the Oil and Gas Properties. 
 

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 The notices of assignments shall advise the third parties that all of the monies or accounts described above have been
assigned to the Collateral Agent, and if required by Collateral Agent, shall also require and direct that future payments thereof, including amounts then owing and unpaid, be paid directly to the Collateral Agent. 
  
 (l)  
Disclosure Updates.    Promptly and in no event later than 5 Business Days after obtaining knowledge thereof, (a) notify the Purchasers if any written information, exhibit, or report furnished to
the Purchasers contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, and (b) correct any defect or error
that may be discovered therein or in any Transaction Document or in the execution, acknowledgement, filing, or recordation thereof. 
  
 (m)  
Board Observer.    Provide the Purchasers who are Affiliates of the Collateral Agent, so long as such Purchasers collectively hold Notes in the aggregate principal amount equal to at least
$5,000,000, with the right to designate an observer, without voting rights, who will be entitled to attend all meetings of Greka’s and Greka Integrated’s Boards of Directors (including audit and compensation committees). Any observer
designated by such Purchasers holding at least a majority in principal amount of the Notes held by such Purchasers shall be entitled to notice of all meetings of Greka’s and Greka Integrated’s Boards of Directors (including committee
meetings) and to all information provided to directors subject to the confidentiality provisions in Section 12.15 hereof. Such observer shall be reimbursed for reasonable out–of–pocket expenses incurred in connection with attendance at
Board of Directors and committee meetings. Notwithstanding anything to the contrary in this Section, the observer designated pursuant to this Section shall not be entitled to be present at any meeting of the Board of Directors of Greka or Greka
Integrated during the time at such meeting any matters related to the Notes are discussed if (i) an Event of Default is then continuing or (ii) if all of the members of the Board of Directors of Greka or Greka Integrated, as applicable, vote
unanimously to prevent such observer from being present at such meeting during such time. 
  
 (n)  
Notices.    Promptly inform the Collateral Agent in writing of: (i) the commencement of all proceedings and investigations by or before and/or the receipt of any notices from, any governmental or
nongovernmental body and all actions and proceedings in any court or before any arbitrator against or in any way concerning any the Credit Parties’ properties, assets or business, involving a possible liability in excess of $500,000 which
might, singly or in the aggregate, have a Material Adverse Effect; (ii) any amendment of any Credit Party’s certificate of incorporation or by-laws; (iii) any change in any Credit Party’s business, assets, liabilities, condition (financial
or otherwise), results of operations or business prospects which has had or might have a Material Adverse Effect; (iv) any Default or Event of Default; (v) any default or any event which with the passage of time or giving of notice or both would
constitute a default under any agreement for the payment of money to which any Credit Party is a party or by which any Credit Party or any Credit Party’s properties may be bound which would have a Material Adverse Effect; (vi) any change in the
location of Credit Party’s 
 

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 executive offices; (vii) any change in the location of any Credit Party’s Inventory or Equipment from the locations
listed on Schedule 6.1(g) hereto, (viii) any change in any Credit Party’s corporate name; (ix) any material delay in any Credit Party’s performance of any of its obligations to any Customer and of any assertion of any material
claims, offsets, counterclaims or Disputes by any Customer and of any allowances, credits and/or other monies granted by any Credit Party to any Customer; (x) and furnish to and inform the Purchasers of all material adverse information relating to
the financial condition of any Customer; and (xi) any material return of goods; 
  
 (o)  
Employee Plans.    (i) With respect to other than a Multiemployer Plan, for each Plan and Pension Plan intended to be qualified under Section 401(a) of the IRC hereafter adopted or maintained by the
Credit Parties or any ERISA Affiliate, the Credit Parties shall (A) seek, or cause its ERISA Affiliates to seek, and receive determination letters from the IRS to the effect that such Plan or Pension Plan is qualified within the meaning of Section
401(a) of the IRC; and (B) from and after the adoption of any such Plan or Pension Plan, cause such plan to be qualified within the meaning of Section 401(a) of the IRC and to be administered in all material respects in accordance with the
requirements of ERISA and Section 401(a) of the IRC. 
  
 (ii)  With respect to each Welfare
Plan hereafter adopted or maintained by the Credit Parties or any ERISA Affiliate, to the extent applicable, the Credit Parties shall comply, or cause its ERISA Affiliates to comply, with the notice and continuation coverage requirements of Section
4980B of the IRC and the regulations thereunder. 
  
 (iii)  The Credit Parties shall not,
directly or indirectly, and shall not permit any ERISA Affiliate to directly or indirectly by reason of an amendment or amendments to, or the adoption of, one or more Pension Plans, permit the present value of all benefit liabilities, as defined in
Title IV of ERISA, (using the actuarial assumptions utilized by the PBGC upon termination of a plan) to exceed the fair market value of assets allocable to such benefits by more than $50,000, or to increase to the extent security must be provided to
any Pension Plan under Section 401(a)(29) of the IRC. The Credit Parties shall not establish or become obligated to any new Retiree Welfare Plan, which would result in the present value of future liabilities under any such plans to exceed $50,000.
Neither the Credit Parties nor any of its ERISA Affiliates shall establish or become obligated to any new unfunded Pension Plan, which would result in the present value of future liabilities under any such plans to exceed $50,000. The Credit Parties
shall not directly or indirectly, and shall not permit any ERISA Affiliate to (a) satisfy any liability under any Pension Plan by purchasing annuities from an insurance company or (b) invest the assets of any Pension Plan with an insurance company,
unless, in each case, such insurance company is rated AA by Standard & Poor’s Corporation and the equivalent by each other nationally recognized rating agency at the time of the investment. 
 

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 (iv)  The Credit Parties and any ERISA Affiliate shall
not contribute or become obligated to contribute to any Multiemployer Plan. 
  
 (p)  
Roll Forward Reserve Reports.    Deliver, on an annual basis, roll forward reserve reports of the Oil and Gas Properties prepared by appraisers satisfactory to the Collateral Agent. 

 
 (q)  
Greka AM, Inc. and Calox, Inc.    If, at any time, any assets of Greka AM, Inc. or Calox, Inc. are not subject to Liens pursuant to the Bank of Texas Loan Agreement and the KSI Funding Loan
Agreement, 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. Greka shall not permit or cause Greka AM, Inc. or Calox, Inc. to create, incur, assume, permit, 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 resect 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. 
  
 (r)  
Dissolution of Subsidiaries.    Dissolve, as soon as practicable and in any event by December 31, 2002, the Subsidiaries of Greka specified as “to be dissolved” on Schedule 5.5
hereto and provide the Collateral Agent evidence of such dissolution. 
  
 6.2  
Negative and Financial Covenants.    Each Credit Party covenants and agrees that from and after the date hereof (except as otherwise provided herein, or unless the Required Holders have given their
prior written consent) so long as the Notes are outstanding it shall not: 
  
 (a)  
Indebtedness.    Create, incur, assume, permit, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except: 
  
 (1)  Permitted Indebtedness 
  
 (2)  Indebtedness evidenced by this Agreement and the other Loan Documents; 
  
 (3)  the GMAC Debt; 
  
 (4)  Indebtedness evidenced by the Vintage Note; 
  
 (4)  Indebtedness set forth on Schedule 6.2(a); 
 

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 (5)  Permitted Purchase Money Indebtedness; and

  
 (6)  Indebtedness owing by any Credit Party to any other Credit Party. 

 
 (b)  
Liens.    Create, incur, assume, or permit to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or
profits therefrom, except for Permitted Liens; provided, however that the existence of any Lien other than a Permitted Lien shall not result in a Default under this Agreement so long as (i) such Lien is not a Lien for unpaid taxes,
(ii) such Lien existed on the Closing Date, (iii) none of the Credit Parties had any knowledge of such Lien and (iv) such Lien is terminated and the Collateral Agent receives evidence of such termination, in form and substance satisfactory to it
within 30 days of the Closing. 
  
 (c)  
Sales of Assets; Liquidation.    (i) Sell, transfer, convey or otherwise dispose of any assets or properties or (ii) liquidate, dissolve or wind up the Credit Parties, except for transfers to the
Credit Parties, whether voluntary or involuntary; provided, however, that the foregoing shall not prohibit (i) the sale of inventory in the ordinary course of business, (ii) the sale of obsolete equipment and fixtures so long as the
proceeds of such sale are used to (A) replace such equipment and fixtures within 90 days of such sale or (B) repay the Obligations, (iii) transfers resulting from any casualty or condemnation of assets or properties, or (iv) other sales of assets or
properties not described on Schedule 6.2(c), the net proceeds of which, in the aggregate, do not exceed $1,000,000 in any Fiscal Year, so long as the net cash proceeds of such sale are placed in an escrow account satisfactory to the
Collateral Agent. If the Credit Parties do not use such amounts in the escrow account to make Capital Expenditures within 90 days of such sale, such amount shall be applied to repay the Obligations or, if such amounts are proceeds of Second Priority
Collateral, the GMAC Debt, and then the Obligations; provided, however, that if such amounts are proceeds of the sale or other disposition of the Asphalt Plant, such amount shall be applied first to repay up to $14.3 million of the
principal of the Senior Notes (together with interest, fees, and expenses related thereto), then the Indebtedness under the Vintage Note, then the balance of the Obligations with respect to the Senior Notes, and then the Obligations with respect to
the Senior Subordinated Notes. 
  
 (d)  
Mergers and Subsidiaries.    (i) Directly or indirectly, by operation of law or otherwise, merge with, consolidate with, or otherwise combine with any Person other than another Credit Party,
provided that in any merger or combination involving Greka, Greka is the surviving entity in such transaction or (ii) create any Subsidiary, unless such Subsidiary becomes a signatory to the Loan Documents as an additional Credit Party, bound by all
the obligations of the Credit Parties thereunder, all in form and substance satisfactory to the Required Holders. 
  
 (e)  
Change Name.    Change any Credit Party’s name, Federal Employee Identification Number, corporate structure or identity, or add any new 
 

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 fictitious name; provided, however, that a Credit Party may change its name or add any new fictitious name
upon at least 30 days prior written notice by a Credit Party to the Collateral Agent and the Purchasers of such change and so long as, at the time of such written notification, such Credit Party provides any financing statements or fixture filings
necessary to perfect and continue perfected the Purchasers’ Liens. 
  
 (f)  
Guarantee.    Guarantee or otherwise become in any way liable with respect to the obligations of any third Person except (i) by endorsement of instruments or items of payment for deposit to the
account of Credit Parties or which are transmitted or turned over to the Purchasers with respect to the GMAC Debt, (ii) for guarantees of Indebtedness permitted under Section 6.2(a) and guarantees set forth on Schedule 6.2(f) hereto and (iii)
for guarantees of performance, surety or appeal bonds of any Credit Party. 
  
 (g)  
Nature of Business.     Make any change in the principal nature of Credit Party’s business. 
  
 (h)  
Prepayments. 
  
 Directly or indirectly, prepay, redeem, defease,
purchase, or otherwise acquire any Indebtedness of any Credit Party in excess of $250,000 in the aggregate during any Fiscal Year, other than (i) the Obligations in accordance with this Agreement, and (ii) the GMAC Debt. 
  
 (i)  
Payments on Vintage Note. 
  
 Directly or indirectly make any payment
on or in respect of the Vintage Note; provided, however, that Greka SMV, Inc. may make interest and scheduled principal payments on the Vintage Note so long as no Default or Event of Default has occurred and is then continuing or would result
therefrom and so long as such principal and interest payments do not, in any calendar month, exceed an amount equal to the product of (i) $15 times (ii) the number of barrels of crude oil produced and sold from Greka SMV, Inc.’s interest in the
Zaca Field in such month, all in accordance with the Vintage Subordination Agreement. Notwithstanding anything to the contrary in this Section, no Credit Party shall, directly or indirectly, make the final scheduled principal payment under the
Vintage Note prior to the payment in full in cash of the Obligations. 
  
 (j)  
Change of Control.    Cause, permit, or suffer to exist, directly or indirectly, any Change of Control. 
  
 (k)  
Consignments.    Consign any Inventory or sell any Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale. 
  
 (l)  
Distributions.    Other than distributions or the declaration and payment of dividends by a Credit Party to another Credit Party, make any distribution or declare or pay any dividends (in cash or
other property, other than common stock) on, or purchase, acquire, redeem, or retire any of, any Credit Party’s Stock of any class, whether 
 

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 now or hereafter outstanding or pay any management or similar fees; provided, however, that at any time after June
30, 2003, so long as the Leverage Ratio is less than 2:1 and provided that no Default or Event of Default has occurred and is continuing or would result therefrom, the Credit Parties may repurchase Greka’s Stock for an aggregate purchase price
not exceeding $5,000,000 in any Fiscal Year; provided further, however, that the Credit Parties may not acquire more then 10% of the outstanding common stock of Greka as of the Closing Date. 
  
 (m)  
Accounting Methods.    Modify or change its method of accounting (other than as may be required to conform to GAAP) or enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of Credit Parties’ accounting records without said accounting firm or service bureau agreeing to provide the Collateral Agent and
Purchasers information regarding the assets with respect to which the Purchasers have a Lien or the Credit Parties’ financial condition. 
  
 (n)  
Investments.    Directly or indirectly in any transaction or related series of transactions, acquire or invest in any assets or business of any Person other than investments in Cash Equivalents and
Permitted Acquisitions. 
  
 (o)  
Transactions with Affiliates.    Except for agreements set forth on Schedule 6.2(o) hereto or transactions among the Credit Parties, directly or indirectly enter into or permit to exist any
transaction with any Affiliate of any Credit Party except for transactions that are in the ordinary course of such Credit Parties’ business, upon fair and reasonable terms, that are fully disclosed to the Credit Parties, and that are no less
favorable to such Credit Parties than would be obtained in an arm’s length transaction with a non-Affiliate. 
  
 (p)  
Suspension.    Suspend or go out of a substantial portion of its business. 
  
 (q)  
Loans and Advances.    Make or accrue any loans or other advances of money or extensions of credit to any Person other than a Credit Party in excess of $250,000 in the aggregate during any Fiscal
Year. 
  
 (r)  
Change in Location of Chief Executive Office; Inventory and Equipment with Bailees.    Relocate its chief executive office to a new location without the Credit Parties providing 30 days prior
written notification thereof to the Collateral Agent and the Purchasers and so long as, at the time of such written notification, the applicable Credit Party provides any financing statements or fixture filings necessary to perfect and continue
perfected the Purchasers’ Liens and also provides the Collateral Agent a Collateral Access Agreement with respect to such new location. The Inventory and Equipment shall not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without the Required Holders’ prior written consent. 
 

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 (s)  
Receivables.    Bill Receivables under any name except the present name of the respective Credit Party. 
  
 (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 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
 

	 June 30, 2003
 	  	 2.00:1.00
 
	 September 30, 2003
 	  	 2.50:1.00
 
	 December 31, 2003 and each fiscal quarter thereafter
 	  	 3.00:1.00
 

 
  
 (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 less than the amount set forth below for the corresponding period: 

 
 
	 Period Ending
 
	  	 Amount
 

	 June 30, 2002
 	  	 $
 	 2,000,000
 
	 September 30, 2002
 	  	 $
 	 6,100,000
 
	 December 31, 2002
 	  	 $
 	 9,500,000
 
	 March 31, 2003
 	  	 $
 	 11,700,000
 

 
  
 (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: 
  
 
	 Fiscal Quarter Ending
 
	  	 Ratio
 

	 June 30, 2003
 	  	 4.00:1.00
 
	 September 30, 2003
 	  	 3.50:1.00
 
	 December 31, 2003 and each fiscal quarter thereafter
 	  	 3.00:1.00
 

 
 

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 (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) hereto or (y) crude oil received at the Santa
Maria 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); 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. 
  
 (u)  
Capital Expenditures.    Make Capital Expenditures measured on a Fiscal Year-end basis for the 12-month period ending each Fiscal Year after the date hereof, in excess of the amounts stated on
Schedule 6.2(t) for the corresponding types of assets described on Schedule 6.2(t); 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. 
  
 (v)  
Management Compensation.    Increase the salary and bonus of any officer of any Credit Party in any calendar year, except consistent with past practice of such Credit Party. 

 
 (w)  
Amendments to Certificate of Incorporation and By-Laws.    Authorize, adopt or approve an amendment to the certificate of incorporation or by-laws of any Credit Party, except to increase the number
of authorized shares of common stock. 
  
