Grewal Randeep S, et al. – ‘SC 13D/A’ on 5/28/03 re: Greka Energy Corp – EX-1

On:  Wednesday, 5/28/03, at 5:30pm ET   ·   Accession #:  1050502-3-439   ·   File #:  5-42492

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Amendment to General Statement of Beneficial Ownership   —   Schedule 13D
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D/A    Amendment to General Statement of Beneficial           8     27K 
                          Ownership                                              
 2: EX-1        Merger Agreement                                      57    218K 
 3: EX-99       Agreement                                              1      6K 

EX-1   —   Merger Agreement
Exhibit Table of Contents

EX-1
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                                                                       EXHIBIT 1

MERGER AGREEMENT

by and among

 ALEXI HOLDINGS LIMITED,

 ALEXI CORPORATION

 and

GREKA ENERGY CORPORATION

May 27, 2003

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MERGER AGREEMENT

This Merger Agreement ("Agreement") is made as of May 27, 2003, by and
among Alexi Holdings Limited, a Cayman Islands company ("Parent"), Alexi        
Corporation, a Colorado corporation and a wholly-owned subsidiary of Parent     
("Merger Sub"), and Greka Energy Corporation, a Colorado corporation            
("Company"). Certain capitalized terms used in this Agreement are defined in    
Exhibit A.                                                                      

PRELIMINARY STATEMENTS

   A. Parent, Merger Sub and Company intend to effect a merger of Merger Sub
into Company in accordance with this Agreement and the Colorado Business        
Corporation Act ("Merger"). Upon consummation of the Merger, Merger Sub will    
cease to exist, and Company will become a wholly-owned Subsidiary of Parent.    

 B. The respective boards of directors of Parent, Merger Sub and Company
have approved this Agreement and the Merger.                                    

 AGREEMENT

The parties, intending to be legally bound, agree as follows:         

Article 1 

DESCRIPTION OF TRANSACTION

1.1  MERGER OF MERGER SUB INTO COMPANY                                          

   Upon the terms and subject to the conditions set forth in this Agreement,
at the Effective Time (as defined in Section 1.3), Merger Sub shall be merged   
with and into Company, and the separate existence of Merger Sub shall cease.    
Following the Effective Time, Company shall continue as the surviving           
corporation ("Surviving Corporation"). The name of Surviving Corporation shall  
be Greka Energy Corporation.                                                    

1.2  EFFECT OF THE MERGER                                                       

  The Merger shall have the effects set forth in this Agreement and in the
applicable provisions of the Colorado Business Corporation Act ("CBCA").        

1.3  CLOSING; EFFECTIVE TIME                                                    

  The consummation of the Contemplated Transactions ("Closing") shall take
place at the offices of Baker & McKenzie, 2001 Ross Avenue, 2300 Trammell Crow  
Center, Dallas, Texas at 10:00 a.m. (or at such other place and time as the     
parties may agree) on a date to be designated by Parent ("Closing Date"), which 
shall be no later than the fifth business day after the satisfaction or waiver  
of the last to be satisfied or waived of the conditions set forth in Articles 6,
7 and 8 (other than those conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of such conditions).     

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Subject to the provisions of this Agreement, articles of merger satisfying the  
applicable requirements of the CBCA ("Articles of Merger") shall be duly        
executed by Company and Merger Sub and, simultaneously with or as soon as       
practicable following Closing, filed with the Secretary of State of the State of
Colorado ("Secretary of State"). The Merger shall become effective upon the     
later of: (a) the date and time of the filing of the Articles of Merger with the
Secretary of State, or (b) such later date and time as may be specified in the  
Articles of Merger with the prior written consent of Parent ("Effective Time"). 

1.4  ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS               

At the Effective Time:                                                

 (a) the Articles of Incorporation of Surviving Corporation shall be the
Articles of Incorporation of Company;                                           

     (b) the Bylaws of Surviving Corporation shall be the Bylaws of Company; and

   (c) the directors and officers of Surviving Corporation immediately after
the Effective Time shall be the respective individuals who are directors and    
officers of Merger Sub immediately prior to the Effective Time.                 

1.5  CONVERSION OF SHARES                                                       

   (a) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time whether or not subject to transfer restrictions or  
rights of Company to reacquire such shares (other than (i) shares of Company    
Common Stock held in Company's treasury or by any of Company's Subsidiaries,    
(ii) shares of Company Common Stock held by Parent or Merger Sub and (iii)      
Dissenting Shares) shall, by virtue of the Merger and without any action on the 
part of Parent, Merger Sub, Company or the holder thereof, be cancelled and     
extinguished and be converted into the right to receive, pursuant to Section    
1.6, $6.25 per share ("Merger Consideration"), payable in cash to the holder    
thereof, without interest thereon, upon the surrender of the Company Stock      
Certificate formerly representing such shares of Company Common Stock, less any 
required withholding of Taxes.                                                  

(b) Each share of Merger Sub Common Stock issued and outstanding      
immediately prior to the Effective Time shall, by virtue of the Merger and      
without any action on the part of Parent, Merger Sub or Company, be converted   
into and become one fully paid and nonassessable share of common stock, no par  
value per share, of Surviving Corporation.                                      

   (c) Each share of Company Common Stock held in the treasury of Company or
by any of Company's Subsidiaries and each share of Company Common Stock held by 
Parent or Merger Sub (or their respective Subsidiaries) immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Parent, Merger Sub, Company or the holder thereof, be cancelled, retired and 
cease to exist and no payment shall be made with respect thereto.               

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     (d) Immediately prior to the Effective Time, Company shall take all actions
necessary so that all warrants then outstanding to purchase shares of Company   
Common Stock heretofore granted under any arrangement or agreement shall become 
fully exercisable (whether or not currently exercisable) and, at the Effective  
Time, each warrant not theretofore exercised shall be canceled. Subject to the  
following sentence and Sections 1.5(f) and (g), each holder of a warrant that is
canceled pursuant to the preceding sentence shall, in respect of each such      
warrant, be entitled to a cash payment by Surviving Corporation in an amount    
equal to (i) the excess, if any, of (x) the Merger Consideration over (y) the   
applicable exercise price per share of Company Common Stock subject to such     
warrant, multiplied by (ii) the number of shares of Company Common Stock for    
which such warrant was exercisable immediately prior to such cancellation,      
provided that the foregoing shall not require any action that violates the      
warrant. The foregoing cash payment shall be made by the Surviving Corporation  
upon or as soon as practicable after (A) such holder's surrender of all warrants
held by such holder or (B) delivery by such holder of such holder's written     
agreement or acknowledgement that all warrants held by such holder have been    
cancelled as a result of the Merger in exchange for such cash payment; provided,
however, that if it is determined that compliance with this Section 1.5(d) would
cause any individual subject to Section 16 of the Exchange Act to become subject
to the profit recovery provisions thereof, any warrants held by such individual 
will be cancelled or purchased as the case may be, as promptly thereafter as    
possible so as not to subject such individual to any liability pursuant to      
Section 16.                                                                     

     (e) Immediately prior to the Effective Time, Company shall take all actions
necessary so that all options then outstanding to purchase shares of Company    
Common Stock ("Company Stock Options") heretofore granted under any plan,       
arrangement or agreement (collectively, "Option Plans") shall become fully      
vested and exercisable (whether or not currently exercisable) and, at the       
Effective Time, each Company Stock Option not theretofore exercised shall be    
canceled. Subject to the following sentence and Sections 1.5(f) and (g), each   
holder of a Company Stock Option that is canceled pursuant to the preceding     
sentence shall, in respect of each Company Stock Option, be entitled to a cash  
payment by Surviving Corporation in an amount equal to (i) the excess, if any,  
of (x) the Merger Consideration over (y) the applicable exercise price per share
of Company Common Stock subject to such Company Stock Option, multiplied by (ii)
the number of shares of Company Common Stock for which such Company Stock Option
was exercisable immediately prior to such cancellation, provided that the       
foregoing shall not require any action that violates the Option Plans. The      
foregoing cash payment shall be made by the Surviving Corporation upon or as    
soon as practicable after (A) such holder's surrender of all Company Stock      
Options held by such holder or (B) delivery by such holder of such holder's     
written agreement or acknowledgement that all Company Stock Options held by such
holder have been cancelled as a result of the Merger in exchange for such cash  
payment; provided, however, that if it is determined that compliance with this  
Section 1.5(e) would cause any individual subject to Section 16 of the Exchange 
Act to become subject to the profit recovery provisions thereof, any Company    
Stock Options held by such individual will be cancelled or purchased as the case
may be, as promptly thereafter as possible so as not to subject such individual 
to any liability pursuant to Section 16.                                        

     (f) The Surviving Corporation shall be entitled to deduct and withhold from
the amounts otherwise payable pursuant to this Section 1.5 to any holder of     
Company Stock Options or of warrants to purchase Company Common Stock such      
amounts as the Surviving Corporation is required to deduct and withhold with    

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respect to the making of such payment under the Code, or any provision of state,
local or foreign tax Law. To the extent that amounts are so deducted and        
withheld by the Surviving Corporation, such withheld amounts shall be treated   
for all purposes of this Agreement as having been paid to the holder of the     
Company Stock Options in respect of which such deduction and withholding was    
made by the Surviving Corporation.                                              

     (g) Except as provided herein or as otherwise agreed to by the parties, and
to the extent permitted by the Option Plans, (i) the Option Plans shall         
terminate as of the Effective Time and the provisions in any other plan, program
or arrangement providing for the issuance or grant by Company or any of its     
Subsidiaries of any interest in respect of the capital stock of the Company or  
any of its Subsidiaries shall be deleted as of the Effective Time and (ii)      
Company will use all reasonable efforts to ensure that following the Effective  
Time no holder of Options or any participant in the Option Plans or any other   
such plans, programs or arrangements shall have any right thereunder to acquire 
any equity securities of Company, Surviving Corporation or any Subsidiary       
thereof.                                                                        

1.6  EXCHANGE OF CERTIFICATES                                                   

   (a) On or prior to the Closing Date, Parent shall select a reputable bank
or trust company to act as exchange agent in connection with the Merger         
("Exchange Agent"). Promptly after the Effective Time, Parent shall deposit with
the Exchange Agent the funds necessary to make the payments contemplated by     
Section 1.5 ("Exchange Fund"). For purposes of determining the amount of the    
Exchange Fund, Parent shall assume that no holder of shares of Company Common   
Stock will perfect its right to appraisal (as described in Section 1.8).        

(b) As soon as reasonably practicable after the Effective Time, Parent
shall cause the Exchange Agent to mail to the record holders of Company Stock   
Certificates (i) a letter of transmittal in customary form and containing such  
provisions as Parent may reasonably specify (including a provision confirming   
that delivery of Company Stock Certificates shall be effected, and risk of loss 
and title to Company Stock Certificates shall pass, only upon delivery of such  
Company Stock Certificates to the Exchange Agent), and (ii) instructions for use
in effecting the surrender of Company Stock Certificates in exchange for payment
therefor. Upon surrender of a Company Stock Certificate to the Exchange Agent   
for exchange, together with a duly executed letter of transmittal and such other
documents as may be reasonably required by the Exchange Agent or Parent, (x) the
holder of such Company Stock Certificate shall be entitled to receive in        
exchange therefor (as promptly as practicable) cash in an amount equal to the   
product of the number of shares of Company Common Stock represented by such     
Company Stock Certificate and the Merger Consideration, without interest        
thereon, less the required withholding of Taxes, and (y) each Company Stock     
Certificate so surrendered shall be canceled. Until surrendered as contemplated 
by this Section 1.6, each Company Stock Certificate (other than Company Stock   
Certificates representing Dissenting Shares and shares of Company Common Stock  
canceled pursuant to Section 1.5(c)) shall be deemed, from and after the        
Effective Time, to represent only the right to receive for each share of Company
Common Stock represented thereby the Merger Consideration provided for under    
this Agreement, without any interest thereon. If any Company Stock Certificate  
shall have been lost, stolen or destroyed, Surviving Corporation may, in its    
discretion and as a condition precedent to the issuance of the Merger           
Consideration, require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such  
sum as Surviving Corporation may reasonably direct) as indemnity against any    
claim that may be made against the Exchange Agent, Parent or Surviving          
Corporation with respect to such Company Stock Certificate.                     

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(c) After the Effective Time, there shall be no transfers on the stock
transfer books of Surviving Corporation of the shares of Company Common Stock   
that were outstanding immediately prior to the Effective Time. If, after the    
Effective Time, Company Stock Certificates are presented to Surviving           
Corporation, they shall be cancelled and exchanged for the Merger Consideration 
in accordance with the procedures set forth in this Section 1.6.                

(d) From and after the Effective Time, the holders of Company Stock   
Certificates evidencing ownership of shares of Company Common Stock outstanding 
immediately prior to the Effective Time shall cease to have any rights with     
respect to such shares of Company Common Stock except as otherwise provided     
herein or by applicable Law. Such holders shall have no rights, after the       
Effective Time, with respect to such shares of Company Common Stock except to   
surrender such certificates in exchange for the Merger Consideration pursuant to
this Agreement or to perfect any rights of appraisal as a holder of Dissenting  
Shares that such holders may have pursuant to Section 7-113-101 et seq. of the  
CBCA.                                                                           

(e) Any portion of the Exchange Fund (including the proceeds of any   
investments thereof) that remains undistributed to holders of Company Stock     
Certificates as of the date 180 days after the date on which the Effective Time 
occurs shall be delivered to Parent upon demand, and any holders of Company     
Stock Certificates who have not theretofore surrendered their Company Stock     
Certificates in accordance with this Section 1.6 shall thereafter look only to  
Parent for satisfaction of their claims for Merger Consideration.               

   (f) Each of the Exchange Agent, Parent and Surviving Corporation shall be
entitled to deduct and withhold from any consideration payable or otherwise     
deliverable pursuant to this Agreement to any holder or former holder of Company
Common Stock such amounts as may be required to be deducted or withheld         
therefrom under the Code or any provision of state, local or foreign Tax Law or 
under any other applicable Law. To the extent such amounts are so deducted or   
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the Person to whom such amounts would otherwise have been   
paid.                                                                           

   (g) Notwithstanding anything to the contrary in this Section 1.6, none of
the Exchange Agent, Parent or Surviving Corporation shall be liable to a holder 
of a Company Stock Certificate for any amount properly delivered to a public    
official pursuant to any applicable abandoned property, escheat or similar law. 
If Company Stock Certificates are not surrendered prior to two years after the  
date on which the Effective Time occurs, unclaimed funds payable with respect to
such Company Stock Certificates shall, to the extent permitted by applicable    
Law, become the property of Surviving Corporation, free and clear of all claims 
or interest of any Person previously entitled thereto.                          

1.7  FURTHER ACTION                                                             

    If, at any time after the Effective Time, any further action is determined
by Parent to be necessary or desirable to carry out the purposes of this        
Agreement or to vest Surviving Corporation with full right, title and possession
of and to all rights and property of Merger Sub and Company, the officers and   
directors of Surviving Corporation and Parent shall be fully authorized (in the 
name of Merger Sub, in the name of Company or otherwise) to take such action.   

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1.8  APPRAISAL RIGHTS                                                           

    Notwithstanding anything in this Agreement to the contrary, Company Common
Stock outstanding immediately prior to the Effective Time and held by a holder  
who has delivered a written demand for appraisal of such shares in accordance   
with Section 7-113-101 et seq. of the CBCA, if such sections provide for        
appraisal rights for such shares of Company Common Stock in the Merger          
("Dissenting Shares"), shall not be converted as provided in Section 1.5 of this
Agreement, unless and until such holder fails to perfect or effectively         
withdraws or loses his right to appraisal and payment under the CBCA. If, after 
the Effective Time, any such holder fails to perfect or effectively withdraws or
loses his right to appraisal, such Dissenting Shares shall thereupon be treated 
as if they had been converted as of the Effective Time into the right to receive
the Merger Consideration as provided in Section 1.5 hereof, together with any   
dividends or distributions payable thereon, and to which such holder is         
entitled, without interest thereon. Company shall give Parent prompt notice of  
any demands received by Company for appraisal of Company Common Stock, and prior
to the Effective Time, Parent shall have the right to participate in all        
negotiations and Proceedings with respect to such demands. Prior to the         
Effective Time, Company shall not, except with the prior written consent of     
Parent, make any payment with respect to, or offer to settle, any such demands. 
Parent covenants and agrees that, in the event any cash payment is to be made   
following the Effective Time in respect of Dissenting Shares (as a result of a  
judgment, settlement or otherwise), Parent shall contribute to the capital of   
Surviving Corporation an amount sufficient to make such payment, and no funds or
other assets of Surviving Corporation shall, directly or indirectly, be used for
such purpose.                                                                   

Article 2 

 REPRESENTATIONS AND WARRANTIES OF COMPANY

  Company represents and warrants to Parent and Merger Sub that, except as
set forth in the Company Disclosure Schedule:                                   

2.1  ORGANIZATION AND GOOD STANDING                                             

(a) Company and each of its Subsidiaries (collectively, "Acquired     
Companies") are corporations or limited partnerships duly organized, validly    
existing and in good standing under the laws of their respective jurisdictions  
of organization, with full corporate power and authority to conduct their       
respective businesses as now being conducted, to own or use the respective      
properties and assets that they purport to own or use and to perform all their  
respective obligations under Company Contracts, except where the failure to have
such power or authority could not reasonably be expected to, individually or in 
the aggregate, result in a Company Material Adverse Effect. Each of the Acquired
Companies is duly qualified to do business as a foreign corporation or limited  
partnership and is in good standing under the laws of each state or other       
jurisdiction in which either the ownership or use of the properties owned or    
used by it, or the nature of the activities conducted by it, requires such      
qualification, except where the failure to be so qualified could not reasonably 
be expected to, individually or in the aggregate, result in a Company Material  
Adverse Effect.                                                                 

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   (b) Exhibit 21.1 of the Company's Annual Report on Form 10-K for the year
ended December 31, 2002 lists all Acquired Companies and indicates as to each   
its jurisdiction of organization and, except in the case of Company, its        
shareholders or partners. Company has delivered to Parent copies of the         
Governing Documents of each of the Acquired Companies, as currently in effect.  

