--------------------------------------------------------------------------------

CONFIDENTIAL

Exhibit 10.4

--------------------------------------------------------------------------------

FORM OF STOCK PURCHASE AGREEMENT
dated February 7, 2018
by and between
California Resources Corporation
and
[PURCHASER]

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

TABLE OF CONTENTS
 
Page
 
 
 
 
ARTICLE I GENERAL
1

 
 
 
Section 1.01.
Defined Terms
1

 
 
 
ARTICLE II PURCHASE AND SALE OF SECURITIES
5

 
 
 
Section 2.01.
Purchase and Sale of Purchased Shares
5

Section 2.02.
Closing
5

Section 2.03.
Deliveries at Closing
6

 
 
 
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
6

 
 
 
Section 3.01.
Organization; Existence and Qualification
6

Section 3.02.
Power
6

Section 3.03.
Authorization and Enforceability
6

Section 3.04.
No Violation
7

Section 3.05.
Brokers’ Fees
7

Section 3.06.
Consents, Approvals or Waivers
7

Section 3.07.
Capitalization and Authorization of Purchased Shares
7

Section 3.08.
No Registration Rights
8

Section 3.09.
No General Solicitation; Offering Exemption
8

Section 3.10.
Listing and Maintenance Requirements
9

Section 3.11.
Compliance with Laws
9

Section 3.12.
Company Reports; Financial Statements
10

Section 3.13.
Accounting and Disclosure Controls
10

Section 3.14.
Compliance with and Liability Under; Environmental Laws
11

Section 3.15.
Investment Company Status
12

Section 3.16.
Absence of Certain Changes
12

Section 3.17.
Litigation and Liabilities
12

Section 3.18.
Energy Regulatory Matters
12

 
 
 
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
13

 
 
 
Section 4.01.
Organization, Existence and Qualification
13

Section 4.02.
Power
13

Section 4.03.
Authorization and Enforceability
13

Section 4.04.
Brokers’ Fees
13

Section 4.05.
No Violation
13

-i-

--------------------------------------------------------------------------------

Section 4.06.
Consents, Approvals or Waivers
14

Section 4.07.
Investment Intent
14

Section 4.08.
Purchaser Status
14

Section 4.09.
Legends
15

Section 4.10.
Experience of the Purchaser
15

Section 4.11.
Access to Information
15

Section 4.12.
Independent Investment Decision
15

Section 4.13.
No Reliance
16

 
 
 
ARTICLE V INDEMNIFICATION
16

 
 
 
Section 5.01.
Indemnification
16

Section 5.02.
Indemnification Procedures
17

Section 5.03.
Limitations
17

Section 5.04.
Adjustment for Tax Purposes
18

 
 
 
ARTICLE VI MISCELLANEOUS
18

 
 
 
Section 6.01.
Public Announcements
18

Section 6.02.
Fees and Expenses
19

Section 6.03.
Transfer Taxes
19

Section 6.04.
Further Assurances
19

Section 6.05.
Independent Investment
19

Section 6.06.
Counterparts
19

Section 6.07.
Notices
19

Section 6.08.
Removal of Legend
20

Section 6.09.
Rule 144 Reporting
21

Section 6.10.
Governing Law
21

Section 6.11.
Waiver of Jury Trial
22

Section 6.12.
Captions; Headings
22

Section 6.13.
Amendment
22

Section 6.14.
Waivers
22

Section 6.15.
Assignment; Successors and Assignees
22

Section 6.16.
Entire Agreement
23

Section 6.17.
Third Person Beneficiaries
23

Section 6.18.
References; Exhibits
23

Section 6.19.
Construction
24

Section 6.20.
Specific Performance
24

Section 6.21.
Severability
24

Exhibit A    Form of Restrictive Legend

-ii-

--------------------------------------------------------------------------------

FORM OF STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of the 7th day of
February, 2018, by and between California Resources Corporation, a Delaware
corporation (the “Company”), and [PURCHASER] (the “Purchaser”). The signatories
to this Agreement are sometimes referred to herein collectively as the “Parties”
and individually as a “Party.”
WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act (as defined below) and Rule
506 promulgated thereunder, the Company desires to issue and sell to the
Purchaser, and the Purchaser desires to purchase from the Company, in a private
placement transaction, the Purchased Shares (as defined below), at a price per
share of $21.3274 (the “Per-Share Purchase Price”), which aggregate proceeds
will be used by the Company for general corporate purposes, which may include
repaying outstanding indebtedness, funding capital expenditures and
acquisitions.
NOW, THEREFORE, in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows, each intending to
be legally bound:

ARTICLE I
GENERAL

Section 1.01.    Defined Terms. As used herein:
(a)    “Affiliate” has the meaning ascribed to it, on the date hereof, under
Rule 405 of the Securities Act.
(b)    “Aggregate Purchase Price” means the Per-Share Purchase Price multiplied
by the number of Purchased Shares sold pursuant to this Agreement.
(c)    “Agreement” has the meaning set forth in the Preamble.
(d)    “Applicable Date” has the meaning set forth in Section 3.12 hereto.
(e)    “Business Day” means any day other than a Saturday or Sunday or any other
day on which commercial banks in Los Angeles, California are authorized or
required by law or executive order to close.
(f)    “CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
(g)    “Closing” has the meaning set forth in Section 2.02(a) hereto.
(h)    “Closing Date” has the meaning set forth in Section 2.02(a) hereto.

--------------------------------------------------------------------------------

(i)    “Common Stock” means the common stock, par value $0.01 per share, of the
Company.
(j)    “Company” has the meaning set forth in the Preamble.
(k)    “Company Entities” means the Company and the Company’s Subsidiaries.
(l)    “Company Indemnitees” has the meaning set forth in Section 5.01(b)
hereto.
(m)    “Company LTIP” has the meaning set forth in Section 3.07(a).
(n)    “Company Reports” has the meaning set forth in Section 3.12 hereto.
(o)    “Contract” means any written contract, agreement, understanding, option,
right to acquire, preferential purchase right, preemptive right, warrant,
indenture, debenture, note, bond, loan, loan agreement, collective bargaining
agreement, joint venture agreement, joint operating agreement, lease, mortgage,
franchise, license, commitment, letter of credit, guaranty, surety or any other
binding arrangement.
(p)    “Elk Hills Transaction Documents” means, collectively, (i) the
Contribution and Unit Purchase Agreement by and among Elk Hills Power, LLC,
California Resources Elk Hills, LLC, ECR Corporate Holdings L.P. and, solely for
purposes of Section 7.14, California Resources Corporation, (ii) the New LLC
Agreement, and (iii) the other ancillary documents executed in connection with
those agreements, all dated as of the date hereof.
(q)    “Environment” means ambient air, indoor air, surface water, groundwater,
drinking water, soil, surface and subsurface strata, and natural resources such
as wetlands, flora and fauna.
(r)    “Environmental Laws” means the common law and all federal, state, local
and foreign Laws or regulations, ordinances, codes, orders, decrees, judgments
and injunctions issued, promulgated or entered thereunder, relating to pollution
or protection of the Environment or occupational health and workplace safety
(only to the extent relating to occupational exposures to Hazardous Materials),
including without limitation, those relating to (i) the Release or threatened
Release of Hazardous Materials; and (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, transport, handling or
recycling of Hazardous Materials.
(s)    “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
(t)    “FERC” means the Federal Energy Regulatory Commission.
(u)    “FPA” means the Federal Power Act, as amended, including the regulations
of the FERC thereunder.