 7.    
CONDITIONS PRECEDENT 
  
 7.1  
Conditions Precedent.    The obligation of each Purchaser to purchase the Securities at the Closing pursuant to Section 2.1 hereof, is subject to the condition that such Purchaser shall have
received, on the Closing Date, the following, each dated the Closing Date unless otherwise indicated, in form and substance satisfactory to such Purchaser: 
  
 (a)  Favorable opinion of Ballad Spahr Andrews & Ingersoll LLP and in-house counsel to the Credit Parties, substantially in the form attached
hereto as Exhibit D, it being understood that to the extent that such opinion of counsel to the Credit Parties shall rely upon any other opinion of counsel, each such other opinion shall be in form and substance reasonably satisfactory to the
Purchasers and shall provide that Purchasers may rely thereon. 
  
 (b)  Resolutions of the
Board of Directors of each Credit Party, certified by the Secretary or Assistant Secretary of such Credit Party, as of the Closing Date, to be duly adopted and in full force and effect on such date, authorizing (i) the

 

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consummation of each of the transactions contemplated by this Agreement and (ii) specific officers to execute and deliver this Agreement and each other Transaction Document to which it is a
party. 
  
 (c)  Governmental certificates, dated the most recent practicable date prior to
the Closing Date, with telegram updates where available, showing that each Credit Party is organized and in good standing in the state of its organization, and is qualified as a foreign corporation and in good standing in all other jurisdictions in
which it is qualified to transact business. 
  
 (d)  A copy of the certificate of
incorporation and all amendments thereto of each Credit Party, certified as of a recent date by the Secretary of State of the state of its organization, and copies of each Credit Party’s by-laws, certified by the Secretary or Assistant
Secretary of such Credit Party as true and correct as of the Closing Date. 
  
 (e)  Each of
the Notes and Warrants duly executed by Greka. 
  
 (f)  Each of the Collateral Documents,
duly executed by the parties thereto. 
  
 (g)  UCC-1 financing statements reflecting each
Credit Party as the debtor in favor of Collateral Agent for the benefit of the Purchasers, in form and substance satisfactory to the Purchasers. 
  
 (h)  Certificates of the Secretary or an Assistant Secretary of each Credit Party, dated the Closing Date, as to the incumbency and signatures of the officers of such Credit Party executing
this Agreement, the Securities, each other Transaction Document to which it is a party and any other certificate or other document to be delivered pursuant hereto or thereto, together with evidence of the incumbency of such Secretary or Assistant
Secretary. 
  
 (i)  Certificate of the President of each Credit Party, dated the Closing
Date, stating that all of the representations and warranties of such Credit Party contained herein or in the other Transaction Documents are true and correct on and as of the Closing Date as if made on such date and that no breach of any covenant
contained in Section V has occurred or would result from the Closing hereunder. 
  
 7.2  
Additional Conditions.    The obligation of each Purchaser to purchase the Securities at the Closing pursuant to Section 2.1 is subject to the additional conditions precedent that: 

 
 (a)  Such Purchaser shall have received evidence that the insurance policies provided for in Section
5.22 are in full force and effect, certified by the insurer thereof. 
 

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 (b)  Such Purchaser shall have received a copy of an
amendment to the GMAC Loan Agreement duly executed by Greka, the Guarantors party thereto and the lenders party thereto and UCC-3 termination statements and mortgage release documents terminating Liens in and to the First Priority Collateral, each
in form and substance satisfactory to such Purchaser, in its sole discretion, and no default or event of default shall be continuing under any agreements governing the GMAC Debt. 
  
 (c)  The Credit Parties shall have paid the Closing Fee and all fees required to be paid by them pursuant to Section 12.2 hereof for which the
Credit Parties shall have received an invoice on or prior to the Closing Date. 
  
 (d)  Except as disclosed pursuant to Section 5.18 hereof, there shall not have occurred any event or condition since December 31, 2001 which could have a Material Adverse Effect. 
  
 (e)  All of the representations and warranties of Company contained herein or in the other Transaction Documents
shall be true and correct on and as of the Closing Date as if made on such date and no breach of any covenant contained in Section V and no Default or Event of Default shall have occurred or would result from the Closing hereunder. 

 
 (f)  All required consents and approvals from any third parties to consummate the transactions
contemplated hereby, including pursuant to the GMAC Loan Agreement, shall have been obtained. 
  
 (g)  The Closing shall have occurred no later than June     , 2002. 
  
 (h)  Such Purchaser shall have received a certified copy of the Vintage Acquisition Agreement and related documents, and the transactions contemplated by the Vintage Acquisition Agreement shall have been consummated in
accordance with the terms thereof without any amendments or waivers unless consented to by the Purchasers. Such Purchaser shall also have received a copy of the Vintage Note and a related subordination agreement duly executed by the parties thereto
and such Vintage Note and subordination agreement shall be in form and substance satisfactory to such Purchaser, in its sole discretion. 
  
 8.    
EVENTS OF DEFAULT; RIGHTS AND REMEDIES 
  
 8.1  
Events of Default.    The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an “Event of Default” hereunder and under the Notes:

  
 (a)  Any Credit Party fails to make any payment of principal of, or interest on or any
other amount owing in respect of, any Note, or any of the other Obligations, including pursuant to Section 2.4, when due and

 

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payable or declared due and payable which, other than principal (which shall constitute an immediate Event of Default), shall have remained unremedied for a period of 10 days. 

 
 (b)  Any Credit Party fails or neglects to perform, keep or observe any of the provisions of Section
6.2 or Section 6.1(b) hereof. 
  
 (c)  Any Credit Party fails or neglects to perform, keep
or observe any other provision of this Agreement or of any of the other Loan Documents, and the same shall remain unremedied for a period of 30 days after the Credit Parties shall receive written notice of any such failure from the Purchasers.

  
 (d)  A default shall occur under any other agreement, document or instrument to which
any Credit Party is a party or by which any Credit Party or any of their property is bound (after giving effect to any applicable notice or cure periods), and such default (i) involves the failure to make any payment (whether of principal, interest
or otherwise) due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of any Indebtedness of any Credit Party in an aggregate amount exceeding $250,000, or (ii) causes (or permits any holder of such
Indebtedness or a trustee to cause) such Indebtedness or a portion thereof in an aggregate amount exceeding $250,000, to become due prior to its stated maturity or prior to its regularly scheduled dates of payment. 
  
 (e)  Any representation or warranty herein or in any Loan Document or in any written statement pursuant thereto
or hereto, report, financial statement or certificate made or delivered to Purchasers by any Credit Party pursuant hereto or thereto is untrue or incorrect in any material respect, as of the date when made. 
  
 (f)  Any of the assets of any Credit Party shall be attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors of any Credit Party and shall remain unstayed or undismissed for 60 consecutive days; or any Credit Party shall have
concealed, removed or permitted to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors or any of them or made or suffered a transfer of any of its property or the incurring of an obligation which
may be fraudulent under any bankruptcy, fraudulent conveyance or other similar law. 
  
 (g)  A case or proceeding shall have been commenced against any Credit Party in a court having competent jurisdiction seeking a decree or order in respect of any Credit Party (i) under title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of any Credit Party
of any substantial part of its or their properties, or (iii) ordering the winding-up or liquidation of the affairs of any Credit Party and such case or proceeding shall remain undismissed or unstayed for 60 consecutive days or such court shall enter
a decree or order granting the relief sought in such case or proceeding. 
 

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 (h)  Any Credit Party (i) files a petition seeking
relief under title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to the institution of proceedings thereunder or to the filing
of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of any Credit Party of any substantial part of its properties, (iii) fails generally to
pay its debts as such debts become due, or (iv) takes any corporate action in furtherance of any such action. 
  
 (i)  Final judgment or judgments (after the expiration of all times to appeal therefrom) for the payment of money in excess of $500,000 in the aggregate shall be rendered against any Credit Party and the same shall not be
(i) fully covered by insurance, or (ii) vacated, stayed, bonded, paid or discharged for a period of 30 days. 
  
 (j)  With respect to any Plan, a prohibited transaction within the meaning of Section 4975 of the IRC or Section 406 of ERISA occurs which in the reasonable determination of the Required Holders could result in direct or
indirect liability to any Credit Party, (ii) with respect to any Title IV Plan, the filing of a notice to voluntarily terminate any such plan in a distress termination, (iii) with respect to any Multiemployer Plan, any Credit Party or any ERISA
Affiliate shall incur any Withdrawal Liability, (iv) with respect to any Pension Plan subject to Section 412 of the Code or Section 302 of ERISA, any Credit Party or any ERISA Affiliate shall incur an accumulated funding deficiency or request a
funding waiver from the IRS, or (v) with respect to any Title IV Plan or Multiemployer Plan which has an ERISA Event not described in clauses (ii)-(iv) hereof, in the reasonable determination of the Agent there is a reasonable likelihood for
termination of any such plan by the PBGC; provided, however, that the events listed in clauses (i)-(v) hereof shall constitute Events of Default only if the liability, deficiency or waiver request of any Credit Party or any ERISA
Affiliate, whether or not assessed, exceeds $500,000 in any case set forth in (i)-(v) above, or exceeds $500,000 in the aggregate for all such cases. 
  
 8.2  
Remedies.    If any Event of Default specified in Section 8.1 shall have occurred and be continuing, the Required Holders may, without notice, declare all Obligations to be forthwith due and
payable, whereupon all such Obligations shall become and be due and payable, without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Greka; provided, however, that in the case of an
Event of Default specified in Section 8.1(a), holders of at least 7.5% of the Senior Notes, upon 30 days notice to the Collateral Agent, may declare all Obligations with respect to the Senior Notes immediately due and payable; provided
further, however, that upon the occurrence of an Event of Default specified in Section 8.1(f), (g) or (h) hereof, all Obligations shall become due and payable without declaration, notice or demand by any Purchaser. 

 
 Any Purchaser may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it

 

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shall deem advisable in its best interests, including any action (or the failure to act) pursuant to the Loan Documents. 
  
 8.3  
Waivers by the Credit Parties.    Except as otherwise provided for in this Agreement and applicable law, the Credit Parties waive (i) presentment, demand and protest and notice of presentment,
dishonor notice of intent to accelerate and notice of acceleration, (ii) all rights to notice and a hearing prior to the Senior Purchasers’ or Subordinated Purchasers’ taking possession or control of, or to the Senior Purchasers’ or
Subordinated Purchasers’ replevy, attachment or levy upon, any collateral securing the Obligations or any bond or security which might be required by any court prior to allowing such Purchasers to exercise any of their remedies, and (iii) the
benefit of all valuation, appraisal and exemption laws. The Credit Parties acknowledge that they has been advised by counsel of their choice with respect to this Agreement, the other Loan Documents and the transactions evidenced by this Agreement
and the other Loan Documents. 
  
 8.4  
Right of Set-Off.    Upon the occurrence and during the continuance of any Event of Default, each Purchaser, with the prior consent of the Collateral Agent, is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Purchaser to or for the
credit or the account of Greka against any and all of the obligations of Greka now or hereafter existing under this Agreement and the Notes held by Purchaser irrespective of whether or not such Purchaser shall have made any demand under this
Agreement or any Note and although such obligations may be unmatured. Each Purchaser agrees promptly to notify Greka after any such set-off and application made by such Purchaser; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the Purchasers under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Purchasers may have.

  
 9.    
SUBORDINATION 
  
 9.1  
Note Subordinated to Senior Debt.    The Credit Parties covenant and agree, and the Subordinated Purchasers and any other holder of the Senior Subordinated Notes (Subordinated Purchasers and
such holders being hereinafter referred to collectively as “Holder”) by its acceptance thereof likewise covenants and agrees, that all payments of the principal of and interest on the Senior Subordinated Notes and all other Obligations of
the Credit Parties with respect to the Senior Subordinated Notes (collectively the “Subordinated Debt”) shall be subordinated in accordance with the provisions of this Section 9 to the prior payment in full of all Senior Debt. For purposes
of this Section 9, the term “Senior Debt” shall mean all principal of and premium, if any, and interest on, and all other amounts owing in respect of the Senior Notes now or hereafter outstanding (including interest accruing at the rate
provided for herein applicable to Senior Notes after the commencement of any proceedings of the type referred to in Section 9.2(a) hereof, whether or not an allowed claim in such proceeding)

 

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and all expenses, fees, reimbursements, indemnities and other amounts owing pursuant to the Senior Notes, to the extent permitted to be incurred pursuant hereto. 
  
 9.2  
Priority and Payment Over of Proceeds in Certain Events. 
  
 (a)  Subordination on Dissolution, Liquidation or Reorganization of Company.    Upon payment or distribution of assets or securities of any Credit Party of any kind or character, whether in cash,
property or securities, upon any dissolution or winding up or total or partial liquidation or reorganization of any Credit Party, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings or upon an assignment
for the benefit of creditors or any other marshalling of the assets and liabilities of any Credit Party, all Senior Debt shall first be paid in full in cash, or payment provided for in cash or cash equivalents in a manner satisfactory to the holders
of Senior Debt, before any direct or indirect payments or distributions, including, without limitation, by exercise of set-off, of any cash, property or securities on account of principal of (or premium, if any) or interest on the Senior
Subordinated Notes and to that end the holders of Senior Debt shall be entitled to receive (pro rata on the basis of the respective amounts of Senior Debt held by them) directly, for application to the payment thereof (to the extent necessary to pay
all Senior Debt in full after giving effect to any substantially concurrent payment or distribution to or provision for payment to the holders of such Senior Debt), any payment or distribution of any kind or character, whether in cash, property or
securities, in respect of the Subordinated Debt, except that the holders of the Senior Subordinated Notes may receive and retain equity securities of any Credit Party or debt securities of any Credit Party that are subordinated to Senior Debt (and
any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the Senior Subordinated Notes are subordinated to the Senior Debt pursuant to this Section 9. The holders of Senior Debt are
hereby authorized to file an appropriate claim for and on behalf of the Holders if they or any of them do not file, and there is not otherwise filed on behalf of the Holders, a proper claim or proof of claim in the form required in any such
proceeding prior to 30 days before the expiration of the time to file such claim or claims. 
  
 (b)  Subordination Upon Acceleration of Senior Debt.    No direct or indirect payment by or on behalf of any Credit Party of principal of (premium, if any), or interest on, the Subordinated Debt
shall be made, upon acceleration of the Senior Notes or on the Maturity Date, until the Senior Debt has been paid in full. 
  
 (c)  Rights and Obligations of Holders. 
  
 (1)  In the
event that, notwithstanding the foregoing provision prohibiting such payment or distribution, the Holders shall have received any payment on account of the Subordinated Debt at a time when such payment is prohibited by such provision before the
Senior Debt is paid in full, then and in such event, such payment or distribution shall be received and held in trust by the Holders apart from their other assets and paid over or delivered to the holders of the Senior Debt remaining unpaid to the
extent necessary to pay in full in cash the principal of (premium, if any), and interest on,

 

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such Senior Debt in accordance with its terms and after giving effect to any concurrent payment or distribution to the holders of such Senior Debt. 
  
 (2)  Nothing contained in this Section 9 will limit the right of the Holders of Subordinated Debt to take any
action to accelerate the maturity of the Subordinated Debt pursuant to Section 8.2 hereof, provided, however, that all Senior Debt then due or thereafter declared to be due shall first be paid in full before the Holders are entitled to
receive any payment from any Credit Party of principal of, or interest on, the Senior Subordinated Notes. 
  
 (3)  Upon any payment or distribution of assets or securities referred to in this Section 9, the Holders shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, and upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making any such payment or distribution, delivered to the Holders for the
purpose of ascertaining the persons entitled to participate in such distribution, the holders of Senior Debt and other Indebtedness of any Credit Party, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Section 9. 
  
 9.3  
Rights of Holders of Senior Debt Not To Be Impaired.    No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act by any such holder, or by any noncompliance by any Credit Party with the terms and provisions and covenants herein regardless of any knowledge thereof such holder may have or otherwise be charged
with. 
  
 The provisions of this Section 9 are intended to be for the benefit of, and shall be enforceable directly
by, the holders of the Senior Debt. Each Credit Party and each Holder of a Senior Subordinated Note, by its acceptance thereof, acknowledges that the holders of the Senior Debt are relying upon the provisions of this Section 9 in extending such
Senior Debt. 
  
 9.4  
Subrogation.    Upon the payment in full of all Senior Debt, the Holders shall be subrogated to the extent of the payments or distributions made to the holders of, or otherwise applied to payment
of, the Senior Debt pursuant to the provisions of this Section 9 and to the rights of the holders of Senior Debt to receive payments or distributions of assets of Company made on the Senior Debt until the Senior Subordinated Notes shall be paid in
full; and for the purposes of such subrogation, no payments or distributions to holders of Senior Debt of any cash, property or securities to which Holders of the Senior Subordinated Notes would be entitled except for the provisions of this Section
9, no payment over pursuant to the provisions of this Section 9 to holders of Senior Debt by the Holders, shall, as between any Credit Party, its creditors other than holders of Senior Debt and the Holders, be deemed to be payment by such Credit
Party to or on account of Senior Debt, it being understood that the provisions of

 

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this Section 9 are solely for the purpose of defining the relative rights of the holders of Senior Debt, on the one hand, and the Holders, on the other hand. 
  