(c) Company has delivered to Parent copies of the charters of each    
committee of Company's board of directors and any code of conduct or similar    
policy adopted by Company.                                                      

2.2  AUTHORITY; ENFORCEABILITY; NO CONFLICT                                     

    (a) Company has all necessary corporate power and authority to execute and
deliver this Agreement and the other agreements referred to in this Agreement,  
to perform its obligations hereunder and thereunder and to consummate the       
Contemplated Transactions. The execution and delivery of this Agreement by      
Company and the consummation by Company of the Contemplated Transactions have   
been duly and validly authorized by all necessary corporate action and no other 
corporate proceedings on the part of Company are necessary to authorize this    
Agreement or to consummate the Contemplated Transactions (other than, with      
respect to the Merger, the approval and adoption of this Agreement by the       
holders of a majority of the then outstanding shares of Company Common Stock    
("Required Company Shareholder Vote") and the filing of appropriate merger      
documents as required by the CBCA). The affirmative vote of a majority of the   
shares of Company Common Stock outstanding as of the record date for the Company
Shareholders' Meeting is the only vote of the holders of any class or series of 
the Company's securities necessary to approve this Agreement and the            
Contemplated Transactions. This Agreement has been duly and validly executed and
delivered by Company and constitutes the legal, valid and binding obligation of 
Company, enforceable against Company in accordance with its terms.              

(b) Neither the execution and delivery of this Agreement nor the      
consummation of any of the Contemplated Transactions do or will, directly or    
indirectly (with or without notice or lapse of time or both), (i) Contravene,   
conflict with or result in a violation of (A) any provision of the Governing    
Documents of any of the Acquired Companies, or (B) any resolution adopted by the
board of directors, shareholders or partners of any of the Acquired Companies;  
(ii) Contravene, conflict with or result in a violation of, or give any         
Governmental Body or other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under, any Law or   
Order to which any of the Acquired Companies, or any of the assets owned or used
by any of the Acquired Companies, is or may be subject; (iii) Contravene,       
conflict with or result in a violation of any of the terms or requirements of,  
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,   
terminate or modify, any Governmental Authorization that is held by any of the  
Acquired Companies, or that otherwise relates to the business of, or any of the 
assets owned or used by, any of the Acquired Companies; (iv) cause any of the   

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Acquired Companies to become subject to, or to become liable for the payment of,
any Tax; (v) cause any of the assets owned by any of the Acquired Companies to  
be reassessed or revalued by any Governmental Body; (vi) Contravene, conflict   
with or result in a violation or breach of any provision of, or give any Person 
the right to declare a default or exercise any remedy under, accelerate the     
maturity or performance of or cancel, terminate or modify, any Company Contract;
(vii) require a Consent from any Person; or (viii) result in the imposition or  
creation of any Encumbrance upon or with respect to any of the assets owned or  
used by any of the Acquired Companies, except, in the case of clauses (ii),     
(iii), (iv), (v), (vi), (vii) and (viii), for any such Contravention, conflict  
or violation that could not reasonably be expected, individually or in the      
aggregate, to have a Company Material Adverse Effect.                           

   (c) The execution and delivery of this Agreement by Company does not, and
the performance of this Agreement and the consummation of the Contemplated      
Transactions by Company will not, require any Consent of, or filing with or     
notification to, any Governmental Body, except (i) for (A) applicable           
requirements, if any, of the Exchange Act, the Securities Act and state         
securities or "blue sky" laws, (B) the filing of Articles of Merger as required 
by the CBCA and (ii) where failure to obtain such Consents, or to make such     
filings or notifications, would not result in a Company Material Adverse Effect.

2.3  CAPITALIZATION                                                             

  The authorized capital stock of Company consists of 50,000,000 shares of
Company Common Stock and 50,000,000 shares of Company Preferred Stock. As of the
date hereof, (a) 4,951,451 shares of Company Common Stock are issued and        
outstanding, all of which are duly authorized, validly issued, fully paid and   
nonassessable, (b) 1,506,000 shares of Company Common Stock are reserved for    
issuance upon the exercise of outstanding Company Stock Options, (c) 230,000    
shares of Company Common Stock are reserved for issuance upon exercise of       
outstanding warrants of Company, (d) no shares of Company Common Stock are held 
in the treasury of Company, (e) 77,000 shares of Company Common Stock are       
reserved for issuance pursuant to the Company Stock Options not yet granted, and
(f) 4,951,451 shares of Company Common Stock are reserved for issuance upon     
exercise of the Rights issued pursuant to the Rights Agreement, dated November  
3, 1999, between Company and American Securities Transfer & Trust, Inc., as     
Rights Agent ("Company Rights Agreement"). No shares of Company Preferred Stock 
are outstanding and no series of Company Preferred Stock has been designated.   
Other than the financing arrangements that have been specifically disclosed in  
or filed as Exhibits to the Company SEC Reports, there are not any bonds,       
debentures, notes or other indebtedness or securities of Company having the     
right to vote (or convertible into, or exchangeable for, securities having the  
right to vote) on any matters on which Company's shareholders may vote. Except  
as set forth in this Section 2.3, as of the date hereof no shares of capital    
stock or other voting securities of Company are issued, reserved for issuance or
outstanding, and no shares of capital stock or other voting securities of       
Company will be issued or become outstanding after the date hereof other than   
upon exercise of the Company Stock Options outstanding as of the date hereof.   
Except as set forth in this Section 2.3, there are no options, stock            
appreciation rights, warrants or other rights, Contracts, arrangements or       
commitments of any character ("Options") relating to the issued or unissued     
capital stock of any of the Acquired Companies, or obligating any of the        
Acquired Companies to issue, grant or sell any shares of capital stock of, or   
other equity interests in, or securities convertible into equity interests in,  

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Company or any of its Subsidiaries. Since December 31, 2002, Company has not    
issued any shares of its capital stock or Options in respect thereof, except    
upon the conversion of the securities or the exercise of the options and        
warrants referred to above. All shares of Company Common Stock subject to       
issuance as described above will, upon issuance on the terms and conditions     
specified in the instruments pursuant to which they are issuable, be duly       
authorized, validly issued, fully paid and nonassessable. Other than the        
financing arrangements that have been specifically disclosed in or filed as     
Exhibits to the Company SEC Reports: (i) none of the Acquired Companies has any 
Contract or other obligation to repurchase, redeem or otherwise acquire any     
shares of Company Common Stock or any capital stock of any of Company's         
Subsidiaries, or make any investment (in the form of a loan, capital            
contribution or otherwise) in any of Company's Subsidiaries or any other Person;
(ii) each outstanding share of capital stock of each of Company's Subsidiaries  
is duly authorized, validly issued, fully paid and nonassessable and each such  
share owned by any of the Acquired Companies is free and clear of all           
Encumbrances; (iii) none of the outstanding equity securities or other          
securities of any of the Acquired Companies was issued in violation of the      
Securities Act or any other Law; and (iv) none of the Acquired Companies owns,  
or has any Contract or other obligation to acquire, any equity securities or    
other securities of any Person (other than Subsidiaries of Company) or any      
direct or indirect equity or ownership interest in any other business. None of  
the Acquired Companies is a general partner of any general or limited           
partnership of which all of the partnership interests are not held by the       
Company or Subsidiary.                                                          

2.4  SEC FILINGS; FINANCIAL STATEMENTS                                          

Company has on a timely basis filed all forms, reports and documents  
required to be filed by it with the SEC since August 15, 2002. The Company SEC  
Reports (i) were or will be prepared in accordance with the requirements of the 
Securities Act and the Exchange Act, as the case may be, and the rules and      
regulations thereunder and (ii) did not at the time they were filed with the    
SEC, or will not at the time they are filed with the SEC, contain any untrue    
statement of a material fact or omit to state a material fact required to be    
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The      
Certifications are each true and correct. No Subsidiary of Company is or has    
been required to file any form, report, registration statement or other document
with the SEC. The Acquired Companies maintain disclosure controls and procedures
required by Rule 13a-15 or 15d-15 under the Exchange Act, and such disclosure   
controls and procedures are effective to ensure that all material information   
concerning the Acquired Companies is made known on a timely basis to the        
individuals responsible for the preparation of Company's filings with the SEC   
and other public disclosure documents. Company has delivered to Parent copies of
all written descriptions of, and all policies, manuals and other documents      
promulgating, such disclosure controls and procedures. Company is in compliance 
with the applicable listing rules of the NASDAQ National Market and has not     
since August 2002 received any notice from the NASDAQ National Market asserting 
any non-compliance with such rules. As used in this Section 2.4, the term "file"
shall be broadly construed to include any manner in which a document or         
information is furnished, supplied or otherwise made available to the SEC.      

2.5  FINANCIAL STATEMENTS                                                       

   The financial statements and notes contained or incorporated by reference
in the Company SEC Reports fairly present the financial condition and the       
results of operations, changes in shareholders' equity and cash flow of the     
Acquired Companies as at the respective dates of and for the periods referred to
in such financial statements, all in accordance with GAAP and Regulation S-X of 
the SEC, subject, in the case of interim financial statements, to normal        

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recurring year-end adjustments (the effect of which will not, individually or in
the aggregate, be materially adverse) and the omission of notes to the extent   
permitted by Regulation S-X of the SEC (that, if presented, would not differ    
materially from notes to the financial statements found in the Company's Report 
on Form 10-Q for the period ended March 31, 2003 included in the Company SEC    
Reports (the consolidated balance sheet included in such Quarterly Report is the
"Balance Sheet")); the financial statements referred to in this Section 2.5     
reflect the consistent application of such accounting principles throughout the 
periods involved, except as disclosed in the notes to such financial statements.
No financial statements of any Person other than the Acquired Companies are     
required by GAAP to be included in the consolidated financial statements of     
Company. The Company's auditors have not performed any non-audit services for   
the Acquired Companies since the beginning of the immediately preceding fiscal  
year of Company. The Acquired Companies maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (a) transactions are   
executed in accordance with management's general or specific authorizations, (b)
transactions are recorded as necessary to permit preparation of financial       
statements in conformity with GAAP and to maintain asset accountability, (c)    
access to assets is permitted only in accordance with management's general or   
specific authorization and (d) the recorded accountability for assets is        
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Company has delivered to Parent copies
of all written descriptions of, and all policies, manuals and other documents   
promulgating, such internal accounting controls. The Company does not have any  
Off-Balance Sheet Arrangements.                                                 

2.6  NO UNDISCLOSED LIABILITES                                                  

 The Acquired Companies have no Liabilities or obligations of any nature
(whether absolute, accrued, contingent, choate or inchoate or otherwise), except
for Liabilities or obligations reflected or reserved against in the Balance     
Sheet, current liabilities incurred in the Ordinary Course of Business and not  
in violation of this Agreement since the date thereof (assuming for this purpose
that this Agreement had been in effect since the date of the Balance Sheet) and 
contingent or inchoate liabilities that could not reasonably be expected to have
a Company Material Adverse Effect.                                              

2.7  ABSENCE OF CERTAIN CHANGES AND EVENTS                                      

    Since the date of the Balance Sheet, the Acquired Companies have conducted
their businesses only in the Ordinary Course of Business, there has not been any
Company Material Adverse Effect, no event has occurred or circumstance exists   
that may result in a Company Material Adverse Effect and there has not been:    

(a) any material loss, damage or destruction to, or any material      
interruption in the use of, any of the assets of any of the Acquired Companies  
(whether or not covered by insurance) that has had or could reasonably be       
expected to have a Company Material Adverse Effect;                             

   (b) (i) any declaration, accrual, set aside or payment of any dividend or
any other distribution in respect of any shares of capital stock of any Acquired
Company, or (ii) any repurchase, redemption or other acquisition by any Acquired
Company of any shares of capital stock or other securities;                     

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   (c) any sale, issuance or grant, or authorization of the issuance of, (i)
any capital stock or other security of any Acquired Company (except for Company 
Common Stock issued upon the valid exercise of outstanding Company Stock        
Options), (ii) any option, warrant or right to acquire any capital stock or     
other security of any Acquired Company (except for Company Stock Options) or    
(iii) any instrument convertible into or exchangeable for any capital stock or  
other security of any Acquired Company;                                         

  (d) any amendment or waiver of any of the rights of any Acquired Company
under, or acceleration of vesting under, (i) any provision of any of Company's  
employee stock option plans, (ii) any provision of any Contract evidencing any  
outstanding Company Stock Option, (iii) any provision on any Company warrant or 
(iv) any restricted stock purchase agreement;                                   

(e) any amendment to any Governing Document of any of the Acquired    
Companies or any merger, consolidation, share exchange, business combination,   
recapitalization, reclassification of shares, stock split, reverse stock split  
or similar transaction involving any Acquired Company;                          

(f) any receipt by the Acquired Companies of any Acquisition Proposal;

     (g) any creation of any Subsidiary of an Acquired Company or acquisition by
any Acquired Company of any equity or other interest in any other Person;       

   (h) except in the Ordinary Course of Business, any capital expenditure by
any Acquired Company which, when added to all other capital expenditures made by
or on behalf of the Acquired Companies since the date of the Balance Sheet,     
exceeds $50,000 in the aggregate;                                               

   (i) except in the Ordinary Course of Business, any action by the Acquired
Companies to (i) enter into, or suffer any of the assets owned or used by it to 
become bound by, any material Contract, or (ii) amend or terminate, or waive any
material right or remedy under, any material Contract;                          

  (j) any (i) acquisition, lease or license by any Acquired Company of any
material right or other material asset from any other Person, (ii) sale or other
disposal or lease or license by any Acquired Company of any material right or   
other material asset to any other Person or (iii) waiver or relinquishment by   
any Acquired Company of any right, except for rights or other assets acquired,  
leased, licensed or disposed of in the Ordinary Course of Business and          
consistent with past practices;                                                 

(k) any write-off as uncollectible of, or establishment of any        
extraordinary reserve with respect to, any account receivable or other          
indebtedness of an Acquired Company;                                            

    (l) any pledge of any assets of, or sufferance of any of the assets of, an
Acquired Company to become subject to any Encumbrance, except for pledges or    
sufferances of immaterial assets made in the Ordinary Course of Business and    
consistent with past practices;                                                 

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(m) other than loans and/or guarantees made between one or more of the
Acquired Companies for the benefit of another Acquired Company, any (i) loan by 
an Acquired Company to any Person, or (ii) incurrence or guarantee by an        
Acquired Company of any indebtedness for borrowed money;                        

     (n) any (i) adoption, establishment, entry into or amendment by an Acquired
Company of any stock option plan or (ii) payment of any bonus or any profit     
sharing or similar payment to, or material increase in the amount of the wages, 
salary, commissions, fringe benefits or other compensation or remuneration      
payable to, any of the directors, officers or employees of any Acquired Company;

    (o) any change of the methods of accounting or accounting practices of any
Acquired Company in any material respect;                                       

(p) any material Tax election by any Acquired Company;                

(q) any commencement or settlement of any Proceeding by any Acquired  
Company that would have a Company Material Adverse Effect; or                   

   (r) any agreement or commitment to take any of the actions referred to in
clauses (c) through (q) above.                                                  

2.8  LEGAL PROCEEDINGS                                                          

 (a) Except as disclosed in the Company SEC Reports, there is no pending
Proceeding (i) that has been commenced by or against any of the Acquired        
Companies or that otherwise relates to or may affect the business of, or any of 
the assets owned or used by, any of the Acquired Companies, except for such     
Proceedings as are normally incident to the business carried on by the Acquired 
Companies and could not reasonably be expected to, individually or in the       
aggregate, result in a Company Material Adverse Effect, (ii) that challenges, or
that may have the effect of preventing, delaying, making illegal or otherwise   
interfering with, any of the Contemplated Transactions or (iii) against any     
director or officer of any of the Acquired Companies pursuant to Section 8A or  
20(b) of the Securities Act or Section 21(d) or 21C of the Exchange Act.        

     (b) To the Knowledge of Company, (i) no Proceeding that if pending would be
required to be disclosed under the preceding paragraph has been threatened and  
(ii) no event has occurred or circumstance exists that may give rise to or serve
as a basis for the commencement of any such Proceeding.                         