2

--------------------------------------------------------------------------------

(v)    “Fraud” means fraud involving a knowing and willful misrepresentation or
concealment of a fact or willful misconduct in connection with the making of any
representation contained in this Agreement.
(w)    “Freely Tradable” means, with respect to any security, that such security
(i) is eligible to be sold by the holder thereof, without the application of any
volume or manner of sale restrictions, pursuant to Rule 144, (ii) bears no
legends restricting the transfer thereof (other than legends which would be
subject to prompt removal pursuant to Section 6.08), and (iii) bears an
unrestricted CUSIP number (if held in global form).
(x)    “GAAP” means generally accepted accounting principles in the United
States.
(y)    “Governmental Authority” means any federal, state, local or foreign
government and/or any political subdivision thereof, including departments,
courts, arbitrators, commissions, boards, bureaus, ministries, agencies or other
instrumentalities.
(z)    “Hazardous Material” means any material, substance, chemical, pollutant,
contaminant, waste, product, derivative, compound, mixture, solid, liquid,
mineral or gas, in each case, whether naturally occurring or man-made, that is
hazardous, acutely hazardous or toxic, or that is classified or regulated as
such under Environmental Laws and any other substance that could reasonably be
expected to give rise to liability under Environmental Laws.
(aa)    “Indemnified Party” has the meaning set forth in Section 5.02(a) hereto.
(bb)    “Indemnifying Party” has the meaning set forth in Section 5.02(a)
hereto.
(cc)    “Laws” means all laws, statutes, constitutions, rules, regulations,
ordinances, orders, decrees, requirements, judgments and codes of Governmental
Authorities.
(dd)    “Lien” means any lien, pledge, condemnation award, claim, restriction,
charge, security interest, mortgage or encumbrance of any nature whatsoever
including as a statutory landlord lien.
(ee)    “Losses” has the meaning set forth in Section 5.01(a) hereto.
(ff)    “Material Adverse Effect” means any result, occurrence, change, event,
condition, circumstance or effect of any of the forgoing (whether foreseeable or
not) that, individually or in the aggregate with any such other result,
occurrence, change, event, condition, circumstance or effect, has, or is
reasonably expected to have, a material adverse effect on (i) the condition
(financial or otherwise), or results of operations, stockholders’ equity or
properties of the Company Entities taken as a whole or (ii) the ability of the
Company Entities to perform their obligations under or consummate the
Transactions; provided, however, that a Material Adverse Effect shall not be
deemed to occur pursuant to clause (i) or (ii) to the extent such result,
occurrence, change, event, condition, circumstance or effect results from: (A)
general changes in economic, financial market or regulatory conditions, (B) any
outbreak of hostilities or war, acts of terrorism or natural disasters, in each
case in the United States or elsewhere, (C) a general deterioration in the
economic conditions prevalent

3

--------------------------------------------------------------------------------

in the oil and natural gas industry or exploration and production companies, (D)
changes in oil and natural gas prices, including changes in price differentials,
(E) changes in other commodity prices, (F) any change of Law or changes to GAAP
or interpretations thereof, (G) any decline in the market price, or change in
trading volume, of the Common Stock of the Company, (H) any failure by the
Company to meet any internal or public projections, forecasts or estimates of
revenue, earnings, cash flow, cash position or other financial measures, (I) the
announcement of this Agreement or the Transactions or (J) the performance of
this Agreement, compliance with the covenants set forth herein or consummation
of the Transactions; provided further, that clauses (A), (B) and (C) above apply
only to the extent that such result, occurrence, change, event, condition,
circumstance or effect has not had, and would not reasonably be expected to
have, a disproportionate effect on the Company Entities taken as a whole
relative to other participants in the oil and gas industry or exploration and
production companies or businesses.
(gg)    “New LLC Agreement” means the Second Amended Restated Limited Liability
Company Agreement by and between California Resources Elk Hills, LLC and ECR
Corporate Holdings L.P., dated as of the date hereof.
(hh)    “Party” has the meaning set forth in the Preamble.
(ii)    “Permit” means any permit, license, franchise, registration,
certificate, exception, authorizations, consent, approval or other similar
action by any Governmental Authority.
(jj)    “Per-Share Purchase Price” has the meaning set forth in the Recitals.
(kk)    “Person” means any individual, partnership, firm, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
(ll)    “PUHCA” means the Public Utility Holding Company Act of 2005, including
the regulations of FERC thereunder.
(mm)    “Purchased Shares” means the [●] shares of Common Stock purchased
pursuant to this Agreement.
(nn)    “Purchaser” has the meaning set forth in the Preamble.
(oo)    “Purchaser Indemnitees” has the meaning set forth in Section 5.01(a)
hereto.
(pp)    “QF” means a “qualifying cogeneration facility” within the meaning of 16
U.S.C. § 796 and the regulations of the FERC thereunder, including 18 C.F.R. §
292.205, with all of the exemptions from regulation set forth in 18 C.F.R. Part
292 Subpart F (but for the exemption from Sections 205 and 206 of the FPA).
(qq)    “Release” means any release, spill, emission, discharge, deposit,
disposal, leaking, pumping, pouring, dumping, emptying, injection or leaching
into the Environment.
(rr)    “SEC” means the United States Securities and Exchange Commission.

4

--------------------------------------------------------------------------------

(ss)    “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
(tt)    “Subsidiary” of any Person means a corporation, limited liability
company, partnership, joint venture or other entity of which: (i) such party or
any other Subsidiary of such party is a general partner; (ii) voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such organization is held by such party or by any one
or more of such party’s Subsidiaries; or (iii) at least 50% of the equity
interests is controlled by such party.
(uu)    “Tax” or “Taxes” means any and all taxes and other similar charges,
assessments or fees imposed by any Governmental Authority, including all
federal, state, local and foreign income, profits, gross receipts, goods and
services, net proceeds, alternative or add-on minimum, ad valorem, real property
(including assessments, fees or other charges imposed by any Governmental
Authority that are based on the use or ownership of real property), personal
property (tangible and intangible), value added, turnover, sales, use,
environmental, stamp, documentary, leasing, lease, user, excise, duty,
franchise, capital, transfer, registration, license, withholding, social
security (or similar), unemployment, disability, payroll, employment, fuel,
excess or windfall profits, occupational, premium, severance, production,
estimated, or other similar tax of any kind whatsoever, together with any
interests, penalties, additions to tax, fines or other additional amounts
imposed thereon or related thereto, whether disputed or not.
(vv)    “Tax Benefit” has the meaning set forth in Section 5.03(c) hereto.
(ww)    “Transactions” means the transactions contemplated by this Agreement.
(xx)    “Transfer Agent” initially means American Stock Transfer & Trust
Company, the Company’s duly appointed transfer agent for the Common Stock.

ARTICLE II
PURCHASE AND SALE OF SECURITIES

Section 2.01.    Purchase and Sale of Purchased Shares. Subject to the terms and
conditions herein set forth, the Company agrees to issue, sell and deliver to
the Purchaser, and the Purchaser hereby agrees to purchase from the Company, at
the Closing, the Purchased Shares for the Aggregate Purchase Price as set forth
herein.