 If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this Section 9 shall have
been applied, pursuant to the provisions of this Section 9, to the payment of Senior Debt, then and in such case, the Holders shall be entitled to receive from the holders of Senior Debt at the time outstanding any payments or distributions received
by such holders of Senior Debt in excess of the amount sufficient to pay all Senior Debt in full. 
  
 9.5  
Obligations of Company Unconditional.    Nothing contained in this Section 9 or elsewhere in this Agreement or in the Senior Subordinated Notes is intended to or shall impair, as between any Credit
Party and the Holders, the obligations of such Credit Party, which are absolute and unconditional, to pay to the Holders the principal of (premium, if any), and interest on, the Senior Subordinated Notes as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of any Credit Party other than the holders of the Senior Debt, nor shall anything herein or therein prevent any Holder from
exercising all remedies otherwise permitted by applicable law upon the occurrence of a Default or Event of Default under this Agreement, subject to the rights, if any, under this Section 9 of the holders of Senior Debt in respect of cash, property
or securities of any Credit Party received upon the exercise of any such remedy. 
  
 The failure to make a payment on
account of principal of, or interest on, the Senior Subordinated Notes by reason of any provision of this Section 9 shall not be construed as preventing the occurrence of a Default or an Event of Default hereunder. 
  
 9.6  
Notice to Holders.    Greka shall give prompt written notice to each Holder of any fact known to any Credit Party which would prohibit the making of any payment on or in respect of the Senior
Subordinated Notes, but failure to give such notice shall not affect the subordination of the Subordinated Debt to the Senior Debt provided in this Section 9. Notwithstanding the provisions of this Section 9 or any other provision of this Agreement
or the Senior Subordinated Notes, no Holder shall be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or in respect of the Senior Subordinated Notes, unless and until the Holders shall have
received written notice thereof from Greka or a representative of or holder of Senior Debt, and, prior to the receipt of any such written notice, subject to the provisions of this Section 9, the Holders shall be entitled in all respects to assume no
such facts exist. Nothing contained in this Section 9.6 shall limit the right of the holders of Senior Debt to recover payments as contemplated by 9.1 and 9.2 
  
 9.7  
Right of Any Holder as Holder of Senior Debt.    Any Holder in its individual capacity shall be entitled to all the rights set forth in this Section 9 with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Agreement shall deprive such Holder of any of its rights as such holder. 
 

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 9.8  
Reinstatement.    The provisions of this Section 9 shall continue to be effective or be reinstated, and the Senior Debt shall not be deemed to be paid in full, as the case may be, if at any time
any payment of any of the Senior Debt is rescinded or must otherwise be returned by the holder thereof upon the insolvency, bankruptcy or reorganization of any Credit Party or otherwise, all as though such payment had not been made. 

 
 10.    
INDEMNIFICATION 
  
 Each Credit Party agrees to indemnify and hold harmless each
Purchaser, the Collateral Agent and their Affiliates and their respective officers, directors and employees from and against any losses, liabilities, obligations, damages, penalties, actions, proceedings, judgments, suits, claims, costs, fees,
expenses and disbursements (including, without limitation, reasonable attorneys’ fees and disbursements) of any kind (“Losses”) which may be imposed upon, incurred by or asserted against such Purchaser, Collateral Agent or such other
indemnified Persons as a result of such Purchaser or Collateral Agent having entered into this Agreement or any of the other Loan Documents or relating to or arising out of any untrue representation, breach of warranty or failure to perform any
covenants or agreement by any Credit Party contained herein or in any certificate or document delivered pursuant hereto or arising out of, under or pursuant to any Environmental Law applicable to any Credit Party or its Subsidiaries or any Hazardous
Materials located at, on, under, or Released from any Facility or by any Credit Party or any of its Subsidiaries or otherwise relating to or arising out of the transactions contemplated hereby; provided, however, that Greka shall not
be liable for such indemnification to such indemnified Person to the extent that any such Losses result from such indemnified Person’s gross negligence or willful misconduct. 
  
 11.    
COLLATERAL AGENT 
  
 11.1  
Collateral Agency Provisions.    (a)  Appointment. Guggenheim Investment Management, LLC is hereby appointed to act on behalf of all the Purchasers as the Collateral Agent under
this Agreement, and the other Loan Documents. The provisions of this Section 11.1 are solely for the benefit of the Collateral Agent and such Purchasers, and no Credit Party nor any other Person shall have any rights as a third party beneficiary of
any of the provisions hereof. In performing its functions and duties under this Agreement, the Collateral Agent shall act solely as an agent of the respective Purchasers and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any Credit Party or any other Person. The Collateral Agent shall have no duties or responsibilities except for those expressly set forth in this Agreement. The duties of the Collateral Agent
shall be mechanical and administrative in nature and the Collateral Agent shall not have, or be deemed to have, by reason of this Agreement or otherwise a fiduciary relationship in respect of any Purchaser. The Purchasers hereby authorize the
Collateral Agent to execute the Intercreditor Agreement, dated as of the date hereof, with Vintage Petroleum California, Inc., the Subordination Agreement, dated as of the date hereof, with GMAC Commercial Credit Corporation and the Mortgagee
Waiver, dated as of the date hereof, with GMAC 
 

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 Commercial Credit Corporation, each in substantially the same form and substance as previously delivered to the Purchasers. 

 
 (b)  Actions.    If the Collateral Agent shall request instructions from the Required
Holders or all Purchasers affected thereby with respect to any act or action (including failure to act) in connection with this Agreement, then the Collateral Agent shall be entitled to refrain from such act or taking such action unless and until
the Collateral Agent shall have received instructions from the Required Holders or all Purchasers affected thereby, as the case may be, and the Collateral Agent shall not incur liability to any Person by reason of so refraining. The Collateral Agent
shall be fully justified in failing or refusing to take any action hereunder (a) if such action would, in the opinion of the Collateral Agent, be contrary to law or the terms of this Agreement, (b) if such action would, in the opinion of the
Collateral Agent, expose the Collateral Agent to any liability or (c) if the Collateral Agent shall not first be indemnified to its satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing
to take any such action. Without limiting the foregoing, no Purchaser shall have any right of action whatsoever against the Collateral Agent as a result of the Collateral Agent acting or refraining from acting hereunder in accordance with the
instructions of the Required Holders or all affected Purchasers, as applicable. 
  
 (c)  Collateral
Agent’s Reliance. etc.    Neither the Collateral Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement, except for damages caused by its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Collateral Agent: (i) may treat the payee of any Note
as the holder thereof until the Collateral Agent receives written notice of the assignment or transfer thereof signed by such payee and in form satisfactory to the Collateral Agent; (ii) may consult with legal counsel, independent public accountants
and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any
Purchaser and shall not be responsible to any Purchaser for any statements, warranties or representations made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement on the part of any Credit Party or to inspect the Collateral including the books and records of any Credit Party; (v) shall not be responsible to any Purchaser for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon
any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. 
  
 (d)  Purchaser Credit Decisions.    Each Purchaser acknowledges that it has, independently and
without reliance upon the Collateral Agent or any other Purchaser and based on such financial statements and other documents and information as it has 
 

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 deemed appropriate, made its own credit and financial analysis of the Credit Parties and its own decision to enter into this Agreement. Each
Purchaser also acknowledges that it will, independently and without reliance upon the Collateral Agent or any other Purchaser and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement. Each Purchaser acknowledges the potential conflict of interest of each other Purchaser as a result of the Purchasers holding disproportionate interests in the Notes, and expressly
consents to, and waives any claim based upon, such conflict of interest. 
  
 (e)  Successor Collateral
Agent.    The Collateral Agent may resign at any time by giving not less than 30 days’ prior written notice thereof to the Purchasers and Greka. Upon any such resignation, the Required Holders shall have the right to
appoint a successor Collateral Agent. If no successor Collateral Agent shall have been so appointed by the Required Holders and shall have accepted such appointment within 30 days after the resigning Collateral Agent’s giving notice of
resignation, then the resigning Collateral Agent may, on behalf of the Purchasers, appoint a successor Collateral Agent, which shall be a Purchaser, if a Purchaser is willing to accept such appointment, or otherwise shall be a commercial bank or
financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and
surplus of at least $300,000,000. If no successor Collateral Agent has been appointed pursuant to the foregoing by the 30th day after the date such notice of resignation was given by the resigning Collateral Agent, such resignation shall become
effective and the Required Holders shall thereafter perform all the duties of the Collateral Agent hereunder until such time, if any, as the Required Holders appoint a successor Collateral Agent as provided above. Prior to the occurrence and
continuation of an Event of Default any successor Collateral Agent appointed by the Collateral Agent or the Required Holders shall be subject to the prior approval of Greka, such approval not to be unreasonably withheld or delayed. Upon the
acceptance of any appointment as the Collateral Agent hereunder by a successor Collateral Agent, such successor Collateral Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Collateral Agent.
Upon the earlier of the acceptance of any appointment as the Collateral Agent hereunder by a successor Collateral Agent or the effective date of the resigning Collateral Agent’s resignation, the resigning Collateral Agent shall be discharged
from its duties and obligations under this Agreement, except that any indemnity rights or other rights in favor of such resigning Collateral Agent shall continue. After any resigning Collateral Agent’s resignation hereunder, the provisions of
this Section 11.1 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement. 
  
 (f)  Indemnification by the Purchasers.    The Purchasers agree to indemnify the Collateral Agent (to the extent the Collateral Agent is not reimbursed by the
Credit Parties and without limiting the obligations of Greka hereunder), ratably on a pro rata basis based on the principal amount outstanding under the Notes from and 
 

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 against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Collateral Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by the Collateral Agent in
connection therewith; provided,however, that no Purchaser shall be liable to the extent it is finally judicially determined that such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements arose primarily from the Collateral Agent’s gross negligence or willful misconduct. 
  
 12.    
MISCELLANEOUS 
  
 12.1  
Complete Agreement; Modification of Agreement; Sale of Interest.    (a) The Transaction Documents constitute the complete agreement between the parties with respect to the subject matter hereof and
thereof, supercede any previous agreement or understanding between them relating hereto or thereto and may not be modified, altered or amended except as provided therein, or in the case of the Loan Documents by an agreement in writing signed by the
Credit Parties and the Purchasers in accordance with Section 12.1(d) hereof. The Credit Parties may not sell, assign or transfer any of the Loan Documents or any portion thereof, including, without limitation, their rights, title, interests,
remedies, powers and duties hereunder or thereunder. The Credit Parties hereby consent to any Purchaser’s sale of participations, assignment, transfer or other disposition, at any time or times, of any of the Loan Documents or of any portion
thereof or interest therein, including, without limitation, such Purchaser’s rights, title, interests, remedies, powers or duties thereunder, whether evidenced by a writing or not. 
  
 (b) In the event any Purchaser assigns or otherwise transfers all or any part of any of the Notes, Greka shall, upon the request of such Purchaser issue new Notes to
effectuate such assignment or transfer. 
  
 (c) Any Purchaser may sell, assign, transfer or negotiate to one or more
other lenders, commercial banks, insurance companies, other financial institutions or any other Person acceptable to such Purchaser all or a portion of its rights and obligations under the Notes held by such Purchaser and this Agreement;
provided, however, that acceptance of such assignment by any assignee shall constitute the agreement of such assignee to be bound by the terms of this Agreement applicable to such Purchaser; provided further,
however, the Purchasers may not assign any interest in the Notes to any Person who is in the oil and gas business without Greka’s prior consent, not to be unreasonably withheld, except that such consent shall not be required if an Event
of Default has occurred and is continuing. From and after the effective date of such an assignment, (x) the assignees thereunder shall, in addition to the rights and obligations hereunder held by it immediately prior to such effective date, have the
rights and obligations hereunder that have been assigned to it pursuant to such assignment and (y) the assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such assignment, relinquish
its rights and be released from its obligations under this Agreement (and, in the case of an assignment and 
 

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 acceptance covering all or the remaining portion of an assignor’s rights and obligations under this Agreement, such assignor shall cease to
be a party hereto). 
  
 (d) No amendment or waiver of any provision of this Agreement, any Note or any other Loan
Document, nor consent to any departure by any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Holders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by each holder of a Note affected thereby do any of the following: (i) subject such
holder to any additional obligations, (ii) reduce the principal of, or interest on, any Note or other amounts payable hereunder or release or discharge any Credit Party from its obligations to make such payments, (iii) postpone any date fixed for
any payment of principal of, or interest on, any Note or other amounts payable hereunder, (iv) change the aggregate unpaid principal amount of any Note, or the number of holders thereof, which shall be required for such holders or any of them to
take any action hereunder, or (v) amend this Section 12.1(d). 
  
 12.2  
Fees and Expenses.    The Credit Parties shall pay all reasonable out-of-pocket costs, fees and expenses of each of the Purchasers and the Collateral Agent in connection with the preparation of the
Transaction Documents and the transactions contemplated thereby, including, without limitation, all reasonable legal fees and expenses of Weil, Gotshal & Manges LLP, counsel to the Purchasers and the Collateral Agent, and any other local
counsel. If, at any time or times, regardless of the existence of an Event of Default (except with respect to paragraph (iii) below, which shall be subject to an Event of Default having occurred and be continuing), the Required Holders or, in the
case of paragraphs (ii) or (iii) below, any Purchaser, shall employ counsel or other advisors for advice or other representation or shall incur reasonable legal or other costs and expenses in connection with: 
  
 (i)  any amendment, modification or waiver, or consent with respect to, any of the Loan Documents or advice in
connection with the administration of the loans made pursuant hereto or its rights hereunder or thereunder; 
  
 (ii)  any litigation, contest, dispute, suit, proceeding or action (whether instituted by such Purchaser, any Credit Party, any Subsidiary of such Credit Party or any other Person) in any way relating to any of the Loan
Documents or any other agreements to be executed or delivered in connection herewith; or 
  
 (iii)  any attempt to enforce any rights of such Purchaser against any Credit Party, any of its Subsidiaries or any other Person, that may be obligated to such Purchaser by virtue of any of the Loan Documents; 

 
 then, and in any such event, the reasonable attorneys’ and other parties’ fees arising from such services, including those of any appellate
proceedings, and all expenses, costs, 
 

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 charges and other fees incurred by such counsel and others in any way or respect arising in connection with or relating to any of the events or
actions described in this Section shall be payable, on demand, by the Credit Parties to such Purchaser and shall be additional Obligations under this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: paralegal fees, costs and expenses; accountants’ and investment bankers’ fees, costs and expenses; court costs and expenses; photocopying and duplicating expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; telegram charges; secretarial overtime charges; expenses for travel, lodging and food paid or incurred in connection with the performance of such legal services; and costs and
expenses of the Collateral Agent. 
  
 12.3  
No Waiver by Purchaser.    Any Purchaser’s failure, at any time or times, to require strict performance by any Credit Party of any provision of this Agreement and any of the other Loan
Documents shall not waive, affect or diminish any right of such Purchaser thereafter to demand strict compliance and performance therewith. Any suspension or waiver by such Purchaser of an Event of Default by any Credit Party under the Loan
Documents shall not suspend, waive or affect any other Event of Default by any Credit Party under this Agreement and any of the other Loan Documents whether the same is prior or subsequent thereto and whether of the same or of a different type. None
of the undertakings, agreements, warranties, covenants and representations of any Credit Party contained in this Agreement or any of the other Loan Documents and no Event of Default by any Credit Party under this Agreement and no defaults by any
Credit Party under any of the other Loan Documents shall be deemed to have been suspended or waived by any Purchaser, unless such suspension or waiver is by an instrument in writing signed by an officer of such Purchaser and the Required Holders and
directed to any Credit Party specifying such suspension or waiver. 
  
 12.4  
Remedies.    Each Purchaser’s rights and remedies under this Agreement shall be cumulative and nonexclusive of any other rights and remedies which such Purchaser may have under any other
agreement, including without limitation, the Loan Documents, the other Transaction Documents, by operation of law or otherwise. 
  
 12.5  
Waiver of Jury Trial.    The parties hereto waive all right to trial by jury in any action or proceeding to enforce or defend any rights under the Transaction Documents. 
  
 12.6  
Severability.    Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

  
 12.7  
Binding Effect; Benefits.    This Agreement and the other Transaction Documents shall be binding upon, and inure to the benefit of, the successors 
 

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 of each Credit Party and each Purchaser and the assigns, transferees and endorsees of each Purchaser. 
  