2.9  RECOMMENDATION OF SPECIAL COMMITTEE AND COMPANY BOARD; OPINION OF FINANCIAL
ADVISOR                                                               

   (a) The Special Committee, at a meeting duly called and held, unanimously
(i) determined that this Agreement and the transactions contemplated by this    
Agreement are fair to, and in the best interests of, the shareholders of the    
Company, and (ii) resolved to recommend approval and adoption of this Agreement 
and the Merger by the Board of the Directors of Company.                        

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  (b) The Board of Directors of Company, at a meeting duly called and held
and acting on the unanimous recommendation of the Special Committee, (i)        
determined that this Agreement and the Contemplated Transactions are fair to,   
and in the best interests of, the shareholders of the Company, (ii) approved    
this Agreement and transactions contemplated hereby, and (iii) resolved to      
recommend approval and adoption of this Agreement and the Merger by the         
shareholders of the Company.                                                    

     (c) CIBC World Markets Corp. ("CIBC") has rendered to the Special Committee
its opinion to the effect that, as of the date of this Agreement and subject to 
the assumptions and limitations specifically described by CIBC to the Special   
Committee, the Merger Consideration to be received by the shareholders of the   
Company is fair from a financial point of view to such holders, other than the  
holders of Excluded Shares (as defined in such opinion). A complete and correct 
written copy of CIBC's engagement letter has been delivered to Parent and a     
complete and correct written copy of CIBC's opinion letter will be delivered to 
Parent promptly after the date of this Agreement. Company has received the      
approval of CIBC to permit the inclusion of a copy of its written opinion, when 
delivered, in its entirety in the Proxy Statement, subject to CIBC's review of  
the Proxy Statement.                                                            

2.10 RIGHTS PLAN                                                                

   Company has delivered to Parent a copy of the Company Rights Agreement as
currently in effect. Company has amended the Company Rights Agreement to provide
that (a) neither Parent nor Merger Sub nor any of their respective Affiliates   
shall be deemed to be an Acquiring Person (as such term is defined in the       
Company Rights Agreement), (b) neither a Distribution Date nor a Shares         
Acquisition Date (as each such term is defined in the Company Rights Agreement) 
shall be deemed to occur, and the Rights will not detach from the Company Common
Stock or become non-redeemable, as a result of the execution, delivery or       
performance of this Agreement or the consummation of the Merger or the other    
Contemplated Transactions and (c) the Rights shall terminate immediately prior  
to the Effective Time.                                                          

2.11 ENVIRONMENTAL MATTERS                                                      

Except as disclosed in the Company SEC Reports, each of the Acquired  
Companies is, and at all times has been, in substantial compliance with, and has
not been and is not in material violation of or subject to any material         
liability under, any Environmental Law. None of the Acquired Companies has any  
basis to expect, nor has any of them or any other Person for whose conduct they 
are or may be held to be responsible received, any actual or threatened order,  
notice, or other communication from (a) any Governmental Body or private citizen
acting in the public interest, or (b) the current or prior owner or operator of 
any Facilities, of any actual or potential material violation of or failure to  
comply with any Environmental Law, or of any actual or threatened material      
obligation to undertake or bear the cost of any Environmental, Health, and      
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which any of the Acquired       
Companies has or has had an interest, or with respect to any property or        
Facility at or to which Hazardous Materials were generated, manufactured,       
refined, transferred, imported, used, or processed by any of the Acquired       
Companies or any other Person for whose conduct they are or may be held         
responsible, or from which Hazardous Materials have been transported, treated,  
stored, handled, transferred, disposed, recycled, or received.                  

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2.12 AGREEMENTS, CONTRACTS AND COMMITMENTS                                      

  Company has not breached or defaulted (nor has any event occurred which,
with passage of time or giving of notice would constitute a default), or        
received in writing any claim or notice that it has breached or defaulted under,
any of the terms or conditions of any agreement, contract or commitment filed as
an exhibit to the Company SEC Reports ("Company Material Contracts") in such a  
manner as, individually or in the aggregate, are reasonably likely to have a    
Company Material Adverse Effect. Each Company Material Contract that has not    
expired by its terms is in full force and effect.                               

2.13 COMPLIANCE WITH LAWS; PERMITS                                              

   Each of the Acquired Companies has complied with, is not in violation of,
and has not received any notices of violation with respect to, any applicable   
Law with respect to the conduct of its business, or the ownership or operation  
of its business, except for failures to comply or violations which, individually
or in the aggregate, have not had and are not reasonably likely to have a       
Company Material Adverse Effect. Each of the Acquired Companies has all permits,
licenses, easements, variations, exemptions, consents, certificates approvals,  
authorizations and registrations (collectively, "Permits") with and under all   
federal, state and local Laws, and from all Governmental Bodies required by it  
to carry on its respective business as currently conducted, except where the    
failure to have such Permits would not be reasonably likely to have,            
individually or in the aggregate, a Company Material Adverse Effect.            

2.14 TAKEOVER STATUTES NOT APPLICABLE                                           

The Board of Directors of Company has taken all actions so that no    
restrictive provision of any "fair price," "moratorium," "business combination,"
"control share acquisition," "interested shareholder," or other similar         
anti-takeover Law, or restrictive provision of any applicable anti-takeover     
provision in the Governing Documents of any of the Acquired Companies is, or at 
the Effective Time will be, applicable to Company, Parent, Merger Sub or the    
Surviving Corporation, the shares of Company Common Stock (including shares     
acquired in the Merger), the Merger or the other Contemplated Transactions.     

2.15 BROKERS; FINDERS                                                           

No broker, finder or investment banker is entitled to any brokerage,  
finder's or other fee or commission in connection with the Contemplated         
Transactions based upon arrangements made by or on behalf of Company, except for
the fees payable to CIBC.                                                       

2.16 FULL DISCLOSURE                                                            

     (a) This Agreement (including the Company Disclosure Schedule) does not (i)
contain any representation, warranty or information that is false or misleading 
with respect to any material fact, or (ii) omit to state any material fact      
necessary in order to make the representations, warranties and information      
contained herein (in the light of the circumstances under which such            
representations, warranties and information were made or provided) not false or 
misleading.                                                                     

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   (b) None of the information supplied or to be supplied by or on behalf of
Company for inclusion or incorporation by reference in the Proxy Statement will,
at the time the Proxy Statement is mailed to the holders of Company Common Stock
or at the time of the Company Shareholders' Meeting, contain any untrue         
statement of a material fact or omit to state any material fact required to be  
stated therein or necessary in order to make the statements therein, in the     
light of the circumstances under which they are made, not misleading. The Proxy 
Statement and Schedule 13E-3 will each comply as to form in all material        
respects with the provisions of the Exchange Act and the rules and regulations  
promulgated by the SEC thereunder.                                              

Article 3 

 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

   Parent and Merger Sub represent and warrant to Company severally, but not
jointly, that:                                                                  

3.1  ORGANIZATION AND GOOD STANDING                                             

Each of Parent and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of their respective jurisdictions  
of organization.                                                                

3.2  AUTHORITY; ENFORCEABILITY; NO CONFLICT                                     

 (a) Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement and the other agreements        
referred to in this Agreement, to perform its obligations hereunder and         
thereunder and to consummate the Contemplated Transactions. The execution and   
delivery of this Agreement by Parent and Merger Sub and the consummation by     
Parent and Merger Sub of the Contemplated Transactions have been duly and       
validly authorized by all necessary corporate action and no other corporate     
proceedings on the part of Parent or Merger Sub are necessary to authorize this 
Agreement or to consummate the Contemplated Transactions (other than the filing 
of appropriate merger documents as required by the CBCA). The Boards of         
Directors of each of Parent and Merger Sub, at meetings duly called and held,   
(i) determined that this Agreement and the Contemplated Transactions are fair   
to, and in the best interests of, the shareholders of Parent and Merger Sub, and
(ii) approved this Agreement and the Contemplated Transactions. This Agreement  
has been duly and validly executed and delivered by each of Parent and Merger   
Sub and constitutes the legal, valid and binding obligation of each of Parent   
and Merger Sub, enforceable against each of Parent and Merger Sub in accordance 
with its terms.                                                                 

(b) Neither the execution and delivery of this Agreement nor the      
consummation of any of the Contemplated Transactions do or will, directly or    
indirectly (with or without notice or lapse of time or both), (i) Contravene,   
conflict with or result in a violation of (A) any provision of the Governing    
Documents of either Parent or Merger Sub or (B) any resolution adopted by the   
board of directors of Parent or Merger Sub; (ii) Contravene, conflict with or   
result in a violation of, or give any Governmental Body or other Person the     

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right to challenge any of the Contemplated Transactions or to exercise any      
remedy or obtain any relief under, any Law or Order to which Parent or Merger   
Sub is or may be subject; or (iii) require a Consent from any Person, except, in
the case of clauses (ii) and (iii), for any such Contravention, conflict or     
violation that could not reasonably be expected, individually or in the         
aggregate, to have a Parent Material Adverse Effect.                            

   (c) The execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement and the consummation of the       
Contemplated Transactions by Parent and Merger Sub will not, require any Consent
of, or filing with or notification to, any Governmental Body, except (i) for (A)
applicable requirements, if any, of the Exchange Act, the Securities Act and    
state securities or "blue sky" laws and (B) the filing of the Articles of Merger
as required by the CBCA and (ii) where failure to obtain such Consents, or to   
make such filings or notifications, would not result in a Parent Material       
Adverse Effect.                                                                 

3.3  CAPITALIZATION                                                             

    (a) The authorized capital stock of Parent consists of 5,000,000 shares of
Parent Common Stock. As of the date hereof, one share of Parent Common Stock is 
issued and outstanding, which is duly authorized, validly issued, fully paid and
nonassessable. There are no Options relating to the issued or unissued capital  
stock of Parent, or obligating Parent to issue, grant or sell any shares of     
capital stock of, or other equity interests in, or securities convertible into  
equity interests in, Parent. Parent has no Contract or other obligation to      
repurchase, redeem or otherwise acquire any shares of Parent Common Stock.      

    (b) The authorized capital stock of Merger Sub consists of 1,000 shares of
Merger Sub Common Stock. As of the date hereof, 100 shares of Merger Sub Common 
Stock are issued and outstanding, all of which are duly authorized, validly     
issued, fully paid and nonassessable and held by Parent.                        

3.4  NO PRIOR ACTIVITIES                                                        

     Except for obligations incurred in connection with its incorporation or the
negotiation and consummation of this Agreement and the Contemplated             
Transactions, neither Parent or Merger Sub has incurred any obligation or       
Liability nor engaged in any business or activity of any type or kind           
whatsoever, or entered into any agreement or arrangement with any Person.       

3.5  BROKERS; FINDERS                                                           

No broker, finder or investment banker is entitled to any brokerage,  
finder's or other fee or commission in connection with the Contemplated         
Transactions based upon arrangements made by or on behalf of Parent or Merger   
Sub.                                                                            

3.6  FULL DISCLOSURE                                                            

     (a) This Agreement does not, and the certificate referred to in Section 8.4
will not, (i) contain any representation, warranty or information that is false 
or misleading with respect to any material fact, or (ii) omit to state any      
material fact necessary in order to make the representations, warranties and    
information contained and to be contained herein and therein (in the light of   
the circumstances under which such representations, warranties and information  
were or will be made or provided) not false or misleading.                      

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   (b) None of the information supplied or to be supplied by or on behalf of
Parent or Merger Sub for inclusion or incorporation by reference in the Proxy   
Statement will, at the time the Proxy Statement is mailed to the holders of     
Company Common Stock or at the time of the Company Shareholders' Meeting,       
contain any untrue statement of a material fact or omit to state any material   
fact required to be stated therein or necessary in order to make the statements 
therein, in the light of the circumstances under which they are made, not       
misleading.                                                                     

3.7  DUE DILIGENCE                                                              

    Parent and Merger Sub have had, to their Knowledge, full access to (a) the
Company and its records, assets and properties and (b) the Company's auditors,  
accountants, legal counsel and tax advisors. Without waiving any of its rights  
to terminate this Agreement as provided herein, Parent and Merger Sub do not    
have Knowledge that, as of the date of this Agreement, any of Company's         
representations and warranties in Article 2 are false, incomplete, or untrue.   

Article 4 

 CERTAIN COVENANTS OF COMPANY AND PARENT

4.1  ACCESS AND INVESTIGATION BY PARENT                                         

 During the period from the date of this Agreement through the Effective
Time (the "Pre-Closing Period"), Company shall, and shall cause the respective  
Representatives of the Acquired Companies to: (a) provide Parent and Parent's   
Representatives with reasonable access to the Acquired Companies'               
Representatives, personnel and assets and to all existing books, records, Tax   
Returns, work papers and other documents and information relating to the        
Acquired Companies; and (b) provide Parent and Parent's Representatives with    
such copies of the existing books, records, Tax Returns, work papers and other  
documents and information relating to the Acquired Companies, and with such     
additional financial, operating and other data and information regarding the    
Acquired Companies, as Parent may reasonably request. Without limiting the      
generality of the foregoing, during the Pre-Closing Period, Company shall       
promptly provide Parent with copies of: (i) all material operating and financial
reports prepared by the Acquired Companies for Company's senior management, (ii)
any notice, report or other document filed with or sent to any Governmental Body
in connection with the Merger or any of the Contemplated Transactions; and (iii)
any material notice, report or other document received by any of the Acquired   
Companies from any Governmental Body.                                           

4.2  OPERATION OF COMPANY'S BUSINESS                                            

  (a) During the Pre-Closing Period, except as provided in this Agreement:
(i) Company shall ensure that each of the Acquired Companies conducts its       
business and operations (A) in the Ordinary Course of Business and in accordance
with past practices and (B) in compliance with all applicable Laws and the      
requirements of all material Company Contracts; (ii) Company shall use its      
reasonable best efforts to ensure that each of the Acquired Companies preserves 
intact its current business organization, keeps available the services of its   
current directors, officers and employees and maintains its relations and       

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goodwill with all suppliers, customers, landlords, creditors, licensors,        
licensees, employees and other Persons having business relationships with the   
respective Acquired Companies; (iii) Company shall not and shall not permit any 
of the other Acquired Companies to take, without the prior Consent of Parent,   
any affirmative action, or fail to take any reasonable action within its        
control, as a result of which any of the changes or events in Section 2.7 would 
be likely to occur; (iv) Company shall promptly notify Parent of (A) any notice 
or other communication from any Person alleging that the Consent of such Person 
is or may be required in connection with the Contemplated Transactions, and (B) 
any Proceeding commenced or, to the best of its Knowledge threatened against,   
relating to or involving or otherwise affecting any of the Acquired Companies   
that relates to the consummation of the Contemplated Transactions; (v) Company  
shall not enter into any Contract providing for a hedging or derivative         
transaction of a nature described in Financial Accounting Standards Board       
Release No. 133; (vi) Company shall (to the extent requested by Parent) cause   
its officers to report regularly to Parent concerning the status of Company's   
business; and (vii) Company shall not grant any options to purchase or otherwise
acquire Options.                                                                

 (b) During the Pre-Closing Period, each Party shall promptly notify the
other Parties in writing of: (i) the discovery by a Party of any event,         
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes a material inaccuracy in any   
representation or warranty made by Company in this Agreement; (ii) any event,   
condition, fact or circumstance that occurs, arises or exists after the date of 
this Agreement and that would cause or constitute a material inaccuracy in any  
representation or warranty made by Company in this Agreement if (A) such        
representation or warranty had been made as of the time of the occurrence,      
existence or discovery of such event, condition, fact or circumstance, or (B)   
such event, condition, fact or circumstance had occurred, arisen or existed on  
or prior to the date of this Agreement; (iii) any material breach of any        
covenant or obligation of any of the Acquired Companies; and (iv) any event,    
condition, fact or circumstance that would make the timely satisfaction of any  
of the conditions set forth in Articles 6, 7 and 8 impossible or unlikely or    
that has had or could reasonably be expected to have a Company Material Adverse 
Effect. Without limiting the generality of the foregoing, Company shall promptly
advise Parent in writing of any Proceeding or claim threatened, commenced or    
asserted against or with respect to any of the Acquired Companies, except where 
such Proceeding or claim would not be reasonably likely to have a Company       
Material Adverse Effect. No notification given to Parent pursuant to this       
Section 4.2(b) shall limit or otherwise affect any of the representations,      
warranties, covenants or obligations of Company contained in this Agreement.    