Section 2.02.    Closing.
(a)    The closing of the sale of the Purchased Shares to the Purchaser (the
“Closing”) shall, unless otherwise agreed to by the Parties, take place at the
offices of Sullivan & Cromwell LLP, 1888 Century Park East, Suite 2100, Los
Angeles, California 90067 or at such other place as the Parties shall mutually
agree, at 8:00 A.M. Pacific Time, on the date hereof (such date, the “Closing
Date”).

5

--------------------------------------------------------------------------------

(b)    At the Closing, (i) the Company shall (or shall cause the Transfer Agent
to) (A) record in its stock transfer books the Purchased Shares purchased by the
Purchaser, registered in the Purchaser’s name, free and clear of any Liens
(other than those created by or in favor of the Purchaser, transfer restrictions
under the certificate of incorporation and bylaws of the Company and applicable
federal and state securities laws), and (B) deliver to the Purchaser a notice
from the Transfer Agent evidencing the issuance of the Purchased Shares, and
(ii) the Purchaser will, by wire transfer of immediately available funds,
transfer to an account or accounts designated in advance by the Company the
Aggregate Purchase Price.

Section 2.03.    Deliveries at Closing.
(a)    Deliveries of the Company. At the Closing, the Company will deliver, or
cause to be delivered, to the Purchaser:
(i)    an opinion of Sullivan & Cromwell LLP, counsel for the Company, dated the
Closing Date, in form and substance satisfactory to the Purchaser; and
(ii)    evidence that the Company has submitted a subsequent listing application
seeking the authorization of the New York Stock Exchange for the listing of the
Purchased Shares.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows as of the
date of this Agreement:

Section 3.01.    Organization; Existence and Qualification. Each of the Company
Entities is duly organized and is validly existing and in good standing under
the Laws of the state of its formation, is duly qualified to do business and is
in good standing in each jurisdiction in which it is required to qualify in
order to conduct its business, except where the failure to so qualify would not,
individually or in the aggregate, have a Material Adverse Effect.

Section 3.02.    Power. Each Company Entity has the requisite power and
authority to own, lease or hold its properties and carry on its business as
currently conducted and as proposed to be conducted and, in the case of the
Company, to enter into this Agreement and to consummate the Transactions.

Section 3.03.    Authorization and Enforceability.
(a)    The execution, delivery and performance by the Company of this Agreement
and the consummation of the Transactions, have been duly and validly authorized
by all necessary corporate action on the part of the Company.
(b)    (i) This Agreement has been duly executed and delivered by the Company
and (ii) this Agreement constitutes the valid and binding obligations of the
Company, enforceable against

6

--------------------------------------------------------------------------------

the Company in accordance with its terms, except, in the case of clause (ii), as
such enforceability may be limited by applicable bankruptcy or other similar
Laws affecting the rights and remedies of creditors generally as well as to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

Section 3.04.    No Violation. The execution, delivery and performance by the
Company of this Agreement, and the consummation of the Transactions will not,
with or without notice or the passage of time or both: (a) violate any provision
of the organizational documents of any of the Company Entities; (b) violate or
breach the terms of, result in a default under, result in the creation of any
Lien, or give rise to any right of termination, cancellation, forfeiture,
suspension, adverse modification, or acceleration under (x) any note, bond,
mortgage, indenture or credit agreement to which any Company Entity is a party
and (y) any other Contract to which any Company Entity is a party or by which it
is bound or to which any of its assets are subject; (c) violate any judgment,
order, ruling, regulation or decree applicable to the Company Entities or any of
their properties or assets; or (d) violate any Law applicable to the Company
Entities or any of their properties or assets, except for matters described in
clauses (b), (c) or (d) above which would not reasonably be expected to have a
Material Adverse Effect. As of the date of this Agreement, the Company is not
party to a stockholder rights agreement, “poison pill” or similar agreement or
plan.

Section 3.05.    Brokers’ Fees. No Person is entitled to any brokerage,
financial advisory, finder’s or similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company.

Section 3.06.    Consents, Approvals or Waivers. The execution, delivery and
performance by the Company of this Agreement (including the authorization,
issuance and delivery of the Purchased Shares) will not be subject to or require
any consent, approval, authorization, or waiver from, or any registration or
filing with or notification to, any person (including any Governmental
Authority) except for (i) filings required by federal and state securities Laws,
(ii) the approval for listing on the NYSE of the Purchased Shares; and (iii)
such consents as have been obtained or where the failure of the Company to
obtain or make any such consent, approval, authorization, order, filing or
registration would not reasonably be expected to have a Material Adverse Effect.

Section 3.07.    Capitalization and Authorization of Purchased Shares.
(a)    As of the date of this Agreement, the authorized capital stock of the
Company consists of (i) 200,000,000 shares of Common Stock, of which as of the
date hereof, 42,901,946 are issued and outstanding, including 933,189 shares
issued with respect to restricted stock awards granted under the California
Resources Corporation Long-Term Incentive Plan (the “Company LTIP”), 1,111,809
shares are reserved for issuance in connection with future grants of awards
under the Company LTIP, 1,104,753 shares are reserved for issuance with respect
to outstanding stock options issued under the Company LTIP, 1,035,195 shares are
reserved for issuance with respect to outstanding restricted stock units issued
under the Company LTIP, 515,054 shares are reserved for issuance with respect to
outstanding performance share units granted under the Company LTIP (assuming
achievement of performance at the maximum level), and 306,154 shares are
reserved

7

--------------------------------------------------------------------------------

for issuance under the Company’s 2014 Employee Stock Purchase Plan, as amended
and (ii) 20,000,000 shares of preferred stock, $0.01 par value, of which as of
the date hereof, none are issued and outstanding. Such issued and outstanding
shares have been duly authorized and validly issued and are fully paid and
non-assessable. Such issued and outstanding shares were not issued in violation
of and are not subject to any preemptive rights, resale rights, rights of first
refusal or similar rights.
(b)    The Purchased Shares have been duly authorized for issuance and sale to
the Purchaser pursuant to the terms of this Agreement and, when issued and
delivered by the Company to the Purchaser pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued, fully
paid and non-assessable and will be free and clear of all Liens (other than
those created by or in favor of the Purchaser, transfer restrictions under the
certificate of incorporation and bylaws of the Company and applicable federal
and state securities laws). The Purchased Shares will not be issued in violation
of and will not be subject to any preemptive rights, resale rights, rights of
first refusal or similar rights.
(c)    Other than as set forth in the Company Reports (as defined below), under
the New LLC Agreement or Section 3.07(a), (i) there are no outstanding rights
(including preemptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any equity interest in any Company Entity
(including securities convertible into equity interests), or any Contract of any
kind granting any rights to the issuance of any equity interest of any Company
Entity, any such convertible or exchangeable securities or any such rights,
warrants or options, (ii) there are no outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the holders of any equity interests in any Company Entity on any matter
submitted to the holders or any class thereof and (iii) no Company Entity has
any obligation to purchase, redeem or otherwise acquire any equity interests or
to pay any dividend or make any other distribution in respect thereof.

