MERGER AGREEMENT



                                  by and among



                             ALEXI HOLDINGS LIMITED,



                                ALEXI CORPORATION



                                       and



                            GREKA ENERGY CORPORATION



                                  May 27, 2003



{PAGE}



                                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).



{PAGE}



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.



                                       2

{PAGE}



     (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



                                       3

{PAGE}



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

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC