EXHIBIT 10.1
Certain portions of this exhibit (indicated by “[*****]”) have been omitted
pursuant to Item 601(b)(10) of Regulation S-K.
THIS RESTRUCTURING SUPPORT AGREEMENT IS NOT AN OFFER OR ACCEPTANCE WITH RESPECT
TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN
THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR
SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS
OF THE BANKRUPTCY CODE. NOTHING CONTAINED IN THIS RESTRUCTURING SUPPORT
AGREEMENT SHALL BE AN ADMISSION OF FACT OR LIABILITY OR, UNTIL THE OCCURRENCE OF
THE AGREEMENT EFFECTIVE DATE ON THE TERMS DESCRIBED IN THIS AGREEMENT, DEEMED
BINDING ON ANY OF THE PARTIES TO THIS AGREEMENT.
RESTRUCTURING SUPPORT AGREEMENT
This RESTRUCTURING SUPPORT AGREEMENT (including all exhibits, annexes, and
schedules attached to this agreement in accordance with Section 14.02,
this “Agreement”) is made and entered into as of July 15, 2020 (the “Execution
Date”), by and among the following parties (each of the following described in
sub-clauses (i) through (iv) of this preamble, collectively, the “Parties”):
(i)
(a) California Resources Corporation (“CRC”), a company incorporated under the
Laws1 of Delaware, and (b) each of its Affiliates listed on Annex A to the
Restructuring Term Sheet (as defined herein) that has executed and delivered a
counterpart signature page to this Agreement to counsel to each of the Ad Hoc
Group (as defined herein) and Ares (as defined herein) (the Entities (as defined
herein) in this clause (i), collectively, the “Company Parties”);

(ii)
the undersigned holders of, or investment advisors, sub-advisors, or managers of
discretionary accounts that hold, 2016 Term Loan Claims (as defined herein) that
have executed and delivered counterpart signature pages to this Agreement, a
Joinder or a Transfer Agreement, in each case, to counsel to each of the Company
Parties, the Ad Hoc Group and Ares (the Entities in this clause (ii),
collectively, the “Consenting 2016 Term Loan Lenders”);

(iii)
the undersigned holders of, or investment advisors, sub-advisors, or managers of
discretionary accounts that hold, 2017 Term Loan Claims (as defined herein) that
have executed and delivered counterpart signature pages to this Agreement, a
Joinder or a Transfer Agreement, in each case, to counsel to each of the Company
Parties, the Ad Hoc Group and Ares (the Entities in this clause (iii),
collectively, the “Consenting 2017 Term Loan Lenders”);

__________
1 
Capitalized terms used but not defined in the preamble and recitals to this
Agreement have the meanings ascribed to them in Section 1.

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

(iv)
the undersigned holders of, or investment advisors, sub-advisors, or managers of
discretionary accounts that hold, Second Lien Notes Claims (as defined herein)
that have executed and delivered counterpart signatures to this Agreement, a
Joinder or a Transfer Agreement, in each case, to counsel to the Company
Parties, the Ad Hoc Group and Ares (the Entities in this clause (iv),
collectively, the “Consenting Second Lien Noteholders” and together with the
Consenting 2016 Term loan Lenders and the 2017 Term Loan Lenders, the
“Consenting Creditors”); and

(v)
one or more funds, investment vehicles and/or accounts managed or advised by
Ares Management LLC or one or more of their affiliates, including ECR Corporate
Holdings L.P., that, in each case, have executed and delivered counterpart
signature pages to this Agreement or a Transfer Agreement in each case, to
counsel to each of the Company Parties and the Ad Hoc Group (the entities in
this clause (iv) collectively, “Ares” and together with the Consenting
Creditors, the “Consenting Parties”).

RECITALS
WHEREAS, the Company Parties, Ares and the Consenting Creditors have in good
faith and at arm’s length negotiated or been apprised of certain restructuring
and recapitalization transactions with respect to the Company Parties’ capital
structure (including with respect to Elk Hills Power (as defined herein)) on the
terms set forth in this Agreement and as specified in the following documents
(the “Restructuring Transactions”):
●
the term sheet setting forth the terms and conditions of the Restructuring
Transactions, attached as Exhibit A to this Agreement (together with all
schedules, annexes, and exhibits, thereto, the “Restructuring Term Sheet”);

●
the term sheet setting forth the terms and conditions of a $650 million
second-lien debtor-in-possession financing facility attached as Annex B to the
Restructuring Term Sheet (the “Junior DIP Term Sheet”);

●
the term sheet setting forth the terms and conditions of a second-lien exit
facility as attached as -Annex C to the Restructuring Term Sheet (the “Second
Lien Exit Facility Term Sheet”);

●
the term sheet setting forth the terms and conditions of the backstop commitment
(the “Backstop Commitment Term Sheet”) attached as Annex D to the Restructuring
Term Sheet; and

●
the term sheet setting forth the terms and governance of Reorganized CRC (as
defined below) (the “Governance Term Sheet”) attached as Annex F to the
Restructuring Term Sheet;

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WHEREAS, the Company Parties intend to implement the Restructuring Transactions,
as set forth in the Restructuring Term Sheet, by commencing voluntary cases
under chapter 11 of the Bankruptcy Code in the Bankruptcy Court (the “Chapter 11
Cases”) and consummating the Plan (as defined herein);
WHEREAS, the Backstop Parties have agreed to backstop the Equity Rights Offering
in accordance with the terms and conditions described in the Backstop Commitment
Agreement; and
WHEREAS, the Parties have agreed to take certain actions in support of the
Restructuring Transactions on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements contained in
this Agreement, and for other valuable consideration, the receipt and
sufficiency of which are acknowledged, each Party, intending to be legally bound
by this Agreement, agrees as follows:
AGREEMENT
Section 1.    Definitions and Interpretation.
1.01.    Definitions. The following terms shall have the following definitions:
“2016 Credit Agreement” means that certain Credit Agreement, dated as of August
12, 2016, by and among CRC, as the borrower, the lenders party thereto, and The
Bank of New York Mellon Trust Company, N.A., as administrative agent and
collateral agent, as may be amended, supplemented, or otherwise modified from
time to time.
“2016 Term Loan” means all loans of CRC outstanding under the 2016 Credit
Agreement.
“2016 Term Loan Claims” means all Claims against any Debtor arising under,
derived from, or based upon the 2016 Term Loan under the 2016 Credit Agreement.
“2017 Credit Agreement” means that certain Credit Agreement, dated as of
November 17, 2017, by and among CRC, as the borrower, the lenders party thereto,
and The Bank of New York Mellon Trust Company, N.A., as administrative agent and
collateral agent, as may be amended, supplemented, or otherwise modified from
time to time.
“2017 Term Loan” means all loans of CRC outstanding under the 2017 Credit
Agreement.
“2017 Term Loan Claims” means all Claims against any Debtor arising under,
derived from, or based upon the 2017 Term Loan under the 2017 Credit Agreement.
“9019 Orders” means the Interim 9019 Order and the Final 9019 Order.

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“Ad Hoc Group” means the ad hoc group of those certain funds or accounts
managed, advised, or sub-advised by those certain funds that hold, among their
Company Claims, 2017 Term Loan Claims, 2016 Term Loan Claims and Second Lien
Notes Claims, and that is represented by the Ad Hoc Group Advisors.
“Ad Hoc Group Advisors” means Davis Polk & Wardwell LLP, Evercore Inc., Haynes
and Boone, LLP, Trimeric Corporation, Cox, Castle & Nicholson LLP, Cornerstone
Engineering, Inc., Rapp & Krock, PC, ERM Consulting and Engineering Inc. and any
other special and local counsel and advisors providing advice to the Ad Hoc
Group in connection with the Restructuring Transactions.
“Affiliate” means, with respect to any specified Entity, any other Entity
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Entity. For purposes of this definition,
“control” (including, with correlative meanings, the terms “controlling,”
“controlled by,” and “under common control with”), as used with respect to any
Entity, shall mean the possession, directly or indirectly, of the right or power
to direct or cause the direction of the management or policies of such Entity,
whether through the ownership of voting securities, by agreement, or otherwise.
“Agent” means The Bank of New York Mellon Trust Company, N.A. as administrative
agent and collateral agent under the 2016 Credit Agreement and the 2017 Credit
Agreement.
“Agreement” has the meaning set forth in the preamble to this Agreement and, for
the avoidance of doubt, includes all the exhibits, annexes, and schedules
attached to this Agreement in accordance with Section 14.02.
“Agreement Effective Date” means the date on which the conditions set forth in
Section 2 have been satisfied or waived in accordance with this Agreement.
“Agreement Effective Period” means, with respect to a Party, the period from the
Agreement Effective Date to the Termination Date applicable to that Party.
“Alternative Restructuring Proposal” means any inquiry, proposal, offer, bid,
term sheet, discussion, or agreement with respect to a sale, disposition,
new-money investment, restructuring, reorganization, merger, amalgamation,
acquisition, consolidation, dissolution, debt investment, equity investment,
liquidation, tender offer, recapitalization, plan of reorganization, share
exchange, business combination, or similar transaction involving any one or more
Company Parties and/or Elk Hills Power or the debt, equity, or other interests
in any one or more Company Parties and/or Elk Hills Power that in each case is
an alternative to one or more of the Restructuring Transactions; provided that
no inquiry, proposal, offer, bid, term sheet, discussion, or agreement that
would solely replace or refinance the Second Lien Exit Facility or the Eligible
Notes in whole or in part with more alternative debt financing shall constitute
an Alternative Restructuring

4

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Proposal if such inquiry, proposal, offer, bid, term sheet, discussion or
agreement is otherwise consistent with the Plan.
“Amended Elk Hills Power Agreements” means the Elk Hills Power Agreements as
amended pursuant to the Elk Hills Settlement.
“Ares” has the meaning set forth in the Preamble to this Agreement.
“Ares Advisors” means Kirkland & Ellis LLP, Lazard Ltd., and any other special
and local counsel and/or advisors providing advice to Ares in connection with
the Restructuring Transactions.
“Avoidance Actions” means any and all actual or potential avoidance, recovery,
subordination, or other Claims, causes of action, or remedies that may be
brought by or on behalf of the Company Parties, their estates, or other parties
in interest under sections 502, 510, 542, 544, 545, 547 through 553, and 724(a)
or other applicable sections of the Bankruptcy Code or under similar or related
local, state, federal, or foreign statutes and common law, including fraudulent
transfer laws.
“Backstop Commitment” has the meaning ascribed to such term in the Backstop
Commitment Term Sheet.
“Backstop Commitment Agreement” means that certain backstop commitment
agreement, dated as of July 15, 2020, with the terms and conditions set forth in
the Backstop Commitment Term Sheet and such other terms as are acceptable to the
Company Parties and the Backstop Parties, by and among the Backstop Parties and
CRC, as may be amended, supplemented, or modified from time to time, setting
forth, among other things, the terms and conditions of the Equity Rights
Offering and the Backstop Commitment.
“Backstop Commitment Percentage” has the meaning ascribed to such term in the
Backstop Commitment Agreement; provided, that each Backstop Party shall be
permitted to allocate their respective funding obligation with respect to the
Backstop Commitment to any Affiliate designee, and the Backstop Commitment
Percentage shall be calculated accordingly.
“Backstop Commitment Term Sheet” has the meaning set forth in the recitals to
this Agreement.
“Backstop Party” has the meaning ascribed to it in the Backstop Commitment Term
Sheet.
“Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§
101-1532, as amended.

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“Bankruptcy Court” means the United States Bankruptcy Court presiding over the
Chapter 11 Cases, which shall be the United States Bankruptcy Court for the
Southern District of Texas.
“Business Day” means any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state of New York.
“Cause of Action” means any action, Claim, cause of action, Avoidance Actions,
controversy, demand, right, action, lien, indemnity, Equity Interest, guaranty,
suit, obligation, liability, damage, judgment, account, defense, offset, power,
privilege, license, and franchise of any kind or character whatsoever, whether
known, unknown, contingent or noncontingent, matured or unmatured, suspected or
unsuspected, liquidated or unliquidated, disputed or undisputed, secured or
unsecured, assertable directly or derivatively, in contract or in tort, in law
or in equity, or pursuant to any other theory of law.
“Chapter 11 Cases” has the meaning set forth in the recitals to this Agreement.
“Chosen Court” means, (a) before one or more Company Parties commences Chapter
11 Cases, federal courts or state courts located in New York, New York and, (b)
after commencement of such proceeding, in the Bankruptcy Court with jurisdiction
over such proceeding.
“Claim” has the meaning ascribed to it in section 101(5) of the Bankruptcy Code.
“Class” means any group of Claims or interests classified by the Plan pursuant
to section 1122(a) of the Bankruptcy Code.
“Class B Preferred Units” has the meaning ascribed to it in the Elk Hills Power
Agreements.
“Class C Common Units” has the meaning ascribed to it in the Elk Hills Power
Agreements.
“Company Claims” means any Claim against a Company Party, including the
Prepetition RBL Claims, the 2016 Term Loan Claims, the 2017 Term Loan Claims,
the Second Lien Notes Claims, the Unsecured Notes Claims, the Senior DIP Claims
and the Junior DIP Claims.
“Company Parties” has the meaning set forth in the preamble to this Agreement.
“Confirmation Order” means the confirmation order with respect to the Plan.
“Consenting 2016 Term Loan Lenders” has the meaning set forth in the Preamble to
this Agreement.

6

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“Consenting 2017 Term Loan Lenders” has the meaning set forth in the Preamble to
this Agreement.
“Consenting Creditors” means the meaning set forth in the Preamble to this
Agreement.
“Consenting Parties” has the meaning set forth in the Preamble to this
Agreement.
“Consenting Parties Fees and Expenses” means the reasonable and documented fees
and expenses accrued since the inception of their respective engagements related
to the implementation of the Restructuring Transactions and not previously paid
by, or on behalf of, the Company Parties of the Ad Hoc Group Advisors and Ares
Advisors.
“Consenting Second Lien Noteholders” has the meaning set forth in the Preamble
to this Agreement.
“Conversion Right” has the meaning ascribed to it in the Restructuring Term
Sheet.
“CRC” has the meaning set forth in the preamble to this Agreement.
“Debtor” means each of the Company Parties in its capacity as a debtor and
debtor-in-possession in its respective Chapter 11 Case.
“Defaulting Second Lien Exit Lender” means any Second Lien Exit Lender that
fails to timely fund its Second Lien Exit Commitment in accordance with the
terms of the Second Lien Exit Facility Documents.
“Deficiency/Unsecured Debt Claims” has the meaning ascribed to it in the
Restructuring Term Sheet.
“Definitive Documents” means all of the definitive documents implementing the
Restructuring Transactions, including those set forth in Section 3.
“DIP Credit Agreements” means the Senior DIP Credit Agreement and the Junior DIP
Credit Agreement.
“DIP Order” means the Interim DIP Order and the Final DIP Order.
“Disclosure Statement” means the related disclosure statement with respect to
the Plan.
“Eligible Notes” has the meaning ascribed to it in the Restructuring Term Sheet.
“Elk Hills Power” means Elk Hills Power, LLC or any successor thereof.

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“Eligible Fixed Income Securities” has the meaning ascribed to it in the
Restructuring Term Sheet.
“Eligible Stock” has the meaning ascribed to it in the Restructuring Term Sheet.
“Elk Hills Power Agreements” means, collectively, (a) the Contribution and Unit
Purchase Agreement, dated as of February 7, 2018, by and among Elk Hills Power,
LLC, California Resources Elk Hills, LLC, ECR Corporate Holdings L.P. and,
solely for the purposes of Section 7.14 thereof, California Resources
Corporation; (b) the Second Amended and Restated Limited Liability Company
Agreement of Elk Hills Power, LLC, dated as of February 7, 2018, by and between
California Resources Elk Hills, LLC and ECR Corporate Holdings L.P.; (c) the
Commercial Agreement, dated as of February 7, 2018, by and between Elk Hills
Power, LLC and California Resources Elk Hills, LLC; (d) the Master Services
Agreement, dated as of February 7, 2018, by and between Elk Hills Power, LLC and
California Resources Elk Hills, LLC; and (e) any other agreements entered into
in connection with the transactions contemplated by the foregoing agreements.
“Elk Hills Settlement Agreement” has the meaning ascribed to it in the
Restructuring Term Sheet.
“Entity” shall have the meaning set forth in Section 101(15) of the Bankruptcy
Code.
“Equity Interests” means, collectively, the shares (or any class thereof),
common stock, preferred stock, general or limited partnership interests, limited
liability company interests, and any other equity, ownership, or profits
interests and options, warrants, rights, or other securities or agreements to
acquire or subscribe for, or which are convertible into or based on the value of
such shares (or any class thereof) of, common stock, preferred stock, general or
limited partnership interests, limited liability company interests, or other
equity, ownership, or profits interests (in each case whether or not arising
under or in connection with any employment agreement).
“Equity Rights Offering” means the rights offering of New Common Stock to be
issued by Reorganized CRC in exchange for $450 million in cash on the terms and
conditions set forth in the Restructuring Term Sheet and/or Backstop Commitment
Term Sheet, as applicable
“Execution Date” has the meaning set forth in the preamble to this Agreement.
“Exit Facility Documents” means the First Lien Exit Facility Documents and the
Second Lien Exit Facility Documents.
“Final 9019 Order” means, as applicable, the final order of the Bankruptcy Court
approving the Elk Hills Settlement Agreement, including the Elk Hills Settlement
Agreement and the Amended Elk Hills Power Agreements attached thereto.

8

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“Final DIP Order” means the final order of the Bankruptcy Court setting forth
the terms of debtor-in-possession financing and use of cash collateral, which
shall be consistent with and approve entry into the Senior DIP Facility
Documents, the Junior DIP Term Sheet, and the Junior DIP Facility Documents.
“First Lien Exit Facility” has the meaning ascribed to it in the Restructuring
Term Sheet.
“First Lien Exit Facility Documents” means the documentation necessary to
effectuate the incurrence of the First Lien Exit Facility.
“First Day Pleadings” means the first day pleadings that the Company Parties
determine, are necessary or desirable to file, and which are reasonably
acceptable in form and substance to the Required Consenting Creditors and Ares.
“Governance Term Sheet” has the meaning set forth in the Recitals to this
Agreement.
“Governing Body” means the board of directors, board of managers, manager,
general partner, investment committee, special committee, or such similar
governing body of an Entity.
“Interim 9019 Order” means, as applicable, the interim order of the Bankruptcy
Court approving the Elk Hills Settlement Agreement, including the Elk Hills
Settlement Agreement and the Amended Elk Hills Power Agreements attached
thereto.
“Interim DIP Order” interim order of the Bankruptcy Court setting forth the
terms of debtor-in-possession financing and use of cash collateral, which shall
be consistent with and approve entry into the Senior DIP Facility Documents, the
Junior DIP Term Sheet, and the Junior DIP Facility Documents.
“Joinder” means a joinder to this Agreement substantially in the form attached
to this Agreement as Exhibit E.
“Junior DIP Agent” means Alter Domus (US) LLC as administrative agent under the
Junior DIP Facility.
“Junior DIP Claims” means any Claim against the Debtors arising under, derived
from, or based upon the Junior DIP Facility or the Junior DIP Credit Agreement.
“Junior DIP Commitment” has the meaning ascribed to it in the Junior DIP Term
Sheet.
“Junior DIP Commitment Parties” means the Consenting Creditors providing the
Junior DIP Commitments as set forth in Exhibit C attached hereto.
“Junior DIP Credit Agreement” means that certain second-lien senior secured
superpriority debtor-in-possession credit agreement by and among the Company
Parties, the Junior

9

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DIP Agent, and the lenders that are from time to time party thereto, consistent
with the terms and conditions of the Junior DIP Term Sheet and this Agreement
and as approved by the DIP Orders.
“Junior DIP Facility” means the new second-lien superpriority
debtor-in-possession credit facility to be effectuated on the terms and
conditions set forth in the Junior DIP Term Sheet.
“Junior DIP Facility Documents” means the Junior DIP Credit Agreement and other
documentation, agreements, instruments and certificates necessary to effectuate
the incurrence of the Junior DIP Facility.
“Junior DIP Term Sheet” has the meaning set forth in the recitals to this
Agreement.
“KEIP/KERP Plan” means any retention or incentive compensation plans of the
Company Parties’ executive management team or other key employees of the Company
Parties.
“Law” means any federal, state, local, or foreign law (including common law),
statute, code, ordinance, rule, regulation, order, ruling, or judgment, in each
case, that is validly adopted, promulgated, issued, or entered by a governmental
authority of competent jurisdiction (including the Bankruptcy Court).
“Liquidation Preference” has the meaning ascribed to it in the Elk Hills Power
Agreements.
“Make-Whole Amount” has the meaning ascribed to it in the Elk Hills Power
Agreements.
“Milestones” means the milestones set forth in Section 4 hereof.
“MIP” has the meaning ascribed to it in the Restructuring Term Sheet.
“New Common Stock” means the new common stock of the Reorganized CRC to be
issued on the Plan Effective Date.
“New Organizational Documents” means the documents providing for corporate
governance of Reorganized CRC and the other Reorganized Debtors, charters,
bylaws, operating agreements, or other organizational documents or shareholders’
agreements, as applicable, which shall be consistent with section 1123(a)(6) of
the Bankruptcy Code (as applicable) and the Governance Term Sheet.
“Parties” has the meaning set forth in the preamble to this Agreement.
“Permitted Transferee” means each transferee of any Company Claims who meets the
requirements of Section 8.01.