Section 3.08.    No Registration Rights. As of the date hereof, except for the
Registration Rights Agreement to be entered into as of the date hereof between
the Company and the purchasers party thereto and the New LLC Agreement, there
are no contracts, agreements or understandings, between any of the Company
Entities and any Person granting such Person the right to require any Company
Entity to file a registration statement under the Securities Act with respect to
any securities of any Company Entity owned or to be owned by such Person or to
require any Company Entity to include such securities in any securities being
registered pursuant to any registration statement filed by any Company Entity
under the Securities Act.

Section 3.09.    No General Solicitation; Offering Exemption.
(a)    None of the Company or any of its Affiliates (as defined in Rule 501(b)
of Regulation D under the Securities Act), has, directly or through an agent,
(i) engaged in any form of general solicitation or general advertising in
connection with the offering of the Purchased Shares (as those terms are used in
Regulation D) under the Securities Act or in any manner involving a public
offering within the meaning of Section 4(a)(2) of the Securities Act or (ii) at
any time within the past six months, made any offer or sale of any security or
any solicitation of any offer to buy any security under circumstances that would
(A) eliminate the availability of the exemption from registration

8

--------------------------------------------------------------------------------

under Regulation D of the Securities Act in connection with the offering and
sale of the Purchased Shares as contemplated by this Agreement or (B) cause the
offering and sale of the Purchased Shares pursuant to this Agreement to be
integrated with any prior offerings by the Company for purposes of any
applicable law. The Company has not entered into any contractual arrangement
with respect to the sale of the Purchased Shares except for this Agreement.
(b)    Assuming the accuracy of the representations of the Purchaser set forth
in Section 4.07, the sale and issuance of the Purchased Shares are exempt from
registration under the Securities Act, and such sale and issuance is also exempt
from registration under applicable state securities and “blue sky” laws. The
Company has taken, or will take, all action necessary to be taken to comply with
such state securities or “blue sky” laws; provided that the Company shall not be
required to (i) qualify as a foreign corporation or other entity or as a dealer
in securities in any such jurisdiction where it would not otherwise be required
to so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it
is not otherwise so subject.

Section 3.10.    Listing and Maintenance Requirements.     The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act and listed on The New
York Stock Exchange, and the Company has taken no action designed to, or which
to the knowledge of the Company is reasonably likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from The New York Stock Exchange, nor, other than as
disclosed in the Company Reports, has the Company received as of the date of
this Agreement any notification that the SEC or The New York Stock Exchange is
contemplating terminating such registration or listing.

Section 3.11.    Compliance with Laws.
(a)    Except as otherwise disclosed in the Company Reports, each of the Company
Entities possesses such valid and current certificates, authorizations or
Permits issued by the appropriate state, federal or foreign regulatory agencies
or bodies necessary to own, lease and operate its properties and to conduct its
business, except for any of the foregoing that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, and neither
the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of, or noncompliance with, any such
certificate, authorization or Permit which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would reasonably be
expected to have a Material Adverse Effect.
(b)    The Company Entities have filed all necessary federal, state, local and
foreign tax returns or have properly requested extensions thereof, and have paid
all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them except
as may be being contested in good faith and by appropriate proceedings and for
which adequate reserves are being maintained in accordance with GAAP, and,
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

9

--------------------------------------------------------------------------------

Section 3.12.    Company Reports; Financial Statements.
(a)    The Company has filed or furnished, as applicable, on a timely basis, all
forms, statements, certifications, reports and documents required to be filed or
furnished by it with the SEC pursuant to the Exchange Act or the Securities Act
since January 1, 2016 (the “Applicable Date”) (the forms, statements, reports
and documents filed or furnished to the SEC since the Applicable Date, including
any amendments thereto, the “Company Reports”). Each of the Company Reports, at
the time of its filing or being furnished, complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and the
Sarbanes-Oxley Act of 2002, and any rules and regulations promulgated thereunder
applicable to the Company Reports. As of their respective dates (or, if amended,
as of the date of such amendment), the Company Reports did not, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading.
(b)    Each of the consolidated balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and schedules)
fairly presents, the consolidated financial position of the Company and its
consolidated Subsidiaries as of its date and each of the consolidated and
combined statements of operations, comprehensive income, equity and cash flows
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents the results of operations, retained
earnings (loss) and changes in financial position, as the case may be, of such
companies for the periods set forth therein (subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments), and in each case
were prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as may be noted therein or in the notes thereto. KPMG
LLP is an independent registered public accounting firm with respect to the
Company and has not resigned or been dismissed as independent registered public
accountants of the Company as a result of or in connection with any disagreement
with the Company on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedures.

Section 3.13.    Accounting and Disclosure Controls.
(a)    The Company maintains “internal control over financial reporting” (as
defined in Rule 13a-15(f) of the Exchange Act) that has been designed by, or
under the supervision of, its principal executive and principal financial
officers, or persons performing similar functions, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP and that
include those policies and procedures that (i) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and that receipts and expenditures of the
Company are being made only in accordance with the authorizations of management
and the directors of the Company; (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a Material Adverse Effect on the
Company’s financial statements; and (iv) provide reasonable assurance that the
interactive

10

--------------------------------------------------------------------------------

data in eXtensible Business Reporting Language incorporated by reference in the
Company Reports fairly presents the required information in all material
respects and has been prepared in accordance with the SEC’s rules and guidelines
applicable thereto.
(b)    The Company maintains “disclosure controls and procedures” (as defined in
Rule 13a-15(e) of the Exchange Act) that are designed to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms, including controls and
procedures designed to ensure that such information is accumulated and
communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure. The Company has carried out evaluations
of the effectiveness of its disclosure controls and procedures as required by
Rule 13a-15 of the Exchange Act and such disclosure controls and procedures were
effective as of the end of the Company’s most recently completed fiscal quarter.

Section 3.14.    Compliance with and Liability Under; Environmental Laws.
(a)    Except as otherwise disclosed in the Company Reports or as would not,
individually or in the aggregate, have a Material Adverse Effect: (i) each of
the Company Entities and their respective operations and facilities are in
compliance with all applicable Environmental Laws; (ii) each of the Company
Entities holds and is in compliance with all Permits, licenses or other
governmental authorizations or approvals required for their operations under
Environmental Laws; (iii) none of the Company Entities has received any written
communication from a Governmental Authority or third party alleging that any of
the Company Entities is in violation of, or liable under, any Environmental Law;
(iv) there are no claims, demands, actions or proceedings by a Governmental
Authority or third party alleging a violation of, or liability under, applicable
Environmental Laws that are pending or, to the Company’s knowledge, threatened
against the Company Entities; (v) none of the Company Entities has received any
written notice asserting an alleged liability or obligation under any
Environmental Law, including without limitation, CERCLA, or any comparable state
Laws, with respect to a site or facility requiring investigation, response or
other corrective action; and (vi) there has been no Release or, to the Company’s
knowledge, threatened Release of Hazardous Materials at, on, under or from any
of the Company Entities’ properties or, to the Company’s knowledge, any other
location, that reasonably could be expected to give rise to any liability, or
any remedial or corrective action obligations under any Environmental Law.
(b)    In the ordinary course of its business, the Company Entities assess the
effect of Environmental Laws on their business, operations and properties, and
they identify and evaluate associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for cleanup, closure
of properties, compliance with Environmental Laws or any Permit, license or
approval, any related constraints on operating activities, and any potential
liabilities to third parties under Environmental Laws).