 12.8  
Conflict of Terms.    Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision
contained in this Agreement is in conflict with, or inconsistent with, any provision in any of the other Loan Documents, the provision contained in this Agreement shall govern and control. 
  
 12.9  
Governing Law.    Except as otherwise expressly provided in any of the Transaction Documents, in all respects, including all matters of construction, validity and performance, this Agreement and
the Obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and performed in such state, without regard to the principles thereof regarding
conflict of laws, and any applicable laws of the United States of America. Each Purchaser and each Credit Party agree to submit to personal jurisdiction and to waive any objection as to venue in the federal or New York State courts located in the
County of New York, State of New York. Service of process on Purchaser or Company in any action arising out of or relating to any of the Transaction Documents shall be effective if mailed to such party at the address listed in Section 12.10 hereof.
Nothing herein shall preclude any Purchaser or any Credit Party from bringing suit or taking other legal action in any other jurisdiction. 
  
 12.10  
Notices.    Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or
served upon any of the parties by another, or whenever any of the parties desires to give or serve upon another any such communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person with receipt acknowledged or by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback addressed to the
respective party hereto at the address indicated for such party on Schedule A and Schedule B; provided, however, any party may substitute such other address by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback, or three (3) business days after the same shall have been deposited with the United States mail. Failure or delay in delivering copies of any
notice, demand, request, consent, approval, declaration or other communication to the persons designated above to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or
other communication. 
 

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 12.11  
Survival.    The representations and warranties of the Credit Parties in this Agreement shall survive the execution, delivery and acceptance hereof by the parties hereto and the closing of the
transactions described herein or related hereto. 
  
 12.12  
Section and Other Headings.    The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

  
 12.13  
Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same
instrument. 
  
 12.14  
Publicity.    Neither any Credit Party nor its Subsidiaries nor any Purchaser shall issue any press release or make any public disclosure regarding the transactions contemplated hereby unless such
press release or public disclosure is approved by the other parties hereto in advance. Notwithstanding the foregoing, each of the parties hereto may, in documents required to be filed by it with the SEC or other regulatory bodies, make such
statements with respect to the transactions contemplated hereby as each may be advised by counsel is legally necessary or advisable, and may make such disclosure as it is advised by its counsel is required by law, subject to advance notice to the
Purchasers. 
  
 12.15  
Confidentiality.    Each of the Credit Parties and Purchasers agrees to keep confidential and not to disclose to or use for the benefit of any third party the terms of this Agreement or any other
information which at any time is communicated by any other party hereto as being confidential without the prior written approval of such other party; provided, however, that this provision shall not apply to (a) information which, at
the time of disclosure, is already part of the public domain (except by breach of this Agreement), (b) information which is required to be disclosed by law (including, without limitation, pursuant to Item 10 of Rule 601 of Regulation S-K under the
Securities Act and the Exchange Act) and (c) any disclosure of information to assignees or prospective assignees of any Notes or Warrants or to participants or prospective participants in any Notes or Warrants. 
 

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 IN WITNESS WHEREOF, the Credit Parties and the Purchasers have executed this
Agreement as of the day and year first above written. 
  
 
	 Borrower:
 
	 
	 GREKA ENERGY CORPORATION
 
	 
	 By:
 	 	 /s/    RANDEEP S. GREWAL
 

	  	 	 Randeep S. Grewal
 
	  	 	 President, Chief Executive Officer and Chairman
 
	 
	 Guarantors:
 
	 
	 GREKA INTEGRATED, INC.
 
	 
	 By:
 	 	 /s/    RANDEEP S. GREWAL
 

	  	 	 Randeep S. Grewal
 
	  	 	 President, Chief Executive Officer and Chairman
 
	 
	 GREKA REALTY, INC.
 
	 
	 By:
 	 	 /s/    RANDEEP S. GREWAL
 

	  	 	 Randeep S. Grewal
 
	  	 	 President, Chief Executive Officer and Chairman
 
	 
	 GREKA SMV, INC.
 
	 
	 By:
 	 	 /s/    RANDEEP S. GREWAL
 

	  	 	 Randeep S. Grewal
 
	  	 	 President, Chief Executive Officer and Chairman
 

 
  
  
  
 

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	 SABA PETROLEUM COMPANY
 
	 
	 By:
 	 	 /s/    RANDEEP S.
GREWAL        
 

	  	 	 Randeep S. Grewal
 
	  	 	 President, Chief Executive Officer and Chairman
 
	 
	 SABA PETROLEUM, INC.
 
	 
	 By:
 	 	 /s/    RANDEEP S.
GREWAL        
 

	  	 	 Randeep S. Grewal
 
	  	 	 President, Chief Executive Officer and Chairman
 
	 
	 SANTA MARIA REFINING COMPANY
 
	 
	 By:
 	 	 /S/    RANDEEP S.
GREWAL        
 

	  	 	 Randeep S. Grewal
 
	  	 	 President, Chief Executive Officer and Chairman
 
	 
	 Purchasers:
 
	 
	 NORTH AMERICAN COMPANY FOR LIFE
AND HEALTH INSURANCE
 
	 
	 By:
 	 	 /s/    TODD L.
BOEHLY        
 

	  	 	 Todd L. Boehly
 
	  	 	 Managing Director
 

 
 

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	 MIDLAND NATIONAL LIFE INSURANCE COMPANY
 
	 
	 By:
 	 	 /s/    TODD L.
BOEHLY        
 

	  	 	 Todd L. Boehly
 Managing
Director
 

 
  
 
	 HIGHBRIDGE/ZWIRN SPECIAL OPPORTUNITIES FUND, L.P.
 
	 
	 By:
 	 	 HIGHBRIDGE/ZWIRN CAPITAL MANAGEMENT, LLC
 
	 
	 By:
 	 	 /s/    DANIEL B.
ZWIRN            
 

	  	 	 Daniel B. Zwirn
 Managing
Principal
 

 
  
  
 
	 Collateral Agent:
 
	 
	 GUGGENHEIM INVESTMENT MANAGEMENT, LLC
 
	 
	 By:
 	 	 /s/    TODD L.
BOEHLY        
 

	  	 	 Todd L. Boehly
 Managing
Director
 

 
 

 73Prepared by R.R. Donnelley Financial -- Asset Sale Agreement

 Exhibit 10.2 
  
 ASSET SALE AGREEMENT 
  
 CAT CANYON, LOS FLORES, CLARK AVENUE, SANTA MARIA VALLEY AND ZACA
FIELDS 
  
 
	 1
 	  	 Sale and Purchase of Assets
 
	 2.
 	  	 Closing
 
	 3.
 	  	 Effective Date
 
	 4.
 	  	 Transfer Date
 
	 5.
 	  	 Purchase Price and Manner of Payment
 
	 6.
 	  	 [Omitted]
 
	 7.
 	  	 Disposition of Accounts Receivable and Other Revenue
 
	 8.
 	  	 Proration of Credits and Payment Obligations
 
	 9.
 	  	 Proration of Real Estate and Other Taxes
 
	 10.
 	  	 Sales Tax and Use Taxes
 
	 11.
 	  	 Documentation of Sale and Transfer of Ownership
 
	 12.
 	  	 Conditions Precedent to Closing
 
	 13.
 	  	 Deliveries at Closing
 
	 14.
 	  	 Post-Closing Settlement
 
	 15.
 	  	 Title Matters
 
	 16.
 	  	 Buyers Acceptance of the Assets
 
	 17.
 	  	 Physical Condition of the Assets
 
	 18.
 	  	 Buyer’s Investigation and Indemnification
 
	 19.
 	  	 Compliance
 
	 20.
 	  	 Indemnification and Assumption of Obligations
 
	 21.
 	  	 Indemnification and Assumption of Environmental Risks
 
	 22.
 	  	 Representations
 
	 23.
 	  	 Operation of the Assets Prior to Closing
 
	 24.
 	  	 Covenant Not to Sue and Alternative Dispute Resolution
 
	 25.
 	  	 Miscellaneous
 
	 26.
 	  	 Additional Plugging, Abandonment and Remediation Requirements
 
	 27.
 	  	 Security for Plugging and Abandonment
 
	 28.
 	  	 Casualty Losses
 

 
  
 Exhibit A—Corporation Grant Deed 
 Exhibit B—Bill of Sale 
 Exhibit C—Assignment of Leases and Agreements 
 Exhibit D—Sublicense Agreement For Use Of OEC Technology 
 Exhibit E—Parent Company Guarantee 
 Exhibit F—Parent Company Confirmation 
 Exhibit G—Allocation of Value

 Exhibit H—Claims and Litigation 
 Exhibit I—Preferential Rights to Purchase, First Rights of
Refusal and Consents to Assign 
 

 1 

 Schedule 1.1(a)—Oil, Gas and Mineral Leases and Real Property 
 Schedule 1.1(e)—Applicable Contracts 
 Schedule 8(b)—Suspense Accounts 
 Schedule 15(c)—Working and Net Revenue Interests 
 Schedule 22(a)(x)(1)—Defaulted Leases 
 

 2 

 ASSET SALE AGREEMENT 
  
 CAT CANYON, LOS FLORES, CLARK AVENUE, SANTA MARIA VALLEY AND ZACA FIELDS 
  
 THIS AGREEMENT, made as of this 31st day of May, 2001, between VINTAGE PETROLEUM CALIFORNIA, INC., an Oklahoma corporation (“Seller”), with a place of business at 110 West Seventh Street, Tulsa, Oklahoma 74119, and
GREKA SMV, INC., a Colorado corporation (“Buyer”), with a place of business at 3201 Airpark Drive, Suite 201, Santa Maria, CA 93455. 
  
 RECITALS 
  
 Seller desires to sell to Buyer and Buyer desires
to purchase from Seller on the terms and conditions set forth in this Asset Sale Agreement (“Contract”) those certain oil and gas interests, operating rights, real property, personal property, fixtures and improvements located on the real
property and associated assets, identified herein. Accordingly, in consideration of the mutual promises contained herein, the mutual benefits to be derived by each party hereunder and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows: 
  
 1.  Sale and
Purchase of Assets: 
  
 1.1  Assets To Be Sold:    Seller
shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase and receive at “Closing” (as defined below) all of Seller’s undivided right, title and interest (but exclusive of the equipment, machinery, and other real,
personal movable, immovable and mixed property expressly reserved by Seller pursuant to Section 1.2 hereof and elsewhere herein) in and to the following: 
  
 a)  the oil, gas, and mineral leases and real property recited and described in and on Schedule 1.1(a) (“Property”) insofar and only
insofar as same are contained therein and described; 
  
 b)  all oil and gas wells, salt
water disposal wells, injection wells and other wells on the Property(collectively the “Wells”); 
  
 c)  all equipment, machinery, fixtures, flowlines, roads, pipelines, pole lines, appurtenances, materials, improvements, and other real, personal, and mixed property located on, used in the operation of, or relating to the
production, treatment, sale, or disposal of hydrocarbons, water, and associated substances produced from the Property including without limitation, the property recited and described in and on Exhibit B attached hereto and made a part hereof (the
“Personal Property”); 
 

 3 

  
 d)  all hydrocarbons, including, natural gas,
casinghead gas, drip gasoline, natural gasoline, natural gas liquids, condensate products, and crude oil, whether gaseous or liquid, produced from or allocable to the Property on or after the Effective Date (the “Hydrocarbons”);

  
 e)  all contracts, permits, road use agreements, rights-of-way, easements, licenses,
servitudes and agreements relating to the Property, Personal Property and Wells, or the ownership or operation thereof, or the production, treatment, sale, storage or disposal of hydrocarbons, water, or substances associated therewith recited and
described in and on Schedule 1.1(e) (the “Applicable Contracts”); 
  
 f)  originals of all of the files, records, information and materials relating to the Property, Hydrocarbons, Applicable Contracts and Personal Property, owned by Seller and which Seller is not prohibited from transferring
to Buyer by law or existing contractual relationship (collectively, the “Records”), including, without limitation: (i) lease, land and title records (including abstracts of title, title opinions, certificates of title, title curative
documents, division orders, and division order files) (the “Land Files”), (ii) the Applicable Contracts, (iii) all environmental and production files (the “Production Files”), and (iv) original Well files; 

 
 g)  the Sublicense Agreement For Use Of OEC Technology, attached hereto as Exhibit “D”; and

  
 h)  all geophysical, geological, engineering and other technical and interpretative
data relating to the Assets including, without limitation, all such data and interpretations Seller or its affiliates acquired from Texaco Exploration and Production Inc. and from Shell Oil Company. 
  
 All such Property, Wells, Hydrocarbons, Applicable Contracts, Personal Property, Records, and Sublicense are hereinafter collectively
referred to as the “Assets” and are intended by the parties to include all interests of Seller located in Santa Barbara, County, California (except for the California lease). 
  
 1.2  Exclusions and Reservations:    Specifically excepted and reserved from this transaction are the following,
hereinafter referred to as the “Excluded Assets”. 
  
 a)  Any of Seller’s
reserve estimates, economic analyses, pricing forecasts, legal opinions or analyses, or information considered by Seller as confidential or protected by “Attorney-Client Privilege”; 
 

 4 

  
 b)  All rights and claims arising, occurring, or
existing in favor of Seller prior to the Effective Date including, but not limited to, any and all contract rights, claims, penalties, receivables, revenues, recoupment rights, recovery rights, accounting adjustments, mispayments, erroneous
payments, personal injury, property damage, royalty or other rights and claims of any nature in favor of Seller relating to any time period prior to the Effective Date; 
  
 c)  All corporate, financial, and tax records of Seller; however, Buyer shall be entitled to receive copies of any financial and tax records which
directly relate to the Assets, or which are necessary for Buyer’s ownership, administration, or operation of the Assets; 
  
 d)  All rights, titles, claims and interests of Seller related to the Assets for all periods prior to the Effective Date (i) under any policy or agreement of insurance or indemnity, (ii)
under any bond, or (iii) to any insurance or condemnation proceeds or awards; 
  
 e)  All
hydrocarbons produced from or attributable to Seller’s interest in the Assets with respect to all periods prior to the Effective Date together with all proceeds from or of such hydrocarbons; 
  

f)  Claims of Seller for refund of or loss carry forwards with respect to (i) production, windfall profit, severance, ad valorem or any other
taxes attributable to the Assets for any period prior to the Effective Date, (ii) income or franchise taxes attributable to the Assets for any period prior to the Effective Date; 
  
 g)  All amounts due or payable to Seller as adjustments or refunds under any contracts or agreements affecting the Assets for all periods prior to
the Effective Date; 
  
 h)  All amounts due or payable to Seller as adjustments to
insurance premiums related to the Assets for all periods prior to the Effective Date; 
  
 i)  Subject to the terms hereof, all monies, proceeds, benefits, receipts, credits, income or revenues (and any security or other deposits made) attributable to the Assets prior to the Effective Date; 

 
 j)  All Seller’s patents, trade secrets, copyrights, names, marks and logos; 

 
 k)  All software and software licenses; and 
 

 5 

  
 l)  Vehicles. 
  
 2.  Closing:    Closing shall mean the date on which the Purchase Price (as defined below) is paid to
Seller and the conveyancing instruments referred to in Paragraph 13 are delivered to Buyer. Closing shall occur at Seller’s office, five business days after Buyer has delivered notice to Seller that it is ready to close, but in no event later
than July 31, 2001at a mutually agreeable time. 
  
 3.  Effective Date:    The
Effective Date of the sale shall be: 
  
 a.  For Property without Consents, May 1, 2001, as
of 7:00 a.m., PDT. 
  
 b.  For any individual Property with a Consent requirement, 30 days
prior to receipt of all of the Consents required for such individual Property. 
  
 4.  Transfer
Date:    The Transfer Date shall be at 7:00 a.m. on the next ensuing day after Closing. 
  
 5.  Purchase Price and Manner of Payment:    Buyer shall pay to Seller, or its respective designee, as consideration for the Assets, a Purchase Price of Seventeen Million Seven Hundred Fifty
Thousand Dollars ($17,750,000), as adjusted, plus interest, as hereinafter provided: 
  
 a.  At Closing, Buyer shall pay to Seller the Purchase Price, as adjusted herein. 
  
 b.  Buyer shall pay to Seller at Closing interest on the Purchase Price. Such interest shall be calculated at LIBOR (3 month rate) and shall be based upon the period beginning 30 days after the Effective Date and ending at
the Closing (calculated separately for each individual Property); provided that no interest shall accrue during any period for which Seller’s actions or omissions have caused a delay in Closing. 
  
 c.  All amounts to be paid hereunder to Seller shall be paid by wire transfer of immediately available funds
made payable to “Vintage Petroleum California, Inc.” or its designee. 
  
 d.  Seller may request no later than five (5) days prior to Closing, that Buyer bring additional funds to Closing for the reasonably estimated costs for filing fees, transfer taxes, sales and gross receipt taxes on the
tangible personal property, and such other charges necessary to transfer the Assets. The Purchase Price shall be allocated among tangibles and intangibles comprising the Assets as follows: Ninety Percent (90%) of the Purchase Price shall be
 
 

 6 

 
attributed to the real property (15% attributable to real property surface and 85% attributable to real property oil and gas) and Ten Percent (10%) shall be attributed to the Equipment and other
personal property. Buyer and Seller agree to be bound by the allocation of the Purchase Price among tangible and intangible Assets, set forth herein, for all purposes; to consistently report such allocations for all federal, state and local income
tax purposes; and to timely file all reports required by the Internal Revenue Code of 1986, as amended, concerning the Purchase Price allocations. Buyer shall timely reimburse Seller for any and all charges paid by Seller over the estimated amount
and Seller shall refund any excess amount to Buyer. 
  