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“Person” means any natural person, corporation, limited liability company,
professional association, limited partnership, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any governmental authority.
“Petition Date” means the first date any of the Company Parties commences a
Chapter 11 Case.
“Plan” means the plan of reorganization with respect to the Restructuring
Transactions.
“Plan Effective Date” means the date upon which (a) the Confirmation Order has
been entered by the Bankruptcy Court, (b) all conditions precedent to the
effectiveness of the Plan have been satisfied or are expressly waived in
accordance with the terms thereof, as the case may be, (c) the transactions to
occur on the Plan Effective Date pursuant to the Plan become effective or are
consummated, and (d) the substantial consummation (as defined in section 1101 of
the Bankruptcy Code) of the Plan occurs.
“Plan Supplement” means the compilation of documents and forms of documents,
schedules, and exhibits to the Plan that will be filed by the Company Parties
with the Bankruptcy Court.
“Preferred Deferred Amount” has the meaning ascribed to it in the Elk Hills
Power Agreements.
“Preferred Distribution Rate” has the meaning ascribed to it in the Elk Hills
Power Agreements.
“Prepetition RBL Claim” means all Claims against any Debtor arising under,
derived from, or based upon the RBL Credit Agreement.
“Qualified Marketmaker” means an entity that (a) holds itself out to the public
or the applicable private markets as standing ready in the ordinary course of
business to purchase from customers and sell to customers Company Claims (or
enter with customers into long and short positions in Company Claims), in its
capacity as a dealer or market maker in Company Claims and (b) is, in fact,
regularly in the business of making a market in claims against issuers or
borrowers (including debt securities or other debt).
“RBL Credit Agreement” means that certain Credit Agreement, dated as of
September 24, 2014, by and among CRC, as the borrower, the lenders party
thereto, and JPMorgan Chase Bank, N.A., as administrative agent, as may be
amended, supplemented, or otherwise modified from time to time.

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“Related Fund” means any fund, account (including separately managed account),
or investment vehicle that is controlled, managed, advised or sub-advised by a
Consenting Creditor, an Affiliate or the same investment manager, advisors or
sub-advisor as a Consenting Creditor, or an Affiliate of such investment
manager, advisor or sub-advisor.
“Releases & Exculpation Provisions” means the releases and exculpation
provisions to be included in the Plan as set forth in Annex H of the
Restructuring Term Sheet.
“Reorganized CRC” means California Resources Corporation on and after the Plan
Effective Date and the issuer of the New Common Stock under the Plan.
“Reorganized Debtor” means, a Debtor, or any successor or assign thereto, by
merger, reorganization, consolidation, or otherwise, on and after the Plan
Effective Date, including Reorganized CRC.
Required Backstop Parties” means Backstop Parties holding greater than 50% of
the Backstop Commitments.
“Required Consenting Creditors” means the Required Consenting Term Loan Lenders
and the Required Backstop Parties.
“Required Consenting Parties” means, as of the date such consent, direction,
approval or other action is required, those Consenting Parties (a) anticipated
to hold greater than 66⅔% of the New Common Stock immediately after the
occurrence of the Plan Effective Date (without giving effect to the MIP),
calculated in accordance with (i) the Backstop Commitment Agreement and (ii)
 the Restructuring Term Sheet; provided that such calculation shall disregard
shares offered in the Equity Rights Offering to non-Backstop Parties; and (b)
committed to provide greater than 50% of the Backstop Commitment Percentages.
“Required Consenting Term Loan Lenders” means Consenting Creditors holding
greater than 50% of the aggregate principal amount of the 2017 Term Loan Claims
held by all Consenting Creditors.
“Restricted Period” means the period commencing as of the date each Consenting
Creditor, as applicable, executes this Agreement until the Termination Date, as
to such Consenting Creditor.
“Restructuring Term Sheet” has the meaning set forth in the recitals to this
Agreement.
“Restructuring Transactions” has the meaning set forth in the recitals to this
Agreement.
“RSA Party” means a party to this Agreement whether as an initial signatory on
the date of this Agreement or pursuant to the execution of a Joinder.

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“Rules” means Rule 501(a)(1), (2), (3), and (7) of Regulation D under the
Securities Act.
“Second Day Pleadings” means the “second day” pleadings that the Company Parties
determine are necessary or desirable to file, and which are reasonably
acceptable in form and substance to the Required Consenting Creditors and Ares.
“Second Lien Exit Commitment” means, subject to the terms and conditions hereof,
a several and not joint commitment to provide the amount set forth opposite each
Second Lien Exit Lender’s name in Exhibit B attached hereto.
“Second Lien Exit Facility” has the meaning ascribed to it in the Restructuring
Term Sheet.
“Second Lien Exit Facility Documents” means the documentation necessary to
effectuate the incurrence of the Second Lien Exit Facility on terms consistent
with the Second Lien Exit Facility Term Sheet.
“Second Lien Exit Facility Term Sheet” has the meaning set forth in the recitals
to this Agreement.
“Second Lien Exit Lenders” has the meaning ascribed to it in the Restructuring
Term Sheet.
“Second Lien Exit Permitted Transferee” means (i) a Related Fund of a Second
Lien Exit Lender, (ii) any other Second Lien Exit Lender or (iii) any other
person that is a party to this Agreement or executes a joinder hereto with the
consent (not to be unreasonably withheld, conditioned or delayed) of the
Required Consenting Creditors and the Company (including, as part of such
joinder, making the necessary representations and warranties under the Second
Lien Exit Facility Documents); provided that absent such consent, such
transferee shall be deemed a Permitted Transferee to the extent such proposed
transferee deposits with the escrow agent, pursuant to escrow arrangements
satisfactory to the Company, an amount of funds sufficient, in the reasonable
determination of the Company, to satisfy the transferring Second Lien Exit
Lender’s obligations under this Agreement and the Second Lien Exit Facility
Documents.
“Second Lien Notes” means all notes of CRC outstanding under the Second Lien
Notes Indenture.
“Second Lien Notes Claims” means all Claims against any Debtor arising under,
derived from, or based upon the Second Lien Notes Indenture.
“Second Lien Notes Indenture” means that certain Indenture dated as of December
15, 2015, by and among CRC, as the issuer, the guarantors party thereto, and the
Bank of New York Mellon Trust Company, N.A., as trustee, pursuant to which the
8.00% senior secured second lien

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notes due 2022 were issued, as may be amended, supplemented, or otherwise
modified from time to time.
“Securities Act” means the Securities Act of 1933, as amended.
“Senior DIP Agent” means JPMorgan Chase Bank, N.A. as administrative agent under
the Senior DIP Facility.
“Senior DIP Claims” means any Claim against the Debtors arising under, derived
from, or based upon the Senior DIP Facility or the Senior DIP Credit Agreement.
“Senior DIP Commitment Letter” means that certain letter, dated July 15, 2020,
by the Senior DIP Commitment Parties setting forth their commitment to provide
the Senior DIP Facility.
“Senior DIP Commitment Parties” means the parties set forth in the Senior DIP
Commitment Letter.
“Senior DIP Credit Agreement” means that certain first-lien senior secured
superpriority debtor-in-possession credit agreement by and among the Company
Parties, the Senior DIP Agent, and the lenders that are from time to time party
thereto, consistent with the terms and conditions of the Senior DIP Commitment
Letter and this Agreement and as approved by the DIP Orders.
“Senior DIP Facility” means the new first-lien superpriority
debtor-in-possession credit facility to be effectuated on the terms and
conditions set forth in the Senior DIP Facility Documents.
“Senior DIP Facility Documents” means the Senior DIP Credit Agreement and any
other documentation, agreements, instruments, and certificates necessary to
effectuate the incurrence of the Senior DIP Facility.
“Settlement Effective Date” has the meaning ascribed to it in the Restructuring
Term Sheet.
“Solicitation Commencement Date” means the date by which the Company Parties
shall have commenced solicitation of votes to accept or reject the Plan.
“Solicitation Materials” means all solicitation materials in respect of the
Plan.
“Termination Date” means the date on which termination of this Agreement as to a
Party is effective in accordance with Sections 12.01, 12.02, 12.03, 12.04,
12.05, and 12.06.
“Transfer” means to sell, resell, reallocate, use, pledge, assign, transfer,
hypothecate, participate, donate, or otherwise encumber or dispose of, directly
or indirectly (including through derivatives, options, swaps, pledges, forward
sales, or other transactions).

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“Transfer Agreement” means an executed transfer agreement providing, among other
things, that a transferee is bound by the terms of this Agreement and
substantially in the form attached to this Agreement as Exhibit D.
“Trustee” means The Bank of New York Mellon Company, N.A., as trustee under the
Second Lien Notes Indenture.
“Unpaid Amounts” has the meaning ascribed to it in the Elk Hills Power
Agreements.
“Unsecured Notes Claim” means all Claims against any Debtor arising under,
derived from, or based upon the Unsecured Notes Indenture.
“Unsecured Notes Indenture” means that certain Indenture dated as of October 1,
2014 by and among CRC, as the issuer, the guarantors party thereto, and Wells
Fargo Bank, National association., as trustee, pursuant to which the 5% Senior
Notes due 2020, 5.5% Senior Notes due 2021, and 6% Senior Notes due 2024 were
issued, as may be amended, supplemented, or otherwise modified from time to
time.
1.02.    Interpretation. For purposes of this Agreement:
(a)    in the appropriate context, each term, whether stated in the singular or
the plural, shall include both the singular and the plural, and pronouns stated
in the masculine, feminine, or neutral gender shall include the masculine,
feminine, and the neutral gender;
(b)    capitalized terms defined only in the plural or singular form shall
nonetheless have their defined meanings when used in the opposite form;
(c)    unless otherwise specified, any reference in this Agreement to a
contract, lease, instrument, release, indenture, or other agreement or document
being in a particular form or on particular terms and conditions means that such
document shall be substantially in such form or substantially on such terms and
conditions;
(d)    unless otherwise specified, any reference in this Agreement to an
existing document, schedule, or exhibit shall mean such document, schedule, or
exhibit, as it may have been or may be amended, restated, supplemented, or
otherwise modified from time to time; notwithstanding the foregoing, any
capitalized terms in this Agreement that are defined with reference to another
agreement, are defined with reference to such other agreement as of the date of
this Agreement, without giving effect to any termination of such other agreement
or amendments to such capitalized terms in any such other agreement following
the date of this Agreement;
(e)    unless otherwise specified in this Agreement, the provisions of
Bankruptcy Rule 9006(a) shall apply in computing any period of time prescribed
or allowed herein. If any payment,

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distribution, act or deadline under the Plan is required to be made or performed
or occurs on a day that is not a Business Day, then the making of such payment
or distribution, the performance of such act, or the occurrence of such deadline
shall be deemed to be on the next succeeding Business Day, but shall be deemed
to have been completed or to have occurred as of the required date.
(f)    unless otherwise specified, all references in this Agreement to
“Sections” are references to Sections of this Agreement;
(g)    the words “herein,” “hereof,” and “hereto” refer to this Agreement in its
entirety rather than to any particular portion of this Agreement;
(h)    captions and headings to Sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the
interpretation of this Agreement;
(i)    references to “shareholders,” “directors,” and/or “officers” shall also
include “members” and/or “managers,” as applicable, as such terms are defined
under the applicable limited liability company Laws;
(j)    the use of “include” or “including” is without limitation, whether stated
or not; and
(k)    the word “or” shall not be exclusive.
Section 2.    Effectiveness of this Agreement. This Agreement shall become
effective and binding upon each of the Parties at 12:00 a.m., prevailing Eastern
Time, on the Agreement Effective Date, which is the date on which all of the
following conditions have been satisfied or waived in accordance with this
Agreement:
(a)    each of the Company Parties shall have executed and delivered counterpart
signature pages of this Agreement to counsel to each of (i) the Company Parties,
(ii) the Ad Hoc Group and (iii) Ares;
(b)    holders of more than two thirds of the aggregate outstanding principal
amount of the 2017 Term Loan Claims shall have executed and delivered
counterpart signature pages of this Agreement to counsel to each of (i) the
Company Parties, (ii) the Ad Hoc Group and (iii) Ares;
(c)    Ares has executed and delivered counterpart signature pages of this
Agreement to counsel to each of (i) the Company Parties and (ii) the Ad Hoc
Group;
(d)    the Senior DIP Commitment Parties shall have executed and delivered
counterpart signature pages to the Senior DIP Commitment Letter to counsel to
each of (i) the Company Parties, (ii) the Ad Hoc Group and (iii) Ares;

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(e)    the Backstop Parties shall have executed and delivered counterpart
signature pages of the Backstop Commitment Agreement to counsel to each of (i)
the Company Parties, (ii) the Ad Hoc Group and (iii) Ares; and
(f)    the Company Parties shall have paid all Consenting Parties Fees and
Expenses that are due and payable as of the Agreement Effective Date; provided,
however, that the Company Parties shall have received an invoice for such
Consenting Parties Fees and Expenses at least one (1) Business Day prior to the
Agreement Effective Date.
Section 3.    Definitive Documents.
3.01.    The Definitive Documents governing the Restructuring Transactions shall
include the following (in each case, and any order, or amendment or modification
of any order, entered by the Bankruptcy Court related to the below items):
(a)    the First Day Pleadings and Second Day Pleadings and all orders sought
pursuant thereto;
(b)    the Plan (and all exhibits, ballots, solicitation procedures, and other
documents and instruments related thereto), including any “Definitive
Documentation” as defined therein and not explicitly so defined herein;
(c)    the Plan Supplement and all documents, annexes, exhibits, schedules
contained therein, including any schedules of rejected contracts;
(d)    the Disclosure Statement;
(e)    the order of the Bankruptcy Court approving the Disclosure Statement and
the other Solicitation Materials;
(f)    the Confirmation Order and pleadings in support of entry of the
Confirmation Order;
(g)    the 9019 Orders;
(h)    the DIP Orders;
(i)    the Senior DIP Facility Documents;
(j)    the Junior DIP Facility Documents;
(k)    the Backstop Commitment Agreement and all pleadings and agreements
related to the Equity Rights Offering;

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(l)    the New Organizational Documents;
(m)    the First Lien Exit Facility Documents;
(n)    the Second Lien Exit Facility Documents;
(o)    the Amended Elk Hills Power Agreements;
(p)    any documentation in connection with the Conversion Right, the Eligible
Stock, or the Eligible Notes, as applicable;
(q)    any documentation in connection with the Eligible Notes, including the
form of indenture governing the same;
(r)    any KEIP/KERP Plan and any motion or order related thereto;
(s)    any agreements, motions, pleadings, briefs, applications, orders, and
other filings with the Bankruptcy Court related to Elk Hills Power;
(t)    any other material agreements, motions, pleadings, briefs, applications,
orders, and other filings with the Bankruptcy Court related to the Restructuring
Transactions; and
(u)    any material pleadings that impose or seek authority to impose sell-down
orders or restrictions on the ability of the Consenting Creditors or other
parties to trade any of the Company Parties’ securities, other than equity
securities.
3.02.    The Definitive Documents that are not executed or in a form attached to
this Agreement as of the Execution Date remain subject to negotiation and
completion.  Upon completion, the Definitive Documents and every other document,
deed, agreement, filing, notification, letter, or instrument related to the
Restructuring Transactions shall contain terms, conditions, representations,
warranties, and covenants not inconsistent with the terms of this Agreement, as
they may be modified, amended, or supplemented in accordance with Section 13.
Further, the Definitive Documents that are not executed or in a form attached to
this Agreement as of the Execution Date, and any amendment thereto, shall be
subject to the following consent rights:
(a)    The Definitive Documents listed in the foregoing sections 3.01(a)-(f),
3.01(i)- 3.01(o), 3.01(r), 3.01(t), and 3.01(u) shall be filed no later than the
Settlement Effective Date and at the time of filing shall be reasonably
acceptable to Ares and the Required Consenting Creditors; provided that any
modifications after the Settlement Effective Date to (i) the Definitive
Documents listed in the foregoing 3.01(o) shall be reasonably acceptable to Ares
and the Required Consenting Creditors and (ii) the Definitive Documents listed
in the foregoing 3.01(a)-(f), 3.01(i)- 3.01(n), 3.01(r), 3.01(t), and 3.01(u)
shall be (x) reasonably acceptable to the Required Consenting Parties

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and (y) to the extent any modification disproportionately and adversely affects
Ares, as compared to the other Required Consenting Parties, reasonably
acceptable to Ares.
(b)    The Definitive Documents listed in the foregoing sections 3.01(g),
3.01(h), 3.01(p)- 3.01(q), and 3.01(s), shall be reasonably acceptable to the
Required Consenting Parties and Ares.
Section 4.    Milestones.
4.01    The following Milestones shall apply to this Agreement unless extended
or waived in writing by the Company Parties and the Required Consenting
Creditors and Ares:
(a)    On or prior to the Petition Date (as defined herein), the Backstop
Commitment Agreement shall have been finalized.
(b)    On July 15, 2020 or such earlier date as agreed upon by the parties, the
Company Parties shall commence the Chapter 11 Cases.
(c)    No later than 5 days after the Petition Date, the Bankruptcy Court shall
have entered the Interim DIP Order.
(d)    No later than 5 days after the Petition Date, the Bankruptcy Court shall
have entered the Interim 9019 Order.
(e)    No later than 14 days after the Petition Date, the Company Parties shall
have filed the Plan, Disclosure Statement and a motion seeking approval of the
Disclosure Statement.
(f)    No later than 40 days after the Petition Date, the Bankruptcy Court shall
have entered the Final DIP Order.
(g)    No later than 40 days after the Petition Date, the Bankruptcy Court shall
have entered the Final 9019 Order.
(h)    No later than 40 days after the Petition Date, the Company Parties shall
have filed the Plan Supplement containing the (i) schedules of assumed or
rejected contracts, (ii) the constituents documents of the Reorganized Debtors
consistent with the terms of the Governance Term Sheet, (iii) the form of
registration rights agreement, (iv) required disclosures regarding directors and
officers of the Reorganized CRC (consistent with the terms of the Governance
Term Sheet) and (v) any documents (to the extent not already filed) in
connection with the Definitive Documents listed in the foregoing sections
3.01(o)-3.01(q).
(i)    No later than 40 days after the Petition Date, the Bankruptcy Court shall
have entered an order approving the Backstop Commitment Agreement.

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(j)    No later than 44 days after the Petition Date, the Bankruptcy Court shall
have entered an order approving the Solicitation Materials and the Disclosure
Statement.
(k)    No later than 28 days after the Subscription Commencement Date (as
defined in the Backstop Commitment Agreement), the Debtors shall have ended the
subscription period for the Equity Rights Offering.
(l)    No later than 105 days after the Petition Date, the Bankruptcy Court
shall have entered the Confirmation Order.
(m)    No later than 135 days after the Petition Date, the Plan Effective Date
shall have occurred.    
4.02.    Outside Date. With respect to the milestones set in 4.01(l) and
4.01(m), the Company Parties may not extend such milestones beyond 180 days
after the Petition Date without the consent of each Backstop Party.
Section 5.    Commitments of the Consenting Creditors.
5.01.    Affirmative Commitments. During the Agreement Effective Period, each
Consenting Creditor severally, and not jointly, agrees in respect of all of its
Company Claims to:
(a)    support the Restructuring Transactions and vote and exercise any powers
or rights available to it (including in any creditors’ meeting or in any process
requiring voting or approval to which they are legally entitled to participate)
in each case in favor of any matter requiring approval to the extent necessary
to implement the Restructuring Transactions;
(b)    give any notice, order, instruction, or direction to the Agent or Trustee
necessary to give effect to the Restructuring Transactions;
(c)    negotiate in good faith and use commercially reasonable efforts to
execute and implement the Definitive Documents that are not inconsistent with
this Agreement to which it is required to be a party or to which it has consent
rights pursuant to Section 3.02;
(d)    consent to the use of their cash collateral and the priming of the liens
on the collateral securing the 2017 Term Loans, the 2016 Term Loans and the
Second Lien Notes by the liens securing the Senior DIP Facility and Junior DIP
Facility, in each case in accordance with the Budget (as defined in the DIP
Credit Agreements) and the DIP Order;
(e)    negotiate in good faith any appropriate additional or alternative
provisions or agreements to address any legal, financial, or structural
impediment that may arise that would prevent, hinder, impede, delay, or are
necessary to effectuate the consummation of the Restructuring Transactions; and

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(f)    negotiate in good faith upon reasonable request of any other Party any
modifications to the Restructuring Transactions that improve the tax efficiency
of the Restructuring Transactions or are otherwise necessary to address any
legal, financial, or structural impediment that may prevent the consummation of
the Restructuring Transactions, in each case to the extent such modifications
can be implemented without any adverse effect on such Consenting Creditor.
5.02.    Negative Commitments. During the Agreement Effective Period, each
Consenting Creditor severally, and not jointly, agrees in respect of all of its
Company Claims that it shall not, directly or indirectly, and shall not direct
any other Entity to:
(a)    object to, delay, impede, or take any other action to interfere with
acceptance, implementation, or consummation of the Restructuring Transactions;
(b)    object to, delay, impede or take any other action to interfere with
Bankruptcy Court approval of any KEIP/KERP Plan, provided that the terms of such
programs shall not substantively differ from the proposal provided to the Ad Hoc
Group Advisors and Ares on July 10, 2020;
(c)    knowingly pursue, propose, file, support, solicit support for or vote for
any Alternative Restructuring Proposal;
(d)    file any motion, pleading, or other document with the Bankruptcy Court or
any other court (including any modifications or amendments thereof) that, in
whole or in part, is not consistent with this Agreement or the Plan;
(e)    exercise, take (directly or indirectly), or direct the Agent to take, any
action to enforce or any right or remedy for the enforcement, collection, or
recovery of any of the Company Claims against the Company Parties, including
rights or remedies arising from or asserting or bringing any claims under or
with respect to the 2016 Term Loan Claims, 2017 Term Loan Claims or the Second
Lien Notes Claims (as applicable) other than as otherwise permitted under this
Agreement;
(f)    initiate, or have initiated on its behalf, any litigation or proceeding
of any kind with respect to the Chapter 11 Cases, this Agreement, or the other
Restructuring Transactions contemplated in this Agreement against the Company
Parties or the other Parties other than to enforce this Agreement or any
Definitive Document or as otherwise permitted under this Agreement;
(g)    support any effort to reject, seek to modify, fail to perform, or any way
take any action to delay, impede, or interfere with any of the Elk Hills Power
Agreements except to the extent consistent with the 9019 Orders;

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(h)    develop, promote or otherwise pursue the “bypass plan” involving the
LTS-1 and LTS-2 gas processing plants and the 35R Cogen facility located in Kern
County, California or any action with a similar effect; or
(i)    object to, delay, impede, or take any other action to interfere with the
Company Parties’ ownership and possession of their assets, wherever located, or
interfere with the automatic stay arising under section 362 of the Bankruptcy
Code.
5.03.    Commitments with Respect to Chapter 11 Cases.
(a)    During the Agreement Effective Period, each Consenting Creditor that is
entitled to vote to accept or reject the Plan pursuant to its terms, severally,
and not jointly, agrees that it shall, subject to receipt by such Consenting
Creditor, whether before or after the commencement of the Chapter 11 Cases, of
the Solicitation Materials:
(i)    vote each of its Company Claims to accept the Plan by delivering its duly
executed and completed ballot accepting the Plan on a timely basis following the
commencement of the solicitation of the Plan and its actual receipt of the
Solicitation Materials and the ballot;
(ii)    support the Releases and Exculpation Provisions;
(iii)    to the extent it is permitted to elect whether to opt out of the
releases set forth in the Plan, elect not to opt out of the releases set forth
in the Plan by timely delivering its duly executed and completed ballot(s)
designating that it does not opt out of the releases;
(iv)    not change, withdraw, amend, or revoke (or cause to be changed,
withdrawn, amended, or revoked) any vote or election referred to in clauses
(a)(i) and (a)(ii) above; and
(v)    not directly or indirectly, through any Person, seek, solicit, propose,
support, assist, engage in negotiations in connection with or participate in the
formulation, preparation, filing, or prosecution of any Alternative
Restructuring Proposal or object to or take any other action that would
reasonably be expected to prevent, interfere with, delay, or impede the
solicitation, approval of the Disclosure Statement, or the confirmation and
consummation of the Plan and the Restructuring Transactions; provided that
nothing in this Section 5.03(a)(v) shall affect any rights of the Company
Parties set forth in 7.03(b).
(b)    Subject to Section 5.07(f) hereof, during the Agreement Effective Period,
each Consenting Creditor, in respect of each of its Company Claims, severally,
and not jointly, will support, and will not directly or indirectly object to,
delay, impede, or take any other action to interfere with any motion or other
pleading or document filed by a Company Party in the Bankruptcy Court that is
not inconsistent with this Agreement.