11

--------------------------------------------------------------------------------

Section 3.15.    Investment Company Status. The Company is not, and after giving
effect to the issuance and sale of the Purchased Shares and the application of
the proceeds therefrom as described herein will not be, required to register as
an “investment company” as such term is defined in the Investment Company Act.

Section 3.16.    Absence of Certain Changes.     Since September 30, 2017, the
Company and its Subsidiaries have conducted their respective businesses in the
ordinary course of such businesses consistent with past practices (other than in
connection with this Agreement and the Elk Hills Transaction Documents), and
there has not been any change with respect to any circumstance, occurrence or
development, that, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect.
Section 3.17.    Litigation and Liabilities.
(a)    Except as otherwise disclosed in the Company Reports, there are no legal
or governmental actions, suits or proceedings pending or, to the Company’s
knowledge, threatened (i) against or affecting any of the Company Entities or
(ii) which have, as the subject thereof, any property owned or leased by any of
the Company Entities, which such action, suit or proceeding, in either (i) or
(ii), if determined adversely to the applicable Company Entity, would reasonably
be expected to have a Material Adverse Effect or adversely affect the
consummation of the transactions contemplated by this Agreement or (iii) that
are required to be described in the Company Reports and are not so described;
and there are no statutes, regulations, contracts or other documents that are
required to be described in the Company Reports that are not so described or
filed as required.
(b)    No material labor dispute with the employees of any of the Company
Entities exists, or, to the knowledge of the Company, is imminent, except as
described in the Company Reports.

Section 3.18.    Energy Regulatory Matters. Every direct and indirect
“subsidiary company” (as defined in PUHCA) of the Company that is an “electric
utility” or a “public utility” (as those terms are defined under the FPA) is the
owner of a QF. The Company is not itself a “public utility” under the FPA. Each
QF that is an “affiliate” (as that term is defined under PUHCA) of the Company
is in compliance with, or has received a waiver from FERC with respect to, all
of the material requirements of the FERC applicable to a QF. The execution,
delivery and performance by the Company of this Agreement and the consummation
of the Transactions do not require the approval or authorization of the FERC
under Section 203(a)(1) of the FPA, provided, however, that following such
consummation, any “affiliate” (as that term is defined under PUHCA) of the
Company that is a QF, or that holds any authorization or has filed any tariff
with the FERC under 18 C.F.R. Part 35 Subpart H of the FERC’s regulations must
submit to FERC such notices and reports as the regulations of the FERC then
require. The Company is not subject to regulation by FERC as a “Natural Gas
Company,” as that term is defined under the Natural Gas Act, as amended. The
Company is not subject to regulation as a “public utility” under the California
Public Utilities Code. As of the date hereof, to the knowledge of the Company,
the Company is not the subject of any actual, pending, or threatened proceeding,
investigation, data request, summons, subpoena, or notice under any of 18 C.F.R.
Part 1b, Part 1c, Part 33, Part 35, or Part 292. Notwithstanding the foregoing,
for so long as any Purchased Shares are owned by the Purchaser, the Company
shall promptly advise the Purchaser

12

--------------------------------------------------------------------------------

of any actual, pending, or threatened loss of the status as a QF, or
ineligibility for status as a QF, of any electric generating facility that is
directly or indirectly owned, controlled or operated by the Company or any
Subsidiary of the Company.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows as of the
date of this Agreement:

Section 4.01.    Organization, Existence and Qualification. The Purchaser is an
entity that has been duly organized and is validly existing and in good standing
under the Laws of its jurisdiction of organization.

Section 4.02.    Power. The Purchaser has the requisite power and authority to
enter into and perform this Agreement and to consummate the Transactions.

Section 4.03.    Authorization and Enforceability. The execution, delivery and
performance by the Purchaser of this Agreement and the consummation of the
Transactions have been duly and validly authorized by all necessary requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and constitutes a valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy or other
similar Laws affecting the rights and remedies of creditors generally as well as
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

Section 4.04.    Brokers’ Fees. There is no broker or finder or other Person
engaged by the Purchaser who would have any valid claim through the Purchaser
against the Company for any commission or brokerage fee or other similar payment
in connection with this Agreement or the Transactions as a result of any
agreement of or action taken by the Purchaser.

Section 4.05.    No Violation. The execution, delivery and performance by the
Purchaser of this Agreement, and the consummation of the Transactions will not,
with or without notice or the passage of time or both: (a) violate any provision
of the organizational documents of the Purchaser; (b) conflict with or violate
or breach the terms of, result in a default under, result in the creation of any
Lien under, or give rise to any right of termination, cancellation, forfeiture,
suspension, adverse modification, or acceleration under any note, bond,
mortgage, indenture, credit agreement or other Contract to which the Purchaser
is a party or by which it is bound; (c) violate any judgment, order, ruling,
regulation or decree applicable to the Purchaser as a party in interest; or (d)
violate any Law applicable to the Purchaser or any of its assets, except any
matters described in clauses (b), (c) or (d) above which would not have a
material adverse effect on the ability of the Purchaser to consummate the
Transactions.

13

--------------------------------------------------------------------------------

Section 4.06.    Consents, Approvals or Waivers. All consents, approvals,
authorizations or waivers from, and any registrations or filings with or
notifications to, any Governmental Authority required on the part of the
Purchaser in connection with the Purchaser’s execution, delivery or performance
of this Agreement and the consummation of the Transactions contemplated therein
have been obtained and are effective as of the date hereof.

Section 4.07.    Investment Intent. The Purchaser understands that the Purchased
Shares are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law. The Purchaser is
acquiring the Purchased Shares as principal for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Purchased Shares or any part thereof, has no present intention of distributing
any of such Purchased Shares and has no arrangement or understanding with any
other Persons regarding the distribution of such Purchased Shares in any
transaction in violation of the applicable federal and state securities laws in
the United States (this representation and warranty not limiting the Purchaser’s
right to sell or otherwise dispose of the Purchased Shares in compliance with
applicable federal and state securities laws in the United States and in
compliance with other agreed restrictions). The Purchaser does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Purchased Shares. Such Purchaser understands and
acknowledges that the Purchased Shares are subject to certain resale
restrictions under applicable securities laws. The Purchaser also acknowledges
that it has been advised to consult its own legal advisers with respect to
applicable resale restrictions and that it is solely responsible for complying
with such restrictions (and that, without limiting the representations and
warranties made by the Company in this Agreement, the Company is not in any
manner responsible for ensuring compliance by the Purchaser with such
restrictions).

Section 4.08.    Purchaser Status. (A) At the time the Purchaser was offered the
Purchased Shares, it was, and at the date hereof, it is, an “accredited
investor” as defined in Rule 501(a) under the Securities Act. (B) The Purchaser
is not itself a “public utility” under the FPA. The execution, delivery and
performance by the Purchaser of this Agreement and the consummation of the
Transactions do not require the approval or authorization of the FERC under
Section 203(a)(2) of the FPA provided, however, that following such
consummation, any “affiliate” (as that term is defined under PUHCA) of the
Purchaser that holds any authorization or has filed any tariff with the FERC
under 18 C.F.R. Part 35 Subpart H of the FERC’s regulations must submit to FERC
such notices and reports as the regulations of the FERC then require. The
Purchaser is not subject to regulation by FERC as a “Natural Gas Company,” as
that term is defined under the Natural Gas Act, as amended. As of the date
hereof, to the knowledge of the Purchaser, the Purchaser is not the subject of
any actual, pending, or threatened proceeding, investigation, data request,
summons, subpoena, or notice under any of 18 C.F.R. Part 1b, Part 1c, Part 33,
Part 35, or Part 292.