 6.  [Omitted] 
  
 7.  Disposition of Accounts Receivable and Other Revenue:    Accounts receivable or other revenue
associated with the Assets, to the extent that such accounts receivable or revenue are attributable to times prior to the Effective Date, and oil in tanks above the pipeline connections and gas produced prior to such date shall not be part of the
sale but shall remain the property of Seller. All storage tanks, if any, on the property subject to this Contract shall be gauged at 7:00 a.m. local time on the Effective Date. Buyer shall have the right to be present to witness such gauging; if
Buyer elects not to be present, Buyer shall be deemed to have accepted the gauging as to quantity and gravity set at the gauging. Such gauging shall deduct reasonable and customary amounts for line-fill and tank bottoms necessary for operations.
Seller and Buyer shall execute such additional documents as may be necessary to properly evidence the transfer of the interests herein sold and purchased. Seller shall have the right to enter upon the Assets to remove all oil and gas not sold herein
within a reasonable time following Closing, or sell the same to Buyer at the highest posted field price for oil and Seller’s gas sales contract price for gas prevailing in the field as of Closing. 
  
 8.  Proration of Credits and Payment Obligations: 
  
 a.  All credits and payment obligations associated with the Assets, including but not limited to royalties, lease rentals, and other forms of
contractual payments shall be prorated between Seller and Buyer as of the Effective Date. Seller shall be responsible for all such items attributable to periods prior to the Effective Date or Closing, as applicable, and Buyer shall be responsible
for and shall pay for all such items attributable to periods on and after such date. Buyer shall pay and be responsible for all sales, transfer, and use taxes, plus any penalty or interest thereon, applicable to the sale of the Assets. 

 7 

  
 b.  Notwithstanding paragraph 8.a., at Closing or such
other time as Seller and Buyer agree, Seller shall deliver to Buyer all funds as an offset against Buyers payment to Seller as required in Paragraph 5.a., in an amount representing the value or proceeds of production removed or sold from the Assets
and then held by Seller in accounts from which payments have been suspended and as disclosed on Schedule 8(b). Thereafter Buyer shall be solely responsible for the proper distribution of such funds, including any obligation under law to identify and
locate the persons entitled to such funds and to report and escheat such funds under applicable state unclaimed property law. 
  
 c.  Seller shall retain all rights and obligations regarding outstanding receivables pertaining to the Assets which accrued to Seller prior to the Effective Date. 
  
 d.  Seller shall retain all rights and obligations regarding outstanding trade payables related to the Assets
which accrued to Seller prior to the Effective Date. 
  
 e.  In accordance with generally
accepted accounting principles, Seller shall complete a settlement statement accounting within 90 days of Closing pursuant to Paragraph 14. 
  
 9.  Proration of Real Estate and Other Taxes:    All real estate, occupation, ad valorem, personal property, and severance taxes and charges on any of the Assets
shall be prorated as of the Effective Date. Seller shall pay all such items for all periods prior to such date and shall be entitled to all refunds and rebates with regard to such periods. In the event Buyer pays additional taxes or charges which
are assessed upon or levied against any of the Assets after Closing with respect to any period prior to the Effective Date, Seller shall promptly reimburse Buyer the amount thereof upon presentation of a receipt therefor. If Seller elects to
challenge the validity of such assessment or levy, or any portion thereof, Buyer shall extend reasonable cooperation to Seller in such efforts, at no expense to Buyer. Buyer shall be responsible for the determination and payment of any sales tax or
transfer tax due on the sale and purchase of any tangible personal property hereunder. 
  
 10.  Sales
Tax and Use Taxes:    Buyer shall be responsible for all sales, use, transfer and similar taxes arising out of the sale of the Assets. At Closing, Buyer shall pay Seller all state and local sales or use taxes applicable to
that portion of the Assets which is tangible personal property, and Seller shall remit such amount to the appropriate taxing authority in accordance with applicable law. All recording and transfer fees shall be paid by Buyer. 
 

 8 

  
 Should this purchase and sale constitute an isolated or occasional sale and not
be subject to sales or use tax with any of the taxing authorities having jurisdiction over this transaction, no sales tax will be collected by Seller from Buyer at the date of Closing. Seller agrees to cooperate with Buyer in demonstrating that the
requirements for an isolated or occasional sale or any other sales tax exemption have been met. 
  
 11.  Documentation of Sale and Transfer of Ownership:    Subject to the terms of this Contract, the Assets to be conveyed by Seller to Buyer shall be conveyed “AS IS, WHERE IS” pursuant
to the instruments substantially in the form of the Exhibits attached hereto and such other form or forms customary and necessary to properly transfer the Assets according to the requirements of any applicable federal, state or local agency. Buyer
assumes the risk of description, title and condition of the Assets and shall satisfy itself with respect thereto. 
  
 a.  Seller shall deliver the Assets to Buyer on the Transfer Date subject to the reservations, limitations, conditions and restrictions contained in this Contract and the instruments of conveyance attached hereto.

  
 b.  The title to the Assets shall be subject to all matters appearing of record or that
can be ascertained by an inspection thereof and shall be conveyed to Buyer without any warranty of title, express or implied, except that Seller has not heretofore disposed of, burdened or otherwise encumbered, any interest herein offered for sale.
The cost of title insurance, if any, shall be paid for by the party requesting it. 
  
 12.  Conditions
Precedent to Closing: 
  
 a.  Seller’s Conditions
Precedent:    Unless waived in writing on notice given not later than five (5) days prior to Closing, the obligations of Seller to consummate the transactions contemplated by this Contract are subject to each of the following
conditions: 
  
 (i).  Buyer shall have performed and complied with all terms of this
Contract required to be performed or complied with by Buyer prior to Closing; 
  
 (ii).  No
action or proceeding by or before any governmental authority shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which might restrain, prohibit or invalidate any of the transactions contemplated
by this Contract, other than an action or proceeding instituted or threatened by Seller or any of its affiliates; 
 

 9 

  
 (iii).  Seller and Buyer shall have executed, delivered
and acknowledged a bilateral form of assignment and a bilateral form of grant deed whereby Seller transfers its right, title and interest in the Assets to Buyer and Buyer assumes the obligations and liabilities pursuant to Paragraphs 20 and 21,
hereof; 
  
 (iv).  Buyer shall have provided Seller with a copy of the bond required by
Section 3206 of the Public Resources Code of the State of California or other security acceptable to the State of California for wells which have not produced oil or gas or have not been used as injectors, for a period of five (5) years, not later
than ten (10) days before Closing. 
  
 (v).  The representations and warranties of Buyer
contained in this Contract shall be true and correct in all material respects on the Closing Date as though made on and as of such date. 
  
 b.  Buyer’s Conditions Precedent:    Unless waived in writing on notice given not later than five (5) days prior to Closing, the obligations of Buyer to
consummate the transactions contemplated by this Contract are subject to each of the following conditions; 
  
 (i).  Seller shall have performed and complied with all terms of this Contract required to be performed or complied with by Seller prior to Closing; 
  
 (ii).  No action or proceeding by or before any governmental authority shall have been instituted or threatened (and not subsequently dismissed,
settled or otherwise terminated) which might restrain, prohibit or invalidate any of the transactions contemplated by this Contract, other than an action or proceeding instituted or threatened by Buyer or any of its affiliates; 

 
 (iii).  Seller and Buyer shall have executed, delivered and acknowledged a bilateral form of
assignment and a bilateral form of grant deed whereby Seller transfers its right, title and interest in the Assets to Buyer, and Buyer assumes the obligations and liabilities pursuant to Paragraphs 20 and 21, hereof. 
  
 (iv).  The representations and warranties of Seller contained in this Contract shall be true and correct in all
material respects on the Closing Date as though made on and as of such date. 
  
 (v).  All
Consents shall have been obtained, waived or the time to exercise such rights have expired. 
 

 10 

  
 (vi).  Vintage Petroleum Inc. (“Vintage”)
shall have transferred all of the Assets to Seller subject to all of the representations, warranties, and conditions (including the obtaining of all Consents from Vintage to Seller) described in this Agreement. 
  
 13.  Deliveries at Closing: 
  
 a.  Buyer shall deliver to Seller at or before Closing the following: 
  
 (i).  the amount specified in Paragraph 5.a. above, as adjusted by this Contract; 
  
 (ii).  a duplicate original notice to the Division of Oil, Gas and Geothermal Resources as required by Section 3202 of the Public Resources Code
of the State of California including satisfactory evidence of indemnity bonds in amounts as provided in Section 3204 or 3205 or such other security acceptable to the State of California; 
  
 (iii).  a certificate of insurance policy as further described in Paragraph 27 herein; 
  
 (iv).  a duplicate original Parent Company Guarantee substantially identical to Exhibit “E”; and 
  
 (v).  such other instruments or documents as Seller may reasonably request of Buyer to consummate the
transaction contemplated herein. 
  
 b.  Seller shall deliver to Buyer at Closing the
following: 
  
 (i).  a duplicate original Assignment of Oil and Gas Leases and Corporation
Grant Deed, in the form of Exhibit “A”, in favor of Buyer duly executed and acknowledged by Seller, the original of which will be recorded by Buyer at Buyer’s expense; and 
  
 (ii).  a duplicate original Bill of Sale, in the form of Exhibit “B”, in favor of Buyer conveying the personal property located on the
premises, duly executed by Seller; and 
  
 (iii).  a duplicate original Assignment of
Agreements, in the form of Exhibit “C”, in favor of Buyer, duly executed and acknowledged by Seller, the original of which will be recorded by Buyer at Buyer’s expense; 
 

 11 

  
 (iv).  a duplicate original notice to the Division of
Oil, Gas and Geothermal Resources as required by Section 3201 of the Public Resources Code of the State of California; 
  
 (v).  a duplicate original Sublicense Agreement For Use of OEC Technology identical to Exhibit “D”; 
  
 (vi).  a duplicate original notice to OEC, pursuant to the Sublicense Agreement attached as Exhibit “D”; 
  
 (vii).  an executed Parent Company Confirmation substantially identical to Exhibit “F”; 
  
 (viii).  conveyance documents from Vintage to Seller duly executed and acknowledged in the same form as will be
provided from Seller to Buyer together with written evidence of all Consents to such assignment, and 
  
 (ix).  such other instruments or documents as Buyer may reasonably request of Seller to consummate the transaction contemplated herein. 
  
 14.  Settlement:    Not later than five (5) days prior to Closing, Seller shall deliver to Buyer a preliminary settlement statement that will reconcile the
reasonably estimated expenses and revenues attributable to the period between the Effective Date and the Closing and other adjustments to the Purchase Price as prescribed in this Contract. The parties shall use their reasonable efforts to agree on
such preliminary settlement statement no later than one (1) day prior to Closing. Not later than 90 days after Closing, or as soon thereafter as practicable, Seller shall deliver to Buyer a final settlement statement that will reconcile the actual
expenses and revenues attributable to the period between the Effective Date and the Closing and other adjustments to the Purchase Price as prescribed in this Contract including, without limitation, any outstanding joint interest billings owed by
either party or its affiliates to the other party or its affiliates, irrespective of whether it relates to the Property. The Parties shall use their best efforts to agree to such settlement statement within 30 days after delivery to Buyer. If unable
to reach agreement, the parties agree to enter into alternative dispute resolution pursuant to Paragraph 24 of this Contract. Settlement will be made within 15 days following agreement on the settlement statement. Thereafter, additional proceeds
received by or expenses paid by either Seller or Buyer for or on behalf of the other shall be settled by invoicing the other party for expenses paid or remitting to the other party any proceeds received within 10 days of receipt of such invoice.

 

 12 

  
 15.  Title Matters: 
  
 a.  Asset Title Review:    Seller shall make available until two (2) days before
Closing at Seller’s office at 110 West Seventh Street, Tulsa, Oklahoma, 74119, or such other place as deemed appropriate by Seller, upon execution of this Contract, during normal business hours, and Buyer shall examine such title information
and abstracts as may then be available in Seller’s and Vintage’s files. Seller also agrees to provide copies to Buyer of all documents, reports, or similar information, if available, in Seller’s and Vintage’s files, which
document and evidence Seller’s ownership of the real property and working interest portions of the Assets being conveyed hereunder, as well as copies of any contracts, agreements or similar documents which benefit or obligate Seller as to the
Assets or the production therefrom, i.e., production purchase contracts with third parties, including accounting records related thereto. Seller shall not perform any additional title work, and any existing abstracts and title opinions will not be
made current by Seller. NO WARRANTY OF ANY KIND IS MADE BY SELLER AS TO THE COMPLETENESS OR ACCURACY OF INFORMATION SO SUPPLIED, and Buyer agrees that any conclusions drawn therefrom shall be the result of its own independent review and judgment;
provided, however, that Seller represents that to the best of its knowledge, it has made available all of Seller’s and Vintage’s title information related to the Assets. 
  
 b.  Title Adjustments:    In the event of a “Title Defect” as defined in Paragraph 15.c below, Buyer shall
notify Seller in writing of any matter Buyer considers to be a Title Defect not later than 9:00 a.m. CST on June 30, 2001 (the “Preliminary Defect Notice”); provided, however, that Buyer may notify Seller in writing of any Title Defect
occurring subsequent to June 30, 2001 but prior to Closing (“Final Defect Notice”). Such notices shall include (i) a specific description of the matter Buyer asserts as a Title Defect, (ii) a specific description of the Asset or portion of
the Assets that is affected by the Title Defect, (iii) Buyer’s calculation of the amount by which each Title Defect has diminished the value of the Assets, such amount to be determined by Buyer in good faith and in a commercially reasonable
manner, and (iv) reasonable supporting documentation. Buyer shall be deemed to have waived any Title Defect which Buyer fails to assert in its notices prior to the dates set forth in this Paragraph 15.b, or which Buyer accepts or assumes by Closing
on that Asset. 
  
 c.  Title Defect:    The term “Title
Defect” shall refer to any defect or deficiency in title to the Property, except for Permitted Encumbrances, that in Buyer’s reasonable opinion (i) create a lien, claim, encumbrance, restriction or other obligation affecting the interests
of Seller in the Assets, (ii) diminish Seller’s net revenue interest described on Schedule 15.c., (iii) increase Seller’s working interest described on Schedule 15.c. (defined as Seller’s
 
 

 13 

 
share of the costs of operation, development or production borne by the owner of such interest without a corresponding increase in Seller’s net revenue interest, or which creates an
obligation to pay costs or expenses in an amount greater than such interest), or (iv) materially diminishes Seller’s ability to exercise its ownership rights or operations of the Assets. 
  

d.  Permitted Encumbrances:    As used in this Paragraph 15, the term “Permitted Encumbrance” means:

  
 (i).  lessor’s royalties, non-participating royalties, overriding royalties and
division orders and sales contracts containing customary terms and provisions covering oil, gas or associated liquefied or gaseous hydrocarbons, reversionary interests, and similar burdens if the net cumulative effect of such burdens does not
operate to reduce the net revenue interest claimed by Seller; 
  
 (ii).  subject to the
provisions of Paragraph 25.2 hereof, preferential rights to purchase and required third party consents to assignments and similar agreements, exclusive of governmental consents or approvals, with respect to which prior to Closing (a ) waivers or
consents are obtained from the appropriate parties or (b) the appropriate time period for asserting such rights has expired without an exercise of such rights; 
  
 (iii).  liens for taxes or assessments not yet due or delinquent; 
  
 (iv).  all rights to consent by, required notices to, filings with, or other actions by governmental entities in connection with the sale or
conveyance of oil and gas leases or interests therein, if the same are customarily obtained subsequent to such sale or conveyance and Buyer has no reason to believe they cannot be obtained; 
  
 (v).  conventional rights of reassignment requiring less than ninety (90) days notice to the holders of such rights; 
  
 (vi).  such Title Defects as Buyer may have waived; 
  
 (vii).  easements, road-use agreements, rights-of-way, servitudes, permits, surface leases and other rights in respect of surface operations;
provided they do not materially interfere with Buyer’s operation or use of the Assets; 
  
 (viii).  defects, irregularities and deficiencies in title of or to any rights-of-way, road-use agreements, easements, surface leases or other rights which in the aggregate do not materially impair the use of such rights
of-way, road-use agreements, easements, surface leases or other rights
 
 

 14 

 
for the purpose of which such rights will be held by Buyer and would not have a material adverse effect on the operation or value of any of the Assets; 
  
 (ix).  zoning, planning and environmental laws and regulations to the extent valid and applicable to the Assets;

  
 (x).  vendors’, carriers’, warehousemen’s, repairmen’s
mechanics’, workmen’s, materialmen’s, construction or other like liens arising by operation of law in the ordinary course of business or incident to the construction or improvement of any property in respect of obligations which are
not yet due; 
  
 (xi).  defects, irregularities and deficiencies in title of any of the
Assets listed in Schedule 22.a.(x)(1); and 
  
 (xii).  defects, irregularities and
deficiencies in title of any of the Assets listed in the Notice of Defects letter dated November 24, 1999 sent by Buyer to Vintage Petroleum, Inc. (“Vintage”) relating to the Asset Sale Agreement dated November 2, 1999 between Buyer and
Vintage (the “Defect Notice”). 
  
 e.  Remedies for Title
Failures:    Seller shall have the right but not the obligation to cure any Title Defect asserted in such Preliminary Defect Notice or Final Defect Notice at its own expense prior to Closing. If Seller chooses to cure a Title
Defect, Seller must cure the Title Defect to the reasonable satisfaction of Buyer before Closing. If Seller cures the Title Defect, the parties shall proceed to Closing without adjustment of the Purchase Price or termination of this Contract. Seller
may delay Closing in order to attempt to cure any such Title Defect, but in no event shall closing be delayed beyond August 31, 2001; provided, however, Seller notifies Buyer in writing on or before Closing of Seller’s delay. If Seller fails to
cure any Title Defect on or prior to Closing, it shall be deemed to be a title failure (‘Title Failure”) for the relevant Asset. Buyer shall not be entitled to any adjustment to the Purchase Price until such time as the Title Failures
aggregate to five percent (5%) of the Purchase Price (the “Deductible Amount”). Notwithstanding the provisions of the foregoing sentence or any other provision of this Contract, it is specifically agreed and understood that liquidated
amounts due and owing in respect of vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, workmen’s, materialmen’s, construction or other like liens shall not be included in the Deductible Amount, but shall
otherwise be treated as Title Defects in accordance with the provisions of this Paragraph 15, including, without limitation, the provisions of this Paragraph 15.e (i)-(iii). It is fully understood by Seller and Buyer that Buyer shall never be
entitled to an adjustment to the Purchase Price for the Deductible Amount. Buyer and Seller
 
 

 15 

 
shall negotiate in good faith to reach agreement regarding the value of any Title Failure based on the allocated lease values listed in Exhibit “G” attached hereto, and unless waived by
Buyer shall mutually agree to one of the following options with respect to each Title Failure: 
  
 (i).  if the Title Failure results from a difference in net revenue interest from that claimed by Seller, the parties shall proceed to Closing and reduce the Purchase Price by an amount (“Defect Amount”)
determined by multiplying the Allocated Portion of the Purchase Price by a fraction, the numerator of which shall be the difference between the actual net revenue interest being conveyed and the net revenue interest claimed by Seller and the
denominator of which shall be the net revenue interest claimed by Seller; 
  
 (ii).  if the
Title Failure affects all of Seller’s interest in a defined portion of the Assets, such that the defect results in a complete failure of title to or total condemnation of such defined portion of the Assets, such affected Asset or defined
portion of the Assets shall be deleted from the sale and the Purchase Price shall be reduced by the Defect Amount which shall be the portion of the Purchase Price that is allocated to the affected Asset or defined portion of the Asset; and

  
 (iii).  if the Title Failure is one other than described in items (i) or (ii), the
Defect Amount shall be an amount determined in good faith by the mutual agreement of Buyer and Seller, taking into account the portion of the Purchase Price to be allocated by agreement of Seller and Buyer to the portion of the Assets affected by
the Title Failure, the legal effect of the Title Failure, and the potential economic effect of the Title Failure over the life of the Assets. 
  
 f.  Contract Termination:    Notwithstanding anything to the contrary within this Paragraph 15, if the Parties cannot agree on the value of any Title Failure or if
the aggregate amount of adjustments to the Purchase Price for Title Failures as set forth in the Preliminary and Final Defect Notice exceeds an amount equal to fifteen percent (15%) of the initial unadjusted Purchase Price, Seller or Buyer shall
have the option to terminate this Contract, without any liability, upon written notice to the other on or prior to the Closing. For purposes of determining Seller’s right to terminate this contract pursuant to this Paragraph 15.f the amount of
Title Defect adjustments shall be the amounts set forth in Buyer’s notices unless Buyer and Seller agree to a lesser amount in accordance with Paragraph 15.e. If either party exercises its option to terminate this Contract pursuant to this
Paragraph 15.f, this Contract shall become void and have no effect and neither party shall have any further right or duty to or claim against the other party under this Contract, except as expressly provided to the contrary in this Contract.

 

 16 

  
 g.  Increase in Purchase
Price:    Seller shall be entitled to an increase in the Purchase Price with respect to any interest to which Seller has (i) record title ownership of a net revenue interest that is greater than the net revenue interest
claimed by Seller and/or (ii) an ownership interest in any Personal Property greater than the interest for such Asset claimed by Seller. In the event that Seller is entitled to an adjustment, such adjustment shall be calculated in the same manner as
downward adjustments to the Purchase Price in accordance with Paragraph 15.e. Buyer shall be obligated to notify Seller, if Buyer makes any determination of any interest increase at the same time as required for Title Defects Notice.15.e.
Notwithstanding anything to the contrary herein, Buyer shall have the option to terminate this Contract due to an increase in the Purchase Price that Buyer deems is material, in its sole discretion. If Buyer exercises its option to terminate this
Contract pursuant to this Paragraph 15.g., this Contract shall become void and have no effect and neither party shall have any further right or duty to or claim against the other party under this Contract, except as expressly provided to the
contrary in this Contract. 
  
 16.  Buyer’s Acceptance of the Assets: 
  
 a.  Subject to the terms of this Contract, at Closing Buyer assumes the risk of condition of the Assets,
including compliance with all laws, rules, orders and regulations affecting the environment, whether existing before or after Closing and Buyer shall satisfy itself with respect thereto. 
  
 b.  OTHER THAN AS STATED HEREIN, THE ASSETS ARE SOLD “AS IS, WHERE IS” AND SELLER MAKES NO WARRANTY, WHETHER EXPRESS OR IMPLIED IN FACT
OR IN LAW, OF MERCHANTABILITY, FITNESS FOR ANY PURPOSE, STATE OF REPAIR, CONDITION OR SAFETY OF THE REAL OR PERSONAL PROPERTY, NOR COMPLIANCE WITH APPLICABLE LAW, RULE, ORDER AND REGULATION, CONCERNING THE ASSETS. 
  
 17.  Physical Condition of the Assets: 
  
 a.  The Assets have been used for oil and gas drilling and producing operations, related oilfield operations and possibly for the storage and
disposal of waste materials or hazardous substances. Physical changes in the land may have occurred as a result of such uses. The Assets contain buried pipelines and other equipment, whether or not of a similar nature, the locations of which may not
now be within the knowledge of Seller’s or Vintage’s current
 
 

 17 

 
employees, easily determined by an examination of Seller’s records, or be readily apparent by a physical inspection of the property. 
  

Except as set forth herein to the contrary, Buyer understands that neither Seller nor Vintage has the requisite information with which to determine the
exact nature or condition of the Assets or the effect any such use has had on the physical condition of the Assets. 
  
 b.  Buyer acknowledges that: 
  
 (i).  It has entered
into this Contract on the basis of its own investigation of the physical condition of the Assets, including subsurface condition. 
  
 (ii).  The Assets have been used in the manner and for the purposes set forth above and that physical changes to the Assets may have occurred as a result of such use. 
  
 (iii).  Low levels of naturally occurring radioactive material (NORM) may be present at some locations. NORM is
a natural phenomena associated with many oil fields in the U.S. and throughout the world. Buyer should make its own determination on this matter. 
  
 (iv).  Pursuant to the California Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65), Buyer is hereby notified and assumes the risk that detectable amounts of chemicals
known to the State of California to cause cancer, birth defects and other reproductive harm may be found in, on or around the Assets. 
  
 (v).  California Health and Safety Code Section 25359.7 provides that any owner of nonresidential real property who knows, or has reasonable cause to believe, that any release of hazardous
substances as defined under California law, has come to be located on or beneath that real property shall, prior to the sale of that real property by that owner, give written notice of that condition to the Buyer of that real property. Buyer
acknowledges that one or more hazardous substances as defined under California law, may have come to be located in or on the Assets. 
  
 (vi).  Buyer acknowledges that some or all of the Assets may be situated in a seismic hazard zone as designated under Seismic Hazards Mapping Act (Public Resources Code Sections 2690-2699.6).
Buyer and Seller agree that the Assets shall be deemed to be within a Seismic Hazard Zone for all purposes related to this Contract. 
 

 18 

  
 (vii).  Buyer acknowledges that the Assets may be
situated in an Earthquake Fault Zone under the Alquist-Priolo Earthquake Fault Zoning Act (Cal. PRC Sections 2621-2630) and the construction or development on the Assets of any structure for human occupancy may be subject to the findings of a
geologic report prepared by a geologist registered in California, unless such report is waived by the city or county under the terms of that Act. Buyer and Seller agree that the Assets shall be deemed to be within an Earthquake Fault zone for all
purposes related to this Contract. 
  
 (viii).  Subject to the provisions contained in
Paragraphs 18 and 20, on Closing, Buyer shall assume the risk that the Assets may contain wastes or contaminants and that adverse physical conditions, including the presence of wastes or contaminants may not have been revealed by Buyer’s or
Seller’s investigation, and all responsibility and liability related to disposal, spills, waste, or contamination on and below the Assets shall be transferred from Seller to Buyer. This provision shall survive the Closing. 

 
 18.  Buyer’s Investigation and Indemnification: 
  

a.  Buyer shall conduct a thorough environmental and physical condition assessment of the Assets during the period (“Examination
Period”) beginning on the date of this Contract and ending four business days prior to Closing. Buyer and its agents shall have the right to do the following (and Seller agrees to cooperate reasonably with Buyer in this regard): to enter upon
and within the Assets and all buildings and improvements thereon, inspect the same, conduct soil and water tests and borings, and generally conduct such tests, examinations, investigations and studies as may be necessary or appropriate in
Buyer’s sole judgment for the preparation of appropriate engineering and other reports and judgments relating to the Assets, their condition, and the presence of waste or contaminants. Additionally, Buyer shall have the right to thoroughly
review all environmental, regulatory, engineering and other technical documents in Seller’s or Vintage’s possession relating directly to the Assets and those documents located in the Data Room. Buyer shall keep any data or information
acquired by all such examinations and the results of all analyses of such data and information strictly confidential and not disclose same to any person or agency without the prior written approval of Seller; provided that, if Buyer or its agents
obtain information that subjects it to any reporting requirement or duty to disclose under any environmental law, Buyer shall not be required to obtain Seller’s approval prior to making the required report or disclosure, but Buyer shall notify
Seller that it intends to make the required report or disclosure within a reasonable time so as to provide Seller an opportunity to object or legally prevent or protect such disclosure. Buyer shall
 
 

 19 

 
also supply to Seller, at no cost to Seller, a copy of any data or information compiled by Buyer. 
  
 b.  Buyer is hereby granted access to the Assets prior to Closing to conduct its environmental assessment upon the following conditions:

  
 (i).  Buyer waives and releases all claims against Seller and Vintage, their respective
directors, officers, employees and agents for injury to or death of persons or damage to property arising in any way from the exercise of rights granted to Buyer hereby or the activities of Buyer or its employees or agents on the Assets. Buyer shall
indemnify Seller, Vintage, their respective directors, officers, employees and agents of Seller against and hold each and all of said indemnitees harmless from any and all loss, cost, damage, expense or liability, including attorneys’ fees,
whatsoever arising out of (a) any and all statutory or common law liens or other encumbrances for labor or materials furnished in connection with such tests, samplings, studies or surveys as Buyer may conduct with respect to the Assets, and (b) any
injury to or death of persons or damage to property occurring in, on or about the Assets as a result of such exercise or activities (except where any such injury or damage is caused solely by the gross negligence or willful misconduct of any of said
indemnitees). The foregoing obligation of indemnity shall survive Closing or termination of this Contract without Closing. 
  
 (ii).  Buyer shall obtain and maintain comprehensive public liability and property damage insurance with respect to the exercise by Buyer and its agents of the rights granted in this Paragraph 18, which insurance
shall: (a) be obtained from and maintained with an insurer acceptable to Seller, (b) have limits of not less than $1,000,000.00 per occurrence for death or injury and $500,000.00 for property damage, (c) cover Buyer’s obligations under the
indemnity provisions of this paragraph 18, (d) name Seller and Vintage as additional insureds, and (e) contain a provision pursuant to which the insurer agrees not to cancel or modify the insurance coverage without furnishing at least thirty (30)
days’ prior written notice to Seller. Prior to any exercise of the rights granted hereby, Buyer shall furnish to Seller a certificate evidencing the existence of the insurance required hereunder. 
  
 c.  If as a result of information which Buyer obtains from any such assessment done by Buyer, it is determined
by Buyer in its reasonable opinion that a material defect exists in regard to the Assets (“Material Defect”) and/or that the environment associated with the Assets has been materially contaminated (“Materially Contaminated” or
“Material Contamination”), such terms being defined as the violation of existing applicable federal or state laws or regulations or common law principles, with respect to environmental
 
 

 20 

 
conditions, to the extent that (i) prosecution, if instituted, would be reasonably likely to result in a penalty, fine or damage payment or (ii) removal and remediation of such contamination
required by present federal or state laws or regulations or court order would be reasonably likely to result, and, other than the California and Hunter Cat leases, information of such Material Defect or Material Contamination was not contained in
the data room during Buyer’s 1999 visit, observable in the Buyer’s 1999 site visits, or contained in the Defect Notice, Buyer shall notify Seller in writing of any and all such Material Defects or Material Contamination claims
(“Preliminary Notice of Claims”) no later than 9:00 a.m. CST, June 30, 2001; provided, however, that Buyer may notify Seller in writing any Material Defects or Material Contamination occurring subsequent to June 30, 2001 but prior to
Closing (“Final Notice of Claims”). Buyer shall be deemed to have waived any Material Defect or Material Contamination which Buyer fails to assert on or before such dates. Notification shall include (i) a detailed description of such
claim, (ii) a copy of any environmental assessment, reports, data and information pertaining to such claim, if applicable, and (iii) Buyer’s calculation of the amount by which such claim has diminished the value of the Assets, such amount to be
determined by Buyer in good faith and in a commercially reasonable manner. As used in this Paragraph 18, the term Damages shall mean any and all damage, loss, injury, or liabilities. 
  
 d.  If Material Defects or Material Contamination exists the parties shall use their reasonable efforts to agree to an adjustment of the Purchase
Price. If the parties cannot agree on the adjustment of the Purchase Price, either party shall be entitled to terminate this Contract without further liability to either party, unless Buyer agrees to waive such Material Defects and Material
Contamination and assume all liability and obligations relating thereto. Each party shall cooperate with the other party’s reasonable corrective work, and any operations unreasonably interfering with the corrective work shall cease until
correction is completed. If Buyer or Seller exercises its option to terminate this Contract pursuant to this Paragraph 18.d, this Contract shall become null and void and have no effect and neither party shall have any further right or duty to or
claim against the other party under this contract, except as expressly provided to the contrary in this Contract. 
  
 e.  Subject to the provisions contained in Paragraphs 18 and 20, in the event of Closing, then Buyer shall acquire the Assets in an “AS IS, WHERE IS” condition and shall assume the risk that the Assets may contain
waste materials or hazardous substances, and that adverse physical conditions, including but not limited to the presence of waste materials or hazardous substances or the presence of unknown abandoned and unabandoned oil and gas wells, water wells,
sumps and pipelines or other Material Defects or Material Contamination may not have been revealed by Buyer’s investigation, 
 

 21 

  
 AND ALL RESPONSIBILITY AND LIABILITY RELATED TO ALL OF SUCH CONDITIONS WILL BE
TRANSFERRED FROM SELLER TO BUYER. 
  
 f.  Except as otherwise stated in this Contract,
as of Closing, Buyer specifically assumes and shall be responsible for all obligations and liabilities and shall defend, indemnify and hold Seller and Vintage harmless in accordance with Paragraph 21 (including, but not limited to, indemnification
for liability under CERCLA, RCRA, environmental laws and regulations, as well as all acts, laws and regulations amendatory or supplemental thereto) against any and all damages pertaining to the environmental or physical condition of the Assets
(whether relating to periods before or after the Effective Date). 
  
 g.  In the event of
Closing and with reasonable prior notice, Buyer shall grant to Seller a right of entry to the Assets to perform environmental remedial work at Seller’s sole cost, risk and expense, if Seller, in its sole discretion, determines that such action
is necessary to reduce alleged future environmental liabilities of Seller. Seller agrees to indemnify, hold harmless, and defend Buyer from and against all loss, liability, claims, fines, expenses, costs (including attorneys’ fees and
expenses), and causes of action caused by or arising out of Seller’s use of the right of entry granted hereby and/or Seller’s performance of environmental remedial work hereunder. Any such entry or action on the Assets by Seller shall not
be construed as an admission of responsibility by Seller, nor shall Seller’s action lessen or reduce Buyer’s responsibility for environmental liability. A perpetual right of entry for environmental remedial work may be incorporated in the
final documents transferring title to Buyer. 
  