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5.04.    Junior DIP Commitments. Each Junior DIP Commitment Party, severally and
not jointly, commits to provide or cause to be provided by any fronting banks or
any of its subsidiaries or Affiliates or any funds and/or accounts managed,
advised or controlled by any of the foregoing, the Junior DIP Facility in the
amount set forth opposite such Junior DIP Commitment Party’s name Exhibit C
attached hereto, in each case subject to the terms and conditions for providing
such commitment set forth in the Junior DIP Term Sheet and the Junior DIP
Facility Documents.
5.05.    Second Lien Exit Commitments.
(a)    Each Second Lien Exit Lender, severally and not jointly, commits to
provide or cause to be provided by any fronting banks or any of its subsidiaries
or Affiliates or any funds and/or accounts managed, advised or controlled by any
of the foregoing, the Second Lien Exit Facility in the amount set forth opposite
such Second Lien Exit Lender’s name in Exhibit B attached hereto, in each case
subject to the terms and conditions for providing such commitment set forth in
the Second Lien Exit Facility Term Sheet.2 
(b)    Any Defaulting Second Lien Exit Lender will be liable for the
consequences of its breach and the Company can enforce rights of money damages
and/or specific performance upon the failure to timely fund by a Defaulting
Second Lien Exit Lender. Each Second Lien Exit Lender that is not a Defaulting
Second Lien Exit Lender shall have the right, but not the obligation, to assume
its pro rata share of the Second Lien Exit Commitments of a Defaulting Second
Lien Exit Lender.
5.06.    Transfer of Second Lien Exit Commitments.
(a)    Each Second Lien Exit Lender’s Second Lien Exit Commitment shall be
transferable in whole or in part to a Second Lien Exit Permitted Transferee;
provided that the transferring Second Lien Exit Lender shall give notice to the
Company Parties of its intent to transfer its Second Lien Exit Commitment (other
than to a Related Fund), whether in whole or in part. Any third party Second
Lien Exit Permitted Transferee of any Second Lien Exit Commitment shall agree in
writing to be bound by the representations, warranties, covenants and
obligations of such transferring Second Lien Exit Lender under this Agreement
and any Second Lien Exit Permitted Transferee other than a Related Fund shall,
as a condition of such transfer, provide the Company Parties and the
non-transferring Second Lien Exit Lenders with evidence reasonably satisfactory
to the Company Parties that such transferee is reasonably capable of fulfilling
such
__________
2 
On the Plan Effective Date, the Junior DIP Facility shall be repaid in full in
cash with the proceeds of the Equity Rights Offering and the Second Lien Exit
Facility; provided that, for administrative convenience, at the direction and at
the option of any Junior DIP Commitment Party that is also a Second Lien Exit
Lender, all or any portion of the cash to be received by such Junior DIP
Commitment Party on account of the principal amount of outstanding Junior DIP
Obligations owed to it shall be set off or otherwise applied on a dollar for
dollar basis towards the cash payment obligations of such Second Lien Exit
Lender pursuant to such documentation as the Company Parties may reasonably
require to evidence the discharge of the applicable Junior DIP Obligations to
the extent of the amounts so applied.

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obligations, including such financial information as may reasonably be requested
by the Company Parties demonstrating the ability of such Second Lien Exit
Permitted Transferee to fund the entire amount of its existing Second Lien Exit
Commitment (if any) plus the amount of the Second Lien Exit Commitment
transferred to such Second Lien Exit Permitted Transferee.
(b)    Any transfer in violation of this Section 5.06 shall be void ab initio;
provided that a transfer shall not be void ab initio solely on account of a
Second Lien Exit Lender’s failure to provide notice of such transfer.
5.07.    Additional Provisions Regarding the Consenting Creditors’ Commitments.
Notwithstanding anything contained in this Agreement, nothing in this Agreement
shall:
(a)    impair or waive the rights of any Consenting Creditor to appear as a
party in interest in any matter to be adjudicated in the Chapter 11 Cases, so
long as such appearance and the positions advocated in connection therewith are
not inconsistent with this Agreement or for the purpose of delaying,
interfering, impeding, or taking any other action to delay, interfere or impede,
directly or indirectly, the Restructuring Transactions;
(b)    affect the ability of any Consenting Creditor to consult with the Company
Parties or any other party in interest in the Chapter 11 Cases (including any
official committee and the United States Trustee), so long as, in the case of
consultation with any party in interest, the appearance, and positions advocated
in connection therewith are not inconsistent with this Agreement or for the
purpose of delaying, interfering, impeding, or taking any other action to delay,
interfere or impede, directly or indirectly, the Restructuring Transaction;
(c)    impair or waive the rights of any Consenting Creditor to assert or raise
any objection permitted under this Agreement in connection with the
Restructuring Transactions;
(d)    prevent any Consenting Creditor from enforcing this Agreement or
contesting whether any matter, fact, or thing is a breach of, or is inconsistent
with, this Agreement; or
(e)    obligate a Consenting Creditor to deliver a vote to support the Plan or
prohibit a Consenting Creditor from withdrawing such vote, in each case from and
after the Termination Date (other than a Termination Date as a result of the
occurrence of the Plan Effective Date); provided that upon the Termination Date
as to a Consenting Creditor (other than a Termination Date as a result of the
occurrence of the Plan Effective Date), such Consenting Creditor’s vote shall
automatically be deemed void ab initio and such Consenting Creditor shall have a
reasonable opportunity to cast a vote.
Section 6.    Commitments of Ares.
6.01.    Affirmative Commitments. During the Agreement Effective Period, Ares
agrees to:

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(a)    support the Restructuring Transactions and vote and exercise any powers
or rights available to it (including in any creditors’ meeting or in any process
requiring voting or approval to which they are legally entitled to participate)
in each case in favor of any matter requiring approval to the extent necessary
to implement the Restructuring Transactions;
(b)    negotiate in good faith and use commercially reasonable efforts to
execute and implement the Definitive Documents to which it has consent rights
that are not inconsistent with this Agreement to which it is required to be a
party or to which it has consent right pursuant to Section 3.02;
(c)    negotiate in good faith any appropriate additional or alternative
provisions or agreements to address any legal, financial, or structural
impediment that may arise that would prevent, hinder, impede, delay, or are
necessary to effectuate the consummation of the Restructuring Transactions;
(d)    consent to the use of its powers under the Elk Hills Power Agreements
(including to cause its representatives on the board of Elk Hills Power to vote
to amend the Elk Hills Power Agreements) in accordance with the Restructuring
Term Sheet and the 9019 Orders; and
(e)    negotiate in good faith upon reasonable request of any other Party any
modifications to the Restructuring Transactions that improve the tax efficiency
of the Restructuring Transactions or are otherwise necessary to address any
legal, financial, or structural impediment that may prevent the consummation of
the Restructuring Transactions, in each case to the extent such modifications
can be implemented without any adverse effect on Ares.
6.02.    Negative Commitments. During the Agreement Effective Period, Ares
agrees to:
(a)    object to, delay, impede, or take any other action to interfere with
acceptance, implementation, or consummation of the Restructuring Transactions;
(b)    object to, delay, impede, or take any other action to interfere with the
DIP Orders and DIP Credit Agreements;
(c)    object to, delay, impede or take any other action to interfere with
Bankruptcy Court approval of any KEIP/KERP Plan;
(d)    knowingly pursue, propose, file, support, solicit support for or vote for
any Alternative Restructuring Proposal;
(e)    file any motion, pleading, or other document with the Bankruptcy Court or
any other court (including any modifications or amendments thereof) that, in
whole or in part, is not consistent with this Agreement or the Plan;

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(f)    initiate, or have initiated on its behalf, any litigation or proceeding
of any kind with respect to the Chapter 11 Cases, this Agreement, or the other
Restructuring Transactions contemplated in this Agreement against the Company
Parties or the other Parties other than to enforce this Agreement or any
Definitive Document or as otherwise permitted under this Agreement; or
(g)    object to, delay, impede, or take any other action to interfere with the
Company Parties’ ownership and possession of their assets, other than as set
forth in the Restructuring Term Sheet or the 9019 Order, including Elk Hills
Power or any assets thereof, wherever located, or interfere with the automatic
stay arising under section 362 of the Bankruptcy Code.
6.03.    Commitments with Respect to Chapter 11 Cases.
(a)    During the Agreement Effective Period, Ares agrees to:
(i)    support and not oppose the assumption of the Amended Elk Hills Power
Agreements pursuant to the 9019 Orders on terms consistent with the
Restructuring Term Sheet;
(ii)    support the Releases and Exculpation Provisions;
(iii)    not directly or indirectly, through any Person, seek, solicit, propose,
support, assist, engage in negotiations in connection with or participate in the
formulation, preparation, filing, or prosecution of any Alternative
Restructuring Proposal or object to or take any other action that would
reasonably be expected to prevent, interfere with, delay, or impede the
solicitation, approval of the Disclosure Statement, or the confirmation and
consummation of the Plan and the Restructuring Transactions; provided that
nothing in this Section 6.03(a)(iii) shall affect any rights of the Company
Parties set forth in 7.03(b).
(b)    During the Agreement Effective Period, Ares will support, and will not
directly or indirectly object to, delay, impede, or take any other action to
interfere with any motion or other pleading or document filed by a Company Party
in the Bankruptcy Court that is not inconsistent with this Agreement.
6.04.    Additional Provisions Regarding Ares Commitments. Notwithstanding
anything contained in this Agreement, nothing in this Agreement shall:
(a)    impair or waive the rights of Ares to appear as a party in interest in
any matter to be adjudicated in the Chapter 11 Cases, so long as such appearance
and the positions advocated in connection therewith are not inconsistent with
this Agreement or for the purpose of delaying, interfering, impeding, or taking
any other action to delay, interfere or impede, directly or indirectly, the
Restructuring Transactions;

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(b)    affect the ability of Ares to consult with the Company Parties or any
other party in interest in the Chapter 11 Cases (including any official
committee and the United States Trustee), so long as, in the case of
consultation with any party in interest, the appearance, and positions advocated
in connection therewith are not inconsistent with this Agreement or for the
purpose of delaying, interfering, impeding, or taking any other action to delay,
interfere or impede, directly or indirectly, the Restructuring Transaction;
(c)    impair or waive the rights of Ares to assert or raise any objection
permitted under this Agreement in connection with the Restructuring
Transactions; or
(d)    prevent Ares from enforcing this Agreement or contesting whether any
matter, fact, or thing is a breach of, or is inconsistent with, this Agreement.
Section 7.    Commitments of the Company Parties.
7.01.    Affirmative Commitments. Except as set forth in Section 7.03, during
the Agreement Effective Period, each of the Company Parties agrees to:
(a)    support and take all steps reasonably necessary and desirable to
consummate the Restructuring Transactions in accordance with this Agreement;
(b)    to the extent any legal or structural impediment arises that would
prevent, hinder, or delay the consummation of the Restructuring Transactions
contemplated in this Agreement, support and take all steps reasonably necessary
and desirable to address any such impediment;
(c)    use commercially reasonable efforts to obtain any and all required
governmental, regulatory and/or third-party approvals for the implementation or
consummation for the Restructuring Transactions;
(d)    negotiate in good faith and use commercially reasonable efforts
to execute and deliver the Definitive Documents and any other required
agreements to effectuate and consummate the Restructuring Transactions, as
contemplated by this Agreement;
(e)    provide counsel for the Consenting Creditors and counsel for Ares a
reasonable opportunity (which, to the extent reasonably practicable, shall be no
less than two (2) Business Days) to review draft copies of all Definitive
Documents that the Company Parties intend to file with the Bankruptcy Court;
(f)    actively oppose and object to the efforts of any person seeking to object
to, delay, impede, or take any other action to interfere with the acceptance,
implementation, or consummation of the Restructuring Transactions (including, if
applicable, the filing of timely filed objections or written responses) to the
extent such opposition or objection is reasonably necessary or desirable to
facilitate implementation of the Restructuring Transactions;

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(g)    timely file a formal objection to any motion filed with the Bankruptcy
Court by any Person seeking the entry of an order (i) directing the appointment
of an examiner (with expanded powers beyond those set forth in sections
1106(a)(3) and (4) of the Bankruptcy Code) or a trustee, (ii) converting the
Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code,
(iii) dismissing the Chapter 11 Cases, (iv) modifying or terminating the Company
Parties’ exclusive right to file and solicit acceptances of a plan of
reorganization or (v) for relief that (A) is inconsistent with this Agreement in
any respect or (B) would, or would reasonably be expected to, frustrate the
purposes of this Agreement, including by preventing the consummation of the
Restructuring Transactions;
(h)    timely file a formal objection to any motion, application, or adversary
proceeding challenging the validity, enforceability, perfection, or priority of,
or seeking avoidance or subordination of, any portion of the claims of the
Consenting Creditors;
(i)    use commercially reasonable efforts to comply with all Milestones;
(j)    upon reasonable request of the Consenting Creditors and Ares (which, in
each case, may be through the Ad Hoc Group Advisors and Ares Advisors), as
applicable, use commercially reasonable efforts to inform the Ad Hoc Group
Advisors and Ares Advisors as to: (i) the material business and financial
(including liquidity) performance of the Company Parties; (ii) the status and
progress of the Restructuring Transactions, including progress in relation to
the negotiations of the Definitive Documents; and (iii) the status of obtaining
any necessary or desirable authorizations (including any consents) from each
Consenting Creditor, any competent judicial body, governmental authority,
banking, taxation, supervisory, or regulatory body or any stock exchange;
(k)    inform the Ad Hoc Group Advisors and Ares Advisors as soon as reasonably
practicable after becoming aware of: (i) any matter or circumstance which they
know, or believe is likely, to be a material impediment to the implementation or
consummation of the Restructuring Transactions; (ii) any notice of any
commencement of any material involuntary insolvency proceedings, legal suit for
payment of debt or securement of security from or by any person in respect of
any Company Party; (iii) a breach of this Agreement (including a breach by any
Company Party); and (iv) any representation or statement made or deemed to be
made by them under this Agreement which is or proves to have been incorrect or
misleading in any material respect when made or deemed to be made;
(l)    use commercially reasonable efforts to maintain their good standing under
the Laws of the state or other jurisdiction in which they are incorporated or
organized;
(m)    use commercially reasonable efforts to seek additional support for the
Restructuring Transactions from their other material stakeholders to the extent
reasonably prudent and, to the extent the Company Parties receive any Joinders
or Transfer Agreements, to notify the Consenting Creditors of such Joinders and
Transfer Agreements;

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(n)    promptly pay the Consenting Parties Fees and Expenses in accordance with
this Agreement and the applicable fee letters on a monthly basis and within ten
(10) Business Days of receipt of invoices thereof;
(o)    not seek application of the equitable doctrine of marshaling, section
506(c) of the Bankruptcy Code or section 552(b) of the Bankruptcy Code with
respect to any of the Senior DIP Facility, Junior DIP Facility, 2017 Term Loan
adequate protection liens and claims, or the existing 2017 Term Loan Claims
without the consent of the Required Consenting Creditors;
(p)    negotiate in good faith upon reasonable request of any other Party any
modifications to the Restructuring Transactions that improve the tax efficiency
of the Restructuring Transactions or are otherwise necessary to address any
legal, financial, or structural impediment that may prevent the consummation of
the Restructuring Transactions, in each case to the extent such modifications
can be implemented without any adverse effect on such Company Party; and
(q)    provide any inquiry, proposal, offer, bid or term sheet that solely seeks
to refinance the Second Lien Exit Facility or the Eligible Notes to the Ad Hoc
Group Advisors and the Ares Advisors within two (2) Business Days of receiving
such inquiry, proposal, offer, bid or term sheet.
7.02.    Negative Commitments. Except as set forth in Section 7.03, during the
Agreement Effective Period, each of the Company Parties shall not directly or
indirectly:
(a)    object to, delay, impede, or take any other action to interfere with
acceptance, implementation, or consummation of the Restructuring Transactions;
(b)    take any action that is inconsistent in any material respect with, or is
intended to frustrate or impede approval, implementation and consummation of the
Restructuring Transactions described in, this Agreement, the Plan, or the
Definitive Documents;
(c)    file any motion, pleading, or Definitive Documents with the Bankruptcy
Court or any other court (including any modifications or amendments thereof)
that, in whole or in part, is materially inconsistent with this Agreement or the
Restructuring Transactions;
(d)    amend, alter, supplement, restate or otherwise modify any Definitive
Document, in whole or in part, in a manner that is materially inconsistent with
this Agreement or the Restructuring Transactions;
(e)    amend, alter, supplement, restate or otherwise modify any Elk Hills Power
Agreements, in whole or in part, in a manner that is materially inconsistent
with the Restructuring Term Sheet without the consent of the Required Consenting
Creditors and Ares;

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(f)    (i) operate its business outside the ordinary course (other than any
changes in the operations resulting from or relating to the Restructuring
Transactions or the filing of the Chapter 11 Cases), taking into account the
Restructuring Transactions or (ii) engage in any material merger, consolidation,
disposition, acquisition, investment, dividend, incurrence of indebtedness or
other similar transaction or transfer any asset or right of the Company Parties
or any asset or right used in the business of the Company Parties to any person
or entity outside the ordinary course of business, in each of cases (i) and (ii)
without the reasonable consent of the Required Consenting Creditors and, prior
to the Settlement Effective Date, Ares; provided that, from and after the
Settlement Effective Date, any action described in subsections (i) or (ii) of
this section 7.02(f) that disproportionately and adversely affects Ares, as
compared to the other Required Consenting Parties, shall require the reasonable
consent of Ares.
(g)    except to the extent required by this Agreement or otherwise required to
consummate the Restructuring Transactions, make or change any tax election,
change any annual tax accounting period, adopt or change any method of tax
accounting, file any amended tax return, enter into any closing agreement,
settle any tax claim or assessment, surrender any right to claim a tax refund,
offset or other reduction in tax liability or consent to any extension or waiver
of the limitation period applicable to any tax claim or assessment, in each case
without the reasonable consent of the Required Consenting Creditors and, prior
to the Settlement Effective Date, Ares; provided that, from and after the
Settlement Effective Date, any action described in this Section 7.02(g) that
disproportionately and adversely affects Ares, as compared to the other Required
Consenting Parties, shall require the reasonable consent of Ares;
(h)    support any effort to reject, seek to modify, fail to perform, or any way
take any action to delay, impede, or interfere with any of the Elk Hills Power
Agreements except to the extent consistent with the 9019 Orders;
(i)    develop, promote or otherwise pursue the “bypass plan” involving the
LTS-1 and LTS-2 gas processing plants and the 35R Cogen facility located in Kern
County, California or any action with a similar effect; or
(j)    except with the consent of the Required Consenting Creditors, (i) take
any action that would result in the entry of any order by the Bankruptcy Court
that imposes a sell-down order or restricts the ability of Consenting Creditors
or other parties to Transfer any of the Company Parties’ securities, including,
for the avoidance of doubt, any such order intended to preserve net operating
losses or other tax attributes or (ii) make any material determination with
respect to (a) any such transfer restriction, sell-down order, or notification
requirement regarding ownership of claims in order to determine whether further
actions (including Transfer restrictions or sell-down orders) are necessary or
(b) the potential imposition or waiver of any of the foregoing; provided that
the Required Consenting Creditors shall consent to (A) the filing by the Company
Parties of a motion with the Bankruptcy Court for entry of an order establishing
the date of the entrance of such order as the record date for notice of such
potential trading restriction or sell-down order with respect to Company Claims
and (B) the filing by the Company Parties of a motion restricting