Section 4.09.    Legends. The Purchaser understands that, until such time as the
Purchased Shares have been registered pursuant to the provisions of the
Securities Act, or the Purchased Shares are otherwise eligible for resale under
the Securities Act (including pursuant to Rule 144 promulgated thereunder)
without any restriction as to the number of securities as of a particular date
that can then be immediately sold, the Purchased Shares will bear a restrictive

14

--------------------------------------------------------------------------------

legend as set forth in Exhibit A.

Section 4.10.    Experience of the Purchaser. The Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Purchased Shares, and
has so evaluated the merits and risks of such investment. The Purchaser is able
to bear the economic risk of an investment in the Purchased Shares and, at the
present time, is able to afford a complete loss of such investment.

Section 4.11.    Access to Information. The Purchaser acknowledges that it has
been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Purchased Shares and
the merits and risks of investing in the Purchased Shares; (ii) access to
information about the Company Entities and their respective financial condition,
results of operations, business, properties, management and prospects sufficient
to enable it to evaluate its investment; (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the purchase of the Purchased Shares; and (iv) the
opportunity to ask questions of management. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its representatives
or counsel shall modify, amend or affect such Purchaser’s right to rely on the
truth, accuracy and completeness of the Company’s representations and warranties
contained in this Agreement. The Purchaser has sought such accounting, legal and
tax advice as it has considered necessary to make an informed decision with
respect to its acquisition of the Purchased Shares.

Section 4.12.    Independent Investment Decision. The Purchaser has
independently evaluated the merits of its decision to purchase the Purchased
Shares pursuant to this Agreement, and the Purchaser confirms that it has not
relied on the advice of any other Person’s business and/or legal counsel in
making such decision. The Purchaser understands that nothing in this Agreement
or any other materials presented by or on behalf of the Company to such
Purchaser in connection with the purchase of the Purchased Shares constitutes
legal, tax or investment advice. The Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Purchased Shares.

Section 4.13.    No Reliance. The Purchaser has not relied on any representation
or warranty in connection with the purchase of the Purchased Shares other than
those contained in this Agreement.

ARTICLE V
INDEMNIFICATION

Section 5.01.    Indemnification.
(a)    The Company will indemnify, defend and hold harmless the Purchaser and
its

15

--------------------------------------------------------------------------------

Affiliates and their respective officers, directors, managers, agents,
representatives, employees, Subsidiaries, partners, equityholders, members,
controlling persons and their respective successors and assignees (collectively,
the “Purchaser Indemnitees”) to the fullest extent permitted by Law from and
against any and all claims, proceedings (including administrative, judicial or
regulatory proceedings), losses, liabilities, damages, deficiencies, judgments,
assessments, fines, settlements, costs or expenses (including interest,
penalties, reasonable costs of investigation and reasonable fees, disbursements
and other charges of counsel) (collectively, “Losses”) based upon, arising out
of or otherwise in respect of any breach, violation or inaccuracy by the Company
(i) of any representation or warranty made by the Company in this Agreement; or
(ii) of any covenant or agreement of the Company contained in this Agreement.
(b)    The Purchaser will indemnify, defend and hold harmless the Company, its
officers, directors, managers, agents, representatives, employees and
Subsidiaries and their respective successors and assignees (collectively, the
“Company Indemnitees”), to the fullest extent permitted by Law from and against
any and all Losses based upon, arising out of or otherwise in respect of any
breach, violation or inaccuracy by the Purchaser (i) of any representation or
warranty made by the Purchaser in this Agreement; or (ii) of any covenant or
agreement of the Purchaser contained in this Agreement.
(c)    Notwithstanding anything to the contrary contained in this Agreement,
from and after Closing, this Section 5.01 contains the Parties’ exclusive remedy
against each other with respect to breaches of the representations, warranties,
covenants and agreements of the Parties contained in Article III, and Article
IV, except in the case of Fraud and for claims of injunctive relief in
accordance with Section 6.20.

Section 5.02.    Indemnification Procedures.
(a)    As promptly as possible after receipt by a Purchaser Indemnitee or
Company Indemnitee (hereinafter the “Indemnified Party”) under this Article V of
notice of the threat, assertion or commencement of any claim, action or
proceeding, such Indemnified Party will, if a claim for indemnification in
respect thereof is to be made under this Article V, notify the indemnitor
hereunder (the “Indemnifying Party”) in writing of the commencement thereof;
provided, however, that the failure to notify the Indemnifying Party promptly of
the threat, assertion or commencement of any such claim, action or proceeding
shall not relieve the Indemnifying Party of any liability to the Indemnified
Party under this Article V except to the extent that the Indemnifying Party is
materially prejudiced by such failure.
(b)    The Indemnifying Party shall have the right to participate in and, to the
extent the Indemnifying Party desires, to assume at its expense the defense
thereof with counsel reasonably satisfactory to the Indemnified Party. For so
long as the Indemnifying Party diligently pursues such defense, the Indemnifying
Party shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of any claim,
action or proceeding; provided, however, that if the defendants in any such
claim, action or proceeding include both the Indemnified Party and the
Indemnifying Party and counsel to the Indemnified Party shall have reasonably
concluded that there may be one or more legal defenses available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party, or that

16

--------------------------------------------------------------------------------

such claim or litigation involves or could have an effect upon matters beyond
the scope of the indemnity agreement provided in this Article V, the
Indemnifying Party shall not have the right to assume the defense of such action
on behalf of such Indemnified Party, and the Indemnifying Party shall reimburse
such Indemnified Party for the fees and expenses of one separate counsel that
are reasonably related to the matters covered by the indemnity agreement
provided in this Article V. For the avoidance of doubt, (i) the Company shall
only be required to reimburse the fees and expenses of one separate counsel for
all Purchaser Indemnitees pursuant to the foregoing proviso and (ii) the
Purchaser Indemnitees shall only be required to reimburse the fees and expenses
of one separate counsel for all Company Indemnitees pursuant to the foregoing
proviso. Subject to the foregoing, an Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof but the fees and expenses of such counsel shall not be at the expense of
the Indemnifying Party. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its prior written consent. The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party (such consent not to be unreasonably withheld, conditioned or
delayed), effect any settlement of any pending proceeding unless such settlement
includes an unconditional release of such Indemnified Party from all liability
on claims that are the subject matter of such proceeding.

Section 5.03.    Limitations.
(a)    The representations and warranties of the Parties set forth in Section
3.01, Section 3.02, Section 3.03, Section 3.07, Section 4.01, Section 4.02 and
Section 4.03 shall survive for thirty days following the maximum period
permitted by any applicable statute of limitations.
(b)    All other representations and warranties in Article III and Article IV
shall survive the Closing for a period of twelve (12) months. Representations,
warranties, covenants and agreements shall be of no further force and effect
after the date of expiration of the applicable survival period; provided, that
there shall be no termination of any bona fide claim asserted pursuant to this
Agreement with respect to any breach of any representation, warranty, covenant,
or agreement prior to its expiration date.
(c)    The amount of any Losses for which an Indemnified Party is entitled to
indemnity under this Article V shall be reduced by (i) the amount of insurance
proceeds realized by the Indemnified Party or its Affiliates with respect to
such Losses (x) net of any collection costs, retrospective premium adjustments
or experience based premium adjustments, (y) excluding any such proceeds in
circumstances where the Indemnified Party is required to pay such proceeds over
to a third Person pursuant to subrogation arrangements or otherwise and (z)
excluding the proceeds of any insurance policy issued or underwritten by the
Indemnified Party or its Affiliates and (ii) any Tax Benefit inuring to the
Indemnified Party on account of such Losses. For purposes hereof, “Tax Benefit”
means any refund of Taxes actually received or reduction in the amount of Taxes
actually paid by (A) the Indemnified Party or (B) in the event the Indemnified
Party is treated as a partnership or disregarded entity or otherwise as a pass
through entity for tax purposes, the direct or indirect owners of the
Indemnified Party.
(d)    The maximum aggregate amount of indemnifiable Losses arising out of or
resulting from the indemnification obligation enumerated in Section 5.01(a) that
may be recovered from the

17

--------------------------------------------------------------------------------

Company shall not exceed the Aggregate Purchase Price.
(e)    Notwithstanding anything to the contrary contained in this Agreement, no
Person shall be liable under this Article VIII for any consequential, punitive,
special, exemplary, incidental or indirect damages, including lost profits.

Section 5.04.    Adjustment for Tax Purposes. Any payments made pursuant to this
Article V shall constitute an adjustment of the consideration paid for the
Purchased Shares for Tax purposes and shall be treated as such by the Parties on
their tax returns to the extent permitted by Law.

ARTICLE VI
MISCELLANEOUS

Section 6.01.    Public Announcements. No Party shall make any press release or
other public announcement regarding the existence of this Agreement without the
prior written consent of the other Party, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, that the
foregoing shall not restrict disclosures by the Purchaser or the Company that
are required by applicable securities or other Laws or by the applicable rules
of any stock exchange having jurisdiction over the disclosing Party or its
Affiliates.

Section 6.02.    Fees and Expenses. Subject to Section 7.13 of the Contribution
and Unit Purchase Agreement dated as of the date hereof, each Party shall pay
fees and expenses incurred by such Party in connection with the negotiation,
documentation and diligence of, and the transactions contemplated by, this
Agreement.

Section 6.03.    Transfer Taxes. All transfer, sales and use, registration,
stamp and similar Taxes imposed in connection with the sale of the Purchased
Shares or any other transaction that occurs pursuant to this Agreement shall be
borne by the Company.

Section 6.04.    Further Assurances. The Company shall use its reasonable best
efforts to promptly secure the listing of the Purchased Shares upon the New York
Stock Exchange. The Company agrees to execute and deliver and the Purchaser
agrees to execute and deliver, such other documents, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the Transactions.

Section 6.05.    Independent Investment. Except as may be otherwise disclosed by
the Purchaser in any filings with the SEC under Section 13 and/or Section 16 of
the Exchange Act, the Purchaser is acting independently with respect to its
investment in, and related rights with respect to voting, holding or disposing
of, the Purchased Shares purchased hereunder.

Section 6.06.    Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original instrument, but all such counterparts
together shall constitute but one agreement. Facsimiles of signatures or
signatures delivered in

18

--------------------------------------------------------------------------------

portable document format (.pdf) will be deemed to be originals.

Section 6.07.    Notices. All notices that are required or may be given pursuant
to this Agreement shall be sufficient in all respects if given in writing. Any
such notice shall be deemed given (a) when made, if made by hand delivery, and
upon confirmation of receipt, if made by electronic mail transmission, (b) one
Business Day after being deposited with a next-day courier, postage prepaid, or
(c) three Business Days after being sent certified or registered mail, return
receipt requested, postage prepaid, in each case addressed as follows:
If to the Company, to:
 
 
 
California Resources Corporation
9200 Oakdale Avenue, 9th Floor
Los Angeles, California 91311
 
Attn:
Michael L. Preston 
Executive Vice President,  
General Counsel and Corporate Secretary
 
Email:
Michael.Preston@crc.com
 
 
 
With a copy to (which copy shall not constitute notice):
 
 
 
 
Sullivan & Cromwell LLP
1888 Century Park East
Los Angeles, California 90067-1725
 
Attn:
Alison S. Ressler
 
Email:
resslera@sullcrom.com
 
 
 
If to any Purchaser, to:
 
 
 
 
[•]
 
 
 
With a copy to (which copy shall not constitute notice):
 
 
 
 
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
 
Attn:
Michael Sabin
 
Email:
michael.sabin@cliffordchance.com

Any Party may change its address for notice by notice to the other in the manner
set forth above. All notices shall be deemed to have been duly given at the time
of receipt by the Party to which such notice is addressed.

Section 6.08.    Removal of Legend. In connection with a sale of Purchased
Shares by the Purchaser in reliance on Rule 144, the Purchaser or its broker
shall deliver to the

19

--------------------------------------------------------------------------------

Transfer Agent and the Company a broker representation letter providing to the
Transfer Agent and the Company any information the Company deems necessary to
determine that the sale of the Purchased Shares is made in compliance with Rule
144. Upon receipt of such representation letter, the Company shall promptly
direct its transfer agent to remove the notation of a restrictive legend in the
Purchaser’s certificate or the book entry account maintained by the Transfer
Agent, including the legend referred to in Section 4.09, and the Company shall
bear all costs associated therewith. At such time as the Purchased Shares have
been sold pursuant to an effective registration statement under the Securities
Act or have been held by the Purchaser for more than six months if the Purchaser
is not, and has not been in the preceding three months, an affiliate of the
Company (as defined in Rule 144), if the book entry account or certificate for
such Purchased Shares still bears the notation of the restrictive legend
referred to in Section 4.09, the Company agrees, upon request of the Purchaser
or permitted assignee, to take all steps necessary to promptly effect the
removal of the legend described in Section 4.09 from the Purchased Shares, and
the Company shall bear all costs associated therewith, regardless of whether the
request is made in connection with a sale or otherwise, so long as the Purchaser
or its permitted assigns provide to the Company any information the Company
deems reasonably necessary to determine that the legend is no longer required
under the Securities Act or applicable state laws. The Company shall cooperate
with the Purchaser to effect the removal of the legend referred to in Section
4.09 at any time such legend is no longer appropriate.

Section 6.09.    Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC that may permit the sale of
the Purchased Shares to the public without registration, the Company agrees to
use its reasonable best efforts to:
(a)    make and keep public information regarding the Company available, as
those terms are understood and defined in Rule 144, at all times from and after
the Closing Date until all Purchased Shares held by the Purchaser are Freely
Tradable;
(b)    file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act at all
times from and after the Closing Date until all Purchased Shares held by the
Purchaser are Freely Tradeable;
(c)    until all Purchased Shares held by the Purchaser are Freely Tradeable,
furnish to the Purchaser forthwith upon request a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents so
filed as the Purchaser may reasonably request in availing itself of any rule or
regulation of the SEC allowing the Purchaser to sell any such Purchased Shares
without registration; and
(d)    take such further action as the Purchaser may reasonably request, all to
the extent required from time to time to enable the Purchaser to sell Purchased
Shares without registration under the Securities Act within the limitations of
the exemption provided by Rule 144.