 19.  Compliance:    Buyer shall
comply with all applicable laws, rules, ordinances and regulations, and shall promptly obtain or request assignment from Seller or Vintage of all permits required by public authorities in connection with the Assets. Buyer shall comply with all
covenants in the instruments in the chain of title to the Assets and with all terms and provisions, expressed or implied, in the agreements, deeds, and leases to which the Assets are subject. Seller and Vintage shall cooperate with Buyer before and
after Closing in securing the issuance and assignment to Buyer of all permits relating to the ownership or operation of the Assets. Seller and Vintage shall cooperate with Buyer after the Closing in assigning all permits. In the event of
Buyer’s noncompliance resulting in Seller’s or Vintage’s receipt of a notice of breach that could result in cancellation of any oil and gas lease included in the Assets, Seller shall have the option, but not the obligation to cure
such breach, within thirty (30) days from receipt of such notice; provided notice of Seller’s intent to cure is given to Buyer in writing within fifteen (15) days of receipt. Buyer shall indemnify and hold harmless Seller for any action taken
and upon further notice from Seller, Buyer shall have a period of thirty (30) days from receipt of further notice from Seller to reimburse Seller for any action taken. 
 

 22 

  
 20.  Indemnification and Assumption of
Obligations:    Except as otherwise provided in Paragraph 21 below and elsewhere in this Contract, to the fullest extent permitted by law, but no further, Buyer shall assume full responsibility for the Assets as of Closing
including, but not limited to, all operations, royalty payments, rental payments, suspense accounts and all accounting and reporting thereof and shall indemnify, hold harmless and defend Seller and Vintage from and against all loss, liability,
claims, fines, expenses, costs (including attorney’s fees and expenses) and causes of action, arising after the Closing, with respect thereto, including but not limited to, plugging and abandonment of existing wells, liability for previously
plugged and abandoned wells, the restoration of the surface of the land as may be required under the applicable lease or as may be required by any federal, state or local agency having jurisdiction and the removal of or failure to remove any sumps,
foundation, structures, or equipment. Except as otherwise provided in this Contract, for a period of 3 years after Closing, Seller and Vintage indemnify and hold Buyer harmless from and against all loss, liability, claims, fines, expenses, costs
(including attorney’s fees and expenses) and causes of action, arising prior to the Closing, with respect to operations, royalty payments, rental payments, suspense accounts and all accounting and reporting thereof; and any offsite disposal of
hazardous waste, or Seller’s gross negligence or willful misconduct related to the Property prior to Closing. 
  
 21.  Indemnification and Assumption of Environmental Risks:    Upon Closing and subject to Paragraph 20 above, to the fullest extent permitted by law, but no further, Buyer assumes full
responsibility for, and agrees to indemnify, hold harmless and defend Seller and Vintage from and against all loss, liability, claims, fines, expenses, costs (including attorney’s fees and expenses) and causes of action caused by or arising out
of any current or hereinafter enacted federal, state or local laws, rules, orders, regulations and amendments thereto, applicable to any waste material or hazardous substances on or included with the Assets or the presence, disposal, release or
threatened release of all waste material or hazardous substance from the Assets into the atmosphere or into or upon land or any water course or body of water, including ground water, or disposal of any waste material or hazardous substances on or
included with the Assets, whether or not attributable to Seller’s or Vintage’s activities or ownership or the activities of Seller’s or Vintages respective officers, employees or agents, or to the activities of third parties prior to,
during or after the period of Seller’s or Vintage’s ownership of the Assets. This Indemnification and Assumption shall apply to liability for any environmental response actions undertaken pursuant to the Comprehensive Environmental
Response Compensation and Liability Act (CERCLA) or any other federal, state or local law. 
  
 22.  Representations: 
  
 a.  Seller’s
Representations.    Seller represents and warrants that: 
  
 (i).  Seller:    (a) is a corporation duly organized, validly existing and in good standing under the laws of Oklahoma, (b) is duly qualified to transact business in California and in each
jurisdiction where the
 
 

 23 

 
nature and extent of its business and properties require the same in order for it to perform its obligations under this Contract; and (c) possesses all requisite authority and power to conduct
its business and execute, deliver and comply with the terms and provisions of this Contract and to perform all of its obligations hereunder. 
  
 (ii).  This Contract and the Transaction have been duly authorized by Seller and do not conflict with any provisions of any by-law or other document under which Seller is organized.

  
 (iii).  This Contract has been duly executed and delivered by Seller and constitutes
the valid and binding obligation of Seller, enforceable against it in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency or other laws relating to or affecting the enforcement of creditors’ rights
generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 
  
 (iv).  Seller represents that to the knowledge of Seller’s or Vintage’s senior management (“Seller’s Knowledge”) as of the date of this Contract and Closing,
Seller’s interests in the Assets shall be free and clear of any liens other than Permitted Encumbrances. 
  
 (v).  To Seller’s Knowledge, the Assets have been and are being operated in a prudent, workmanlike manner in accordance with industry standard and in compliance with all applicable laws, and the rules and regulations
of any agency or authority having jurisdiction. 
  
 (vi).  Buyer shall have no
responsibility whatsoever, contingent or otherwise, for any brokers’ or finders’ fees incurred by Seller relating to the Transaction. 
  
 (vii).  Not all files, records, information and materials related to the Property were provided to Buyer in the data room during Buyer’s 1999 visit. Seller or Vintage will provide Buyer,
prior to Closing all files, records, information and materials, in its possession, related to the Property. 
  
 (viii).  There are no lawsuits, claims, actions, suits or investigations, pending or threatened that would materially impede the ownership or operation of the Property except as listed in Exhibit “H”.

  
 (ix).  There are no consents to assign or preferential rights to purchase the Assets
affecting any of the Assets except as listed in Exhibit “I”. 
  
 (x).  Call on
Production.    At the Closing Date, no party shall have any call upon, option to purchase or similar rights under any agreement with respect to the production of the Property from or attributable to the Assets. 

 
 (xi).  Status and Operation of the Leases. 
  
 (1)  Except as related to the Assets set forth in Schedule 22.a.(x)(1), to the best knowledge of Seller and
Vintage, the leases associated with the Property (“Leases”) are (i) in full force and effect
 
 

 24 

 
in accordance with their respective terms, (ii) Seller is in substantial compliance with their respective terms regarding the payment of royalties, (iii) Seller is not in default in the
performance of any obligation on the part of Seller thereunder which could reasonably be expected to result in termination or cancellation thereof, and (iv) no third party claims or demands related to (i)-(iii) above have been made during the period
between the Buyer’s 1999 visit and Closing. 
  
 (2)  To the best knowledge of Seller
and Vintage, except for funds properly suspended for good cause in a separate account maintained by Seller, Seller has not received any proceeds from the sale of Hydrocarbons from the Interests which are subject to potential refund. 

 
 (3)  Seller is being paid, without bond or indemnity of any kind except the usual warranties found
in division orders and Hydrocarbon sales contracts customarily used in the petroleum industry, for its interest in the proceeds of the sale of Hydrocarbons from the Leases. 
  
 (4)  With respect to all Leases operated by Seller and Vintage, and with respect to all Leases operated by unaffiliated third parties, to the
best knowledge of Seller and Vintage, all costs incurred in connection with the operation of the Leases have been fully paid and discharged in accordance with the terms of payment therefor except (i) normal expenses incurred within the period
between Buyer’s 1999 visit and Closing and as to which Seller has not yet been billed, and (ii) costs that are being contested in good faith by Seller. 
  
 (5)  Except as to the Assets listed on schedule 22.a.(x)(1), all material Applicable Contracts are in full force and effect, and neither Seller
nor, to the best knowledge of Seller and Vintage, any other party is in default thereunder in any material respect. 
  
 (6)  To the best knowledge of Seller and Vintage, no other party to any joint operating agreement or other Applicable Contract binding on the Interests is entitled to any adjustments of past accounts at the expense
of Seller. 
  
 (7)  Seller is not obligated by virtue of a claim arising from Seller,
having prior to the Effective Date, taken gas in excess of the volume to which Seller was entitled or to deliver Hydrocarbons produced from the Interests at some future time. 
  
 (xii).  Operation of the Assets Prior to Closing.    Except as set forth in Paragraph 26 below, Seller is not aware of
any legally binding agreements presently existing, except in the ordinary course of business, that may cause Seller prior to Closing, or Buyer after Closing, to acquire assets related to the Assets or otherwise improve the Assets. 

 25 

  
 (8)  With respect to the Assets set forth in Schedule
22.a.(x)(1), to the best knowledge of Seller and Vintage, no third party claims or demands have been made during the period between the date of this Contract and Closing relating to whether the associated leases were in full force and effect in
accordance with their respective terms, or whether the related material Applicable Contracts are in full force and effect or whether any third party is in default thereunder in any material respect. To the best knowledge of Seller and Vintage, (i)
Seller is in substantial compliance with the associated Leases regarding the payment of royalties, (ii) Seller is not in default in the performance of any obligation on the part of Seller thereunder which could reasonably be expected to result in
termination or cancellation thereof, and (iii) no third party claims or demands related to (i) and (ii) above have been made during the period between the date of this Contract and Closing. 
  
 b.  Buyer’s Representations. Buyer represents and warrants that: 
  
 (i).  Buyer:    (a) is a corporation duly organized, validly existing and in good standing under the laws of Colorado,
(b) is duly qualified to transact business California and in each jurisdiction where the nature and extent of its business and properties require the same in order for it to perform its obligations under this Contract; and (c) possesses all
requisite authority and power to conduct its business and execute, deliver and comply with the terms and provisions of this Contract and to perform all of its obligations hereunder; and at Closing, Buyer shall be authorized to own and operate the
Properties under the laws and regulations of California. 
  
 (ii).  This Contract and the
Transaction have been duly authorized by Buyer and do not conflict with the provisions of any by-law or other document under which Buyer is organized. 
  
 (iii).  This Contract has been duly executed and delivered by Buyer and constitutes the valid and binding obligation of Buyer, enforceable against
it in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency or other laws relating to or affecting the enforcement of creditors’ rights generally and general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law). 
  
 (iv).  Buyer
has incurred no liability, contingent or otherwise, for brokers’ or finders’ fees relating to the Transaction for which Seller shall have any responsibility whatsoever. 
  
 (v).  Buyer is knowledgeable, competent, and experienced in the oil and gas industry and has independently evaluated and interpreted the technical
data and other information regarding the Assets prior to entering into this Contract, understands and is financially able to bear the risk associated with ownership of the Assets, and will
 
 

 26 

 
independently conduct all the due diligence investigations and reviews of all matters concerning the Assets as it deems necessary prior to Closing. Buyer acknowledges that Buyer is not relying
upon any statement or representations made by Seller concerning the present or future value of, or anticipated income, costs, or profits, if any, to be derived from the Assets and other than Seller’s representations and warranties provided in
this Contract, Buyer has relied solely upon its independent inspections, estimates, computations, evaluations, reports, studies, knowledge and other information regarding the Assets. 
  
 (vi).  Buyer is not buying the Assets for resale in any manner that would subject the transaction to requirements for registration under
applicable securities laws. 
  
 c.  Seller’s representations under this Paragraph 22
shall survive three (3) years after Closing. 
  
 23.  Operation of the Assets Prior to
Closing:    From the date hereof until Closing, Seller, if within Seller’s reasonable power to do so: (1) shall not abandon any well capable of commercial production, or release or abandon all or any part of its interest
in the Assets without Buyer’s prior written consent; (2) shall cause the Assets to be developed, maintained or operated in a manner materially consistent with prior operations; (3) shall not commence or agree to participate in any operation on
the Assets anticipated to be conducted after Closing and to cost in excess of twenty five thousand dollars ($25,000) per operation net to Buyer’s interest without Buyer’s prior written consent; (4) shall not create any lien, security
interest or other encumbrance with respect to their interest in the Assets or enter into any agreement for the sale, disposition or encumbrance of any of their interest in the Assets, or dedicate, sell, encumber or, without notifying Buyer, dispose
of any oil and gas production, except in the ordinary course of business on a contract which is terminable on not more than thirty (30) days notice; (5) shall maintain in force all insurance policies covering their interest in the Assets; (6) shall
maintain all agreements comprising or affecting the Assets in full force and effect and comply with all express or implied covenants contained therein; (7) shall pay or cause to be paid all material costs and expenses incurred in connection with
their interest in the Assets before the earlier of forty-five (45) days from receipt or the date on which they became delinquent; and (8) shall maintain in all material respects the Assets taken as a whole in good and effective operating condition.

  
 24.  Covenant Not to Sue and Alternative Dispute Resolution: 
  
 This Paragraph applies to any dispute between the parties and their affiliates, arising at any time, related to the Assets
or this Contract, including whether there is a contract between the parties. 
 

 27 

  
 Any claim or controversy related to the Assets or this Contract
of whatever nature, including an action in tort or contract or a statutory action (“Disputed Claim”), or the arbitrability of a Disputed Claim, will be resolved under the terms, conditions, and procedures of this Paragraph and will be
binding on both parties and their respective affiliates, successors and assigns. Neither party nor their affiliates may prosecute or commence any suit or action against the other party relating to any matters that are subject to the Paragraph.

  
 A claim filed by a third party against the Buyer or Seller or their affiliates will be subject to
this Paragraph. If Buyer has notified Seller before Closing of a Disputed Claim by Buyer before Closing and the Disputed Claim in not resolved prior to Closing, the Disputed Claim will not be subject to this Paragraph unless agreed to by the
parties. 
  
 Disputed Claims covered by this Paragraph shall be governed by the following procedure
to resolve such dispute: 
  
 (i).  A meeting shall be held promptly between the parties,
attended by individuals with decision-making authority regarding the dispute, to attempt in good faith to negotiate a resolution of the dispute. 
  
 (ii).  If, within thirty (30) days after such meeting, the parties have not succeeded in negotiating a resolution of the dispute, the parties shall submit the dispute to mediation in
accordance with the Commercial Mediation Rules of the American Arbitration Association. The parties shall bear equally the costs of the mediation. 
  
 (iii).  The parties will jointly appoint a mutually acceptable mediator, seeking assistance in such regard from the American Arbitration
Association if they have been unable to agree upon such appointment within twenty (20) days from the conclusion of the negotiation period. 
  
 (iv).  The parties shall participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days. If the parties are not successful in resolving the
dispute through mediation, then the parties shall settle the dispute through binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction. The place of arbitration shall be Los Angeles, California. The arbitrator(s) are not empowered to award damages in excess of actual damages, such as, but not limited to punitive damages. 

 28 

  
 BINDING ARBITRATION 
  
 NOTICE:    BY INITIALING IN THE SPACE PROVIDED BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDING THE “ALTERNATIVE
DISPUTE RESOLUTION” PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALLING IN THE SPACE PROVIDED BELOW YOU
ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ALTERNATIVE DISPUTE RESOLUTION” PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY
BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. 
  
 WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE “ALTERNATIVE DISPUTE RESOLUTION” PROVISON TO NEUTRAL ARBITRATION.