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trading of CRC’s equity securities which, for the avoidance of doubt, do not
include Company Claims.
7.03.    Additional Provisions Regarding Company Parties’ Commitments.
(a)    Notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement shall require a Company Party or the Governing Body of a Company
Party to take or refrain from taking any action (including terminating this
Agreement under Section 12) to the extent such Company Party or the Governing
Body of a Company Party determines, based on the advice of counsel, that taking
or refraining from taking such action, as applicable, would be inconsistent with
applicable Law or its fiduciary obligations under applicable Law. The Company
Parties shall give prompt written notice to the Consenting Creditors and Ares of
any determination made in accordance with this Section 7.03(a). This Section
7.03(a) shall not impede any Party’s right to terminate this Agreement pursuant
to Section 12, including, for the avoidance of doubt, Ares or the Consenting
Creditors’ rights to terminate in accordance with Section 12.01.
(b)    Notwithstanding anything to the contrary in this Agreement, upon receipt
of an Alternative Restructuring Proposal, each Company Party and their
respective directors, managers, officers, employees, investment bankers,
attorneys, accountants, consultants, and other advisors or representatives
(including any Governing Body members) shall have the right to consider,
consistent with their fiduciary duties, such Alternative Restructuring Proposal;
provided that if any Company Party receives an Alternative Restructuring
Proposal, then such Company Party shall (A) within one calendar day of receiving
such proposal, notify the Ad Hoc Group Advisors and Ares Advisors of the receipt
of such proposal and deliver a copy of such proposal to the Ad Hoc Group
Advisors and Ares Advisors; (B) provide the Ad Hoc Group Advisors and Ares
Advisors with regular updates as to the status and progress of such Alternative
Restructuring Proposal; and (C) use commercially reasonable efforts to respond
promptly to reasonable information requests and questions from the Ad Hoc Group
Advisors and Ares Advisors relating to such Alternative Restructuring Proposal.
If the Company Parties decide to file, support, make a written proposal or
counterproposal to any party relating to an Alternative Restructuring Proposal,
the Company Parties must provide notice to the Ad Hoc Group Advisors and Ares
Advisors prior to taking any such action. Upon receipt of such notice, the
Required Consenting Creditors and Ares shall have the right to terminate this
Agreement pursuant to Section 12.01(dd) of this Agreement.
(c)    Nothing in this Agreement shall: (i) impair or waive the rights of any
Company Party to assert or raise any objection permitted under this Agreement in
connection with the implementation of the Restructuring Transactions; (ii)
affect the ability of any Company Party to consult with any Consenting
Creditors, Ares, or any other party in interest in the Chapter 11 Cases
(including any official committee and the United States Trustee); or (iii)
prevent any Company Party from enforcing this Agreement or contesting whether
any matter, fact, or thing is a breach of, or is inconsistent with, this
Agreement.

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Section 8.    Transfer of Company Claims.
8.01    Except solely to the extent provided in Sections 8.02 or 8.04 of this
Agreement or in any First Day Pleading, this Agreement shall not limit,
restrict, or otherwise affect in any way a Party’s right, authority, or power to
Transfer any Company Claims, including any right, title, or interest in a
Company Claim.
8.02.    Transfer Restrictions. During the Restricted Period, and subject to the
terms and conditions of this Agreement, each Party agrees, solely with respect
to itself, as expressly identified and limited on its signature page or Joinder
or Transfer Agreement, and not in any other manner or with respect to any
affiliates, not to Transfer any right, title, or interest in a Company Claim,
unless (a) the Transferee is a Party to this Agreement or (b) if the Transferee
is not already a Party to this Agreement, the Transferee agrees in writing to be
bound by the terms of this Agreement by executing a Transfer Agreement in the
form attached to this Agreement by the date of that Transfer. Any Transfer in
violation of this Section 8.02 or 8.04 shall be void ab initio. The Transferee
shall use commercially reasonable efforts to promptly provide notice of any
Transfer made pursuant to this section 8.02, including the amount and type of
Company Claims transferred, to counsel to the Company Parties.
8.03.    General Exception. Notwithstanding anything in this Agreement to the
contrary, this Section 8 shall not apply to the grant of any lien or encumbrance
on any right, title, or interest in a Company Claim in favor of a bank or
broker-dealer holding custody of any such right, title, or interest in the
Company Claim in the ordinary course of business that is released upon the
Transfer of any such right, title, or interest.
8.04.    Qualified Marketmaker Exceptions.
(a)    Notwithstanding Section ý8.02, a Consenting Creditor may Transfer any
right, title, or interest in its Company Claims to an entity that is acting in
its capacity as a Qualified Marketmaker without the requirement that the
Qualified Marketmaker execute a Transfer Agreement or be a Party to this
Agreement, on the condition that any subsequent Transfer by such Qualified
Marketmaker of the right, title or interest in such Company Claim is to a
Transferee that (A) is a Party to this Agreement at the time of such Transfer or
(B) becomes a Party to this Agreement on or before the date of such Transfer by
executing a Transfer Agreement pursuant to Section 8.02(b). The Transferee (but
not, for the avoidance of doubt, a Qualified Marketmaker) shall use commercially
reasonable efforts to promptly provide notice of any Transfer made pursuant to
this section 8.04(a), including the amount and type of Company Claims
transferred, to counsel to the Company Parties.
(b)    Notwithstanding Section 8.04(a), a Qualified Marketmaker may Transfer any
right, title, or interest in any Company Claims that it acquires from a Party to
this Agreement to another Qualified Marketmaker (the “Transferee Qualified
Marketmaker”) without the requirement that the Transferee Qualified Marketmaker
execute a Transfer Agreement or be a Party to this

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Agreement, on the condition that any subsequent Transfer by such Transferee
Qualified Marketmaker of the right, title, or interest in such Company Claims is
to a Transferee that (A) is a Party to this agreement at the time of such
Transfer or (B) becomes a Party to this Agreement by the date of settlement of
such Transfer by executing a Transfer Agreement pursuant to Section 8.05. The
Transferee (but not, for the avoidance of doubt, a Qualified Marketmaker) shall
use commercially reasonable efforts to promptly provide notice of any Transfer
made pursuant to this section 8.04(b), including the amount and type of Company
Claims transferred, to counsel to the Company Parties.
(c)    At the time of a Transfer of any Company Claims to the Qualified
Marketmaker:
(i)    if such Company Claims may be voted in favor of the Plan, the Party to
this Agreement must first vote such Company Claims in accordance with the
requirements of this Agreement; and
(ii)    to the extent that a Qualified Marketmaker that is not otherwise a Party
to this Agreement is eligible and entitled to vote the Company Claims acquired
pursuant to Section 8.05(a) above, is not otherwise precluded from voting such
Company Claims in favor of the Plan, and receives a separate ballot for such
Company Claims, such Qualified Marketmaker shall, before the expiration of the
Plan voting deadline established by the Bankruptcy Court, vote such Company
Claims in favor of the Plan as contemplated hereunder.
(d)    Notwithstanding Section 8.02, to the extent that a Party to this
Agreement is acting in its capacity as a Qualified Marketmaker, it may Transfer
any right, title or interest in any Company Claim that the Qualified Marketmaker
acquires from a holder of such Company Claims that is not a Party to this
Agreement without the requirement that the transferee execute a Transfer
Agreement or be a Party hereto.
8.05.    Transfer Agreement.
(a)    A Transferee that becomes a Party to this Agreement as provided in
Section 8.02(b) shall deliver a copy of the executed Transfer Agreement to
counsel for the Company Parties in accordance with Section ý14.10 of this
Agreement within three (3) business days after the date of the Transfer, so long
as such Transfer Agreement was executed in accordance with this Agreement. The
Transfer Agreement shall be treated as confidential information and shall not be
disclosed without prior written consent of the Transferee.
8.06.    Effect of Delivery of Transfer Agreement. By executing and delivering a
Transfer Agreement as provided under Section 8.02(b), a Transferee:
(a)    becomes and shall be treated for all purposes under this Agreement as a
Party to this Agreement with respect to the Transferred Company Claims and with
respect to all other Company Claims that the Transferee holds and subsequently
acquires, subject to Section 8.03 and 8.04(d);

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(b)    agrees to be bound by all of the terms of this Agreement (as such terms
may be amended from time to time in accordance with the terms hereof); and
(c)    is deemed, without further action, to make to the other Parties hereto
the representations and warranties that the Parties to this Agreement make in
Section 9 of this Agreement, in each case as of the date of the Transfer
Agreement.
8.07.    Effect of Transfer; No Liability. A Party of this Agreement that
Transfers any right, title, or interest in any Company Claims in accordance with
the terms of this Section 8 shall (a) be deemed to relinquish its rights and be
released from its obligations under this Agreement solely to the extent of such
Transferred Company Claims and (b) not be liable to any party to this Agreement
for the failure of the Transferee, whether or not a Qualified Marketmaker, to
comply with the terms and conditions of this Agreement.
8.08.    Additional Claims. This Agreement shall not limit, restrict, or
otherwise affect in any way a Party’s right, authority, or power to acquire any
Company Claims in addition to the Party’s Company Claims and such acquired
claims shall automatically and immediately upon acquisition by a Party be deemed
to be subject to the terms of this Agreement (regardless of when or whether
notice of such acquisition is given to counsel to the Company Parties, as
described below), except as set forth in Section 8.04 above. During the
Restricted Period, upon the written request of the Company Parties, a Party to
this Agreement that acquires additional Company Claims from an entity that is
not a Party to this Agreement shall deliver a current list of its Company Claims
to counsel for the Company Parties within five (5) business days after the
receipt of such request, and such list shall be treated as confidential
information and shall not be disclosed without prior written consent of such
Party to this Agreement.
8.09.    Exception for Pending Trades. Notwithstanding anything to the contrary
herein, a claim Transferred to or by a Party to this Agreement prior to the
Agreement Effective Date and that is an open trade on the Agreement Effective
Date shall not be subject to, or bound by, the terms and conditions of this
Agreement (it being understood that such claim so Transferred to and held by a
Party to this agreement for its own account (i.e., not as part of a short
transaction, or to be Transferred by the Party under an open trade or any other
transaction entered into by such Party prior to, and pending as of the date of,
such Party’s entry into this Agreement) shall be subject to the terms of this
Agreement, as provided in Section 8.07).
8.10.    Signature Page Limitation. The Parties understand that the RSA Parties
may be engaged in a wide range of financial services and businesses, and, in
furtherance of the foregoing, the Parties acknowledge and agree that, to the
extent an RSA Party expressly indicates on its signature page hereto or on a
Joinder that it is executing this Agreement solely on behalf of specific trading
desk(s) and/or business group(s) of the RSA Party, the obligations set forth in
this Agreement shall apply only to such trading desk(s) and/or business group(s)
and shall not apply to

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any other trading desk, business group or affiliate of the RSA Party unless they
separately become a party hereto.
Section 9.    Representations and Warranties of Consenting Creditors. Each
Consenting Creditor severally, and not jointly, represents and warrants that, as
of the date such Consenting Creditor executes and delivers this Agreement and as
of the Agreement Effective Date:
(a)    it is the beneficial or record owner of the aggregate principal amount of
the Company Claims or is the nominee, investment manager, or advisor for
beneficial holders of the Company Claims reflected in, and, having made
reasonable inquiry, is not the beneficial or record owner of any Company Claims
other than those reflected in, such Consenting Creditor’s signature page to this
Agreement or a Transfer Agreement, as applicable (as may be updated pursuant to
Section 8);
(b)    it has the full power and authority to act on behalf of, vote and consent
to matters concerning, such Company Claims;
(c)    such Company Claims are free and clear of any pledge, lien, security
interest, charge, claim, equity, option, proxy, voting restriction, right of
first refusal, or other limitation on disposition, transfer, or encumbrances of
any kind, that would adversely affect in any way such Consenting Creditor’s
ability to perform any of its obligations under this Agreement at the time such
obligations are required to be performed;
(d)    it has reviewed, or had the opportunity to review, with the assistance of
professional and legal advisors of its choosing, all information it deems
necessary and appropriate for it to evaluate the financial risks inherent in the
Restructuring Transactions and accept the terms of this Agreement;
(e)    it has knowledge and experience in financial and business matters of this
type that it is capable of evaluating the merits and risks of entering into this
Agreement and of making an informed investment decision, and has conducted an
independent review and analysis of the business and affairs of the Company
Parties that it considers sufficient and reasonable for the purposes of entering
into this Agreement;
(f)    solely with respect to holders of Company Claims, (i) it is either (A) a
“qualified institutional buyer” as defined in Rule 144A under the Securities Act
of 1933, as amended (the “Securities Act”), (B) not a “U.S. person” as defined
in Regulation S under the Securities Act, or (C) an “accredited investor”
as defined in Rule 501 of Regulation D under the Securities Act, and in each
case is able to bear the risk of its investment in the Company Claims, and
(ii) any securities acquired by the Consenting Creditor in connection with the
Restructuring Transactions will have been acquired for investment for its own
account and not with a view to distribution or resale in violation of the
Securities Act; and

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(g)    it has the full power to vote, approve changes to, and transfer all of
its Company Claims and/or Interests or Claims with respect to Elk Hills Power
referable to it as contemplated by this Agreement subject to applicable Law.
Section 10.    Representations and Warranties of Ares. Ares severally, and not
jointly, represents and warrants that, as of the date Ares executes and delivers
this Agreement and as of the Agreement Effective Date:
(a)    it has the full power and authority to act on behalf of, vote and consent
to matters concerning, all of its claims and interests in Elk Hills Power and
all of its Company Claims;
(b)    except as expressly provided by this Agreement, it is not party to any
restructuring or similar agreements or arrangements with the other Parties
(including their representatives) to this Agreement that have not been disclosed
to all Parties to this Agreement.
(c)    it has reviewed, or had the opportunity to review, with the assistance of
professional and legal advisors of its choosing, all information it deems
necessary and appropriate for it to evaluate the financial risks inherent in the
Restructuring Transactions and accept the terms of this Agreement;
(d)    it has knowledge and experience in financial and business matters of this
type that it is capable of evaluating the merits and risks of entering into this
Agreement and of making an informed investment decision, and has conducted an
independent review and analysis of the business and affairs of the Company
Parties and Elk Hills Power that it considers sufficient and reasonable for the
purposes of entering into this Agreement;
(e)    (i) it is either (A) a “qualified institutional buyer” as defined in Rule
144A under the Securities Act of 1933, as amended (the “Securities Act”), (B)
not a “U.S. person” as defined in Regulation S under the Securities Act, or
(C) an “accredited investor” as defined in Rule 501 of Regulation D under the
Securities Act, and in each case is able to bear the risk of its investment in
the Company Claims and Elk Hills Power, and (ii) any securities acquired by the
Consenting Creditor in connection with the Restructuring Transactions will have
been acquired for investment for its own account and not with a view to
distribution or resale in violation of the Securities Act; and
(f)    it has the full power to vote, approve changes to, and transfer all of
its Company Claims referable to it as contemplated by this Agreement subject to
applicable Law.
Section 11.    Mutual Representations, Warranties, and Covenants. Each of the
Parties, severally, and not jointly, represents, warrants and covenants to each
other Party that, as of the date such Party executes and delivers this Agreement
and as of the Agreement Effective Date:
(a)    it is validly existing and in good standing under the Laws of the state
of its

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organization, and this Agreement is a legal, valid, and binding obligation of
such Party, enforceable against it in accordance with its terms, except as
enforcement may be limited by applicable Laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability;
(b)    except as expressly provided in this Agreement, the Plan, and the
Bankruptcy Code, no consent or approval is required by any other Entity in order
for it to effectuate the Restructuring Transactions contemplated by, and perform
its respective obligations under, this Agreement;
(c)    the entry into and performance by it of, and the transactions
contemplated by, this Agreement do not, and will not, conflict in any material
respect with any Law or regulation applicable to it or with any of its articles
of association, memorandum of association, or other constitutional documents;
(d)    except as expressly provided in this Agreement, it has (or will have, at
the relevant time) all requisite corporate or other power and authority to enter
into, execute, and deliver this Agreement and to effectuate the Restructuring
Transactions contemplated by, and perform its respective obligations under, this
Agreement;
(e)    except as expressly provided by this Agreement, it is not party to any
restructuring or similar agreements or arrangements, with the other Parties to
this Agreement that have not been disclosed to all Parties to this Agreement;
and
(f)    no Party is considering, or has any agreement or understanding with
respect to, any Alternative Restructuring Proposal that has not been disclosed
to the Required Consenting Creditors;
Section 12.    Termination Events.
12.01    Consenting Creditors Termination Events. This Agreement may be
terminated by the Required Consenting Creditors with respect to the Consenting
Creditors by the delivery to the Company Parties and Ares of a written notice in
accordance with Section 14.10 hereof upon the occurrence of the following
events:
(a)    the breach in any material respect by a Company Party or Ares of any of
covenants of such Company Party or Ares set forth in this Agreement, which
breach remains uncured for ten (10) Business Days after such terminating
Consenting Creditor transmits a written notice in accordance with Section 14.10
of this Agreement detailing any such breach;
(b)    any representation or warranty in this Agreement made by the Company
Parties shall have been untrue in any material respect when made or shall have
become untrue in any material respect, which remains uncured for ten (10)
Business Days after the Company Party discovers the untrue nature of the
representation or warranty;

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(c)    [Reserved];
(d)    (i) the Company Parties lose the ability to utilize the gas processing
and other services or the ability to purchase power or other commodities, (ii)
the date or amount fixed for Class C distributions pursuant to that certain
Second Amended and Restated Limited Liability Company Agreement, dated February
7, 2018 (as amended, supplemented, or otherwise modified from time to time), by
and between California Resources Elk Hills, LLC and ECR Corporate Holdings L.P.
are changed, or (iii) the composition of the board of Elk Hills Power is changed
without the consent of the Company Parties, in each case provided under the Elk
Hills Power Agreements and/or the Elk Hills Power Agreements are terminated or
rejected, in each of cases (i)-(iii) without the consent of the Required
Consenting Creditors;
(e)    [Reserved];
(f)    the occurrence of an event giving rise to the right of the Required
Backstop Parties to terminate the Backstop Commitment Agreement that has not
been waived or timely cured in accordance therewith;
(g)    the Interim 9019 Order or Final 9019 Order, as applicable, is entered
prior to, or not conditioned on, the Interim DIP Order or the Final DIP Order,
as applicable;
(h)    the Interim DIP Order or the Final DIP Order, as applicable, is entered
prior to, or not conditioned on, the Interim 9019 Order or the Final 9019 Order,
as applicable;
(i)    the Interim DIP Order or the Interim 9019 Order is entered in a form not
acceptable to the Required Consenting Creditors; provided that the forms of
Interim DIP Order and Interim 9019 Order attached to the Restructuring Term
Sheet as Annex H and Annex I, respectively, are deemed to be acceptable to the
Required Consenting Creditors;
(j)    the Final DIP Order or the Final 9019 Order is entered in a form not
acceptable to the Required Consenting Creditors;
(k)    the DIP Orders are reversed, stayed, dismissed, vacated, reconsidered,
modified or amended in a manner that is not approved by the Required Consenting
Creditors or any DIP Order is entered that is not acceptable to the Required
Consenting Creditors;
(l)    the delivery of a Termination Notice (as defined in the applicable DIP
Order) under either DIP Order unless cured or ordered otherwise by the
Bankruptcy Court during the Remedies Notice Period (as defined in the applicable
DIP Order) or the Debtors’ ability to use cash collateral pursuant to either of
the DIP Orders terminates or is modified without the consent of the Required
Consenting Creditors;

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(m)    an Event of Default (as defined in the applicable DIP Credit Agreement)
under either DIP Credit Agreement has occurred and is continuing and the
applicable DIP Agent has provided notice to the Company Parties of such Event of
Default;
(n)    any debtor-in-possession financing is entered into (other than pursuant
to the Senior DIP Credit Agreement or the Junior DIP Credit Agreement), or the
Company Parties file a motion seeking approval of debtor-in-possession financing
(other than pursuant to the Senior DIP Credit Agreement or the Junior DIP Credit
Agreement), on terms that are inconsistent with this Agreement or otherwise not
reasonably acceptable to the Required Consenting Creditors;
(o)    the First Lien Exit Facility Documents are terminated, modified, or
otherwise amended without the consent of the Required Consenting Creditors, such
consent not to be unreasonably withheld, conditioned or delayed;
(p)    the Second Lien Exit Facility Documents are terminated, modified, or
otherwise amended in a manner not consistent with the Second Lien Exit Facility
Term Sheet;
(q)    the Backstop Commitments are terminated, modified, or otherwise amended
without the consent of the Required Consenting Creditors, which consent shall
not be unreasonably withheld, conditioned, or delayed;
(r)    the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling, judgment or order that (i) enjoins the consummation of a material
portion of the Restructuring Transactions and (ii) either (1) such ruling,
judgment or order has been issued at the request of any of the Company Parties
or Ares in contravention of any obligations set forth in this Agreement or (2)
remains in effect for twenty (20) Business Days after such terminating
Consenting Creditors transmit a written notice in accordance with Section ý14.10
of this Agreement detailing any such issuance; notwithstanding the foregoing,
this termination right may not be exercised by any Party that sought or
requested such ruling or order in contravention of any obligation set out in
this Agreement;
(s)    the entry of an order by the Bankruptcy Court, or the filing of a motion
or application by any Company Party seeking an order (without the prior written
consent of the Required Consenting Creditors), (i) converting one or more of the
Chapter 11 Cases of a Company Party to a case under chapter 7 of the Bankruptcy
Code, (ii) appointing an examiner with expanded powers beyond those set forth in
sections 1106(a)(3) and (4) of the Bankruptcy Code or a trustee in one or more
of the Chapter 11 Cases of a Company Party, (iii) dismissing one or more of the
Chapter 11 Cases of a Company Party, without the prior written consent of the
Required Consenting Creditors (iv) terminating exclusivity under Section 1121 of
the Bankruptcy Code, or (v) rejecting this Agreement;
(t)    other than the Chapter 11 Cases, if any Company Party (i) voluntarily
commences any case or files any petition seeking bankruptcy, winding up,
dissolution, liquidation,