Section 6.10.    Governing Law. This Agreement and all matters pertaining
hereto, including matters of performance, non-performance, breach, remedies,
procedures, rights, duties, and interpretation or construction hereof, shall be
governed and construed in accordance

20

--------------------------------------------------------------------------------

with the Laws of the State of Delaware, United States of America without regard
to principles of conflicts of laws that would direct the application of the Laws
of another jurisdiction. Any action referred to in this Section 6.10 shall be
brought in the federal or state courts located within the State of Delaware. The
Parties hereto hereby (a) irrevocably consent to the personal jurisdiction and
venue of such courts, and (b) waive any claim (by way of motion, as a defense or
otherwise) of improper venue, that such parties are not subject personally to
the jurisdiction of such courts, that such courts are an inconvenient forum or
that this Agreement or the subject matter may not be enforced in or by such
courts. The Parties agree that a judgment in any such dispute may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
Law.

Section 6.11.    Waiver of Jury Trial. THE PARTIES HEREBY ACKNOWLEDGE THAT THEY
HAVE BEEN REPRESENTED BY AND HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE, AND
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE ANY AND ALL
RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH,
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 6.12.    Captions; Headings. The Table of Contents and the captions and
headings in this Agreement are for convenience only and shall not be considered
a part of or affect the construction or interpretation of any provision of this
Agreement.

Section 6.13.    Amendment. No amendment, supplement or modification of or to
any provision of this Agreement, or any waiver of any provisions of this
Agreement shall be effective unless signed by each of the Company and the
Purchaser.

Section 6.14.    Waivers. Any failure by any Party to comply with any of its
obligations or agreements herein contained may be waived by the Party to whom
such compliance is owed by an instrument signed by the Party to whom compliance
is owed and expressly identified as a waiver but not in any other manner. No
waiver of, or consent to a change in, any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of, or consent to a change in,
other provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.

Section 6.15.    Assignment; Successors and Assignees.
(a)    The Company may not assign or otherwise transfer all or any part of this
Agreement, nor shall the Company delegate any of its rights or duties hereunder,
without the prior written consent of the Purchaser and any transfer or
delegation made without such consent shall be void.
(b)    The Purchaser may not assign or otherwise transfer all or any part of
this Agreement, nor shall the Purchaser delegate any of its rights or duties
hereunder, without the prior written consent of the Company and any transfer or
delegation made without such consent shall be void.

21

--------------------------------------------------------------------------------

(c)    On and after the Closing, subject to compliance with any restrictions on
transfer imposed by the Securities Act and state securities and “blue sky” laws,
the Purchaser may transfer the Purchased Shares to any Person.
(d)    Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the Parties hereto and their respective successors and
permitted assigns.

Section 6.16.    Entire Agreement. This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter hereof, and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties pertaining to the subject matter hereof.

Section 6.17.    Third Person Beneficiaries. Nothing in this Agreement shall
entitle any Person other than the Purchaser, the Company and their respective
successors and permitted assigns to any claim, cause of action, remedy or right
of any kind; provided, however, that the indemnification provisions of Article V
shall inure to the benefit of the Indemnified Parties.

Section 6.18.    References; Exhibits.
(a)    In this Agreement, unless a clear contrary intention appears:
(i)    References to any gender includes a reference to all other genders;
(ii)    Reference to a Person includes such Person’s successors and assigns but,
in the case of a Party, only if such successors and assigns are permitted by
this Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity;
(iii)    References to the singular includes the plural, and vice versa;
(iv)    Reference to any Article or Section means an Article or Section of this
Agreement;
(v)    References to “days” are to calendar days;
(vi)    All references to money refer to the lawful currency of the United
States;
(vii)    Reference to any Exhibit means an Exhibit to this Agreement, all of
which are incorporated into and made a part of this Agreement;
(viii)    Unless expressly provided to the contrary, “hereunder”, “hereof”,
“herein” and words of similar import are references to this Agreement as a whole
and not any particular Section or other provision of this Agreement;
(ix)    The word “or” is not exclusive;

22

--------------------------------------------------------------------------------

(x)    “Include” and “including” mean including, without limitation; and
(xi)    The “knowledge” of a Party means the actual knowledge of the executive
officers of such Party, after internal inquiry of such Party’s personnel as such
executive officers have deemed appropriate.

Section 6.19.    Construction. The Purchaser is capable of making such
investigation, inspection, review and evaluation of the Purchased Shares as a
prudent purchaser would deem appropriate under the circumstances. The Company
and the Purchaser have had the opportunity to exercise business discretion in
relation to the negotiation of the details of the transaction contemplated
hereby. This Agreement is the result of arm’s-length negotiations from equal
bargaining positions. Each Party has been represented by its own counsel in
connection with the negotiation and preparation of this Agreement and,
consequently, each Party hereby waives the application of any rule of Law that
would otherwise be applicable in connection with the interpretation of this
Agreement, including but not limited to any rule of Law to the effect that any
provision of this Agreement will be interpreted or construed against the Party
whose counsel drafted that provision.

Section 6.20.    Specific Performance. The Parties agree that irreparable damage
may occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. Each
Party agrees that, in the event of any breach or threatened breach by any other
Party of any covenant or obligation contained in this Agreement, the
non-breaching Party shall be entitled (in addition to any other remedy that may
be available to it, including monetary damages) to seek and obtain (a) a decree
or order of specific performance to enforce the observance and performance of
such covenant or obligation, and (b) an injunction restraining such breach or
threatened breach. Each Party further agrees that no other Party or any other
Person shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred
to in this Section 6.20, and each Party hereto irrevocably waives any right it
may have to require the obtaining, furnishing or posting of any such bond or
similar instrument. Each Party further agrees that it shall not object to the
granting of an order of specific performance, an injunction or other equitable
relief on the basis that there exists an adequate remedy at law.

Section 6.21.    Severability. Any term or provision of this Agreement which is
determined by a court of competent jurisdiction to be invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction, and if any provision of this Agreement is
determined to be so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable, in all cases so long as
neither the economic nor legal substance of the Transactions contemplated hereby
is affected in any manner adverse to any Party or its equityholders. Upon any
such determination, the Parties shall negotiate in good faith in an effort to
agree upon a suitable and equitable substitute provision to effect the original
intent of the Parties as closely as possible and to the end that the
Transactions contemplated hereby shall be fulfilled to the

23

--------------------------------------------------------------------------------

maximum extent possible.
[Signature pages follow]

24

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties as of
the date first above written.

 
COMPANY:
 
 
 
 
 
 
 
California Resources Corporation
 
 
 
 
 
 
 
By:
 
 
Name:
 
 
Title:
 

Signature Page to Stock Purchase Agreement

--------------------------------------------------------------------------------

 
PURCHASER:
 
 
 
 
 
 
 
By:
 
 
Name:
 
 
Title:
 

Signature Page to Stock Purchase Agreement

--------------------------------------------------------------------------------

EXHIBIT A
Restrictive Legend
“THE OFFER AND SALE OF THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION THEREUNDER AND, IN THE CASE OF A TRANSACTION EXEMPT FROM
REGISTRATION, UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT OR THE ISSUER HAS
RECEIVED DOCUMENTATION REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES
NOT REQUIRE REGISTRATION UNDER SUCH ACT.

Exhibit A to Stock Purchase Agreement