4.3  NO SOLICITATION                                                            

  (a) Company shall not directly or indirectly, and shall not authorize or
permit any of the other Acquired Companies or any Representative of any of the  
Acquired Companies directly or indirectly to, (i) solicit, initiate, encourage, 
induce or facilitate the making, submission or announcement of any Acquisition  
Proposal or take any action that could reasonably be expected to lead to an     
Acquisition Proposal, (ii) furnish any information regarding any of the Acquired
Companies to any Person in connection with or in response to an Acquisition     
Proposal or an inquiry or indication of interest that could reasonably be       
expected to lead to an Acquisition Proposal, (iii) engage in discussions or     

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negotiations with any Person with respect to any Acquisition Proposal, (iv)     
approve, endorse or recommend any Acquisition Proposal (except pursuant to      
Section 5.2(c)) or (v) enter into any letter of intent or similar document or   
any Contract contemplating or otherwise relating to any Acquisition Transaction;
provided, however, that prior to the mailing of the Proxy Statement to the      
holders of Company Common Stock, this Section 4.3(a) shall not prohibit Company 
from furnishing nonpublic information regarding the Acquired Companies to, or   
entering into discussions with, any Person in response to a Significant Proposal
that is submitted to Company by such Person (and not withdrawn) if (A) neither  
Company nor any Representative of any of the Acquired Companies shall have      
violated any of the restrictions set forth in this Section 4.3, (B) Company     
promptly gives Parent written notice of the identity of such Person and of      
Company's intention to furnish nonpublic information to, or enter into          
discussions with, such Person, and Company receives from such Person an executed
confidentiality agreement in substantially the form attached as Exhibit B and   
(C) Company promptly furnishes such nonpublic information to Parent (to the     
extent such nonpublic information has not been previously furnished by Company  
to Parent). Without limiting the generality of the foregoing, Company           
acknowledges and agrees that any violation of or the taking of any action       
inconsistent with any of the restrictions set forth in the preceding sentence by
any Representative of any of the Acquired Companies, whether or not such        
Representative is purporting to act on behalf of any of the Acquired Companies, 
shall be deemed to constitute a breach of this Section 4.3 by Company.          

(b) Company shall promptly (and in no event later than 24 hours after 
receipt of any Acquisition Proposal, any inquiry or indication of interest that 
could lead to an Acquisition Proposal or any request for nonpublic information) 
advise Parent orally and in writing of any Acquisition Proposal, any inquiry or 
indication of interest that could lead to an Acquisition Proposal or any request
for nonpublic information relating to any of the Acquired Companies (including  
the identity of the Person making or submitting such Acquisition Proposal,      
inquiry, indication of interest or request, and the terms thereof) that is made 
or submitted by any Person during the Pre-Closing Period. Company shall keep    
Parent fully informed with respect to the status of any such Acquisition        
Proposal, inquiry, indication of interest or request and any modification or    
proposed modification thereto.                                                  

(c) On the date of this Agreement, Company shall immediately cease and
cause to be terminated any existing discussions with any Person that relate to  
any Acquisition Proposal.                                                       

     (d) Company agrees not to release or permit the release of any Person from,
or to waive or permit the waiver of any provision of, any confidentiality,      
"standstill" or similar agreement to which any of the Acquired Companies is a   
party, and will use its reasonable best efforts to enforce or cause to be       
enforced each such agreement at the request of Parent. Company also will        
promptly request each Person that has executed, within 12 months prior to the   
date of this Agreement, a confidentiality agreement in connection with its      
consideration of a possible Acquisition Transaction or equity investment to     
return all confidential information heretofore furnished to such Person by or on
behalf of any of the Acquired Companies.                                        

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Article 5 

 ADDITIONAL COVENANTS OF THE PARTIES

5.1  PROXY STATEMENT AND SCHEDULE 13E-3                                         

  (a) As promptly as practicable after the date of this Agreement, Company
shall prepare and cause to be filed with the SEC the Proxy Statement, and use   
commercially reasonable efforts to have the Proxy Statement cleared by the SEC. 
Parent, Merger Sub and Company shall cooperate with each other in the           
preparation of the Proxy Statement, and Company shall notify Parent of the      
receipt of any comments of the SEC with respect to the Proxy Statement and of   
any requests by the SEC for any amendment or supplement thereto or for          
additional information, and shall provide to Parent reasonably promptly, copies 
of all correspondence between Company or any Representative of Company and the  
SEC. Company shall give Parent and its counsel the opportunity to review and    
comment on the Proxy Statement and any other documents filed with the SEC or    
mailed to Company's shareholders prior to their being filed with, or sent to,   
the SEC or mailed to Company's shareholders and shall give Parent and its       
counsel the opportunity to review and comment on all amendments and supplements 
to the Proxy Statement and any other documents filed with, or sent to, the SEC  
or mailed to Company's shareholders and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the SEC or mailed to Company's shareholders. Each of Company, Parent and Merger 
Sub agrees to use its commercially reasonable efforts to respond promptly to all
such comments of and requests by the SEC. As promptly as practicable after the  
Proxy Statement has been cleared by the SEC, Company shall mail the Proxy       
Statement to Company's shareholders. Prior to the date of approval of the Merger
by Company's shareholders, each of Company, Parent and Merger Sub shall correct 
promptly any information provided by it and used in the Proxy Statement that    
shall have become false or misleading in any material respect, and Company shall
take all steps necessary to file with the SEC and have cleared by the SEC any   
amendment or supplement to the Proxy Statement to correct the same and to cause 
the Proxy Statement as so corrected to be disseminated to Company's             
shareholders, in each case to the extent required by applicable Law.            

   (b) Promptly following the date of this Agreement, Parent, Merger Sub and
Company shall file with the SEC, and shall use all commercially reasonable      
efforts to cause any of their respective Affiliates engaging in this transaction
to file with the SEC, a Schedule 13E-3 with respect to the Merger. Each of the  
parties hereto agrees to use all commercially reasonable efforts to cooperate   
and to provide each other with such information as any of such parties may      
reasonably request in connection with the preparation of the Proxy Statement and
the Schedule 13E-3. The Schedule 13E-3 shall be filed with the SEC concurrently 
with the filing of the Proxy Statement. Each of Company, Parent and Merger Sub  
agrees to use its commercially reasonable efforts to respond promptly to all    
comments of and requests by the SEC. Each party hereto agrees to promptly       
supplement, update and correct any information provided by it for use in the    
Schedule 13E-3 if and to the extent that such information is or shall have      
become incomplete, false or, in light of the circumstances, misleading.         

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5.2  COMPANY SHAREHOLDERS' MEETING                                              

   (a) Company shall, subject to Company's right to terminate this Agreement
pursuant to Section 9.1(j), take all action necessary under all applicable Laws 
to call, give notice of and hold a meeting of the holders of Company Common     
Stock to vote on a proposal to adopt this Agreement ("Company Shareholders'     
Meeting"). The Company Shareholders' Meeting shall be held on a date selected by
Company in consultation with Parent as promptly as practicable after the Proxy  
Statement is cleared by the SEC; provided, the Company shall be permitted to    
delay and reschedule the date of the Company Shareholders Meeting in the event  
the condition set forth in Section 8.5 has not been satisfied. Company shall    
ensure that all proxies solicited in connection with the Company Shareholders'  
Meeting are solicited in compliance with all applicable Laws.                   

(b) Subject to Section 5.2(c), (i) the Proxy Statement shall include a
statement to the effect that the board of directors of Company recommends that  
Company's shareholders vote to adopt this Agreement at the Company Shareholders'
Meeting (the recommendation of Company's board of directors that Company's      
shareholders vote to adopt this Agreement being referred to as the "Company     
Board Recommendation"); and (ii) the Company Board Recommendation shall not be  
withdrawn or modified in a manner adverse to Parent, and no resolution by the   
board of directors of Company or any committee thereof to withdraw or modify the
Company Board Recommendation in a manner adverse to Parent shall be adopted or  
proposed.                                                                       

   (c) Notwithstanding anything to the contrary contained in Section 5.2(b),
at any time prior to the adoption of this Agreement by the Required Company     
Shareholder Vote the Company Board Recommendation may be withdrawn or modified  
in a manner adverse to Parent if: (i) a proposal to acquire (by merger or       
otherwise) all of the outstanding shares of Company Common Stock (other than    
Company Common Stock owned by the Person making the Proposal) is made to Company
and is not withdrawn; (ii) Company provides Parent with at least five business  
days prior notice of any meeting of Company's board of directors at which such  
board of directors will consider and determine whether such offer is a Superior 
Proposal; (iii) Company's board of directors determines in good faith (based    
upon a written opinion of an independent financial advisor of nationally        
recognized reputation) that such offer constitutes a Superior Proposal; (iv)    
Company's board of directors determines in good faith, after having taken into  
account the written advice of Company's outside legal counsel, that, in light of
such Superior Proposal, the withdrawal or modification of the Company Board     
Recommendation is required in order for Company's board of directors to comply  
with its fiduciary obligations to Company's shareholders under applicable Law;  
and (v) none of the Acquired Companies nor any of their Representatives shall   
have violated any of the restrictions set forth in Section 4.3. In making any   
determination to withdraw or modify the Company Board Recommendation, Company   
may consider any revised offer by Parent made prior to any determination to make
such withdrawal or modification.                                                

5.3  REASONABLE BEST EFFORTS TO CLOSE                                           

(a) Subject to Section 5.3(b), Parent and Company shall use their     
reasonable best efforts to take, or cause to be taken, all actions necessary to 
consummate the Merger and make effective the Contemplated Transactions. Without 
limiting the generality of the foregoing, but subject to Section 5.3(b) and     

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Company's right to terminate this Agreement pursuant to Section 9.1(j), Parent  
and Company (i) shall make all filings (if any) and give all notices (if any)   
required to be made and given by such party in connection with the Merger and   
the Contemplated Transactions and to submit promptly any additional information 
requested in connection with such filings and notices, (ii) shall use their     
reasonable best efforts to obtain each Consent (if any) required to be obtained 
(pursuant to any applicable Laws or Contract, or otherwise) by such party in    
connection with the Merger or any of the Contemplated Transactions and (iii)    
shall use its reasonable best efforts to lift any restraint, injunction or other
legal bar to the Merger. Company shall promptly deliver to Parent a copy of each
such filing made, each such notice given and each such Consent obtained by      
Company during the Pre-Closing Period.                                          

    (b) At the request of Parent, Company shall agree to divest, sell, dispose
of, hold, separate or otherwise take or commit to take any action that limits   
its freedom of action with respect to its or its Subsidiaries' ability to       
retain, any of the businesses, product lines or assets of Company or any of its 
Subsidiaries, provided that any such action is conditioned upon the consummation
of the Merger.                                                                  

   (c) Notwithstanding anything to the contrary contained in this Agreement,
Parent shall not have any obligation under this Agreement to: (i) dispose or    
transfer or cause any of the Acquired Companies to dispose of or transfer any   
assets, or to commit to cause any of the Acquired Companies to dispose of any   
assets; (ii) discontinue or cause any of Acquired Companies to discontinue      
offering any product or service, or to commit to cause any of the Acquired      
Companies to discontinue offering any product or service; (iii) hold separate or
cause any of the Acquired Companies to hold separate any assets or operations   
(either before or after the Closing Date); or to commit to cause any of the     
Acquired Companies to hold separate any assets or operations; (iv) make or cause
any of the Acquired Companies to make any commitment (to any Governmental Body  
or otherwise) regarding its future operations or the future operations of any of
the Acquired Companies; or (v) contest any Proceeding relating to the Merger if 
Parent determines in good faith that contesting such Proceeding might not be    
advisable.                                                                      

5.4  DISCLOSURE                                                                 

   Parent and Company shall consult with each other before issuing any press
release or otherwise making any public statement with respect to the Merger or  
any of the other Contemplated Transactions. Without limiting the generality of  
the foregoing, Company shall not, and shall not permit any of its               
Representatives to, make any disclosure regarding the Merger or any of the other
Contemplated Transactions unless (a) Parent shall have approved such disclosure 
or (b) Company shall have been advised in writing by its outside legal counsel  
that such disclosure is required by applicable Law.                             

5.5  RIGHTS AGREEMENT                                                           

If applicable, Company shall not amend or grant any waiver under the  
Company Rights Agreement following the date of this Agreement except as         
requested by the Parent in connection with the Contemplated Transaction.        

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Article 6 

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES

    The obligation of each party to effect the Merger and otherwise consummate
the Contemplated Transactions is subject to the satisfaction, on or before the  
Closing Date, of each of the following conditions:                              

6.1  COMPANY SHAREHOLDER APPROVAL                                               

     This Agreement shall have been duly adopted, and the Merger shall have been
duly approved, by the Required Company Shareholder Vote.                        

6.2  NO RESTRAINTS                                                              

No temporary restraining Order, preliminary or permanent injunction or
other Order preventing the consummation of the Merger shall have been issued by 
any court of competent jurisdiction or any other Governmental Body and shall    
remain in effect, and there shall not be any Law enacted, adopted or deemed     
applicable to the Merger that prohibits, retrains, enjoins, restricts or makes  
consummation of the Merger illegal.                                             

Article 7 

 CONDITIONS PRECEDENT TO PARENT'S AND MERGER SUB'S
 OBLIGATION TO CLOSE

  The obligation of Parent and Merger Sub to effect the Merger and to take
the other actions required to be taken by Parent and Merger Sub at Closing is   
subject to the satisfaction, on or before the Closing Date, of each of the      
following conditions (any of which may be waived by Parent and Merger Sub, in   
whole or in part):                                                              

7.1  ACCURACY OF REPRESENTATIONS                                                

   The representations and warranties of Company contained in this Agreement
(a) that are qualified as to materiality or a Company Material Adverse Effect   
shall be true and correct in all respects as of the Closing Date, except to the 
extent such representations and warranties expressly relate to an earlier date  
(in which case as of such earlier date), and (b) that are not so qualified shall
be true and correct in all respects as of the Closing Date, except to the extent
such representations and warranties expressly relate to an earlier date (in     
which case as of such earlier date), except for such breaches of representations
and inaccuracies in warranties in this clause (b) that do not have, and are not 
reasonably likely to have, individually or in the aggregate, a Company Material 
Adverse Effect.                                                                 

7.2  COMPANY'S PERFORMANCE                                                      

   Company shall have performed, in all material respects, its covenants and
agreements contained in this Agreement required to be performed on or prior to  
the Closing Date.                                                               

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7.3  CONSENTS                                                                   

    Each of the Governmental Authorizations and Consents identified in Section
2.2 must have been obtained and must be in full force and effect without        
limitation or condition that has, or would be reasonably expected to have,      
individually or in the aggregate, a Company Material Adverse Effect.            

7.4  NO MATERIAL ADVERSE EFFECT                                                 

     At any time after the date of this Agreement, there shall not have been any
event or occurrence, or series of events or occurrences, that has had or is     
reasonably likely to have, individually or in the aggregate with all other      
events or occurrences since the date of this Agreement, a Company Material      
Adverse Effect.                                                                 

7.5  NO PROCEEDINGS                                                             

     There shall not be pending or threatened any Proceeding: (a) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the    
Contemplated Transactions; (b) relating to the Merger and seeking to obtain from
Parent or any of its Subsidiaries any damages that may be material to Parent;   
(c) seeking to prohibit or limit in any material respect Parent's ability to    
vote, receive dividends with respect to or otherwise exercise ownership rights  
with respect to any of the Acquired Companies; (d) which would materially and   
adversely affect the right of Surviving Corporation to own the assets or operate
the business of the Acquired Companies; (e) seeking to compel any Acquired      
Company, Parent or any Subsidiary of Parent to dispose of or hold separate any  
material assets, as a result of the Merger or any of the Contemplated           
Transactions; or (f) which, if adversely determined, could have a Company       
Material Adverse Effect or a Parent Material Adverse Effect.                    

7.6  SUCCESSFUL COMPLETION OF PARENT FINANCING                                  

     Parent will have on hand an amount in cash and/or have available borrowings
under credit facilities that are sufficient to provide the Exchange Agent       
immediately after the Effective Time the funds necessary to consummate the      
Merger and the Contemplated Transactions, to pay (i) the aggregate Merger       
Consideration to the holders of Company Common Stock on terms which are         
acceptable to Parent and (ii) to either refinance all indebtedness of the       
Company on terms which are acceptable to Parent or obtain from each of          
Guggenheim Investment Management, LLC and GMAC Commercial Credit LLC, the       
Company's principal lenders, a consent to the change in control that will be    
effected by the Merger, or an amendment or supplement to the Company's credit   
agreements on terms which are acceptable to Parent.                             

7.7  OFFICER'S CERTIFICATE                                                      

Company shall have delivered to Parent and Merger Sub a certificate,  
executed on behalf of Company by an authorized executive officer of Company, and
dated as of the Closing Date that the conditions set forth in Sections 7.1, 7.2,
7.3 and 7.5 have been duly satisfied.                                           

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7.8  DISSENTING SHARES                                                          

    The number of Dissenting Shares (if any) with respect to which the holders
thereof shall have properly demanded appraisal in accordance with the CBCA      
before the taking of a vote on the Merger at the Company Shareholder's Meeting  
or any adjournment thereof, the holders of which shall not have withdrawn such  
demand as of the Closing Date, shall not exceed five percent of the issued and  
outstanding Company Common Stock entitled to vote thereon.                      