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administration, moratorium, receivership, reorganization or other relief under
any federal, state or foreign bankruptcy, insolvency, administrative
receivership or similar law now or hereafter in effect, except as contemplated
by this Agreement, (ii) consents to the institution of, or fails to contest in a
timely and appropriate manner, any involuntary proceeding or petition described
in the preceding subsection (i), (iii) applies for or consents to the
appointment of a receiver, administrator, administrative receiver, trustee,
custodian, sequestrator, conservator or similar official with respect to any
Company Party or for a substantial part of such Company Party’s assets, (iv)
makes a general assignment or arrangement for the benefit of creditors, or (v)
takes any corporate action for the purpose of authorizing any of the foregoing;
(u)    the commencement of an involuntary bankruptcy case against the Company
Parties (or Affiliate thereof) under the Bankruptcy Code, if such involuntary
case is not dismissed within 45 calendar days after the filing thereof, or if a
court order grants the relief sought in such involuntary case;
(v)    entry of a final order that grants relief terminating, annulling, or
modifying the automatic stay (as set forth in section 362 of the Bankruptcy
Code) with regard to any material asset that, to the extent such relief were
granted, would have a material adverse effect on the consummation of the
Restructuring Transactions;
(w)    any of the Company Parties files or otherwise makes public any of the
Definitive Documents (including any modification or amendments thereto) (i) in a
form that is materially inconsistent with this Agreement and (ii) without the
consent of the required parties in accordance with this Agreement, which
occurrence remains uncured (to the extent curable) for two (2) Business Days
after such terminating Consenting Creditor transmits a written notice in
accordance with Section 14.10;
(x)    any of the Company Parties (i) files any motion seeking to avoid,
disallow, subordinate, or recharacterize any 2016 Term Loan Claims or 2017 Term
Loan Claims, lien, or interest held by any Consenting Creditors arising under or
relating to the 2016 Credit Agreement or the 2017 Credit Agreements or (ii)
shall have supported any application, adversary proceeding, or cause of action
referred to in the immediately preceding clause (i) filed by a third party, or
consents to the standing of any such third party to bring such application,
adversary proceeding, or cause of action;
(y)    the failure to meet any of the Milestones, unless (i) such Milestone has
been waived or extended in a manner consistent with this Agreement and (ii) such
failure is the result of an act, omission or delay on the part of one or more of
the Required Consenting Creditors exercising their termination rights with
respect thereto under this Section 12.01(y) in violation of their obligations
under this Agreement;
(z)    the Bankruptcy Court enters an order denying confirmation of the Plan;

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(aa)    the Confirmation Order is reversed or vacated, and the Bankruptcy Court
does not enter a revised Confirmation Order reasonably acceptable to the
Required Consenting Creditors within five (5) Business Days;
(bb)    any of the Company Parties withdraws the Plan or publicly announces its
intention not to support the Restructuring Transactions or the Plan;
(cc)    the Bankruptcy Court enters an order granting relief that is
inconsistent with, or denies relief sought that is contemplated by, this
Agreement or the Plan in any materially adverse respect to the Required
Consenting Creditors;
(dd)    the Company Parties exercise their right, consistent with their
fiduciary duties, to not pursue any of the Restructuring Transactions or take
any action in reliance with section 7.03(a) of this Agreement;
(ee)    the Company Parties file, support, make a written proposal or
counterproposal to any party relating to an Alternative Restructuring Proposal
that was not approved by the Required Consenting Creditors;
(ff)    the Company Parties terminate this Agreement with respect to themselves
in accordance with Section 12.03 below;
(gg)    Ares terminates this Agreement with respect to themselves in accordance
with Section 12.02 below; and
(hh)    Ares breaches materially its obligations under this Agreement or the
9019 Orders.
12.02    Ares Termination Events. This Agreement may be terminated by Ares with
respect to itself by the delivery to the Company Parties and the Required
Consenting Creditors of a written notice in accordance with Section 14.10 hereof
upon the occurrence of the following events:
(a)    the breach in any material respect by a Company Party or by one or more
Consenting Creditors constituting the Required Consenting Creditors of any of
covenants of such Company Party or such Consenting Creditors constituting the
Required Consenting Creditors set forth in this Agreement, which breach remains
uncured for ten (10) Business Days after Ares transmits a written notice in
accordance with Section 14.10 of this Agreement detailing any such breach, which
such breach could be reasonably expected to disproportionately and adversely
affect Ares, as compared to the other Required Consenting Parties;
(b)    any representation or warranty in this Agreement made by a Company Party
shall have been untrue in any material respect when made or shall have become
untrue in any material respect, which remains uncured for ten (10) Business Days
after the Company Party discovers the untrue nature of the representation or
warranty and such breach could be reasonably expected to

41

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disproportionately and adversely affect Ares, as compared to the other Required
Consenting Parties;
(c)    the Interim 9019 Order or Final 9019 Order, as applicable, is entered
prior to, or not conditioned on, the Interim DIP Order or the Final DIP Order,
as applicable;
(d)    the Interim DIP Order or the Final DIP Order, as applicable, is entered
prior to, or not conditioned on, the Interim 9019 Order or the Final 9019 Order,
as applicable;
(e)    the Interim DIP Order or the Interim 9019 Order is entered in a form not
acceptable to Ares; provided that the forms of Interim DIP Order and Interim
9019 Order attached to the Restructuring Term Sheet as Annex H and Annex I,
respectively, are deemed to be acceptable to Ares;
(f)    the Final DIP Order or the Final 9019 Order is entered in a form not
acceptable to Ares;
(g)    the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling, judgment or order that (i) enjoins the consummation of a material
portion of the Restructuring Transactions and (ii) either (1) such ruling,
judgment or order has been issued at the request of any of the Company Parties
or the Required Consenting Creditors in contravention of any obligations set
forth in this Agreement or (2) remains in effect for twenty (20) Business Days
after Ares transmits a written notice in accordance with Section ý14.10 of this
Agreement detailing any such issuance; notwithstanding the foregoing, this
termination right may not be exercised by any Party that sought or requested
such ruling or order in contravention of any obligation set out in this
Agreement;
(h)    the entry of an order by the Bankruptcy Court, or the filing of a motion
or application by any Company Party seeking an order (without the prior written
consent of Ares), (i) converting one or more of the Chapter 11 Cases of a
Company Party to a case under chapter 7 of the Bankruptcy Code, (ii) appointing
an examiner with expanded powers beyond those set forth in sections 1106(a)(3)
and (4) of the Bankruptcy Code or a trustee in one or more of the Chapter 11
Cases of a Company Party (iii) dismissing one or more of the Chapter 11 Cases of
a Company Party, without the prior written consent of Ares, (iv) terminating
exclusivity under Section 1121 of the Bankruptcy Code, or (v) rejecting this
Agreement;
(i)    other than the Chapter 11 Cases, if any Company Party (i) voluntarily
commences any case or files any petition seeking bankruptcy, winding up,
dissolution, liquidation, administration, moratorium, receivership,
reorganization or other relief under any federal, state or foreign bankruptcy,
insolvency, administrative receivership or similar law now or hereafter in
effect, except as contemplated by this Agreement, (ii) consents to the
institution of, or fails to contest in a timely and appropriate manner, any
involuntary proceeding or petition described in the preceding subsection (i),
(iii) applies for or consents to the appointment of a receiver,

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administrator, administrative receiver, trustee, custodian, sequestrator,
conservator or similar official with respect to any Company Party or for a
substantial part of such Company Party’s assets, (iv) makes a general assignment
or arrangement for the benefit of creditors, or (v) takes any corporate action
for the purpose of authorizing any of the foregoing;
(j)    the commencement of an involuntary bankruptcy case against the Company
Parties (or Affiliate thereof) under the Bankruptcy Code, if such involuntary
case is not dismissed within 45 calendar days after the filing thereof, or if a
court order grants the relief sought in such involuntary case;
(k)    any of the Company Parties files or otherwise makes public any of the
Definitive Documents (including any modification or amendments thereto) to which
Ares has consent rights (i) in a form that is materially inconsistent with this
Agreement and (ii) without the consent of Ares in accordance with this
Agreement, which occurrence remains uncured (to the extent curable) for two (2)
Business Days after Ares transmits a written notice in accordance with Section
14.10;
(l)    (i) prior to the Settlement Effective Date, the failure to meet any
Milestones and (ii) from and after the Settlement Effective Date, the failure to
meet any Milestone that disproportionately and adversely affects Ares and has
not been waived or approved by the Required Consenting Creditors and the Company
Parties, as compared to the other Required Consenting Parties, in each case, (i)
unless such Milestone has been waived or extended in a manner consistent with
this Agreement and (ii) unless such failure is the result of an act, omission or
delay on the part of Ares in violation of their obligations under this
Agreement;
(m)    the Bankruptcy Court enters an order denying confirmation of the Plan;
(n)    the Confirmation Order is reversed or vacated, and the Bankruptcy Court
does not enter a revised Confirmation Order that does not satisfy the consent
requirements set forth in section 3.02 of this Agreement within five (5)
Business Days;
(o)    any of the Company Parties withdraws the Plan or publicly announces its
intention not to support the Restructuring Transactions or the Plan;
(p)    the Bankruptcy Court enters an order granting relief that is inconsistent
with, or denies relief sought that is contemplated by, this Agreement or the
Plan in any materially adverse respect to Ares;
(q)    the Company Parties exercise their right, consistent with their fiduciary
duties, to not pursue any of the Restructuring Transactions or take any action
in reliance with section 7.03(a) of this Agreement;
(r)    the Company Parties file, support, make a written proposal or
counterproposal to any party relating to an Alternative Restructuring Proposal
that was not approved by Ares;

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(s)    the Company Parties terminate this Agreement with respect to themselves
in accordance with Section 12.03 below;
(t)    the Required Consenting Creditors terminate this Agreement with respect
to themselves in accordance with Section 12.01 above; and
(u)    the Consenting Creditors constituting Required Consenting Creditors
materially breach the obligations of the Consenting Creditors under this
Agreement.
12.03.    Company Party Termination Events.  Any Company Party may terminate
this Agreement with respect to the Company Parties upon prior written notice to
the Consenting Creditors and Ares in accordance with Section 14.10 of this
Agreement upon the occurrence of any of the following events:
(a)    the breach in any material respect by Ares or by one or more Consenting
Creditors constituting the Required Consenting Creditors of any of the covenants
of Ares or such Consenting Creditors set forth in this Agreement that would
have, or could reasonably be expected to have, an adverse effect on the
Restructuring Transactions, which breach that remains uncured for ten (10)
Business Days after such terminating Company Party transmits a written notice in
accordance with Section 14.10 of this Agreement detailing any such breach;
(b)    any representation or warranty in this Agreement made by Ares or one or
more Consenting Creditors constituting Required Consenting Creditors shall have
been untrue in any material respect when made or shall have become untrue in any
material respect, which remains uncured for ten (10) Business Days after Ares or
such Consenting Creditor discovers the untrue nature of the representation or
warranty;
(c)    the Governing Body of any Company Party determines, after consulting with
counsel, (i) that continuing to pursue any of the Restructuring Transactions in
the manner contemplated by this Agreement would be inconsistent with the
exercise of its fiduciary duties or applicable Law or (ii) in the exercise of
its fiduciary duties, to pursue an Alternative Restructuring Proposal;
(d)    the Interim 9019 Order or Final 9019 Order, as applicable, is entered
prior to, or not conditioned on, the Interim DIP Order or the Final DIP Order,
as applicable;
(e)    the Interim DIP Order or the Final DIP Order, as applicable, is entered
prior to, or not conditioned on, the Interim 9019 Order or the Final 9019 Order,
as applicable;
(f)    the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable
ruling, judgment or order that (i) enjoins the consummation of a material
portion of the Restructuring Transactions and (ii) either (1) such ruling,
judgment or order has been issued at the request of the Required Consenting

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Creditors or Ares in contravention of any obligations set forth in this
Agreement or (2) remains in effect for ten (10) Business Days after such
terminating Consenting Creditors transmit a written notice in accordance with
Section ý14.10 of this Agreement detailing any such issuance; notwithstanding
the foregoing, this termination right may not be exercised by any Party that
sought or requested such ruling or order in contravention of any obligation set
out in this Agreement;
(g)    the Required Consenting Creditors terminate this Agreement with respect
to themselves in accordance with Section 12.01 above;
(h)    the Bankruptcy Court enters an order denying confirmation of the Plan;
(i)    Ares terminates this Agreement with respect to themselves in accordance
with Section 12.02 above.
12.04.    Mutual Termination.  This Agreement, and the obligations of all
Parties hereunder, may be terminated by mutual written agreement among all of
the following: (a) the Required Consenting Creditors, (b) each Company Party,
and (c) Ares.
12.05.    Automatic Termination.  This Agreement shall terminate automatically
without any further required action or notice immediately after the Plan
Effective Date.
12.06.    Effect of Termination. After the occurrence of a Termination Date as
to a Party, this Agreement shall be of no further force and effect as to such
Party and each Party subject to such termination shall be released from its
commitments, undertakings, and agreements under or related to this Agreement and
shall have the rights and remedies that it would have had, had it not entered
into this Agreement, and shall be entitled to take all actions, whether with
respect to the Restructuring Transactions or otherwise, that it would have been
entitled to take had it not entered into this Agreement, including with respect
to any and all Claims or Cause of Action. Upon the occurrence of a Termination
Date prior to the Confirmation Order being entered by a Bankruptcy Court, all
Parties agree that any and all ballots tendered by the Parties subject to such
termination before a Termination Date shall be deemed, for all purposes, to be
null and void from the first instance and shall not be considered or otherwise
used in any manner by the Parties in connection with the Restructuring
Transactions and this Agreement or otherwise. Notwithstanding the foregoing, any
Consenting Creditor withdrawing or changing its vote pursuant to this Section
12.06 shall promptly provide written notice of such withdrawal or change to each
other Party to this Agreement and, if such withdrawal or change occurs on or
after the Petition Date, file notice of such withdrawal or change with the
Bankruptcy Court. Nothing in this Agreement shall be construed as prohibiting a
Company Party, Ares, or any of the Consenting Creditors from contesting whether
any such termination is in accordance with the terms or to seek enforcement of
any rights under this Agreement that arose or existed before a Termination Date.
Except as expressly provided in this Agreement, nothing in this Agreement is
intended to, or does, in any manner waive, limit, impair, or restrict (a) any
right of any Company Party or the ability of any Company Party to protect and
reserve its rights (including rights under this Agreement), remedies,

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and interests, including its claims against any Consenting Creditor or Ares, and
(b) any right of any Consenting Creditor or Ares, or the ability of any
Consenting Creditor or Ares, to protect and preserve its rights (including
rights under this Agreement), remedies, and interests, including its claims
against any Company Party or Consenting Creditor. No purported termination of
this Agreement shall be effective under this Section 12.06 or otherwise if the
Party seeking to terminate this Agreement is in material breach of this
Agreement, except a termination pursuant to Sections 12.03(c) or 12.04. Nothing
in this Section 12.06 shall restrict any Company Party’s right to terminate this
Agreement in accordance with Section 12.03(c).
Section 13.    Amendments and Waivers.
(a)    This Agreement, may not be modified, amended, or supplemented, and no
condition or requirement of this Agreement may be waived, in any manner except
in accordance with this Section 13.
(b)    This Agreement may be modified, amended, or supplemented, or a condition
or requirement of this Agreement may be waived, (i) in writing signed by each
Company Party and the Required Consenting Parties or (ii) confirmed by email by
counsel to the Company Parties and the Ad Hoc Group Advisors representing that
it is acting with the authority of the Required Consenting Creditors; provided
that (a) this Agreement may be modified, amended, or supplemented, or a
condition or requirement of this Agreement may be waived, if such modification,
amendment, supplement or waiver adversely and disproportionately affects Ares,
as compared to the other Required Consenting Parties, solely with the written
consent of Ares; and (b) any changes to the consent or termination rights of the
Company Parties, the Required Consenting Creditors, the Required Consenting
Parties, the Required Backstop Parties, or Ares shall require the consent of
each affected Party. Notwithstanding the foregoing, if the proposed
modification, amendment, waiver, or supplement has a material, disproportionate,
and adverse effect on any of the Company Claims held by a Consenting Creditor,
then the consent of each such affected Consenting Creditor shall also be
required to effectuate such modification, amendment, waiver, or supplement.
(c)    Any proposed modification, amendment, waiver, or supplement that does not
comply with this Section 13 shall be ineffective and void ab initio.
(d)    The waiver by any Party of a breach of any provision of this Agreement
shall not operate or be construed as a further or continuing waiver of such
breach or as a waiver of any other or subsequent breach. No failure on the part
of any Party to exercise, and no delay in exercising, any right, power, or
remedy under this Agreement shall operate as a waiver of any such right, power,
or remedy or any provision of this Agreement, nor shall any single or partial
exercise of such right, power, or remedy by such Party preclude any other or
further exercise of such right, power, or remedy or the exercise of any other
right, power, or remedy. All remedies under this Agreement are cumulative and
are not exclusive of any other remedies provided by Law.

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Section 14.    Miscellaneous.
14.01.    Acknowledgements. Notwithstanding any other provision of this
Agreement, this Agreement is not and shall not be deemed to be an offer with
respect to any securities or solicitation of votes for the acceptance of a plan
of reorganization for purposes of sections 1125 and 1126 of the Bankruptcy Code
or otherwise.  Any such offer or solicitation will be made only in compliance
with all applicable securities Laws, provisions of the Bankruptcy Code, and/or
other applicable Law.
14.02.    Exhibits Incorporated by Reference; Conflicts. Each of the exhibits,
annexes, signatures pages, and schedules attached to this Agreement is expressly
incorporated and made a part of this Agreement, and all references to this
Agreement shall include such exhibits, annexes, and schedules. In the event of
any inconsistency between this Agreement (without reference to the exhibits,
annexes, and schedules attached to this Agreement) and the exhibits, annexes,
and schedules attached to this Agreement, this Agreement (without reference to
the exhibits, annexes, and schedules thereto) shall govern, provided, that in
the event of any inconsistency between this Agreement and the Restructuring Term
Sheet, the Restructuring Term Sheet shall govern until such time as the Plan has
been confirmed, at which time, the terms and conditions set forth in the Plan,
to the extent intended to supersede the Restructuring Term Sheet, shall govern.
14.03.    Further Assurances.  Subject to the other terms of this Agreement, the
Parties agree to execute and deliver such other instruments and perform such
acts, in addition to the matters specified in this Agreement, as may be
reasonably appropriate or necessary, or as may be required by order of the
Bankruptcy Court, from time to time, to effectuate the Restructuring
Transactions, as applicable.
14.04.    Complete Agreement.  Except as otherwise explicitly provided in this
Agreement, this Agreement constitutes the entire agreement among the Parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, oral or written, among the Parties with respect thereto, other than
any confidentiality agreement. The Parties acknowledge and agree that they are
not relying on any representations or warranties other than as set forth in this
Agreement.
14.05.    GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.  THIS
AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE CHOSEN
STATE, WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES.  Each Party to
this Agreement agrees that it shall bring any action or proceeding in respect of
any claim arising out of or related to this Agreement, to the extent possible,
in the Chosen Court. Solely in connection with claims arising under this
Agreement, each Party to this Agreement: (a) irrevocably submits to the
exclusive jurisdiction of the Chosen Court; (b) waives any objection to laying
venue in any such

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action or proceeding in the Chosen Court; and (c) waives any objection that the
Chosen Court is an inconvenient forum or does not have jurisdiction over any
Party to this Agreement.
14.06.    TRIAL BY JURY WAIVER. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
14.07.    Execution of Agreement.  This Agreement may be executed and delivered
in any number of counterparts and by way of electronic signature and delivery,
each such counterpart, when executed and delivered, shall be deemed an original,
and all of which together shall constitute the same agreement.  Except as
expressly provided in this Agreement, each Person executing this Agreement on
behalf of a Party has been duly authorized and empowered to execute and deliver
this Agreement on behalf of said Party.
14.08.    Rules of Construction.  This Agreement is the product of negotiations
among the Company Parties and the Consenting Creditors, and in the enforcement
or interpretation of this Agreement, is to be interpreted in a neutral manner,
and any presumption with regard to interpretation for or against any Party by
reason of that Party having drafted or caused to be drafted this Agreement, or
any portion of this Agreement, shall not be effective in regard to the
interpretation of this Agreement. The Company Parties and the Consenting
Creditors were each represented by counsel during the negotiations and drafting
of this Agreement and continue to be represented by counsel.
14.09.    Successors and Assigns; Third Parties.  This Agreement is intended to
bind and inure to the benefit of the Parties and their respective successors and
permitted assigns, as applicable. There are no third-party beneficiaries under
this Agreement, and, except as set forth in Section 8, the rights or obligations
of any Party under this Agreement may not be assigned, delegated, or transferred
to any other Entity. 
14.10.    Notices.  All notices hereunder shall be deemed given if in writing
and delivered, by electronic mail, courier, or registered or certified mail
(return receipt requested), to the following addresses (or at such other
addresses as shall be specified by like notice):
(a)
if to a Company Party, to:

California Resources Corporation
27200 Tourney Road, Suite 200
Santa Clarita, California 91355
Attention: Michael L. Preston
E-mail address: Michael.preston@crc.com
with copies to:

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Sullivan & Cromwell LLP
125 Broad Street
New York, New York 20004
Attention: Alison S. Ressler, Andrew G. Dietderich, and James L. Bromley
E-mail address: resslera@sullcrom.com, dietdericha@sullcrom.com,
bromleyj@sullcrom
(b)
if to a Consenting 2016 Term Loan Lenders and the Consenting 2017 Term Loan
Lenders, to:

Davis Polk & Wardwell LLP
450 Lexington Avenue,
New York, New York 10017
Attention.: Damian S. Schaible, Angela M. Libby, and Jonah A. Peppiatt
(c)
if to Ares, to:

Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
Attention: Steven N. Serajeddini
E-mail address: steven.serajeddini@kirkland.com
and
Kirkland & Ellis LLP
609 Main Street
Houston, TX 77002
Attention: John D. Pitts
E-mail address: john.pitts@kirkland.com
Any notice given by delivery, mail, or courier shall be effective when received.
14.11.    Independent Due Diligence and Decision Making. Each Consenting
Creditor confirms that its decision to execute this Agreement has been based
upon its independent investigation of the operations, businesses, financial and
other conditions, and prospects of the Company Parties. Each Consenting Creditor
acknowledges and agrees that it is not relying on any representations or
warranties other than as set forth in this Agreement.
14.12.    Enforceability of Agreement. Each of the Parties to the extent
enforceable waives any right to assert that the exercise of termination rights
under this Agreement is subject to the automatic stay provisions of the
Bankruptcy Code, and expressly stipulates and consents hereunder

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to the prospective modification of the automatic stay provisions of the
Bankruptcy Code for purposes of exercising termination rights under this
Agreement, to the extent the Bankruptcy Court determines that such relief is
required.
14.13.    Admissibility. Pursuant to Federal Rule of Evidence 408 and any other
applicable rules of evidence, this Agreement and all negotiations relating to
this Agreement shall not be admissible into evidence in any proceeding other
than a proceeding to enforce its terms or the payment of damages to which a
Party may be entitled under this Agreement.
14.14.    Specific Performance. It is understood and agreed by the Parties that
money damages would be an insufficient remedy for any breach of this Agreement
by any Party, and each non-breaching Party shall be entitled to specific
performance and injunctive or other equitable relief (without the posting of any
bond and without proof of actual damages) as a remedy of any such breach,
including an order of the Bankruptcy Court or other court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations
hereunder.
14.15.    Several, Not Joint, Claims. Except where otherwise specified, the
agreements, representations, warranties, and obligations of the Parties under
this Agreement are, in all respects, several and not joint.
14.16.    Severability and Construction. If any provision of this Agreement
shall be held by a court of competent jurisdiction to be illegal, invalid, or
unenforceable, the remaining provisions shall remain in full force and effect if
essential terms and conditions of this Agreement for each Party remain valid,
binding, and enforceable.
14.17.    Remedies Cumulative. All rights, powers, and remedies provided under
this Agreement or otherwise available in respect hereof at Law or in equity
shall be cumulative and not alternative, and the exercise of any right, power,
or remedy thereof by any Party shall not preclude the simultaneous or later
exercise of any other such right, power, or remedy by such Party.
14.18.    Capacities of Consenting Creditors. Each Consenting Creditor has
entered into this agreement on account of all Company Claims that it holds
(directly or through discretionary accounts that it manages or advises) and,
except where otherwise specified in this Agreement, shall take or refrain from
taking all actions that it is obligated to take or refrain from taking under
this Agreement with respect to all such Company Claims.
14.19.    Email Consents. Where a written consent, acceptance, approval, or
waiver is required pursuant to or contemplated by this Agreement, such written
consent, acceptance, approval, or waiver shall be deemed to have occurred if, by
agreement between counsel to, as applicable, the Company Parties, Ares, and the
Required Consenting Creditors, submitting and receiving such consent,
acceptance, approval, or waiver, it is conveyed in writing (including electronic
mail) between each such counsel without representations or warranties of any
kind on behalf of such counsel.

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14.20.    Fees and Expenses. Regardless of whether the Restructuring
Transactions are or have been consummated, and subject to the terms of the DIP
Order, the Company Parties shall promptly pay in cash all Consenting Parties
Fees and Expenses; provided, however, that concurrently with the Agreement
Effective Date, the Company Parties shall pay all Consenting Parties Fees and
Expenses incurred at any time prior to the Agreement Effective Date not
previously paid by the Company Parties; provided further that no success,
transaction or similar fees shall be paid except to the extent set forth in
written agreements approved by the Company.
14.21.    Rights of Initial Consenting Creditors. No right to participate in the
Backstop Commitments or other similar rights shall be provided to any Holder of
any Class of Company Claims (other than 2017 Term Loan Claims) that is not a
Consenting Creditor as of the Agreement Effective Date unless at least an equal
pro rata opportunity to participate has been provided to the Consenting
Creditors and their Related Funds who hold Company Claims in such Class as of
the Agreement Effective Date.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.

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CONSENTING CREDITORS:
[RSA PARTY]
[*****]

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Exhibit A

Restructuring Term Sheet

53

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California Resources Corporation
Restructuring Term Sheet
This term sheet (this “Term Sheet”) sets forth certain material terms of a
proposed restructuring (the “Restructuring”) of California Resources Corporation
(“CRC”) and the other Company Parties listed on Annex A hereto (collectively,
the “Company”). Capitalized terms used but not otherwise defined herein shall
have the meanings set forth in the restructuring support agreement to which this
Term Sheet is attached (together with all exhibits and supplements attached
thereto, including this Term Sheet, the “RSA”).
This Term Sheet does not include a description of all the terms, conditions, and
other provisions that are to be contained in the definitive documentation
governing the Restructuring, which remain subject to negotiation and completion
in accordance with the RSA and applicable bankruptcy law. The documents executed
to effectuate the Restructuring will not contain any material terms or
conditions that are inconsistent in any material respect with this Term Sheet or
the RSA.
This Term Sheet is neither an offer to buy or sell any security nor a
solicitation of acceptances of a chapter 11 plan within the meaning of Section
1125 of the Bankruptcy Code. Any such offer or solicitation will comply with all
applicable securities laws and provisions of the Bankruptcy Code. Nothing
contained in this Term Sheet shall be an admission of fact or liability or,
until the occurrence of the Plan Effective Date in the RSA, deemed binding on
any of the parties hereto. Nothing herein constitutes an agreement,
understanding or commitment to effectuate or implement a restructuring on the
terms described herein or on any other terms.
OVERVIEW
Implementation
The Restructuring will be accomplished through the Chapter 11 Cases commenced in
the Bankruptcy Court to implement the chapter 11 plan of reorganization (the
“Plan”) described herein and otherwise consistent with the RSA.
The RSA will be executed by (a) the Company, (b) the holders of at least 66.67%
of the aggregate principal amount of 2017 Term Loans, (c) the holders of at
least 32% of the aggregate principal amount of a combined class of claims
including the Stipulated 2017 Deficiency Claim (as defined herein) as well as
claims arising under the 2016 Term Loans, the Second Lien Notes and the
Unsecured Notes (the claims described in this clause (c), collectively, the
“Deficiency/Unsecured Debt Claims”), (d) Ares and (e) Elk Hills Power.
Pursuant to the RSA, and subject to the terms and conditions thereof, the
parties thereto have agreed to support the transactions contemplated herein and
therein.
Each Consenting Creditor shall be required to execute the RSA with respect to
all of its holdings under the 2017 Term Loan, the 2016 Term Loan, the Second
Lien Notes and the Unsecured Notes. Ares shall be

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required to execute the RSA with respect to all of its claims against and
interests in Elk Hills Power and any Debtor.
DIP Facilities/Use of Cash Collateral
The “DIP Facilities” shall mean (a) a super-priority debtor in possession credit
facility to be provided by the RBL Lenders in the aggregate principal amount
(inclusive of issued and outstanding letters of credit) of $483,010,655.62 (the
“Senior DIP Facility”) on the terms and conditions set forth in the Senior DIP
Commitment Letter, related senior term sheet and Senior DIP Credit Agreement and
(b) a super-priority debtor in possession credit facility junior to the Senior
DIP Facility to be provided by certain holders of the 2017 Term Loans in the
aggregate principal amount of $650 million (the “Junior DIP Facility”) on the
terms and conditions set forth in the Junior DIP Term Sheet attached as Annex
B hereto and the junior debtor-in-possession financing credit agreement.
The material terms of the DIP Facilities and any related order approving the DIP
Facilities, adequate protection, the use of cash collateral or related matters
shall be consistent with Annex B and otherwise consistent with the RSA and this
Term Sheet, including the consent rights set forth in the RSA; provided that the
Interim DIP Order shall be in the form attached hereto as Annex H.
Any additional provisions in such order that are not required by the
intercreditor agreements shall be in form and substance reasonably acceptable to
the Company, the Required Consenting Parties and the required lenders under the
Senior DIP Facility.
The proceeds of the DIP Facilities shall be used to (i) repay the Prepetition
RBL Claims and (ii) fund the Chapter 11 Cases in accordance with the DIP Budget
(as defined in the Junior DIP Term Sheet).
First Lien Exit Facility
The Company and the Required Consenting Parties shall work together to obtain an
exit facility (the “First Lien Exit Facility”) on terms consistent with the Exit
Facility Terms. If the First Lien Exit Facility cannot be agreed by the date
that is 30 days before the first scheduled hearing for confirmation of the Plan,
the Company shall have the right to accept any First Lien Exit Facility
reasonably acceptable to the Required Consenting Creditors so long as such First
Lien Exit Facility (a) has minimum opening liquidity at closing of no less than
$300 million, (b) is arranged, led and agented by one or more traditional
commercial banks and up to 25% may be syndicated to non-bank investors, (c) has
a final maturity on or after the third anniversary of issuance, (d) has an
interest margin not exceeding 4% per annum or such other amount reasonably
acceptable to the Required Backstop Parties and (e) provides for repayment
without premium or penalty.
For the avoidance of doubt, the documentation under the First Lien Exit Facility
shall not restrict the payment of regularly scheduled obligations under the Elk
Hills Power Agreements.

2

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Second Lien Exit Facility
On the Plan Effective Date, certain members of the Ad Hoc Group and Ares (the
“Second Lien Exit Lenders”) shall provide a term loan facility (the “Second Lien
Exit Facility”) consisting of up to $200.0 million of new term loans. The
Company may reduce the amount of the Second Lien Exit Facility by $10 million or
increments in excess thereof at any time prior to the Emergence Date (as defined
in the Second Lien Exit Facility Term Sheet).
The Second Lien Exit Facility shall contain terms and conditions set forth in
the term sheet attached hereto as Annex C (the “Second Lien Exit Facility Term
Sheet”) and as otherwise agreed with the Required Second Lien Exit Lenders and
the Company, and shall otherwise satisfy the consent rights set forth in the
RSA.
New Money Equity Rights Offering
The Company will distribute subscription rights (the “Subscription Rights”) to
purchase the new common stock in Reorganized CRC (the “New Common Stock”) for
cash to creditors pursuant to the Plan. Subscription Rights will allow the
holders thereof, on a record date to be determined, to purchase New Common Stock
at a 35% discount to Set-Up Equity Value.
The New Common Stock offered in the Equity Rights Offering shall dilute the New
Common Stock issued under the Plan on account of any prepetition claims (which
New Common Stock for avoidance of doubt shall be subject to dilution for the
MIP).
The offering (the “Equity Rights Offering”) will be sized to raise $450 million
of gross proceeds to be funded on the Plan Effective Date. The proceeds of the
Equity Rights Offering shall be applied by the Company to repay the DIP
Facilities and fund working capital.
The Equity Rights Offering shall be offered, implemented or conducted by the
Company pursuant to the terms of the RSA and otherwise on the terms (including
procedures for the implementation thereof) set forth in the term sheet attached
hereto as Annex D (the “Backstop Commitment Term Sheet”). Participation in the
Equity Rights Offering may be limited by securities laws to Accredited Investors
that complete a customary accredited investor questionnaire.
The structure, timing and solicitation process for the Equity Rights Offering
shall be consistent with the Backstop Commitment Term Sheet and otherwise
satisfy the consent rights set forth in the RSA.
Set-Up Equity Value
The Plan will allocate New Common Stock upon exercise of the Subscription Rights
based on a fixed “Set-Up Equity Value” of $1.65 billion; provided that, if
during the five trading days preceding the business day prior to the approval of
the Disclosure Statement by the Court, the average closing price of the ICE
Brent strip price for the period of December 2020 to November 2021 (to be
determined by taking the arithmetic average of the 12 monthly contracts
available for Brent Crude

3

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(ICE) as provided by Bloomberg, L.P. utilizing the ticker symbol COA COMDTY
during the period from December 2020 to November 2021) is less than $40.00/Bbl,
the Set-Up Equity Value for the Subscription Rights will be $1.3 billion.
Although the RSA will include certain agreed conditions to the effectiveness of
the Plan, changes in the operating performance of the Company during the Chapter
11 Cases or variance in the amount of net debt outstanding under the First Lien
Exit Facility shall not alter the allocation of Set-Up Equity Value in the Plan
or the exercise price of the Subscription Rights.
The Set-Up Equity Value is intended only as a contractual term for the limited
purpose of determining the exercise price of the Subscription Rights and is not
a valuation. No party to the RSA shall be required to take a position with
respect to valuation except as necessary to fulfill their respective obligations
under the RSA and to consummate the Plan.
Backstop Commitments
The members of the Ad Hoc Group party to the Backstop Commitment Term Sheet
(each, a “Backstop Party”) will subscribe for (a) the portion of New Common
Stock initially allocated to such Backstop Party or its affiliates in the Plan
and (b) its “Backstop Commitment Percentage” of any portion of the New Common
Stock offered in the Equity Rights Offering that is not initially subscribed for
in the Equity Rights Offering (the “Unsubscribed Equity”).
The Backstop Commitment Agreement shall contain the terms and conditions set
forth in the Backstop Commitment Term Sheet attached hereto as Annex D.
Backstop Compensation
In consideration for the Backstop Parties, or their affiliate designees,
agreeing to make the Backstop Commitment, 25% of the Equity Rights Offering will
be reserved solely for the Backstop Parties. The Subscription Rights for the
remaining 75% of the Equity Rights Offering (the “Remaining Subscription
Rights”) will be distributed to creditors (including the Backstop Parties) in
accordance with their holdings in the applicable classes under the Plan.
In further consideration for the Backstop Parties, or their affiliate designees,
agreeing to make the Backstop Commitment, the Backstop Parties, or their
affiliate designees, shall be entitled to a premium in an amount equal to 8% of
the $450 million Rights Offering Amount payable in New Common Stock at the price
per share in the Equity Rights Offering on the terms and conditions set forth in
the Backstop Commitment Term Sheet attached hereto as Annex D.
New Common Stock
On the Plan Effective Date, Reorganized CRC will issue the New Common Stock (a)
to creditors on account of claims as provided in the Plan, (b) to creditors and
Backstop Parties in connection with the Equity

4

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Rights Offering and (c) to Backstop Parties as payment of the Backstop
Commitment Premium.
Reorganized CRC will list the New Common Stock on the New York Stock Exchange,
unless the Company and at least 75% of the Required Consenting Creditors agree
otherwise.
ELK HILLS SETTLEMENT
Elk Hills Settlement Agreement
The Company, California Resources Elk Hills, LLC (“CREH”), Elk Hills Power, LLC
(“Elk Hills Power”) and Ares shall enter into a Settlement and Assumption
Agreement pursuant to Bankruptcy Rule 9019 on or prior to the Petition Date (the
“Elk Hills Settlement Agreement”). The Debtors shall file a motion (the “9019
Motion”) for entry of orders (the “9019 Orders”) approving the Elk Hills
Settlement Agreement, in form and substance reasonably acceptable to the
Required Consenting Creditors and Ares no later than five days after the
Petition Date and seek a prompt hearing for approval. All Consenting Parties
shall support, and not object to, the approval of the Elk Hills Settlement
Agreement and the performance by the Company of its obligations thereunder.
The obligations of the Company and Ares under the Elk Hills Settlement Agreement
shall be independent of their obligations under the RSA, and the Elk Hills
Settlement Agreement shall survive any termination of the RSA following the
Settlement Effective Date.
After Interim Approval
The Company will seek interim approval of the Elk Hills Settlement Agreement
through the Interim 9019 Order contemporaneously with the Interim DIP Order.
During the period from and after interim approval unless there is a termination
of the Elk Hills Settlement Agreement prior to final approval of the Junior DIP
and final approval of the Elk Hills Settlement Agreement:
(a)    Each of the Company, Elk Hills Power and Ares shall continue to perform
all of their obligations under the existing Elk Hills Power Agreements in the
ordinary course of business as if the Chapter 11 Cases had not been commenced,
except as provided in the Elk Hills Settlement Agreement.
(b)    Elk Hills Power shall pay (i) cash distributions on the Class B Preferred
Units to Ares at a rate per annum of 9.5%, calculated on a liquidation
preference of $835,131,031 (as may be increased for any unpaid cash
distributions after the date of the Elk Hills Settlement Agreement) and
consistent with historical practices, and (ii) cash distributions on account of
its Class A Common Units and Class C Common Units and consistent with historical
practices in each of cases (i) and (ii) at the times and in the manner
contemplated by the Elk Hills Power Agreements; and

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(c)    neither the Company nor any Company Party shall (i) develop, promote or
otherwise pursue the “bypass plan” involving the LTS-1 and LTS-2 gas processing
plants and the 35R Cogen facility located in Kern County, California (the
“Legacy System”), supplemental grid power purchases or a solar generation
facility intended to support the Legacy System, (ii) commence any proceeding
against Elk Hills Power or Ares or any of its Affiliates relating to any
transfer or conveyance of assets by CRC or CREH to Elk Hills Power, including
but not limited to claims for fraudulent conveyance or otherwise to avoid such
transfers or conveyances, (iii) commence any proceeding to obtain control or
ownership of the assets of Elk Hills Power, including but not limited to claims
for recharacterization or substantive consolidation or (iv) take any act outside
the ordinary course of business, including filing any motion, that is not
contemplated by the Settlement Agreement and adverse to Elk Hills Power in any
material respect, including but not limited to any rejection of any Elk Hills
Power Agreement.
After Final Approval
The Company will seek entry of the Final 9019 Order contemporaneously with entry
of the Final DIP Order. Upon final approval of the Elk Hills Settlement
Agreement, on the Settlement Effective Date (defined below):
(a)    the covenants described above applicable after interim approval shall
continue to apply for the duration of the Chapter 11 Cases;
(b)    the liquidation preference for the Class B Preferred Units shall be set
to $835,131,031 (as may be increased for any unpaid cash distributions after the
date of the Elk Hills Settlement Agreement) the distribution rate for the Class
B Preferred Units shall be set permanently to 9.5% per annum, and the Class B
Preferred Units shall be made redeemable by the Company at any time, without
premium or penalty, for a redemption price equal to the liquidation preference
plus accrued and unpaid distributions through the date of redemption;
(c)    the Company Parties, the Consenting Creditors and Ares and their
respective related persons shall have the benefit of customary mutual releases
of all past and present claims and causes of action relating to Elk Hills Power,
in each case other than as set forth in the Elk Hills Settlement Agreement;
(d)    Subject only to receipt of any necessary regulatory approvals, which the
applicable parties will use reasonable best efforts to promptly obtain, and the
earlier of the Plan Effective Date and exercise of the Conversion Right, CREH or
its applicable affiliate shall convey to Elk Hills Power its low temperature
separation gas plants, known as LTS-1 and LTS-2, any and all interests in real
property underlying the gas plants known as CGP-1 and

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CGP-2 and the Elk Hills Power Plant (collectively, the “Subject Assets”);1
(e)    the Company shall be granted the Conversion Right described below; and
(f)    the Company shall assume (i) the LLC Agreement, dated as of February 7,
2018, as amended to give effect to the modifications agreed in the Elk Hills
Settlement Agreement, (ii) the Commercial Agreement, dated as of February 7,
2018, between Elk Hills Power and CREH, (iii) the Master Services Agreement,
dated as of February 7, 2018, by and between Elk Hills Power and CREH, (iv) the
Gas Sales Agreement, dated as of July 30, 2014, as amended December 1, 2014 and
February 7, 2018, between Elk Hills Power and CRC Marketing, Inc. and (v) the
Employee Matters Agreement, dated as of February 7, 2018, between Elk Hills
Power and the Company, (vi) the amendment to the Ground Lease, dated as of
February 7, 2018, (vii) the amendment to the Easement Agreement, dated as of
February 6, 2018 and (viii) any other agreements entered into in connection with
the transactions contemplated by such agreements.
The Settlement Agreement, the Final 9019 Order and the Final DIP Order shall
only become effective upon agreement by Ares and the Required Consenting
Creditors on the forms of those Definitive Documents set forth in Section
3.02(a) of the RSA that are required to be agreed at such time thereunder.
Conversion Right
At any time on and after the Settlement Effective Date, the Company will have
the right (the “Conversion Right”) to acquire all but not less than all of the
Class B Preferred Units, Class A Common Units and Class C Common Units in Elk
Hills Power not held by the Company (the “Ares Interests”) in exchange for the
Eligible Notes and the Eligible Stock (each as defined below). The Company shall
exercise its Conversion Right on the Plan Effective Date. The Company also may
exercise its Conversion Right after termination of the RSA solely in connection
with the effectiveness of an alternative chapter 11 plan of reorganization of
the Company confirmed by the Bankruptcy Court that (a) provides for the issuance
of the Eligible Notes and Eligible Stock and (b) to the extent an alternative
chapter 11 plan of reorganization directly or indirectly disproportionately and
adversely affects Ares, as compared to the other Required Consenting Parties, is
otherwise reasonably acceptable to Ares. For the avoidance of doubt, the Company
may not exercise the Conversion Right unless Ares is issued Eligible Notes and
Eligible Stock

__________
1 
In lieu of the contribution of real property underlying the Elk Hills assets,
CREH or its applicable affiliate may enter into a long-term lease with Elk Hills
Power on nominal economic terms that commences at the same time the LTS-1 and
LTS-2 contribution would have otherwise occurred.