  
 SELLER
                                        
                    BUYER                  
                                        
               
  
 25.  Miscellaneous: 
  
 25.1.  Force
Majeure:    In the event all or part of the Assets, including fixtures and improvements, is damaged or destroyed by fire or other calamity prior to Closing, Seller shall have the option, but not the obligation, of repairing
the damage at its sole cost or deleting the damaged Assets from the proposed sale and determining the value of the property in the manner prescribed in Paragraph 15.e.(ii). 
  
 25.2.  Preferential Rights and Consents to Assign: 
  
 a.  Preferential Rights to Purchase or Rights of First Refusal:    Attached hereto as Exhibit “I” is a list
of Properties containing preferential rights to purchase, first rights of refusal or consents to assign from Seller to Buyer (collectively “Consents”). Assets subject to Consents are subject to Buyer obtaining, at Buyer’s expense, a
waiver of such right or expiration of the appropriate time period for asserting such right without any exercise thereof prior to Closing. Seller shall not be liable to Buyer by reason of inability or failure to obtain any waiver of Consents. Seller
shall give reasonable cooperation to Buyer in obtaining
 
 

 29 

 
such Consents, including sending the first requests, but other than as specified elsewhere in this Contract Seller shall not be liable to Buyer if Consents are not obtained. Within three (3)
business days of the execution of this Contract, Seller shall use its best efforts to (1) notify the holders of the Consent that it intends to transfer the Assets to Buyer, (2) provide them with any information about the transfer of the Assets to
which they are contractually entitled, and (3) ask the holders of the Consents to consent to or waive the preferential right of purchase of the assignment of the affected Assets to Buyer, and (4) provide to Buyer copies of Seller’s notification
to the holders within five (5) business days. Seller shall promptly notify Buyer when any preferential rights are exercised, waived or deemed waived, any Consents are given, denied or the requisite time periods have elapsed without any rights being
exercised or Consent being received. 
  
 b.  In the event Buyer elects to waive its rights
to terminate this agreement pursuant to Paragraph 12 and Close without first having obtained all such Consents, BUYER AGREES TO AND SHALL PROTECT, DEFEND, INDEMNIFY, SAVE, HOLD HARMLESS, DISCHARGE AND RELEASE SELLER AND VINTAGE FROM AND AGAINST
ANY AND ALL DEMANDS, CLAIMS, SUITS, OR CAUSES OF ACTION (INCLUDING, BUT NOT LIMITED TO ANY JUDGMENTS, LOSSES, LIABILITIES, EXPENSES, INTEREST, LEGAL FEES, AND DAMAGES, WHETHER IN LAW OR EQUITY, WHETHER GENERAL, SPECIAL, PENAL, STAUTORY, OR
CONSEQUENTIAL, AND WHETHER IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATED TO THE ASSIGNMENT OF THE ESCROW PROPERTIES ASSIGNED WITHOUT CONSENT.  
  
 25.3.  Fees, Costs and Expenses:    Except as otherwise provided herein, all fees, costs and expenses incurred by
Seller or Buyer relating to this Contract shall be paid by the party incurring the same. 
  
 25.4.  Notices:    All notices and consents to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, telexed with receipt acknowledged, mailed
by registered mail, postage prepaid, or delivered by a recognized commercial courier to the party at the address set forth within this Paragraph 25.4. or such other address as any party shall have designated for itself by ten (10) days’ prior
written notice to the other party. 
 

 30 

  
 
	 Seller
 
	  	 Buyer
 

	 Vintage Petroleum California, Inc.
 	  	 Greka SMV, Inc.,
 
	 110 West Seventh Street
 	  	 3201 Airpark Drive, Suite 201
 
	 Tulsa, Oklahoma 74119
 	  	 Santa Maria, CA 93455
 
	 Attn: General Counsel
 	  	 Attn: Randeep S. Grewal
 
	 FAX 918-878-5783
 	  	 FAX 805-347-1072
 

 
  
 25.5.  Severability:    In the event any covenant, condition, or provision contained herein is held to be invalid by a court of competent jurisdiction, the invalidity of any such covenant,
condition or provision shall in no way affect any other covenant, condition or provision contained herein; provided, however, that any such invalidity does not materially prejudice either the Buyer or Seller in its respective rights and obligations
contained in the valid covenants, conditions, and provisions of this Contract. 
  
 25.6.  Construction of Ambiguity:    In the event of any ambiguity in any of the terms or conditions of this Contract, including any exhibits whether or not placed of record, such ambiguity shall
not be construed for or against any party hereto on the basis that such party did or did not author the same. 
  
 25.7.  Audit:    Buyer and Seller, for itself and for its directors, partners, employers, and agents warrants, covenants and represents to the other that, except as otherwise expressly provided in
this Contract, neither it nor any of its directors, employees, partners or agents has given to or received from the other party, for any of such party’s directors, partners, employees or agents any commission, fee, rebate, gift or other thing
or service in connection with this Contract, and Buyer and Seller each agree that its books and records shall be subject to reasonable audit by the other as may be required to substantiate compliance with this provision. 
  
 25.8.  Confidentiality:    Buyer acknowledges that all information furnished or
disclosed pursuant hereto must remain confidential. Buyer may disclose such information only to its subsidiaries or affiliates, agents, advisors or representatives (herein “Representatives”) who have agreed in writing, prior to being given
access to such information, to be bound by the terms of this Contract. An original of the signed agreement(s) of the Representatives will be furnished to Seller upon request. In the event that Closing of the transactions contemplated by this
Contract does not occur for any reason, Buyer and its Representatives shall promptly return to Seller or destroy any and all materials and information, including any notes, summaries, compilations, analyses or other material derived from the
inspection or evaluation of such material and information, without retaining copies thereof, except for the purposes of any action instituted to enforce the terms of this Contract. Notwithstanding the provisions of Paragraph 25.10., nothing in this
Paragraph 25.8. and this Contract shall have the effect of terminating, modifying or superseding any
 
 

 31 

 
confidentiality agreement entered into by and between Buyer and Seller in relation to this Contract. 
  
 Prior to Closing, without prior consent of the other Party (which consent may not be unreasonably withheld), neither Party may make any public disclosure or issue any press release or other
communication regarding the subject matter of this Agreement, whether directly or indirectly. A Party shall have 48 hours exclusive of Saturdays, Sundays and legal holidays, to respond to a proposed disclosure, press release or communication.
Notwithstanding the foregoing, a Party may make such disclosures as are required by applicable law or by the rules of a relevant stock exchange, provided however that a Party shall promptly advise the other Parties that such disclosure is so
mandated. For purposes of consultation under this section, the following individuals are designated as primary contacts: 
  
 
	 For Seller
 
	  	 For Buyer
 

	 Bob Phaneuf
 	  	 Richard A. L’Altrelli
 
	 Vice President
 	  	 Director of Corporate Development
 
	 Corporate Development
 	  	 212-218-4680
 
	 918-592-0101
 	  	  

 
  
 25.9.  Time of
Performance:    Time is of the essence of this Contract and each and every provision hereof which in time or performance is a factor. 
  
 25.10.  Entire Agreement:    This Contract constitutes the entire agreement between Seller and Buyer with respect to
the subject matter hereof, superseding all prior statements, representations, discussions, agreements and understandings relating to such subject matter. No amendment shall be binding unless in writing and signed by representatives of both parties.
Headings used in this Contract are only for convenience of reference and shall not be used to define the meaning of any provision. This Contract is for the benefit of Seller and Buyer only and not for the benefit of third parties. 

 
 25.11.  Assignment:    Prior to Closing, neither party may assign this
Contract to another party, except to an affiliate, without the express written consent of the other party, which consent shall not be unreasonably withheld, and thereafter such assignee will exercise and perform the assigning party’s rights and
duties under this Contract; provided, however, that the assigning party shall remain responsible to the other party in all respects and will defend, indemnify and hold the other party harmless from any liability, damages or costs including
reasonable attorney’s fees, that may arise as a result of the assignment. 
 

 32 

  
 25.12.  Removal of Signs and
Markers:    Buyer shall, at its own expense and within 90 days after Closing either: (i) remove or cause to be removed all references to Seller or Vintage (including its name or logo and those of is predecessors) from all
lease and well signs and placards which identify or indicate Seller’s or Vintage’s prior ownership in the Assets and place Buyers name and logo, or those of its designated operator, whichever is applicable thereon, (ii) remove said lease
and well signs and placards and erect or install signs and placards as may be required by state or other governmental agencies indicating Buyer or its designated operator, whichever is applicable, as the owner–operator of the Assets and/or
property or (iii) any combination of (i) and (ii) above, so long as any reference to the Seller or Vintage is removed from all lease and well signs and placards. 
  
 Buyer acknowledges that Seller is relying on Buyer to remove references of Seller and Vintage from all signs and placards. If Buyer fails to comply with this paragraph within thirty (30) days notice of
breach by Seller, then Seller shall be entitled to the costs incurred in enforcing this paragraph. 
  
 25.13.  Governing Law:    This Contract shall be governed by the law of the State of California without regard to rules concerning conflicts of law. 
  
 25.14.  Waiver:    The waiver or failure of either party to enforce any provision of
this Contract shall not be construed or operate as a waiver of any further breach of such provision or of any other provision of this Contract. 
  
 25.15.  Survival of Agreements:    Except as otherwise specifically provided in this Contract, all covenants, agreements, representations, guaranties and warranties
shall survive the execution of this Contract, Closing, the delivery and recordation of any deeds, assignments or bill of sales which convey the Assets from Seller to Buyer. 
  
 25.16.  Successors and Assigns:    This Contract and the provisions herein, which shall survive Closing, shall bind and
inure to the benefit and burden of the heirs, successors and assigns of the parties hereto. 
  
 25.17.  Recording and Filing:    Buyer shall be solely responsible for recording of the assignments, deeds, and any other document related to the conveyance of the Assets, and shall promptly
furnish Seller copies of the recorded originals or with the recording information, dependent upon whether the applicable governmental body returns or retains the recorded originals. Seller shall be responsible for all filings with state and federal
agencies for change of operator, and shall promptly provide Buyer with the original approved copies of all such filings, or confirmation thereof. All recording and filing shall be at the sole cost and expense of Buyer and Buyer shall promptly
reimburse Seller for all such costs upon presentation of appropriate invoices. 
 

 33 

  
 25.18  Further
Assurances.    Buyer and Seller agree to execute and deliver to the other all division orders, transfer orders and all other documents necessary to fully vest in Buyer the rights, obligations and benefits acquired pursuant to
this Contract. If requested by Buyer, Seller and Vintage agree to provide within a reasonable time access to their financial information for the Properties for each of the three years ending December 31, 2000, 1999, and 1998 so that Buyer may
perform a look back audit. 
  
 25.19  Attorney’s Fees and
Costs.    If any action is instituted to enforce the terms of this Contract, the prevailing party shall be entitled to recover from the losing party all attorney’s fees and costs incurred in such action. 

 
 26.  Additional Plugging, Abandonment and Remediation Requirements: 
  
 a.  Zaca Field: 
  
 (i).  Buyer acknowledges that the Assets located in the Zaca Field are subject to that certain Purchase and Sale Agreement by and between Texaco
Exploration and Production Inc. and Vintage Petroleum, Inc. dated May 10, 1995 and in particular to the provisions set forth in Sections 2.6 and 4.2(b) contained therein. Pursuant to such Sections, Buyer hereby agrees to plug and abandon all idle
wells located in Zaca field, but in any event no less than twenty-four (24) wells, by December 31, 2004. Buyer shall plug no less than four (4) wells in each year prior to 2005. Buyer shall provide Seller with supporting documentation in the form of
paid invoices or other similar proof (reasonably acceptable to Seller) of costs actually incurred and governmental approvals upon such abandonments as soon as practical in order that Seller may furnish such to Texaco. Buyer hereby agrees to
indemnify, hold harmless and defend Seller and its affiliates from and against all loss, liability, claims, fines, expenses, contractual penalty, costs (including attorney’s fees and expenses) and causes of action directly or indirectly caused
by or arising out of any breach by Buyer of this provision. 
  
 (ii).  Buyer acknowledges
the remediation requirements set for in the Surface Lease Agreement dated November 28, 1995 by and between Firestone Farming Company Limited Partnership and Vintage Petroleum, Inc. Buyer hereby agrees to perform the obligation set forth in Paragraph
3.b. of said Lease to remediate the lower sump as described in Exhibit “D” of such Lease no later than September 30, 2001. 
  
 b.  Cat Canyon, Los Flores, Clark Avenue, Santa Maria Valley Fields: 
 

 34 

  
 (i).  Buyer shall be responsible for remediating the
two remaining sumps located on the Nicholson lease (4.29 acre production site) in accordance with the October 14, 1997 Letter of Intent by and between Vintage Petroleum, Inc. and O.J. Portwood, LLC. 
  
 (ii).  Buyer shall be responsible for completing the remediation requirements set forth in the Arbitration Award
in the Ontiveros v. Shell case and remediation of diluent leaks identified as a result of the Work Plan for Characterization of KD Impacted Soil on the California Lease performed by Waterstone Environmental, Inc.  

 
 (iii).  Seller has remediated the soil on the Edmonston lease, however, the Santa Barbara County
Protection Services Division has not provided written releases to close out the remediation. Buyer shall be responsible for any remaining remediation on the Edmonston lease imposed by the County to close out the project. 
  
 (iv).  Buyer shall be responsible for any remediation work required to be done on the soil stockpile located on
the United California, Security and Harbordt properties. 
  
 SUBJECT TO BUYER’S RIGHTS UNDER PARAGRAPH 18,
BUYER WARRANTS THAT IT HAS REVIEWED THE ESTIMATED COMPLIANCE COSTS REPRESENTED BY THIS PARAGRAPH AND HAS A FULL UNDERSTANDING OF THE WORK TO BE PERFORMED AND THE COST OF COMPLIANCE AND THAT BUYER HAS INCLUDED SUCH COSTS IN THE PURCHASE PRICE. BUYER
RECOGNIZES THAT BUYER’S AGREEMENT UNDER THIS PARAGRAPH WAS A MATERIAL INDUCEMENT TO SELLER TO ENTER INTO THIS AGREEMENT. IN ADDITION TO ANY OTHER PROVISION CONTAINED IN THIS AGREEMENT, BUYER FOREVER RELEASES, INDEMNIFIES AND HOLDS HARMLESS
SELLER FROM ANY AND ALL COSTS, WHETHER KNOWN OR UNKNOWN, ASSOCIATED WITH ANY OF THE REQUIREMENTS SET FORTH IN THIS PARAGRAPH. 
  
 27.  Security for Plugging and Abandonment:    Buyer shall obtain insurance to assure Buyer’s performance of its obligations in Paragraph’s 20, 21 and 26 relating specifically to the
Property conditions and plugging and abandonment obligations. Such insurance shall have policy limits of Ten Million Dollars ($10,000,000) and shall be pre-paid by Seller for a period of five (5) years. Buyer must obtain Seller’s approval of
the terms of such insurance policy and the company or companies underwriting such prior to Closing. Seller shall be named an additional insured in such insurance, which shall be primary to any insurance of Seller that may apply. No “other
insurance” provision shall be applicable to Seller and its affiliates, subsidiaries and/or interrelated companies, by virtue of having been named as additional insured or loss payee under any policy of insurance. Buyer shall obtain
 
 

 35 

 
from its insurer(s) a waiver of subrogation against Seller in the insurance policy set forth in this Paragraph 27. If the Parties are unable to agree on the terms of insurance, either Party shall
have the option to terminate this Contract without any liability to the other party 
  
 28.  Casualty
Losses:    If, prior to Closing Date, any facility or equipment included within the Assets to be transferred by Seller is damaged or destroyed by fire, flood, storm or other casualty (hereinafter called “Casualty
Loss”), Seller shall notify Buyer immediately. If such Casualty Loss in Buyer’s reasonable opinion is greater than five percent (5%) of the Purchase Price, excluding any insurance proceeds, Buyer shall be entitled to an adjustment in the
Purchase Price. If the Casualty Loss in Buyer’s reasonable opinion is greater than fifteen percent (15%) of the Purchase Price, both parties shall have the option to terminate this Contract without any liability to the other party. If Closing
occurs, Buyer shall receive any insurance proceeds payable to Seller with respect to such Casualty Loss. 
  
 IN
WITNESS WHEREOF the undersigned parties to this Contract have executed it as of the day and year first mentioned above. 
  
 
	 BUYER
 	  	 SELLER
 
	 
	 GREKA SMV, INC.
 	  	 VINTAGE PETROLEUM CALIFORNIA, INC.
 
	 
	 By:                        /S/    RANDEEP S.
GREWAL
 
	  	 By:                            /s/    ROBERT W.
COX
 

	         Randeep S. Grewal
         Chairman, CEO and President
 	  	         Robert W. Cox
         Vice President
 

 
 

 36

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