7.9  EXTENSION                                                                  

     Company shall have used its best efforts to obtain, from the holders of all
puts to sell Company Common Stock to the Company, an extension of time such that
all such puts may be exercisable until the earlier of the Effective Time or the 
termination of this Agreement.                                                  

Article 8 

 CONDITIONS PRECEDENT TO COMPANY'S OBLIGATION TO CLOSE

 Company's obligation to effect the Merger and to take the other actions
required to be taken by Company at the Closing is subject to the satisfaction,  
on or before the Closing Date, of each of the following conditions (any of which
may be waived by Company, in whole or in part):                                 

8.1  ACCURACY OF REPRESENTATIONS                                                

  The representations and warranties of Parent and Merger Sub contained in
this Agreement (a) that are qualified as to materiality or a Parent Material    
Adverse Effect shall be true and correct in all respects as of the Closing Date,
except to the extent such representations and warranties expressly relate to an 
earlier date (in which case as of such earlier date), and (b) that are not so   
qualified shall be true and correct in all respects as of the Closing Date,     
except to the extent such representations and warranties expressly relate to an 
earlier date (in which case as of such earlier date), except for such breaches  
of representations and inaccuracies in warranties in this clause (b) that do not
have, and are not reasonably likely to have, individually or in the aggregate, a
Parent Material Adverse Effect.                                                 

8.2  PARENT'S AND MERGER SUB'S PERFORMANCE                                      

     Parent and Merger Sub shall have performed, in all material respects, their
respective covenants and agreements contained in this Agreement required to be  
performed on or prior to the Closing Date.                                      

8.3  CONSENTS                                                                   

    Each of the Governmental Authorizations and Consents identified in Section
3.2(c) must have been obtained and must be in full force and effect without     
limitation or condition that has, or would be reasonably expected to have,      
individually or in the aggregate, a Parent Material Adverse Effect.             

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8.4  OFFICER'S CERTIFICATE                                                      

     Parent shall have delivered to Company a certificate, executed on behalf of
Parent and Merger Sub by an authorized executive officer of Parent, and dated as
of the Closing Date that the conditions set forth in Sections 7.6, 8.1, 8.2 and 
8.3 have been duly satisfied.                                                   

8.5  CONFIRMATION OF AVAILABILITY OF FINANCING                                  

    Parent shall have delivered to Company at least 24 hours prior to the date
of the Company Shareholders' Meeting, confirmation reasonably satisfactory to   
the Board of Directors of the availability of financing described in Section    
7.6; provided, however that the failure to provide such confirmation shall not  
effect a waiver by Parent of the conditions required pursuant to Section 7.6.   

8.6  FEES AND EXPENSES                                                          

   At Closing, all reasonable fees and expenses of the Special Committee and
its advisors, including all reasonable attorneys' and other professional fees   
shall be paid in full.                                                          

Article 9 

 TERMINATION

9.1  TERMINATION                                                                

This Agreement may be terminated prior to the Effective Time (whether 
before or after adoption of this Agreement by Company's shareholders):          

(a) by mutual written consent of Parent and Company;                  

(b) by either Parent or Company if the Merger shall not have been     
consummated by June 30, 2004 (unless the failure to consummate the Merger is    
attributable to a failure on the part of the party seeking to terminate this    
Agreement to perform any material obligation required to be performed by such   
party at or prior to the Effective Time);                                       

(c) by Parent if there is pending or threatened any Proceeding: (i)   
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the Contemplated Transactions; (ii) relating to the Merger and seeking to
obtain from Parent or any of its Subsidiaries any damages that may be material  
to Parent; (iii) seeking to prohibit or limit in any material respect Parent's  
ability to vote, receive dividends with respect to or otherwise exercise        
ownership rights with respect to any of the Acquired Companies; (iv) which would
materially and adversely affect the right of Surviving Corporation to own the   
assets or operate the business of the Acquired Companies; (v) seeking to compel 
any Acquired Company, Parent or any Subsidiary of Parent to dispose of or hold  
separate any material assets, as a result of the Merger or any of the           
Contemplated Transactions; or (vi) which, if adversely determined, could have a 
Company Material Adverse Effect or a Parent Material Adverse Effect.;           

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  (d) by either Parent or Company if (i) the Company Shareholders' Meeting
(including any adjournments and postponements thereof) shall have been held and 
completed and Company's shareholders shall have voted on a proposal to adopt    
this Agreement, and (ii) this Agreement shall not have been adopted at such     
meeting (and shall not have been adopted at any adjournment or postponement     
thereof) by the Required Company Shareholder Vote; provided, however, that (A) a
party shall not be permitted to terminate this Agreement pursuant to this       
Section 9.1(d) if the failure to obtain such shareholder approval is            
attributable to a failure on the part of such party to perform any material     
obligation required to be performed by such party at or prior to the Effective  
Time, and (B) Company shall not be permitted to terminate this Agreement        
pursuant to this Section 9.1(d) unless Company shall have made the payment(s)   
required to be made to Parent pursuant to Section 9.3(a) and, if applicable,    
pursuant to Section 9.3(b) or Section 9.3(d);                                   

   (e) by Parent (at any time prior to the adoption of this Agreement by the
Required Company Shareholder Vote) if a Company Triggering Event shall have     
occurred;                                                                       

    (f) by Parent (i) if any of Company's representations and warranties shall
have been inaccurate as of the date of this Agreement, such that the condition  
set forth in Section 7.1 would not be satisfied, or (ii) if (A) any of Company's
representations and warranties shall have become inaccurate as of a date        
subsequent to the date of this Agreement (as if made on such subsequent date),  
such that the condition set forth in Section 7.1 would not be satisfied, and (B)
such inaccuracy has not been cured by Company within 5 business days after its  
receipt of written notice thereof and remains uncured at the time notice of     
termination is given, or (iii) if any of Company's covenants contained in this  
Agreement shall have been breached, such that the condition set forth in Section
7.2 would not be satisfied;                                                     

    (g) by Company (i) if any of Parent's representations and warranties shall
have been inaccurate as of the date of this Agreement, such that the condition  
set forth in Section 8.1 would not be satisfied, or (ii) if (A) any of Parent's 
representations and warranties shall have become inaccurate as of a date        
subsequent to the date of this Agreement (as if made on such subsequent date),  
such that the condition set forth in Section 8.1 would not be satisfied and (B) 
such inaccuracy has not been cured by Parent within 5 business days after its   
receipt of written notice thereof and remains uncured at the time notice of     
termination is given, or (iii) if any of Parent's covenants contained in this   
Agreement shall have been breached, such that the condition set forth in Section
8.2 would not be satisfied;                                                     

(h) by Parent if, since the date of this Agreement, there shall have  
occurred any Company Material Adverse Effect, or there shall have occurred any  
event or circumstance that, in combination with any other events or             
circumstances, could reasonably be expected to have a Company Material Adverse  
Effect, such that the condition set forth in Section 7.4 would not be satisfied;

(i) by Parent if the satisfaction of any condition in Article 7 is or 
becomes impractical and Parent has not waived such condition; or                

    (j) by Company if, prior to the adoption of this Agreement by the Required
Company Shareholder Vote, (i) the board of directors of Company has received a  
Superior Proposal, (ii) in light of such Superior Proposal, the board of        

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directors of Company shall have determined in good faith, after consultation    
with its outside legal advisors, that termination of this Agreement is required 
in order for the board of directors of Company to comply with its fiduciary     
obligations to Company's shareholders under applicable Law, (iii) Company has   
complied in all material respects with Section 4.3, (iv) Company pays the       
termination fee provided for under Section 9.3(d) and expenses provided for     
under Section 9.3(a) prior to termination, and (v) the board of directors of    
Company concurrently approves, and Company concurrently enters into, a binding  
definitive written agreement providing for the implementation of such Superior  
Proposal; provided that Company may not effect such termination pursuant to this
Section 9.1(j) unless and until (i) Parent receives at least three business     
days' prior written notice from Company of its intention to effect such         
termination pursuant to this Section 9.1(j); and (ii) during such three business
day period, Company shall, and shall cause its advisors to, consider any        
adjustments in the terms and conditions of this Agreement that Parent may       
propose.                                                                        

9.2  EFFECT OF TERMINATION                                                      

    If this Agreement is terminated as provided in Section 9.1, this Agreement
shall be of no further force or effect; provided, however, that (a) this Section
9.2 and Section 9.3 and Article 10 shall survive the termination of this        
Agreement and shall remain in full force and effect, and (b) the termination of 
this Agreement shall not relieve any party from any Liability for any material  
inaccuracy in or breach of any representation or any material breach of any     
warranty, covenant or other provision contained in this Agreement.              

9.3  EXPENSES; TERMINATION FEES                                                 

     (a) Except as set forth in this Section 9.3, all fees and expenses incurred
in connection with this Agreement and the Contemplated Transactions shall be    
paid by the party incurring such expenses, whether or not the Merger is         
consummated; provided, however, that if this Agreement is terminated by Parent  
pursuant to Section 9.1(b), (c), (d), (e), (f) or (h) or by Company pursuant to 
Section 9.1(b), (d) or (j), then (without limiting any obligation of Company to 
pay any fee payable pursuant to Section 9.3(b) or Section 9.3(d)) Company shall 
make a nonrefundable cash payment to Parent, at the time specified in Section   
9.3(c), in an amount equal to the aggregate amount of all fees and expenses     
(including all attorneys' fees, accountants' fees, financial advisory fees and  
filing fees) that have been paid or that may become payable by or on behalf of  
Parent in connection with the preparation and negotiation of this Agreement and 
otherwise in connection with the Merger or any other Contemplated Transaction;  
further provided, however, that the amount of the nonrefundable cash fee payable
to Parent may not exceed $500,000, exclusive of fees and expenses (including    
reasonable attorneys' fees) that Parent incurs in connection with any Proceeding
challenging or seeking to restrain or prohibit the Merger or any of the         
Contemplated Transactions.                                                      

(b) If this Agreement is terminated by Parent or Company pursuant to  
Section 9.1(d), then (unless Parent is then entitled to receive a fee pursuant  
to Section 9.3(d)) Company shall pay to Parent, in cash at the time specified in
Section 9.3(c) (and in addition to the amounts payable by Company pursuant to   
Section 9.3(a)), a nonrefundable fee in an amount equal to $1,050,000.          

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 (c) In the case of termination of this Agreement by Company pursuant to
Section 9.1(b), (d) or (j), any nonrefundable payment required to be made       
pursuant to the proviso to Section 9.3(a) shall be made, and any fee payable    
pursuant to Section 9.3(b) shall be paid, by Company prior to the time of such  
termination; and in the case of termination of this Agreement by Parent pursuant
to Section 9.1(b), (c), (d), (e), (f) or (h), any nonrefundable payment required
to be made pursuant to the proviso to Section 9.3(a) shall be made, and any fee 
payable pursuant to Section 9.3(b) shall be paid, by Company within two business
days after such termination.                                                    

  (d) If this Agreement is terminated by (i) Parent or Company pursuant to
Section 9.1(b) or (d) and at or prior to the time of the termination of this    
Agreement an Acquisition Proposal shall have been disclosed, announced,         
commenced, submitted or made, and the transaction described in such Acquisition 
Proposal is consummated within 12 months following such termination, (ii) Parent
pursuant to Section 9.1(e), or (iii) Company pursuant to Section 9.1(j), then   
Company shall pay to Parent, in cash at the time specified in the next sentence 
(and in addition to the amounts payable pursuant to Section 9.3(a)), a          
nonrefundable fee in the amount equal to $1,750,000; provided, however, that if 
Company (A) receives a Significant Proposal within 30 days of the date of this  
Agreement and (B) terminates the Agreement pursuant to Section 9.1(j) before the
earlier of (y) 45 days from the date of this Agreement or (z) the date of       
mailing of the proxy statement contemplated pursuant to Section 5.1 in          
connection with entering into a written agreement that constitutes a Superior   
Proposal and contains terms and conditions that are not materially different    
than the terms and conditions of the Significant Proposal, the nonrefundable fee
payable to Parent pursuant to this Section 9.1(d) shall be $1,000,000. In the   
case of termination of this Agreement by Company pursuant to Section 9.1(b), (d)
or (j), the fee referred to in the preceding sentence shall be paid by Company  
prior to the time of such termination, except that in the case of termination by
Company pursuant to Section 9.1(b) or (d), any termination fee payable pursuant 
to Section 9.3(d)(i) shall be paid by Company on the date of consummation of the
acquisition described in such Acquisition Proposal, provided such consummation  
occurs within 12 months from the date of termination. In the case of termination
of this Agreement by Parent pursuant to Section 9.1(b), (d) or (e), the fee     
referred to in the preceding sentence shall be paid by Company within two       
business days after such termination.                                           

    (e) If Company fails to pay when due any amount payable under this Section
9.3, then (i) Company shall reimburse Parent for all costs and expenses         
(including fees and disbursements of counsel) incurred in connection with the   
collection of such overdue amount and the enforcement by Parent of its rights   
under this Section 9.3, and (ii) Company shall pay to Parent interest on such   
overdue amount (for the period commencing as of the date such overdue amount was
originally required to be paid and ending on the date such overdue amount is    
actually paid to Parent in full) at a rate per annum equal to the greater of (i)
4% over the "prime rate" (as published in the Wall Street Journal) in effect on 
the date such overdue amount was originally required to be paid or (ii) 8.25%.  

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Article 10

GENERAL PROVISIONS

10.1 NOTICES                                                                    

All notices, consents, waivers and other communications under this    
Agreement must be in writing and will be deemed given to a party when (a)       
delivered to the appropriate address by hand or by nationally recognized        
overnight courier service (costs prepaid), (b) sent by facsimile or e-mail with 
confirmation of transmission by the transmitting equipment or (c) received or   
rejected by the addressee, if sent by certified mail, return receipt requested; 
in each case to the following addresses, facsimile numbers or e-mail addresses  
and marked to the attention of the individual (by name or title) designated     
below (or to such other address, facsimile number, e-mail address or individual 
as a party may designate by notice to the other parties):                       

If to Company:                                                        

Greka Energy Corporation                                              
2801 B Santa Maria Way                                                
Santa Maria, CA                                                       
Attn:  Susan Whalen                                                   
Facsimile No.:  (805) 937-7862                                        
E-mail Address:  smw@grekaenergy.com                                  

with a copy (which will not constitute notice) to:                    

Ballard Spahr Andrews & Ingersoll, LLP                                
1225 17th Street, Suite 2300                                          
Denver, CO 80202-5596                                                 
Attn:  Roger V. Davidson                                              
Facsimile No.:  (303) 382-4607                                        
E-mail Address:  davidson@ballardspahr.com                            

If to Parent or Merger Sub:                                           

Randeep Grewal                                                        
c/o Scott Clemens                                                     
Baker & McKenzie                                                      
14th Floor, Hutchison House                                           
10 Harcourt Road                                                      
Hong Kong                                                             
Facsimile No.:  (852) 2845-0476                                       
E-mail Address:  scott.clemens@bakernet.com                           

with a copy (which will not constitute notice) to:                    

Baker & McKenzie                                                      
2001 Ross Avenue, Suite 2300                                          
Dallas, Texas 75201                                                   
Attn:  Daniel W. Rabun                                                
Facsimile No.:  (214) 978-3099                                        
E-mail Address:  daniel.w.rabun@bakernet.com                          

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10.2 FURTHER ACTIONS                                                            

     Upon the request of any party to this Agreement, the other parties will (a)
furnish to the requesting party any additional information, (b) execute and     
deliver, at their own expense, any other documents and (c) take any other       
actions as the requesting party may reasonably require to more effectively carry
out the intent of this Agreement and the Contemplated Transactions.             

10.3 INCORPORATION OF SCHEDULES AND EXHIBITS                                    

The Schedules and Exhibits identified in this Agreement, including the
Company Disclosure Schedule and any supplements thereto, are incorporated herein
by reference and made a part of this Agreement.                                 

10.4 ENTIRE AGREEMENT AND MODIFICATION                                          

This Agreement supersedes all prior agreements among the parties with 
respect to its subject matter and constitutes (along with the documents         
delivered pursuant to this Agreement) a complete and exclusive statement of the 
terms of the agreement between the parties with respect to its subject matter.  
This Agreement may be amended with the approval of the respective boards of     
directors of Company and Parent at any time (whether before or after adoption of
this Agreement by Company's shareholders); provided, however, that after any    
such adoption of this Agreement by Company's shareholders, no amendment shall be
made which by Law requires further approval of Company's shareholders without   
the further approval of such shareholders. This Agreement may not be amended,   
supplemented or otherwise modified except in a written document executed by all 
of the parties to this Agreement.                                               

10.5 DISCLOSURE SCHEDULES                                                       

    The Company Disclosure Schedule will be arranged in Parts corresponding to
the numbered and lettered Sections of Articles 2 and 3, as applicable. Nothing  
in the Disclosure Schedules will be adequate to disclose an exception to any    
representation or warranty made in Article 2 or Article 3 unless it identifies  
the exception with reasonable particularity and describes the facts relating to 
such exception in reasonable detail. Without limiting the generality of the     
foregoing, the listing or inclusion of a copy of a document or other item will  
not be adequate to disclose an exception to any representation or warranty made 
in this Agreement unless the representation or warranty relates to the existence
of the document or item itself.                                                 

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10.6 TIME OF ESSENCE                                                            

    With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.                                              

10.7 DRAFTING AND REPRESENTATION                                                

  The parties have participated jointly in the negotiation and drafting of
this Agreement. No provision of this Agreement will be interpreted for or       
against any party because that party or its legal representative drafted the    
provision.                                                                      

10.8 SEVERABILITY                                                               

    If a court of competent jurisdiction holds any provision of this Agreement
invalid or unenforceable, the other provisions of this Agreement will remain in 
full force and effect. Any provision of this Agreement held invalid or          
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.                                       

10.9 ASSIGNMENT; SUCCESSORS; NO THIRD-PARTY RIGHTS                              

  No party may assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of the other parties;    
provided, however, Parent can assign all of its rights and obligations under    
this Agreement to any Affiliate of Parent. Subject to the preceding sentence,   
this Agreement will apply to, be binding in all respects upon and inure to the  
benefit of each party's successors and permitted assigns. Nothing expressed or  
referred to in this Agreement will be construed to give any Person, other than  
the parties to this Agreement, any legal or equitable right, remedy or claim    
under or with respect to this Agreement or any provision of this Agreement      
except such rights as may inure to a successor or permitted assignee under this 
Section and for the provisions of Article 1 (collectively, "Third-Party         
Provisions"). The Third-Party Provisions may be enforced by the beneficiaries   
thereof.                                                                        

10.10 ENFORCEMENT OF AGREEMENT                                                  

  Each Party acknowledges and agrees that the other Party could be damaged
irreparably if any of the provisions of this Agreement are not performed in     
accordance with the specific terms and that any breach of this Agreement by     
Company could not be adequately compensated in all cases by monetary damages    
alone. Accordingly, each Party agrees that, in addition to any other right or   
remedy to which the other Party may be entitled, at Law or in equity, the other 
Party will be entitled to enforce any provision of this Agreement by a decree of
specific performance and to temporary, preliminary and permanent injunctive     
relief to prevent breaches or threatened breaches of any of the provisions of   
this Agreement, without posting any bond or other undertaking.                  

10.11 WAIVER                                                                    

     The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither any failure nor any delay by any party in exercising   
any right, power or privilege under this Agreement or any of the documents      
referred to in this Agreement will operate as a waiver of such right, power or  
privilege, and no single or partial exercise of any such right, power or        

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privilege will preclude any other or further exercise of such right, power or   
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable Law, (a) no claim or right arising out of this   
Agreement or any of the documents referred to in this Agreement can be          
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in a written document signed by the other party, (b) no   
waiver that may be given by a party will be applicable except in the specific   
instance for which it is given and (c) no notice to or demand on one party will 
be deemed to be a waiver of any obligation of that party or of the right of the 
party giving such notice or demand to take further action without notice or     
demand as provided in this Agreement or the documents referred to in this       
Agreement.                                                                      

10.12 GOVERNING LAW                                                             

     This Agreement will be governed by and construed under the laws of Colorado
without regard to conflicts of laws principles that would require the           
application of any other law.                                                   

10.13 JURISDICTION; SERVICE OF PROCESS                                          

    Any action, hearing, suit or Proceeding arising out of or relating to this
Agreement or any Contemplated Transaction must be brought in the courts of the  
State of Colorado, County of Denver, or, if it has or can acquire jurisdiction, 
in the United States District Court for the District of Colorado. Each of the   
parties irrevocably submits to the exclusive jurisdiction of each such court in 
any such Proceeding and waives any objection it may now or hereafter have to    
venue or to convenience of forum. The parties agree that any or all of them may 
file a copy of this Section with any court as written evidence of the knowing,  
voluntary and bargained agreement between the parties irrevocably to waive any  
objections to venue or to convenience of forum. Process in any Proceeding       
referred to in this Section may be served on any party anywhere in the world.   

10.14 COUNTERPARTS                                                              

  This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same Agreement and shall become effective when  
one or more counterparts have been signed by each of the parties and delivered  
to the other parties.                                                           

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The parties have executed and delivered this Agreement as of the date 
indicated in the first sentence of this Agreement.                              

              ALEXI HOLDINGS LIMITED

              By: /s/ Randeep Grewal
                                    --------------------------------------------
                  Randeep Grewal
            Director

         ALEXI CORPORATION

              By: /s/ Randeep Grewal
                                    --------------------------------------------
                  Randeep Grewal
                      Authorized Officer

                GREKA ENERGY CORPORATION

            By: /s/ Susan Whalen
                                    --------------------------------------------
                Susan Whalen
                                          Vice President -- Asset Management and
             Secretary

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 TABLE OF CONTENTS

                                                                            Page
Article 1         DESCRIPTION OF TRANSACTION...................................1

         1.1      MERGER OF MERGER SUB INTO COMPANY............................1
         1.2      EFFECT OF THE MERGER.........................................1
         1.3      CLOSING; EFFECTIVE TIME......................................1
1.4      ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS      
                  AND OFFICERS.................................................2
         1.5      CONVERSION OF SHARES.........................................2
         1.6      EXCHANGE OF CERTIFICATES.....................................4
         1.7      FURTHER ACTION...............................................5
         1.8      APPRAISAL RIGHTS.............................................6

Article 2         REPRESENTATIONS AND WARRANTIES OF COMPANY....................6

         2.1      ORGANIZATION AND GOOD STANDING...............................6
         2.2      AUTHORITY; ENFORCEABILITY; NO CONFLICT.......................7
         2.3      CAPITALIZATION...............................................8
         2.4      SEC FILINGS; FINANCIAL STATEMENTS............................9
         2.5      FINANCIAL STATEMENTS.........................................9
         2.6      NO UNDISCLOSED LIABILITES...................................10
         2.7      ABSENCE OF CERTAIN CHANGES AND EVENTS.......................10
         2.8      LEGAL PROCEEDINGS...........................................12
 2.9      RECOMMENDATION OF SPECIAL COMMITTEE AND COMPANY BOARD;
                  OPINION OF FINANCIAL ADVISOR................................12
         2.10     RIGHTS PLAN.................................................13
         2.11     ENVIRONMENTAL MATTERS.......................................13
         2.12     AGREEMENTS, CONTRACTS AND COMMITMENTS.......................14
         2.13     COMPLIANCE WITH LAWS; PERMITS...............................14
         2.14     TAKEOVER STATUTES NOT APPLICABLE............................14
         2.15     BROKERS; FINDERS............................................14
         2.16     FULL DISCLOSURE.............................................14

Article 3         REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.....15

         3.1      ORGANIZATION AND GOOD STANDING..............................15
         3.2      AUTHORITY; ENFORCEABILITY; NO CONFLICT......................15
         3.3      CAPITALIZATION .............................................16
         3.4      NO PRIOR ACTIVITIES.........................................16
         3.5      BROKERS; FINDERS............................................16
         3.6      FULL DISCLOSURE.............................................16
         3.7      DUE DILIGENCE...............................................17

Article 4         CERTAIN COVENANTS OF COMPANY AND PARENT.....................17

         4.1      ACCESS AND INVESTIGATION BY PARENT..........................17
         4.2      OPERATION OF COMPANY'S BUSINESS.............................17
         4.3      NO SOLICITATION.............................................18

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Article 5         ADDITIONAL COVENANTS OF THE PARTIES.........................20

         5.1      PROXY STATEMENT AND SCHEDULE 13E-3..........................20
         5.2      COMPANY SHAREHOLDERS' MEETING...............................21
         5.3      REASONABLE BEST EFFORTS TO CLOSE ...........................21
         5.4      DISCLOSURE..................................................22
         5.5      RIGHTS AGREEMENT............................................22

Article 6         CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES..........23

         6.1      COMPANY SHAREHOLDER APPROVAL................................23
         6.2      NO RESTRAINTS...............................................23

Article 7         CONDITIONS PRECEDENT TO PARENT'S AND MERGER SUB'S             
                  OBLIGATION TO CLOSE.........................................23

         7.1      ACCURACY OF REPRESENTATIONS.................................23
         7.2      COMPANY'S PERFORMANCE.......................................23
         7.3      CONSENTS....................................................24
         7.4      NO MATERIAL ADVERSE EFFECT..................................24
         7.5      NO PROCEEDINGS..............................................24
         7.6      SUCCESSFUL COMPLETION OF PARENT FINANCING...................24
         7.7      OFFICER'S CERTIFICATE.......................................24
         7.8      DISSENTING SHARES...........................................25
         7.9      EXTENSION...................................................25

Article 8         CONDITIONS PRECEDENT TO COMPANY'S OBLIGATION TO CLOSE.......25

         8.1      ACCURACY OF REPRESENTATIONS.................................25
         8.2      PARENT'S AND MERGER SUB'S PERFORMANCE.......................25
         8.3      CONSENTS....................................................25
         8.4      OFFICER'S CERTIFICATE.......................................26
         8.5      CONFIRMATION OF AVAILABILITY OF FINANCING...................26
         8.6      FEES AND EXPENSES...........................................26

Article 9         TERMINATION.................................................26

         9.1      TERMINATION.................................................26
         9.2      EFFECT OF TERMINATION.......................................28
         9.3      EXPENSES; TERMINATION FEES..................................28

Article 10        GENERAL PROVISIONS..........................................30

         10.1     NOTICES.....................................................30
         10.2     FURTHER ACTIONS.............................................31
         10.3     INCORPORATION OF SCHEDULES AND EXHIBITS.....................31
         10.4     ENTIRE AGREEMENT AND MODIFICATION...........................31
         10.5     DISCLOSURE SCHEDULES........................................31
         10.6     TIME OF ESSENCE.............................................32
         10.7     DRAFTING AND REPRESENTATION.................................32
         10.8     SEVERABILITY................................................32

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         10.9     ASSIGNMENT; SUCCESSORS; NO THIRD-PARTY RIGHTS...............32
         10.10    ENFORCEMENT OF AGREEMENT....................................32
         10.11    WAIVER......................................................32
         10.12    GOVERNING LAW...............................................33
         10.13    JURISDICTION; SERVICE OF PROCESS ...........................33
         10.14    COUNTERPARTS................................................33

EXHIBIT A         CONSTRUCTION AND DEFINITIONS                                  
EXHIBIT B         FORM OF CONFIDENTIALITY AGREEMENT                             
COMPANY DISCLOSURE SCHEDULE                                                     

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 EXHIBIT A

CONSTRUCTION AND DEFINITIONS

1.   CONSTRUCTION                                                               

Any reference in the Agreement (as defined below) to an "Article,"    
"Section," "Exhibit" or "Schedule" refers to the corresponding Article, Section,
Exhibit or Schedule of or to the Agreement, unless the context indicates        
otherwise. The headings of Articles and Sections are provided for convenience   
only and should not affect the construction or interpretation of the Agreement. 
All words used in the Agreement should be construed to be of such gender or     
number as the circumstances require. The terms "include" and "including"        
indicate examples of a foregoing general statement and not a limitation on that 
general statement. Any reference to a statute refers to the statute, any        
amendments or successor legislation and all regulations promulgated under or    
implementing the statute, as in effect at the relevant time. Any reference to a 
Contract or other document as of a given date means the Contract or other       
document as amended, supplemented and modified from time to time through such   
date.                                                                           

2.   DEFINITIONS                                                                

  For the purposes of the Agreement, the following terms and variations on
them have the meanings specified in this Section:                               

"Acquired Companies" is defined in Section 2.1(a).                    

    "Acquisition Proposal" means any offer, proposal, inquiry or indication of
interest (other than an offer, proposal, inquiry or indication of interest by   
Parent) contemplating or otherwise relating to any Acquisition Transaction.     

   "Acquisition Transaction" means any transaction or series of transactions
involving:                                                                      

        (a) any merger, consolidation, share exchange, business combination,
issuance of securities, acquisition of securities, tender offer, exchange offer 
or other similar transaction (i) in which any of the Acquired Companies is a    
constituent corporation, (ii) in which a Person or "group" (as defined in the   
Exchange Act and the rules promulgated thereunder) of Persons directly or       
indirectly acquires beneficial or record ownership of securities representing   
more than 9.9% of the outstanding securities of any class of voting securities  
of any of the Acquired Companies, or (iii) in which any of the Acquired         
Companies issues or sells securities representing more than 9.9% of the         
outstanding securities of any class of voting securities of any of the Acquired 
Companies; or                                                                   

         (b) any sale (other than sales of Inventory in the Ordinary Course of
Business), lease (other than in the Ordinary Course of Business), exchange,     
transfer (other than sales of Inventory in the Ordinary Course of Business),    
license (other than nonexclusive licenses in the Ordinary Course of Business),  
acquisition or disposition of any business or businesses or assets that         
constitute or account for 9.9% or more of the consolidated net revenues, net    
income or assets of the Acquired Companies.                                     

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"Affiliate" of a specified Person means a Person who, directly or     
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with, such specified Person.                               

"Agreement" is defined in the first paragraph of the Agreement.       

"Articles of Merger" is defined in Section 1.3.                       

"Balance Sheet" is defined in Section 2.5.                            

"CBCA" is defined in Section 1.2.                                     

  "Certifications" means all certifications and statements required by (i)
the SEC's Order dated June 27, 2002 pursuant to Section 21(a)(1) of the Exchange
Act (File No. 4-460), (ii) Rule 13a-14 or 15d-14 under the Exchange Act, or     
(iii) 18 U.S.C. ss.1350 (Section 906 of the Sarbanes-Oxley Act of 2002) with    
respect to any report referred to in clause (a) or (b) of the definition of     
Company SEC Reports.                                                            

"CIBC" is defined in Section 2.9(c).                                  

"Closing" is defined in Section 1.3.                                  

"Closing Date" is defined in Section 1.3.                             

"Code" means the Internal Revenue Code of 1986, as amended.           

"Company" is defined in the first paragraph of the Agreement.         

"Company Board Recommendation" is defined in Section 5.2(b).          

   "Company Common Stock" means the common stock, no par value per share, of
Company.                                                                        

    "Company Contract" means any Contract (a) under which any Acquired Company
has or may acquire rights, (b) under which any Acquired Company is or may become
subject to Liability or (c) by which any Acquired Company or any of its assets  
is or may become bound.                                                         

"Company Disclosure Schedule" means the Disclosure Schedule delivered 
pursuant to Article 2 by Company to Parent concurrently with the execution and  
delivery of the Agreement, together with any updates to it permitted by the     
Agreement.                                                                      

  "Company Material Adverse Effect" means an event, violation, inaccuracy,
circumstance or other matter (considered together with all other matters that   
would constitute exceptions to the representations and warranties set forth in  
the Agreement but for the presence of "Material Adverse Effect" or other        
materiality qualifications, or any similar qualifications, in such              
representations and warranties) that has had or would reasonably be expected to 
have a Material Adverse Effect on (a) the business, condition, capitalization,  
assets, liabilities, operations or financial performance of the Acquired        
Companies taken as a whole, (b) the ability of Company to consummate the Merger 

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or any of the Contemplated Transactions or to perform any of its obligations    
under the Agreement or (c) Parent's ability to vote, receive dividends with     
respect to or otherwise exercise ownership rights with respect to the stock of  
Surviving Corporation; provided, however, that the following shall not be deemed
to constitute, create or cause a Material Adverse Effect: any changes,          
circumstances or effects (i) that affect generally the oil and gas industry, and
do not disproportionately affect such Persons, and that result from national,   
regional, state or local economic conditions, from general developments or      
conditions in the industry in which Company conducts business, from changes in  
laws, rules or regulations applicable to such party or its subsidiaries or from 
other general economic conditions, facts or circumstances that are not subject  
to the control or such party, (ii) that result from the Contemplated            
Transactions and public announcement thereof, (iii) that result from any change 
in the trading prices or volumes of the capital stock of Company, (iv) that     
result from the effects of conditions or events resulting from an outbreak or   
escalation of hostilities involving the United States or the declaration by the 
United States of a national emergency or war or the occurrence of any other     
calamity or crisis, including the occurrence of a terrorist attack or (v) that  
result from any change resulting from the actions of Parent.                    

"Company Material Contracts" is defined in Section 2.12.              

"Company Rights Agreement" is defined in Section 2.3(f).              

   "Company SEC Reports" means (a) the Company's Annual Reports on Form 10-K
for each fiscal year of Company beginning since January 1, 2000, (b) its        
Quarterly Reports on Form 10-Q for each of the first three fiscal quarters in   
each of the fiscal years of Company referred to in clause (a) above, (c) all    
proxy statements relating to Company's meetings of shareholders (whether annual 
or special) held, and all information statements relating to shareholder        
consents, since the beginning of the first fiscal year referred to in clause (a)
above, (d) its Current Reports on Form 8-K filed since the beginning of the     
first fiscal year referred to in clause (a) above, and (e) all other forms,     
reports, registration statements and other documents (other than preliminary    
materials if the corresponding definitive materials have been provided to Parent
pursuant to Section 2.4) filed by Company with the SEC since the beginning of   
the first fiscal year referred to in clause (a) above.                          

"Company Stock Certificate" means any validly issued certificate      
representing shares of the Company Common Stock.                                

"Company Stock Options" is defined in Section 1.5(e).                 

"Company Shareholders' Meeting" is defined in Section 5.2(a).         

"Company Triggering Event" means (a) approval, endorsement or         
recommendation by the board of directors of Company of any Acquisition Proposal,
(b) the failure of Company to comply with Section 5.2, (c) the withdrawal or    
modification of the Company Board Recommendation pursuant to Section 5.2(c), (d)
commencement of a tender or exchange offer relating to securities of Company and
the failure of Company to send to its security holders, within 10 business days 
after the commencement of such tender or exchange offer, a statement disclosing 
that the board of directors recommends rejection of such tender or exchange     
offer, (e) the public announcement of an Acquisition Proposal, and the failure  

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of Company to issue a press release announcing its opposition to such           
Acquisition Proposal within 10 business days after such Acquisition Proposal is 
announced or (f) the breach of, or the taking of any action inconsistent with   
any of the provisions set forth in, Section 4.3 by any of the Acquired Companies
or any Representative of any of the Acquired Companies.                         