7

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that conform with parameters set forth below. Ares will have a reasonable
opportunity to review and comment on all documentation related to the Eligible
Notes and Eligible Stock. Upon consummation of the Conversion Right, Elk Hills
Power shall become a wholly-owned subsidiary of the Company and the existing
arrangements between the Company and Elk Hills Power shall terminate.
The Conversion Right is further conditioned on Ares’ receipt of an officer’s
certificate regarding FERC matters, as further described in the Elk Hills
Settlement Agreement.
Eligible Notes
“Eligible Notes” means one instrument meeting the following requirements:
(a)    secured notes issued by Elk Hills Power or a successor holding its
current facilities and the LTS Plants (“Issuer”) and guaranteed on an unsecured
basis by (i) an intermediate special purpose holding company that owns 100% of
the equity interests in the Issuer (“Intermediate HoldCo”) and (ii) the
publicly-listed parent of the reorganized Company (“Parent”)
(b)    an interest rate of 6.0% per annum through the fourth anniversary of
issuance, increasing to 7.0% per annum after the fourth anniversary of issuance
and to 8.0% per annum after the fifth anniversary of issuance;
(c)    $300 million in principal amount with a seven year maturity and no
required scheduled amortization payments;
(d)    a first-priority security interest in (i) the current facilities of Elk
Hills Power and the LTS Plants and any current assets of the Issuer necessary or
appropriate for their operation and ownership (as reasonably determined by Ares
and the Company), (ii) any third party offtake contracts for power generated by
Elk Hills Power, and (iii) all of the equity of the Issuer held by Intermediate
HoldCo (clauses (i), (ii) and (iii), collectively with the proceeds thereof,
“Primary Collateral”) and (iv) all other assets of Issuer, in each case subject
to customary permitted liens to be agreed;
(e)    (i) customary covenants that prohibit the Issuer from incurring any other
indebtedness, selling or encumbering Primary Collateral, or conducting unrelated
businesses, etc. and (ii) a passive holding company covenant applicable to
Intermediate Holdco, in each of cases (i) and (ii) subject to customary
exceptions to be agreed; provided that the Issuer (A) shall not be required to
preserve or retain any assets in the Issuer other than Primary Collateral and
(B) shall not be limited in any manner with respect to transactions between the
Issuer and the Company with respect to operations, cash management and the
commercial terms of use of the Primary Collateral by the Company, in each

8

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case, other than customary remedial provisions applicable if a Default or Event
of Default (as defined under the Eligible Notes) has occurred and is continuing
(it being understood that nothing in this proviso is intended to override the
provision of collateral in clause (d) above);
(f)    prepayment at any time without premium or penalty; and
(g)    issued pursuant to an indenture governed by New York law on terms and
conditions otherwise reasonably acceptable to Ares and the Required Consenting
Creditors; provided that the indenture shall have no financial maintenance
covenants, and no other covenants applicable to CRC (as opposed to Elk Hills
Power and its subsidiaries) other than those customary for investment grade
corporate issuers.
The terms of the Eligible Notes shall be agreed between the Company, Ares and
the Required Consenting Creditors prior to the entry of the Final 9019 Order.
Eligible Stock
“Eligible Stock” means either (a) 21% of the total amount of New Common Stock
issued pursuant to the Plan subject to dilution by the MIP (but not subject to
dilution by the Equity Rights Offering or the Backstop Commitment Premium) or
(b) Other Eligible Stock.
“Other Eligible Stock” means voting common stock of a public parent Delaware
corporation (“Issuer”) directly or indirectly owning substantially all of the
current assets and business of the Company that meets the following requirements
as of the effective date of the applicable plan of reorganization (except where
indicated):
(a)    the stock is of a series of common stock (i) listed on the New York Stock
Exchange or another exchange reasonably acceptable to Ares and the Required
Consenting Creditors, (ii) that is the only series of outstanding equity
securities of the Issuer and the only series of outstanding publicly-listed
equity securities of the Issuer’s corporate group and (iii) of which no more
than 40% is beneficially owned by any person or group within the meaning of Rule
13d-5(b);
(b)    the stock is freely tradable subject to applicable securities laws;
(c)    the stock constitutes not less than 21% of the voting common stock of the
Issuer (subject to dilution by the MIP);
(d)    the stock is issued by an Issuer with no consolidated indebtedness for
borrowed money (or similar liabilities) other than (i) up to $600 million of
indebtedness for borrowed money or preferred stock (in each case, for the
avoidance of doubt, excluding if applicable any Eligible Notes) issued for new
money and not on account of claims and (ii) any Eligible Notes;

9

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(e)    the holder of such stock has substantially the same or more favorable
voting, governance and registration rights as those set forth in the Governance
Term Sheet (defined below); and
(f)    on terms that do not discriminate unfairly against Ares in any manner
relative to the RSA.
Conditions
The Elk Hills Settlement Agreement will become effective on the first date (the
“Settlement Effective Date”) when certain documentary conditions precedent have
been satisfied (including the receipt of the FERC certification contemplated in
the Elk Hills Settlement Agreement) and the Bankruptcy Court shall have entered
the Final 9019 Order and the Final DIP Order, such order to satisfy the consent
rights set forth in the RSA.
Termination
Before the Settlement Effective Date, the Elk Hills Settlement Agreement may be
terminated by written notice from either Ares or the Company (with the support
of the Required Consenting Creditors) if:
(a)    the Interim 9019 Order is not approved by the 5th day after the Petition
Date or does not otherwise satisfy the consent rights set forth in the RSA;
(b)    the RSA is terminated before the Final 9019 Order is approved;
(c)    the Final DIP Order has not been entered prior to, or is not conditioned
on, the Final 9019 Order;
(d)    the Definitive Documents set forth in Section 3.02(a) of the RSA are not
in agreed form prior to entry of the Final 9019 Order;
(e)    the Final 9019 Order is not approved by the 40th day after the Petition
Date in form and substance reasonably acceptable to Ares, the Company and
Required Consenting Creditors;
(f)    the other party to the Elk Hills Settlement Agreement breaches any
covenant, representation or warranty in the Elk Hills Settlement Agreement in
any material respect not cured within 10 days after written notice; and
(g)    the obligations of the Company, Ares or the Consenting Creditors under
the RSA are terminated for any reason prior to entry of the Final 9019 Order,
other than as a result of a material breach by the Party seeking to terminate
the Elk Hills Settlement Agreement.
TREATMENT OF CLAIMS OR INTERESTS
Holders of claims against and equity interests in the Company will receive the
following treatment in full and final satisfaction of such claims and interests,
which shall be released and discharged under the Plan.

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Treatment of DIP Claims
Claims under the DIP Facilities shall be paid in full in cash on the Plan
Effective Date unless otherwise agreed between the Company, the Required
Consenting Parties and the affected parties under the applicable DIP Facility.
Treatment of Administrative and Priority Claims
Each holder of an allowed administrative, priority, and tax claim shall have
such claim satisfied in full, in cash, or otherwise receive treatment consistent
with the provisions of section 1129(a)(9) of the Bankruptcy Code.
Treatment of RBL Claims
Each holder of an allowed claim in respect of the RBL Facility (the “Prepetition
RBL Claims”) shall be paid in full, to the extent not previously paid from the
proceeds of the DIP Facilities.
Treatment of 2017 Term Loan Claims
The holders of the 2017 Term Loan Claims shall be bifurcated into a stipulated
The stipulated amount will also be used as an estimate for voting purposes.
secured claim in the amount of $537 million (the “Stipulated 2017 Secured
Claim”) and a deficiency claim in the amount of $792 million, which is equal to
the remaining portion of principal and accrued and unpaid interest due on the
Petition Date (the “Stipulated 2017 Deficiency Claim”) and represents 20% of the
aggregate Deficiency/Unsecured Debt Claims. The Company and the Consenting
Parties acknowledge and agree that this stipulation is solely for purposes of
the Plan and they shall not make any argument or claim now or in the future
against any other party to the RSA based on the stipulated amount of the
Stipulated 2017 Secured Claim or the Stipulated 2017 Deficiency Claim and that,
for the avoidance of doubt, such amounts shall not constitute or be construed as
an admission of any fact or liability, a stipulation or a waiver, and are
determined herein without prejudice, with a full reservation as to any rights,
remedies or defenses of the Company and any Consenting Creditor.
Each holder of a Stipulated 2017 Secured Claim shall receive its pro rata share
of:
(a)    91% of the total New Common Stock subject to dilution by the Equity
Rights Offering, the Backstop Commitment Premium, the Eligible Stock and the
MIP; and
(b)    91% of the Remaining Subscription Rights.
Treatment of Deficiency/ Unsecured Debt Claims
Except to the extent that a holder of such claim agrees to lesser treatment,
each holder of a Deficiency/Unsecured Debt Claim shall receive its pro rata
share (to be determined on a pro rata basis together with all other general
unsecured claims in the event that the Class of Deficiency/Unsecured Debt Claims
votes to reject the Plan) of:

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(a)    9% of the total New Common Stock subject to dilution by the Equity Rights
Offering, the Backstop Commitment Premium, the Eligible Stock and the MIP; and
(b)    9% of the Remaining Subscription Rights.
Treatment of Other General Unsecured Claims
If the Class of Deficiency/Unsecured Debt Claims votes to accept the Plan, then,
except to the extent that a holder of such claim agrees to lesser treatment, on
and after the Plan Effective Date, the Debtors will continue to pay or dispute
all general unsecured claims that are not Deficiency/Unsecured Debt Claims in
the ordinary course of business in accordance with the terms and subject to the
conditions of any agreements governing/instruments evidencing or other documents
related to such transactions, as if the Chapter 11 Cases had never been
consummated.
If the Class of Deficiency/Unsecured Debt Claims votes to reject the Plan, then
other general unsecured claims (excluding a customary convenience class if
agreed by the Required Consenting Creditors) shall receive their pro rata share
(to be determined on a pro rata basis together with all general unsecured claims
(including the Deficiency/Unsecured Debt Claims) in the event that the Class of
Deficiency/Unsecured Debt Claims votes to reject the Plan) of:
(a)    9% of the total New Common Stock subject to dilution by the Equity Rights
Offering, the Backstop Commitment Premium, the Eligible Stock and the MIP; and
(b)    9% of the Remaining Subscription Rights.
Treatment of Existing Equity Interests
Existing equity interests in CRC will be cancelled, released, and extinguished,
and will be of no further force or effect.
OTHER TERMS OF THE RESTRUCTURING
Organizational and Governance Matters
Corporate governance for Reorganized CRC, including charters, bylaws, operating
agreements or other organizational documents, as applicable, shall be consistent
with the Governance Term Sheet attached hereto as Annex F, this Term Sheet and
section 1123(a)(6) of the Bankruptcy Code and shall satisfy the consent rights
set forth in the RSA.
Board of Reorganized Company
The initial board of directors of Reorganized CRC (the “New Board”) shall be
designated as set forth in the Governance Term Sheet prior to the Plan Effective
Date and shall be subject to compliance with NYSE listing standards (if
applicable) and other applicable laws and rules. The Chief Executive Officer
shall be included as a member of the New Board.

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Employment and Related Agreements, D&O Insurance and Benefit Plans
Except as otherwise provided in the Plan (and subject to the consent of the
Required Consenting Parties, such consent not to be unreasonably withheld,
conditioned or delayed), on and after the Plan Effective Date, Reorganized CRC
shall amend, adopt, assume, and/or honor in the ordinary course of business any
contracts, agreements, policies, programs, and plans, in accordance with their
respective terms, for, among other things, compensation, including any incentive
plans, retention plans, health care benefits, disability benefits, deferred
compensation benefits, savings, accrued vacation time, severance benefits,
retirement benefits, welfare benefits, workers’ compensation insurance, and
accidental death and dismemberment insurance for the directors, officers, and
employees of the Company who served in such capacity from and after the Petition
Date. Any change of control provisions in any assumed agreement shall be waived.
All Company indemnification obligations shall be assumed by Reorganized CRC on
the Plan Effective Date.
Management Incentive Plan
Reorganized CRC may adopt and implement, on or after the Plan Effective Date,
the management incentive plan (the “MIP”), which shall be subject to the terms
and conditions (including, if applicable, anti-dilution protections) established
from time to time in the sole discretion of the New Board (as defined herein),
pursuant to which up to 10% of the New Common Stock shall be reserved for grant
to the participants pursuant to a MIP acceptable to the Required Consenting
Parties.
KEIP/KERP
Consenting Parties shall agree to support, and not object to, KEIP and KERP
motions; provided that the terms of such programs shall not substantively differ
from the proposal provided to the Ad Hoc Group Advisors and Ares on July 10,
2020.
Restructuring Transactions
The Confirmation Order shall be deemed to authorize, among other things, all
actions as may be necessary or appropriate to effectuate any transaction
described in, approved by, contemplated by or necessary to consummate the Plan
and the Restructuring. On the Plan Effective Date, Reorganized CRC, as
applicable, shall issue all securities, notes, instruments, certificates and
other documents required to be issued pursuant to the Restructuring.
Executory Contracts and Unexpired Leases
The Plan will provide that executory contracts and unexpired leases will be
deemed assumed or rejected pursuant to section 365 of the Bankruptcy Code in a
manner reasonably acceptable to the Required Consenting Parties.
The Company and the Consenting Parties will work together in good faith to
determine which executory contracts and unexpired leases shall be assumed,
assumed and assigned, or rejected in the Chapter 11 Cases.
Subordination
The classification and treatment of Claims under the Plan shall conform to the
respective contractual, legal and equitable subordination rights of

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such Claims, and any such rights shall be settled, compromised and released
pursuant to the Plan.
Cancellation of Notes, Instruments, Certificates, and Other Documents
On the Plan Effective Date, except to the extent otherwise provided in this Term
Sheet or the Plan, all notes, instruments, certificates, and other documents
evidencing claims or interests, including credit agreements and indentures,
shall be canceled, and the Company’s obligations thereunder or in any way
related thereto shall be deemed satisfied in full and discharged.
Tax Matters
The parties will work together in good faith and use commercially reasonable
efforts to structure and implement the transactions in connection with the
Restructuring in a tax efficient manner for the Company, Ares and the Consenting
Creditors.
Exemption from SEC Registration
The issuance of securities under the Plan will be exempt from SEC registration
under section 1145 of the Bankrupty Code to the full extent, if any, permitted
thereby.
Retained Causes of Action
Reorganized CRC shall retain all rights to commence and pursue any Causes of
Action, other than any Causes of Action that the Company has released pursuant
to the release and exculpation provisions outlined in this Term Sheet and
implemented pursuant to the Plan. Notwithstanding the foregoing, Reorganized CRC
and/or a Litigation Trust shall retain all rights to commence and pursue any
Causes of Action as specified in the Plan supplement, including without
limitation any chapter 5 causes of action (other than against Released Parties
as defined in Annex G), unless such causes of action are settled or resolved
prior to the Plan Effective Date with the consent of the Required Consenting
Parties.
Releases and Exculpation
The Plan will include customary mutual releases in favor of the (i) Company,
(ii) the Consenting Creditors and (iii) subject to the Elk Hills Settlement
Agreement, Ares and Elk Hills Power, and each of their respective current and
former directors, officers, shareholders, employees, advisors, legal counsel and
agents, in each case in the form set forth on Annex G.
Retention of Jurisdiction
The Plan will provide that the Bankruptcy Court shall retain jurisdiction for
usual and customary matters.
Conditions Precedent to the Plan Effective Date
The occurrence of the Plan Effective Date shall be subject to the satisfaction
of certain conditions precedent customary in transactions of the type described
herein, including, without limitation, the following:
●    All definitive documentation for the Restructuring shall have been executed
and remain in full force and effect, which definitive documentation shall
satisfy the consents set forth in the RSA.

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●    All requisite filings with governmental authorities (including FERC) and
third parties shall have become effective, and all such governmental authorities
and third parties shall have approved or consented to the Restructuring, to the
extent required.
●    All documents contemplated by the RSA to be executed and delivered on or
before the Plan Effective Date shall have been executed and delivered.
●    The Settlement Effective Date shall have occurred and the Elk Hills
Settlement Agreement shall be in full force and effect.
●    The Confirmation Order shall have become a final and non-appealable order,
which shall not have been stayed, reversed, vacated, amended, supplemented or
otherwise modified, unless waived by the Required Consenting Creditors.
●    The RSA has been assumed pursuant to the Confirmation Order.
Additional conditions precedent to the Plan Effective Date as set forth in the
RSA.
Other Customary Plan Provisions
The Plan will provide for other standard and customary provisions, including in
respect of the cancellation of existing claims and interests, the vesting of
assets, the compromise and settlement of claims, the retention of jurisdiction
by the Bankruptcy Court and the resolution of disputed claims.

 

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Annex A

Schedule of Company Parties

California Resources Corporation
California Heavy Oil, Inc.
California Resources Coles Levee, L.P.
California Resources Coles Levee, LLC
California Resources Elk Hills, LLC
California Resources Long Beach, Inc.
California Resources Mineral Holdings LLC
California Resources Petroleum Corporation
California Resources Production Corporation
California Resources Production Mineral Holdings, LLC
California Resources Real Estate Ventures, LLC
California Resources Royalty Holdings, LLC
California Resources Tidelands, Inc.
California Resources Wilmington, LLC
CRC Construction Services, LLC
CRC Marketing, Inc.
CRC Services, LLC
Monument Production, Inc.
Oso Verde Farms, LLC
Socal Holding, LLC
Southern San Joaquin Production, Inc.
Thums Long Beach Company
Tidelands Oil Production Company LLC

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Annex B
Junior DIP Term Sheet
[See Attached]

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CALIFORNIA RESOURCES CORPORATION
DIP TERM FACILITY TERM SHEET

This term sheet (the “DIP Term Facility Term Sheet”) sets forth the principal
terms of a junior secured superpriority debtor-in-possession credit facility
(the “DIP Term Facility”; the credit agreement evidencing the DIP Term Facility,
the “DIP Term Credit Agreement” and, together with the other definitive
documents governing the DIP Term Facility, the “DIP Term Documents,” each of
which shall be in form and substance acceptable to the DIP Term Facility
Borrower (as defined herein), the DIP Term Facility Agent (as defined herein)
and the Junior DIP Commitment Parties). The DIP Term Documents otherwise shall
be in form and substance substantially consistent with this DIP Term Facility
Term Sheet and shall be entered into with the DIP Term Facility Borrower and
certain of its subsidiaries in connection with the Chapter 11 Cases. The DIP
Term Facility will be subject to the approval of the Bankruptcy Court and
consummated in accordance with (i) the DIP Orders (as defined herein) of the
Bankruptcy Court authorizing the Debtors to enter into the DIP Term Facility and
(ii) the DIP Term Documents to be executed by the Debtors. Capitalized terms
used herein but not defined herein have the meanings ascribed to such terms in
the restructuring support agreement to which this DIP Term Facility Term Sheet
is attached (the “RSA”) and the restructuring term sheet attached thereto as
Exhibit A (the “Restructuring Term Sheet”).

SUMMARY OF PRINCIPAL TERMS
DIP Term Facility Borrower
California Resources Corporation, a Delaware corporation, as a debtor and
debtor-in-possession (the “DIP Term Facility Borrower” or the “Company”).
Guarantors
Each direct or indirect wholly owned subsidiary of the DIP Term Facility
Borrower, including each such subsidiary that is a debtor and
debtor-in-possession (the “Guarantors” and, together with the DIP Term Facility
Borrower, the “Loan Parties”), subject to certain exceptions to be agreed, it
being understood and agreed that each subsidiary of the DIP Term Facility
Borrower that is an obligor under any of the Prepetition Facilities (as defined
herein) shall be a Guarantor.
DIP Term Facility Agent
Alter Domus Products Corp., as administrative agent (in such capacity, the “DIP
Term Facility Agent”).
DIP Term Lenders
The Junior DIP Commitment Parties or any affiliate or designee of any Junior DIP
Commitment Party (the “DIP Term Lenders”).
Amount & Type
A junior secured superpriority debtor-in-possession term loan facility in an
aggregate principal amount of $650.0 million, which shall be available in a
single draw on the Closing Date (as defined herein) subject to the terms and
conditions of this DIP Term Facility Term Sheet and the DIP Term Facility
Documents.

“DIP Term Loans” shall mean the loans made under the DIP Term Facility by the
DIP Term Lenders on the Closing Date. “Junior DIP Commitment” shall mean the
several and not joint commitment of each DIP Term Lender to make DIP Term Loans
on the Closing Date in the amount set forth opposite such DIP Term Lender’s name
on Exhibit C attached to the RSA.

The Junior DIP Commitments will automatically terminate on the earlier of
(i) the funding of the DIP Term Loans and (ii) the date immediately following

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the Closing Date. Amounts borrowed under the DIP Term Facility that are repaid
or prepaid may not be re-borrowed.