"Consent" means any approval, consent, ratification, waiver or other  
authorization.                                                                  

     "Contemplated Transactions" means all of the transactions to be carried out
in accordance with the Agreement, including the merger of Merger Sub with and   
into Company, the performance by the parties of their other obligations under   
the Agreement.                                                                  

  "Contract" means any (i) contract, agreement, commitment, understanding,
lease, license, franchise, warranty, guaranty, mortgage, note, bond or other    
instrument or consensual obligation (whether written or oral and whether express
or implied) that is legally binding or (ii) any letter of intent or expression  
of interest that evidences an intent or desire to enter into an arrangement     
described in clause (i).                                                        

  "Contravene" or "Contravention" -- an act or omission would "Contravene"
something if, as the context requires:                                          

         (a) the act or omission would conflict with it, violate it, result in
a breach or violation of or failure to comply with it, or constitute a default  
under it;                                                                       

     (b) the act or omission would give any Governmental Body or other
Person the right to challenge, revoke, withdraw, suspend, cancel, terminate or  
modify it, to exercise any remedy or obtain any relief under it or to declare a 
default or accelerate the maturity of any obligation under it; or               

          (c) the act or omission would result in the creation of an Encumbrance
on the stock or any of the assets of any of the Acquired Companies.             

"Dissenting Shares" is defined in Section 1.8.                        

"Effective Time" is defined in Section 1.3.                           

     "Encumbrance" means any charge, claim, mortgage, servitude, easement, right
of way, community or other marital property interest, covenant, equitable       
interest, license, lease or other possessory interest, lien, option, pledge,    
security interest, preference, priority, right of first refusal or similar      
restriction; provided, however, that the term "Encumbrance" does not include (a)
mechanic's, materialman's or similar liens with respect to amounts arising or   
incurred in the Ordinary Course of Business, (b) statutory liens for current    
Taxes not yet delinquent or the amount or validity of which is being contested  
in good faith by appropriate Proceedings, (c) liens securing rental payments    
under capital lease arrangements, (d) defects, exceptions, restrictions,        
easements, rights of way and encumbrances disclosed in policies of title        
insurance or zoning, entitlement and other land use and environmental           
regulations by any Governmental Body and (e) such other imperfections in title, 
charges, easements, restrictions and encumbrances which do not materially       
detract from the value of or materially interfere with the present use of any   
property subject thereto or affected thereby.                                   

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"Entity" means any corporation, general partnership, limited liability
company, limited partnership, limited liability partnership, joint venture,     
estate, trust, company, firm, society or other enterprise, association or       
organization.                                                                   

  "Environment" means the soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage      
basins, and wetlands), groundwaters, drinking water supply, stream sediments,   
ambient air (including indoor air), plant and animal life, and any other        
environmental medium or natural resource.                                       

  "Environmental, Health, and Safety Liabilities" means any cost, damages,
expense, liability, obligation, or other responsibility arising from or under   
Environmental Law or Occupational Safety and Health Law and consisting of or    
relating to:                                                                    

  (a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,   
and regulation of chemical substances or products);                             

  (b) fines, penalties, judgments, awards, settlements, legal or
administrative Proceedings, damages, losses, claims, demands and response,      
investigative, remedial, or inspection costs and expenses arising under         
Environmental Law or Occupational Safety and Health Law;                        

        (c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any     
investigation, cleanup, removal, containment, or other remediation or response  
actions required by applicable Environmental Law or Occupational Safety and     
Health Law (whether or not such cleanup has been required or requested by any   
Governmental Body or any other Person) and for any natural resource damages; or 

    (d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.

The terms "removal," "remedial," and "response action," include the types of    
activities covered by the United States Comprehensive Environmental Response,   
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended.        

"Environmental Law" means any Law that requires or relates to:        

      (a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials, 
violations of discharge limits, or other prohibitions and of the commencements  
of activities, such as resource extraction or construction, that could have     
significant impact on the Environment;                                          

  (b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;           

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          (c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;                         

      (d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the      
Environment when used or disposed of;                                           

(e) protecting resources, species, or ecological amenities; 

(f) reducing to acceptable levels the risks inherent in the 
transportation of hazardous substances, pollutants, oil, or other potentially   
harmful substances;                                                             

      (g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or       

          (h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or permitting              
self-appointed representatives of the public interest to recover for injuries   
done to public assets.                                                          

"Exchange Act" means the Securities Exchange Act of 1934, as amended. 

"Exchange Agent" is defined in Section 1.6(a).                        

"Exchange Fund" is defined in Section 1.6(a).                         

"Facilities" means any real property, leaseholds, or other interests  
currently or formerly owned or operated by any Acquired Company and any         
buildings, plants, structures, or equipment (including motor vehicles, tank     
cars, and rolling stock) currently or formerly owned or operated by any Acquired
Company.                                                                        

"GAAP" means generally accepted accounting principles for financial   
reporting in the United States.                                                 

"Governing Document" means any charter, articles, bylaws, certificate,
statement, statutes or similar document adopted, filed or registered in         
connection with the creation, formation or organization of an Entity, and any   
Contract among all equityholders, partners or members of an Entity.             

"Governmental Authorization" means any Consent, license, permit or    
registration issued, granted, given or otherwise made available by or under the 
authority of any Governmental Body or pursuant to any Law.                      

"Governmental Body" means any (a) nation, region, state, county, city,
town, village, district or other jurisdiction, (b) federal, state, local,       
municipal, foreign or other government, (c) governmental or quasi-governmental  
authority of any nature (including any governmental agency, branch, department  
or other Entity and any court or other tribunal), (d) multinational             
organization, (e) body exercising, or entitled to exercise, any administrative, 
executive, judicial, legislative, policy, regulatory or taxing authority or     
power of any nature or (f) official of any of the foregoing.                    

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  "Hazardous Materials" means any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any  
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes        
therefor and asbestos or asbestos-containing materials.                         

  "Knowledge" means, with respect to any Party, the actual knowledge after
reasonable investigation of any of such Party's directors or officers.          

"Law" means any constitution, law, statute, treaty, rule, regulation, 
ordinance, code, binding case law, principle of common law or notice of any     
Governmental Body.                                                              

  "Liabilities" includes liabilities or obligations of any nature, whether
known or unknown, whether absolute, accrued, contingent, choate, inchoate or    
otherwise, whether due or to become due, and whether or not required to be      
reflected on a balance sheet prepared in accordance with GAAP.                  

"Merger" is defined in the Preliminary Statements.                    

"Merger Consideration" is defined in Section 1.5(a).                  

"Merger Sub" is defined in the first paragraph of the Agreement.      

   "Merger Sub Common Stock" means the common stock, no par value per share,
of Merger Sub.                                                                  

     "Occupational Safety and Health Law" means any Law designed to provide safe
and healthful working conditions and to reduce occupational safety and health   
hazards, and any program, whether governmental or private (such as those        
promulgated or sponsored by industry associations and insurance companies),     
designed to provide safe and healthful working conditions.                      

"Off-Balance Sheet Arrangement" means with respect to any Person, any 
securitization transaction to which that Person or its Subsidiaries is party and
any other transaction, agreement or other contractual arrangement to which an   
entity unconsolidated with that Person is a party, under which that Person or   
its Subsidiaries, whether or not a party to the arrangement, has, or in the     
future may have: (a) any obligation under a direct or indirect guarantee or     
similar arrangement; (b) a retained or contingent interest in assets transferred
to an unconsolidated entity or similar arrangement; (c) derivatives to the      
extent that the fair value thereof is not fully reflected as a liability or     
asset in the financial statements; or (d) any obligation or liability, including
a contingent obligation or liability, to the extent that it is not fully        
reflected in the financial statements (excluding the footnotes thereto) (for    
this purpose, obligations or liabilities that are not fully reflected in the    
financial statements (excluding the footnotes thereto) include, without         
limitation: obligations that are not classified as a liability according to     

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GAAP; contingent liabilities as to which, as of the date of the financial       
statements, it is not probable that a loss has been incurred or, if probable, is
not reasonably estimable; or liabilities as to which the amount recognized in   
the financial statements is less than the reasonably possible maximum exposure  
to loss under the obligation as of the date of the financial statements, but    
exclude contingent liabilities arising out of litigation, arbitration or        
regulatory actions (not otherwise related to off-balance sheet arrangements)).  

"Option Plans" is defined in Section 1.5(e).                          

"Options" is defined in Section 2.3.                                  

   "Order" means any order, injunction, judgment, decree, ruling, assessment
or arbitration award of any Governmental Body or arbitrator, and any Contract   
with any Governmental Body pertaining to compliance with Law.                   

   "Ordinary Course of Business" refers to actions taken in Company's normal
operation, consistent with its past practice and having no Company Material     
Adverse Effect.                                                                 

"Parent" is defined in the first paragraph of the Agreement.          

     "Parent Common Stock" means the common stock, $0.01 par value per share, of
Parent.                                                                         

 "Parent Material Adverse Effect" means an event, violation, inaccuracy,
circumstance or other matter (considered together with all other matters that   
would constitute exceptions to the representations and warranties set forth in  
the Agreement but for the presence of "Material Adverse Effect" or other        
materiality qualifications, or any similar qualifications, in such              
representations and warranties) that has had or would reasonably be expected to 
have a Material Adverse Effect on (a) the business, condition, capitalization,  
assets, Liabilities, operations or financial performance of Parent and its      
Subsidiaries taken as a whole, or (b) the ability of Parent to consummate the   
Merger or any of the Contemplated Transactions or to perform any of its         
obligations under the Agreement; provided, however, that the following shall not
be deemed to constitute, create or cause a Material Adverse Effect: any changes,
circumstances or effects (i) that affect generally the oil and gas industry, and
do not disproportionately affect such Persons, and that result from national,   
regional, state or local economic conditions, from general developments or      
conditions in the industry in which Parent conducts business, from changes in   
laws, rules or regulations applicable to such party or its subsidiaries or from 
other general economic conditions, facts or circumstances that are not subject  
to the control or such party, (ii) that result from the Contemplated            
Transactions and public announcement thereof, (iii) that result from any change 
in the trading prices or volumes of the capital stock of Parent; (iv) that      
result from the effects of conditions or events resulting from an outbreak or   
escalation of hostilities involving the United States or the declaration by the 
United States of a national emergency or war or the occurrence of any other     
calamity or crisis, including the occurrence of a terrorist attack; or (v) that 
result from any change resulting from the actions of Company.                   

"Party" means Company, Parent or Merger Sub.                          

"Permits" is defined in Section 2.13.                                 

"Person" refers to an individual or an Entity.                        

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"Pre-Closing Period" is defined in Section 4.1.                       

"Proceeding" means any action, arbitration, audit, examination,       
investigation, hearing, litigation or suit (whether civil, criminal,            
administrative, judicial or investigative, whether formal or informal, and      
whether public or private) commenced, brought, conducted or heard by or before, 
or otherwise involving, any Governmental Body or arbitrator.                    

"Proxy Statement" means the proxy statement to be sent to Company's   
shareholders in connection with the Company Shareholders' Meeting.              

    "reasonable best efforts" means the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to achieve that result 
as expeditiously as possible; provided, however, that a Person required to use  
reasonable best efforts under the Agreement will not be required to make any    
material change to its business, dispose of any material asset, expend material 
funds, incur any material burden or take actions that would result in a material
adverse change in the benefits to such Person of the Agreement and the          
Contemplated Transactions.                                                      

    "Representative" means, with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, legal counsel, accountant or     
other representative of that Person.                                            

    "Required Company Shareholder Vote" means the affirmative vote in favor of
the Agreement and the Merger of a majority of the issued and outstanding shares 
of Company Common Stock entitled to vote on the matter.                         

     "Rights" means any outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital     
stock or other securities of Company.                                           

"SEC" means the United States Securities and Exchange Commission.     

"Secretary of State" is defined in Section 1.3.                       

"Securities Act" means the Securities Act of 1933, as amended.        

"Schedule 13E-3" means the Statement on Schedule 13E-3 to be filed by 
Company and Parent concurrently with the filing of the Proxy Statement pursuant 
to the Exchange Act, together with any amendments or supplements thereto.       

     "Significant Proposal" means an unsolicited bona fide written proposal made
by a third party to purchase all of the outstanding Company Common Stock on     
terms that the board of directors of Company determines, in its reasonable      
judgment, (a) to be more favorable from a financial point of view to Company's  
shareholders than the terms of the Merger, and (b) is reasonably capable of     
being consummated.                                                              

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"Special Committee" means that committee of independent directors     
established by Company's Board of Directors to evaluate the fairness of the     
Agreement and the Contemplated Transactions to Company's shareholders.          

   "Subsidiary" of any Entity means any Entity of which such Entity directly
or indirectly owns or has a right to acquire, beneficially or of record, (a) an 
amount of voting securities of other interests in such Entity that is sufficient
to enable the Entity owning the securities to elect at least a majority of the  
members of such Entity's board of directors or other governing body, or (b) at  
least 50% of the outstanding equity or financial interests of such Entity.      

     "Superior Proposal" means an unsolicited, bona fide written offer made by a
third party to purchase all of the outstanding Company Common Stock not owned by
the third party on terms that the board of directors of Company (excluding      
Randeep S. Grewal) determines, in its reasonable judgment, (a) after receipt of 
a written opinion of an independent financial advisor of nationally recognized  
reputation, to be more favorable from a financial point of view to Company's    
shareholders than the terms of the Merger, taking into account, among other     
things, financing requirements, timing of the closing of the proposed purchase, 
and regulatory and other approvals, and (b) is reasonably capable of being      
consummated; provided, however, that any such offer shall not be deemed to be a 
"Superior Proposal" if any financing required to consummate the transaction     
contemplated by such offer is not committed and is not reasonably capable of    
being obtained by such third party.                                             

"Surviving Corporation" is defined in Section 1.1.                    

    "Tax" or "Taxes" means all federal, state, local, foreign and other taxes,
charges, fees, duties (including customs duties), levies or assessments,        
including income, gross receipts, net proceeds, alternative or add-on minimum,  
ad valorem, turnover, real and personal property (tangible and intangible),     
sales, use, franchise, excise, value added, stamp, leasing, lease, user,        
transfer, fuel, excess profits, occupational, interest equalization, windfall   
profits, severance, license, payroll, environmental, capital stock, disability, 
employee's income withholding, other withholding, unemployment and social       
security taxes, that are imposed by any Governmental Body, and including any    
interest, penalties or additions to tax attributable thereto.                   

   "Tax Return" means any report, return or other information required to be
supplied to a Governmental Body in connection with any Taxes.                   

"Third-Party Provisions" is defined in Section 10.9.                  

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 EXHIBIT B

 CONFIDENTIALITY AGREEMENT

   This Confidentiality Agreement (the "Agreement") is dated ________ and is
by and between Greka Energy Corporation, a Colorado corporation (the "Company"),
and ___________________________, a _________corporation (the "Investigating     
Party").                                                                        

 PRELIMINARY STATEMENT

The Investigating Party has requested access to certain information,  
properties and personnel of the Company and its subsidiaries (collectively, the 
"Disclosing Party") in connection with the negotiation of a possible transaction
(the "Transaction").                                                            

 AGREEMENT

The parties, intending to be legally bound, agree as follows:         

ARTICLE 1 CONFIDENTIAL INFORMATION

1.1  "Confidential Information" means all non-public information of the         
    Disclosing Party disclosed or made available to the Investigating Party or
   any of its directors, officers, employees, agents, consultants, advisors,
    legal counsel or accountants (collectively, "Representatives"), regardless
of the form or manner of disclosure, including without limitation:    

(a) all information relating to the Disclosing Party's trade secrets  
(including all information that applicable law defines as "trade secrets");     

(b) all information concerning products, product specifications, data,
formulae, compositions, designs, sketches, photographs, graphs, drawings,       
samples, inventions, discoveries, ideas, know-how, past, current, and planned   
research and development, current and planned methods and processes, client or  
customer lists and files, current and anticipated client or customer            
requirements, vendor and supplier lists and files, price lists, market studies, 
business plans and business opportunities;                                      

   (c) all information concerning software that was developed or modified by
or for the Disclosing Party (including object and source codes), databases, data
modules or structures, algorithms and computer system architectures;            

     (d) all information concerning the Disclosing Party's business and affairs,
assets, liabilities, historical and current financial statements, financial     
projections and budgets, historical, current and projected sales, capital       
spending budgets, forecasts, strategic plans, marketing and advertising plans,  
publications, agreements, the names and backgrounds of key personnel, personnel 
training techniques and materials and the names, contact information and any    
other information relating to an identified or identifiable natural person;     

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(e) all third-party confidential information in the possession of the 
Disclosing Party; and                                                           

    (f) all notes, analyses, compilations, studies, summaries, interpretations
and other material prepared by the Investigating Party or its Representatives to
the extent they contain, are based on or refer to any information described in  
(i) through (v) above (collectively, "Notes").                                  

1.2  The term Confidential Information does not include any portions of such    
information:                                                          

   (a) that become generally available to the public, other than as a result
of disclosure by the Investigating Party or any of its Representatives; or      

     (b) that becomes available to the Investigating Party on a non-confidential
basis from a source (other than the Disclosing Party or its Representatives)    
which, to the Investigating Party's knowledge after due inquiry, is not         
prohibited from disclosing such information to the Investigating Party by a     
legal, contractual or fiduciary obligation to the Disclosing Party.             

1.3  Any trade secrets of the Disclosing Party will also be entitled to all of  
 the protections and benefits under applicable trade secrets law and any
     other applicable law. If any information that the Disclosing Party deems to
     be a trade secret is found by a court of competent jurisdiction not to be a
  trade secret for purposes of this Agreement, the information nonetheless
    will be considered Confidential Information for purposes of this Agreement
unless it falls within the exception described in Section 1(b).       

ARTICLE 2 RESTRICTED USE AND NONDISCLOSURE

2.1  The Investigating Party agrees that the Investigating Party and its        
     Representatives (i) will keep the Confidential Information confidential and
 (ii) without limiting the foregoing, will not disclose the Confidential
Information to any person (including current or prospective financing 
  sources) except with the specific prior written consent of Susan Whalen,
the Company's Vice President - Asset Management (the "Disclosing Party
   Contact") or except as expressly otherwise permitted by the terms of this
Agreement or a Definitive Agreement (as defined in Section 9). It is  
understood that the Investigating Party may disclose Confidential     
    Information only to those of the Investigating Party's Representatives who
     require such material for the purpose of evaluating the Transaction (but to
the extent practicable, only the part that is so required and without 
revealing the possible Transaction), and who are informed by the      
Investigating Party of the confidential nature of the Confidential    
    Information and the obligations of this Agreement. The Investigating Party
  and its Representatives will not use any of the Confidential Information
for any reason or purpose other than to evaluate and negotiate the    
Transaction.                                                          

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2.2  The Investigating Party will enforce the terms of this Agreement as to its 
Representatives and will take all steps (including all action the     
Investigating Party would take to protect its own trade secrets and   
confidential information) necessary to cause them to comply with this 
Agreement and thereby prevent their disclosure of the Confidential    
    Information, except as permitted by this Agreement. If an unauthorized use
   or disclosure occurs, the Investigating Party will immediately notify the
    Disclosing Party and take, at the Investigating Party's expense, all steps
   (including available actions for seizure and injunctive relief) necessary
to recover the Confidential Information and prevent its subsequent    
     unauthorized use or dissemination. If the Investigating Party fails to take
    these steps in a timely and adequate manner, the Disclosing Party may take
them in its own or in the Investigating Party's name and at the       
Investigating Party's expense.                                        

ARTICLE 3 NONDISCLOSURE OF TRANSACTION

Except as expressly permitted by a Definitive Agreement, neither the  
Investigating Party nor its Representatives will, without prior written consent 
of a Disclosing Party Contact, disclose to any person (including another        
prospective purchaser who has been provided Confidential Information) the terms 
or existence of this Agreement, the fact that the Confidential Information has  
been made available to the Investigating Party or the Investigating Party's     
Representatives, the fact that discussions or negotiations are taking place     
concerning a Transaction, or any of the terms, conditions, or other facts with  
respect thereto; provided, however, that the Investigating Party and its        
Representatives may disclose such information to those of the Investigating     
Party's Representatives who require such information for purposes of assisting  
with the Transaction.                                                           

ARTICLE 4 LEGAL COMPULSION TO DISCLOSE CONFIDENTIAL INFORMATION 

 If the Investigating Party or any of its Representatives become legally
compelled (including pursuant to any rule or regulation promulgated by any      
securities regulation authority or any securities exchange) to make any         
disclosure that is prohibited or otherwise constrained by this Agreement, then  
the Investigating Party or such Representative, as the case may be, will give   
the Company immediate written notice of such requirement so that it may seek a  
protective order or other appropriate relief, or waive compliance with the      
nondisclosure provisions of this Agreement. Subject to the foregoing, the       

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Investigating Party or such Representative may make only such disclosure that,  
in the written opinion of counsel reasonably acceptable to the Company, it is   
legally compelled or otherwise required to make to avoid standing liable for    
contempt or suffering other material censure or penalty; provided, however, that
the Investigating Party and its Representatives must use reasonable efforts to  
obtain reliable assurance that confidential treatment will be accorded any      
Confidential Information so disclosed.                                          

ARTICLE 5 DISCLOSING PARTY CONTACT

The Company will determine, in its sole discretion, what information, 
properties and personnel it wishes to make available to the Investigating Party.
All requests by the Investigating Party or its Representatives for Confidential 
Information, meetings with Disclosing Party personnel or Representatives,       
inspections of Disclosing Party properties, and discussions or questions        
regarding procedures will be made exclusively to the Disclosing Party Contact.  
The Investigating Party and its Representatives will not initiate any           
communications with any director, officer or employee of the Disclosing Party   
(other than a Disclosing Party Contact) without the prior written consent of a  
Disclosing Party Contact.                                                       

ARTICLE 6 EMPLOYEES 

 For a period of two years after the date of this Agreement, neither the
Investigating Party nor its Representatives will (a) induce or attempt to induce
any employee to leave the employ of the Disclosing Party, (b) hire, retain or   
attempt to hire or retain any employee of the Disclosing Party or (c) in any way
interfere with the relationship between the Disclosing Party and any of its     
employees. Notwithstanding the foregoing, this Section will not prohibit the    
Investigating Party from making general employment solicitations not            
specifically directed at the Disclosing Party's employees, or hiring them as a  
result of such solicitations.                                                   

ARTICLE 7 RETURN OF CONFIDENTIAL INFORMATION

   If either party notifies the other party that it does not wish to proceed
with the Transaction, then the Investigating Party will within five business    
days of such notification (a) deliver to a Disclosing Party Contact all         
documents and other materials constituting Confidential Information, other than 
Notes, in the possession or under the control of the Investigating Party or the 
Investigating Party's Representatives, and (b) destroy all Notes, without       
retaining a copy of any such material. Alternatively, if a Disclosing Party     
Contact so requests or gives prior written consent to the Investigating Party's 
request, the Investigating Party will destroy all documents and other materials 
constituting Confidential Information in the possession or under the control of 
the Investigating Party or the Investigating Party's Representatives, including 
all copies that are stored in an electronic or other medium and are retrievable 
in perceivable form. An appropriate officer of the Investigating Party must     
certify any such destruction to the Company in writing, and a list of the       
destroyed documents and materials must accompany the certification.             

ARTICLE 8 ATTORNEY WORK PRODUCT AND ATTORNEY-CLIENT PRIVILEGE 

The Investigating Party acknowledges that the Disclosing Party may be 
entitled to the protections of the attorney work-product doctrine,              
attorney-client privilege or similar protections or privileges with respect to  
certain of the Confidential Information. The Disclosing Party is not waiving,   
and will not be deemed to have waived or diminished, any of its attorney        
work-product protections, attorney-client privileges or similar protections or  

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privileges as a result of the disclosure of such Confidential Information to the
Investigating Party in connection with the Transaction. The parties (a) share a 
common legal and commercial interest in such Confidential Information, (b) are  
or may become joint defendants in proceedings to which such Confidential        
Information relates, and (c) intend that such protections and privileges remain 
intact should either party become subject to any actual or threatened proceeding
to which such Confidential Information relates. In furtherance of the foregoing,
the Investigating Party will not claim or contend, in proceedings involving     
either party, that the Disclosing Party waived the protections of the attorney  
work-product doctrine, attorney-client privilege or similar protections or      
privileges as a result of the disclosure of Confidential Information to the     
Investigating Party in connection with the Transaction.                         

 ARTICLE 9 NO OBLIGATION TO NEGOTIATE DEFINITIVE AGREEMENT

    The Company and its directors and shareholders reserve the right, in their
sole discretion, to reject any and all proposals made by the Investigating Party
or the Investigating Party's Representatives with regard to a Transaction and to
terminate discussions and negotiations with the Investigating Party and the     
Investigating Party's Representatives at any time. No contract providing for a  
Transaction will be deemed to exist unless and until a definitive agreement, if 
any, with respect to a Transaction (a "Definitive Agreement") has been executed 
and delivered, and the parties waive any claims (including breach of contract   
claims, but excluding all claims directly or indirectly based on this Agreement)
in connection with a Transaction unless and until they or, in the case of the   
Company, its shareholders enter into a Definitive Agreement. Neither the parties
to this Agreement nor their respective Representatives and shareholders have any
legal obligation of any kind with respect to a Transaction by virtue of this    
Agreement, except to the extent explicitly set forth herein.                    

ARTICLE 10 NO REPRESENTATIONS OR WARRANTIES 

Neither the Disclosing Party nor its Representatives make any         
representation or warranty (express or implied) concerning the completeness or  
accuracy of the Confidential Information, except pursuant to representations and
warranties that may be made to the Investigating Party in a Definitive Agreement
if, when, and as executed and subject to such limitations and restrictions as   
may be specified therein. The Investigating Party also agrees that if the       
Investigating Party determines to engage in a Transaction, the Investigating    
Party's determination will be based solely on the terms of such Definitive      
Agreement and on the Investigating Party's own investigation, analysis, and     
assessment of the business to be acquired.                                      

ARTICLE 11 COMPLIANCE WITH SECURITIES LAWS

    The Investigating Party is aware, and its Representatives who are apprised
of the Transaction will be advised, that the securities laws of the United      
States prohibit any person who has material, non-public information concerning  
the Disclosing Party from purchasing or selling securities in reliance upon such
information or from communicating such information to any other person or entity
under circumstances in which it is reasonably foreseeable that such person or   
entity is likely to purchase or sell such securities in reliance upon such      
information.                                                                    

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ARTICLE 12 STANDSTILL 

For a period of two years from the date of this Agreement, neither the
Investigating Party nor its Representatives or affiliates will in any manner,   
directly or indirectly:                                                         

12.1 effect or seek, offer or propose (whether publicly or otherwise) to effect,
     or cause, participate in or in any way assist any other person to effect or
  seek, offer or propose (whether publicly or otherwise) to effect (i) any
   acquisition of any securities (or beneficial ownership thereof) or assets
of the Disclosing Party or any of its affiliates; (ii) any tender or  
exchange offer or merger or other business combination involving the  
Disclosing Party or any of its affiliates; (iii) any recapitalization,
    restructuring, liquidation, dissolution or other extraordinary transaction
    with respect to the Disclosing Party or any of its affiliates; or (iv) any
   "solicitation" of "proxies" (as such terms are used in the proxy rules of
   the United States Securities and Exchange Commission) or consents to vote
any voting securities of the Disclosing Party;                        

12.2 form, join or in any way participate in a "group" (as defined under the    
Securities Exchange Act of 1934, as amended);                         

12.3 otherwise act, alone or in concert with others, to seek control of or      
    influence the management, board of directors or policies of the Disclosing
Party;                                                                

12.4 make any public announcements or take any action that might force the      
   Disclosing Party to make a public announcement regarding any of the types
of matters set forth above; or                                        

12.5 enter into any discussions or arrangements with any third party with       
respect to any of the foregoing;                                      

unless the Investigating Party has been specifically invited to do so in writing
by the special committee of the board of directors of the Disclosing Party.     
During such period, neither the Investigating Party nor its Representatives will
request, directly or indirectly, that the Disclosing Party (or its              
Representatives) amend or waive any provision of this Section (including this   
sentence).                                                                      

 ARTICLE 13 DATA PROTECTION AND PRIVACY RESTRICTIONS

     The Investigating Party will inform itself about and observe all applicable
data protection and/or privacy requirements in any jurisdiction in which the    
Confidential Information is located and any other relevant jurisdictions. The   

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Investigating Party will also implement and maintain all such technical and     
organizational security measures as may be reasonably available (having regard  
to technical developments at the time) and as are appropriate in the            
circumstances to protect Confidential Information against unauthorized or       
unlawful processing, accidental loss, distribution or damage. In addition, in   
the event that any Confidential Information is located in a jurisdiction that   
restricts the transfer of such information to other countries or locations, the 
Investigating Party will maintain such information within that jurisdiction     
only, and will not transfer it to any other country or location in a manner that
violates such restrictions. The Investigating Party will indemnify and hold the 
Disclosing Party harmless for any damage or expense (including legal fees and   
costs) resulting from the Investigating Party's contravention or other violation
of any applicable data protection and/or privacy laws.                          

ARTICLE 14 REMEDIES 

 The Investigating Party acknowledges that the Disclosing Party would be
damaged irreparably if any of the provisions of this Agreement are not performed
in accordance with the specific terms, that the Disclosing Party would encounter
extreme difficulty in attempting to prove the actual amount of damages suffered 
by it as a result of the Investigating Party's breach and that any breach of    
this Agreement by the Investigating Party would not be adequately compensated by
monetary damages alone. Accordingly, the Investigating Party agrees that, in    
addition to any other right or remedy to which the Disclosing Party may be      
entitled at law or in equity, the Disclosing Party will be entitled to enforce  
any provision of this Agreement by a decree of specific performance and to      
temporary, preliminary and permanent injunctive relief to prevent any breach or 
threatened breach of this Agreement, without posting any bond or other security 
and without the necessity of proving the amount of any actual damage to the     
Disclosing Party resulting therefrom. In addition, the Investigating Party will 
indemnify and hold the Disclosing Party and its stockholders harmless from any  
damages, loss, cost or liability (including legal fees and the cost of enforcing
this indemnity) arising out of or resulting from the Investigating Party's      
breach of the terms of this Agreement or any other unauthorized use or          
disclosure by the Investigating Party or its Representatives of the Confidential
Information. The Company's subsidiaries and other affiliates constituting a     
Disclosing Party have the right to enforce all indemnity obligations of         
Investigating Party under this Agreement independently of the Company. The      
rights and remedies of the parties to this Agreement are cumulative and not     
alternative.                                                                    

ARTICLE 15 NOTICE 

All notices, consents, waivers and other communications under this    
Agreement must be in writing and will be deemed given to a party when (a)       
delivered to the appropriate address by hand or by a nationally recognized      
overnight courier service (cost prepaid), (b) sent by facsimile or e-mail with  
confirmation of transmission by the transmitting equipment, or (c) received or  
rejected by the addressee, if sent by certified mail, return receipt requested, 
in each case to the following addresses or facsimile numbers and marked to the  
attention of the individual (by name or title) designated below (or to such     
other address, facsimile number or individual as a party may designate by notice
to the other parties):                                                          

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Greka Energy Corporation  
 Attention:  Susan M. Whalen
     Address: 2801 B Santa Maria Way
   Santa Maria, California 93454
      Facsimile No.:    (805) 347-1072
         E-mail Address: smw@grekaenergy.com

____________________      

Attention:                
Address:                  
Facsimile No.:            
E-mail Address:           

ARTICLE 16 ENTIRE AGREEMENT 

 This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes a complete and exclusive statement
of the terms of the agreement between the parties with respect to its subject   
matter. This Agreement may not be amended, supplemented or otherwise modified   
except by a written agreement executed by the party to be charged with the      
modification.                                                                   

ARTICLE 17 SEVERABILITY 

If any court of competent jurisdiction holds any provision of this    
Agreement invalid or unenforceable, the other provisions of this Agreement will 
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.                                       

ARTICLE 18 WAIVER 

 Neither any failure nor any delay by any party in exercising any right,
power, or privilege under this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,  
or privilege or the exercise of any other right, power or privilege.            

ARTICLE 19 GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS

19.1 This Agreement will be governed by and construed under the laws of the     
 State of Texas without regard to conflicts of law principles that would
require application of any other law.                                 

19.2 Any action or proceeding arising out of or relating to this Agreement may  
    be brought in the courts of the State of Colorado, County of Denver or, if
     it has or can acquire jurisdiction, in the United States District Court for
  the District of Colorado, and each of the parties irrevocably submits to
  the jurisdiction of each such court in any such action or proceeding and
   waives any objection it may now or hereafter have to venue or convenience
    of forum. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.            

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ARTICLE 20 COSTS

    Each party will bear its own expenses incurred in connection with pursuing
or consummating the Transaction, including any broker's or finder's fees and all
fees and expenses of its Representatives.                                       

ARTICLE 21 COUNTERPARTS 

This Agreement may be executed in two or more counterparts.           

The parties have executed and delivered this Agreement as of the date 
indicated in the first sentence.                                                

                              Greka Energy Corporation

         By:
                                           -------------------------------------

           Name:
                                           -------------------------------------

            Title:
                                           -------------------------------------

         By:
                                           -------------------------------------

           Name:
                                           -------------------------------------

            Title:
                                           -------------------------------------

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘SC 13D/A’ Filing		Date		First		Last			Other Filings
		6/30/04		27
Filed on:		5/28/03							8-K
		5/27/03		1		2			8-K
		3/31/03		11					10-Q
		12/31/02		8		10			10-K,  NT 10-K
		8/15/02		10
		6/27/02		40
		1/1/00		41					8-K
		11/3/99		9
									List all Filings