Use of Proceeds
The proceeds of the DIP Term Loans will be used, together with amounts borrowed
under the Senior DIP Facility (as defined below) on the Closing Date, (i) to
refinance in full the obligations under the Prepetition RBL Credit Agreement (as
defined herein) and (ii) to pay certain costs, fees and expenses related to the
Chapter 11 Cases. Such refinancing shall be subject to unwinding solely to the
extent that, prior to the termination of the challenge period, the Prepetition
RBL Facility is determined in the Final DIP Order to be undersecured, and the
extent of any such unwinding shall be limited to the amount of such
undersecurity.
Senior DIP Facility
Concurrently with entering into the DIP Term Facility, the Debtors will enter
into a senior secured superpriority debtor-in-possession term loan and/or
revolving credit facility in an aggregate principal amount equal to
$483,010,655.62 (the “Senior DIP Facility” and, together with the DIP Term
Facility, the “DIP Facilities”; the credit agreement evidencing the Senior DIP
Facility, the “Senior DIP Credit Agreement”; and the Senior DIP Credit Agreement
together with the other definitive documents governing the Senior DIP Facility,
the “Senior DIP Documents”), with JPMorgan Chase Bank, N.A. as the
administrative agent thereunder (the “Senior DIP Facility Agent”). The terms of
the Senior DIP Facility shall be substantially consistent with those set forth
in, as applicable, the Senior DIP Commitment Letter and/or the Senior DIP Credit
Agreement.
Maturity Date
The DIP Term Facility shall mature on the date that is the earliest of (i) the
date that is six (6) months following the Petition Date, (ii) the sale of all or
substantially all of the DIP Term Facility Borrower’s or the Loan Parties’
assets, (iii) the Plan Effective Date or the effective date of any other plan of
reorganization in respect of the Debtors and (iv) the date that is forty (40)
days after the Petition Date if the Final DIP Order has not been entered by the
Bankruptcy Court by such date (such earliest date, the “DIP Term Termination
Date”).

Subject to the subordination provisions set forth under the heading “Priority
Under the DIP Term Facility”, if the DIP Term Termination Date occurs other than
as a result of the occurrence of the Plan Effective Date, all obligations under
the DIP Term Facility shall be immediately paid in cash, and the DIP Term
Lenders shall (in each case, to the extent not yet paid) receive the payments
required to be paid thereon and described below (i) under the heading “Fees” and
(ii) in the first paragraph under the heading “Fees and Expenses;
Indemnification”.

On the Plan Effective Date, the DIP Term Loans shall be repaid in full in cash
with the proceeds of the Equity Rights Offering and the Second Lien Exit
Facility; provided that at the direction and at the option of any DIP Term
Lender that is also a Backstop Party, an Exit Second Lien Facility Commitment
Party or a Related Fund (as defined in the Backstop Commitment Agreement) of
such Backstop Party or Exit Second Lien Facility Commitment Party, for
administrative convenience, the cash to be received by such DIP Term Lender on

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account of the principal amount of its DIP Term Loans shall be set off or
otherwise applied towards the obligation of such Backstop Party or Exit Second
Lien Facility Commitment Party (or in each case any Related Fund thereof) to
fund its portion of the Equity Rights Offering or the Second Lien Exit Facility,
as applicable. Upon the set off or application of such amounts, the DIP Term
Loans of such DIP Term Lender in a principal amount equal to such amounts shall
be deemed satisfied and paid in full.
Interest Rate
LIBOR plus 9.00% per annum (or if applicable, ABR plus 8.00% per annum);
provided that in no event shall LIBOR be less than 1.00% (or ABR be less than
2.00%).

Interest shall be payable in cash on each interest payment date (to be defined
in the DIP Term Credit Agreement).
Default Interest
Upon the occurrence and during the continuation of an Event of Default (as
defined herein), all obligations will bear interest at (i) in the case of
principal and interest, a rate equal to 2.00% per annum, plus the otherwise
applicable rate to the relevant DIP Term Loans and (ii) in the case of all other
amounts, such amounts will bear interest at a rate equal to 2.00% per annum
plus the rate applicable to DIP Term Loans that are ABR loans.
Amortization
None.
Fees
Upfront Fee: An upfront fee (“Upfront Fee”) payable to the DIP Term Lenders in
an amount equal to 1.00% on each DIP Term Lender’s allocated share of the Junior
DIP Commitments in effect as of the Closing Date, which Upfront Fee shall be
payable in cash by or on behalf of the DIP Term Facility Borrower on the Closing
Date and may be netted from the amount of DIP Term Loans funded by the DIP Term
Lenders on the Closing Date. For the avoidance of doubt, with respect to the
Upfront Fee payable to the Fronting Lender (as defined below) in its capacity as
a DIP Term Lender, such Upfront Fee shall be held for the benefit of (and passed
on to) each DIP Term Lender (after giving effect to such assignment) to which
the DIP Term Loans funded by the Fronting Lender shall be assigned on or after
the Closing Date.

Fronting Fee: A fronting fee (“Fronting Fee”) payable to Credit Suisse Loan
Funding LLC or a designated affiliate thereof (in such capacity, the “Fronting
Lender”) in an amount equal to the lesser of (i) 0.375% on the aggregate
principal amount of DIP Term Loans funded to the DIP Term Facility Borrower by
the Fronting Lender on the Closing Date and (ii) $500,000, which Fronting Fee
shall be payable by or on behalf of the DIP Term Facility Borrower in cash on
the Closing Date and may be netted from the amount of DIP Term Loans funded by
the Fronting Lender on the Closing Date. For the avoidance of doubt, the
Fronting Fee shall be in addition to (and not in replacement of) the Upfront Fee
or any other fees owed to the Fronting Lender, the DIP Term Lenders or any other
party to the DIP Term Documents.
Mandatory Prepayments
Subject to the limitations set forth under heading “Priority under the DIP Term
Facility”, mandatory prepayments under the DIP Term Facility shall be required
with 100% of the net cash proceeds from (a) issuance of any indebtedness (with
exceptions for permitted indebtedness) or equity and (b) any asset sale or hedge
agreement unwinds by any Loan Party, without reinvestment rights, except for

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(i) sales of inventory and current assets in the ordinary course of business,
(ii) leases (other than on oil and gas properties), subleases, licenses
sublicenses of real, personal or intellectual property in the ordinary course of
business, (iii) disposition of property or assets among Loan Parties to the
extent otherwise permitted under the DIP Term Facility, (iv) sale or disposition
of obsolete, used, worn-out or surplus assets (including equipment) and (v)
other customary exceptions to be mutually agreed; provided that only (x) 50% of
the first $20.0 million of aggregate net cash proceeds and (y) 100% of the net
cash proceeds in excess thereof, in each case, from dispositions of non-core
assets that are identified by the DIP Term Facility Borrower and agreed to by
the Required DIP Term Lenders (as defined herein) and the Senior DIP Facility
Agent prior to the Closing Date shall be required to be prepaid.
Voluntary Prepayments
Subject to the limitations set forth under heading “Priority under the DIP Term
Facility”, amounts outstanding under the DIP Term Facility may be voluntarily
repaid at any time without premium or penalty.
Interim DIP Order
The interim order approving the DIP Term Facility, which shall be in form and
substance acceptable to the Required DIP Term Lenders (the “Interim DIP Order”),
shall, among other things, authorize and approve (i) the borrowing and making of
the DIP Term Loans in an amount up to $650.0 million, (ii) the granting of the
superpriority claims and liens against the Debtors and their assets in
accordance with this DIP Term Facility Term Sheet and the DIP Term Documents,
(iii) the payment of all reasonable and documented fees and expenses (including
the fees and expenses of outside counsel and financial advisors) required to be
paid by the Debtors to the DIP Term Facility Agent and the DIP Term Lenders as
described under the heading “Fees and Expenses Indemnification”, (iv) the use of
cash collateral; provided that the Adequate Protection (as defined herein) shall
be granted in accordance with the terms set forth in this DIP Term Facility Term
Sheet, (v) the payment of the fees as described under the heading “Fees”, which
payment shall not be subject to reduction, setoff or recoupment and (vi) as of
the date of the Interim DIP Order, waivers for the benefit of the DIP Secured
Parties of Section 506(c) of the Bankruptcy Code, the “equities of the case”
exception under the Bankruptcy Code and any rights seeking marshalling.
Final DIP Order
The final order approving the DIP Term Facility shall be substantially in the
same form as the Interim DIP Order (with such modifications as are necessary to
convert the Interim DIP Order into a final order) and in form and substance
acceptable to the Required DIP Term Lenders (as defined herein) (the “Final DIP
Order” and, together with the Interim DIP Order, the “DIP Orders”).
Prepetition Facilities1
“Prepetition RBL Credit Agreement” means that certain Credit Agreement, dated as
of September 24, 2014, among the Company, the lenders party thereto and JPMorgan
Chase Bank, N.A., as the administrative agent (the “Prepetition RBL Agent”). The
“Secured Parties” thereunder are referred to herein as the “Prepetition RBL
Secured Parties” and the facility thereunder is referred to herein as the
“Prepetition RBL Facility”.

__________
1 
In each case, as amended, restated, supplemented or otherwise modified prior to
the date hereof.

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“Prepetition 1.25L Agreement” means that certain Credit Agreement, dated as of
November 17, 2017, among the Company, the lenders party thereto and The Bank of
New York Mellon Trust Company, N.A., as administrative agent (the “Prepetition
1.25L Agent”). The “Secured Parties” thereunder are referred to herein as the
“Prepetition 1.25L Secured Parties”.

“Prepetition 1.5L Agreement” means that certain Credit Agreement, dated as of
August 12, 2016, among the Company, the lenders party thereto and The Bank of
New York Mellon Trust Company, N.A., as administrative agent and collateral
agent (the “Prepetition 1.5L Agent”). The “Secured Parties” thereunder are
referred to herein as the “Prepetition 1.5L Secured Parties”.

“Prepetition 2L Indenture” means that certain Indenture, dated as of December
15, 2015, among the Company and The Bank of New York Mellon Trust Company, N.A.,
as trustee and collateral trustee (the “Prepetition 2L Trustee”). The “Holders”
thereunder are referred to herein as the “Prepetition 2L Secured Parties”.

The facilities and indebtedness governed by the Prepetition 1.25L Agreement, the
Prepetition 1.5L Agreement and the Prepetition 2L Indenture are collectively
referred to herein as the “Prepetition Term Facilities”. The facilities and
indebtedness governed by the Prepetition RBL Credit Agreement and the
Prepetition Term Facilities are collectively referred to herein as the
“Prepetition Facilities”.

The Prepetition RBL Secured Parties, the Prepetition 1.25L Secured Parties, the
Prepetition 1.5L Secured Parties and the Prepetition 2L Secured Parties are
collectively referred to herein as the “Prepetition Secured Parties”.
DIP Collateral
All present and after acquired property (whether tangible, intangible, real,
personal or mixed) of the Loan Parties, wherever located, including, without
limitation, all accounts, all deposit accounts, securities accounts and
commodities accounts, inventory, equipment, capital stock in subsidiaries of the
Loan Parties, including, for the avoidance of doubt, any equity or other
interests in the Loan Parties’ non-Debtor and/or jointly-owned subsidiaries,
investment property, instruments, chattel paper, interests in real property
(whether owned or leased), contracts, patents, copyrights, trademarks and other
general intangibles, and all products and proceeds thereof, subject to customary
exclusions and excluding any causes of action under Bankruptcy Code sections
502(d), 544, 545, 547, 548, 549, 550 or 553 or any other avoidance actions under
the Bankruptcy Code or applicable non-bankruptcy law but, subject to entry of
the Final DIP Order, including the proceeds thereof. The collateral described
above is collectively referred to herein as the “DIP Collateral” and the liens
on the DIP Collateral securing the DIP Term Facility are referred to herein as
the “DIP Term Facility Liens”. For the avoidance of doubt, the DIP Collateral
and the collateral securing the Senior DIP Facility shall be identical.

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Priority Under the DIP Term Facility
All obligations of the Loan Parties to the DIP Term Lenders and to the DIP Term
Facility Agent shall, subject to the Carve-Out (as defined below), at all times:
(a)    be entitled to superpriority administrative expense claim status in the
Chapter 11 Case of such Loan Party;
(b)    be secured by a fully perfected second priority security interest and
lien on the DIP Collateral that is not subject to (x) valid, perfected and
non-avoidable liens as of the Petition Date or (y) valid liens in existence as
of the Petition Date that are perfected subsequent to the Petition Date as
permitted by Section 546(b) of the Bankruptcy Code;
(c)    except as otherwise provided in clause (d) below with respect to the
existing liens of the Prepetition Secured Parties with respect to the DIP
Collateral, be secured by a junior perfected security interest and lien on the
DIP Collateral to the extent such DIP Collateral is subject to (A) valid,
perfected and non-avoidable senior liens (other than Primed Liens (as defined
below)) in favor of third parties that were in existence immediately prior to
the Petition Date that were senior to the liens securing the obligations under
the Prepetition RBL Credit Agreement and the obligations under the Prepetition
1.25L Credit Agreement and (B) valid and non-avoidable liens in favor of third
parties that were in existence immediately prior to the Petition Date that were
senior to the liens securing the obligations under the Prepetition RBL Credit
Agreement and the obligations under the Prepetition 1.25L Credit Agreement and
perfected subsequent to the Petition Date as permitted by Section 546(b) of the
Bankruptcy Code ((A) and (B) together, the “Permitted Prior Liens”); and
(d)    pursuant to Section 364(d)(1) of the Bankruptcy Code, be secured by a
second-priority perfected priming security interest and lien on the DIP
Collateral of each Loan Party to the extent such DIP Collateral is subject to
existing liens that secure obligations under the Prepetition Facilities (the
“Primed Liens”); provided that if any amounts are unwound from the Senior DIP
Facility or the Prepetition RBL Credit Agreement lenders, the DIP Term Facility
Liens and claims shall be junior and subordinated to such unwound amounts to the
same extent as if such amounts were never unwound.
The DIP Term Facility Liens and claims shall be junior to the liens securing the
obligations under the Senior DIP Facility (the “Senior DIP Facility Liens”) and
the Contingent Prepetition RBL Secured Party Replacement Liens and Contingent
Prepetition RBL Secured Party Adequate Protection Claims (each as defined below)
as set forth in the Interim DIP Order and the Final DIP Order.
The DIP Term Facility shall not be entitled to, and shall not retain, any
distributions or prepayments whether in cash, equity, debt or otherwise and
irrespective of whether such distributions or prepayments are from collateral
proceeds, unencumbered assets, new equity or debt issuances or otherwise unless
and until the Senior DIP Facility (and all amounts (if any) that are unwound) is
Paid in Full (as defined below); provided that the DIP Term Facility shall be
entitled to (i) current pay interest so long as no Event of Default under the
Senior DIP Facility shall have occurred and be continuing at the time of such
payment

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and (ii)(x) the Upfront Fee and Fronting Fee described under the heading “Fees”
above and (y) the fees and expenses described in the first paragraph under the
heading “Fees and Expenses; Indemnification” below. For purposes hereof, “Paid
in Full” or “Pay in Full” shall mean the indefeasible payment in full in cash of
all outstanding obligations under the Senior DIP Facility (and all amounts (if
any) that are unwound) (other than (x) secured hedge obligations that, at the
time of such determination, are allowed by the person to whom such secured hedge
obligations are owing to remain outstanding or are not required to be repaid or
cash collateralized pursuant to the provisions of any document governing such
secured hedge obligations or have been assigned or novated concurrently with
such payment, (y) secured cash management obligations and (z) contingent
indemnification obligations not then due and payable), the replacement, backstop
or full cash collateralization of all issued letters of credit, and the
termination of all commitments thereunder.

Upon the occurrence and during the continuance of an Event of Default, the
requisite lenders under the Senior DIP Facility shall control all remedies and
the DIP Term Lenders shall not contest or otherwise object to the exercise of
any such rights and remedies subject to a standstill period to be agreed;
provided that the DIP Term Lenders shall have a customary “purchase right” that
will permit them to purchase the outstanding obligations under the Senior DIP
Facility. The DIP Term Lenders shall have the right to credit bid the DIP Term
Loans provided such bid will Pay in Full the Senior DIP Facility at the closing
thereof.

The “Carve-Out” shall mean (a) fees owing to the United States Trustee incurred
in connection with the Chapter 11 Cases, in an unlimited amount, (b)
professional fees, expenses, and disbursements incurred by professional persons
employed by the Loan Parties or any statutory committee in the Loan Parties’
Chapter 11 Cases (including any fees and expenses of the members of any such
statutory committee) (“Professional Fees and Expenses”) incurred on and after
the Petition Date and before the occurrence of a Carve-Out Trigger Date (as
defined below) in an unlimited amount and (c) Professional Fees and Expenses
incurred after the occurrence of a Carve-Out Trigger Date, in an amount not to
exceed $7.0 million (the “Post-Trigger Date Carve-Out”). Payment of Professional
Fees and Expenses pursuant to the Carve-Out is subject to entry of a customary
order of the Bankruptcy Court, allowing for the interim payment of such amounts,
and subject further to Bankruptcy Court approval of any such Professional Fees
and Expenses; provided that the Carve-Out shall not be available to pay
Professional Fees and Expenses incurred by any party, including the Loan Parties
or any committee or any professionals engaged thereby, in connection with the
initiation or prosecution of any claims, causes of action, adversary proceedings
or other litigation against any of the DIP Term Facility Agent, the DIP Term
Lenders or other secured parties under the DIP Term Documents, subject to
$75,000 being available for a committee to investigate the validity and
enforceability of the obligations under and liens securing the Prepetition RBL
Credit Agreement.

The “Carve-Out Trigger Date” means the first business day after the DIP Term
Facility Agent provides a written notice to the DIP Term Facility Borrower and
its counsel that an event of default under the DIP Term Facility (an “Event of
Default”) (or an event which with the giving of notice would constitute an Event
of Default) has occurred and that the Post-Trigger Date Carve-Out has been
invoked.

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Upon the occurrence of the Carve-Out Trigger Date, the DIP Term Facility
Borrower shall deposit into an interest-bearing escrow account at a financial
institution acceptable to the Required DIP Term Lenders (the “Carve-Out
Account”) an amount equal to the sum of (i) all fees and expenses required to be
paid pursuant to clause (a) in the definition of Carve-Out above, (ii) all
billed and unpaid Professional Fees and Expenses (including outstanding
holdbacks) incurred on or after the Petition Date and prior to the Carve-Out
Trigger Date, (iii) all unbilled Professionals Fees and Expenses incurred on or
after the Petition Date and prior to the Carve-Out Trigger Date and (iv) $7.0
million. For the avoidance of doubt, if the “Carve-Out Trigger Date” happens
under both the Senior DIP Facility and the DIP Term Facility, satisfaction of
the deposit requirements under the Senior DIP Facility shall be deemed to
satisfy the equivalent requirements under the DIP Term Facility. The failure of
the amounts deposited in the Carve-Out Account to satisfy in full the amount set
forth in the Carve-Out shall not affect the priority of the Carve-Out.

The DIP Term Facility Agent and the DIP Term Lenders shall retain automatically
perfected and continuing first priority security interests in any residual
interest in the Carve-Out Account available following satisfaction in full of
all obligations benefiting from the Carve-Out (the “Residual Carve-Out Amount”).
Promptly (but in no event later than 5 business days) following the satisfaction
in full of all obligations benefiting from the Carve-Out, the DIP Term Facility
Borrower shall deliver the Residual Carve-Out Amount, if any, to the Senior DIP
Facility Agent (or, following a Payment in Full, the DIP Term Facility Agent).
Adequate Protection
Prepetition RBL Secured Parties: Until the discharge in full of the obligations
under the Prepetition RBL Credit Agreement as set forth in the Final DIP Order:

(a)    payment of the reasonable and documented prepetition and post-petition
fees and expenses of the Prepetition RBL Agent, including the reasonable and
documented fees and expenses of primary counsel, local counsel and a financial
advisor; 

(b)    contingent replacement liens on the DIP Collateral to secure the
Prepetition RBL Secured Party Adequate Protection Claims (as defined herein)
(the “Contingent Prepetition RBL Secured Party Replacement Liens”), senior to
all other liens on the DIP Collateral except (i) the Carve-Out, (ii) the
Permitted Prior Liens and (iii) the Senior DIP Facility Liens;

(c)    contingent allowed superpriority claims as provided for in sections
503(b) and 507(b) of the Bankruptcy Code (the “Contingent Prepetition RBL
Secured Party Adequate Protection Claims”); and

(d)    other adequate protection to be agreed.

Prepetition 1.25L Secured Parties:

(a)    payment of the reasonable and documented prepetition and post-petition
fees and expenses of the Prepetition 1.25L Agent and the ad hoc

8

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lenders under the Prepetition 1.25L Facility, including the reasonable and
documented fees and expenses of the Ad Hoc Group Advisors; 

(b)    replacement liens on the DIP Collateral to secure the Prepetition 1.25L
Secured Party Adequate Protection Claims (as defined below) (the “Prepetition
1.25L Secured Party Replacement Liens”), senior to all other liens on the DIP
Collateral except (i) the Carve-Out, (ii) the Permitted Prior Liens, (iii) the
DIP Term Facility Liens, (iv) the Contingent Prepetition RBL Secured Party
Replacement Liens and (v) the Senior DIP Facility Liens;

(c)    allowed superpriority claims as provided for in sections 503(b) and
507(b) of the Bankruptcy Code (the “Prepetition 1.25L Secured Party Adequate
Protection Claims”);

(d)    waivers for the benefit of the Prepetition 1.25L Secured Parties of
(i) Section 506(c) of the Bankruptcy Code and the “equities of the case”
exception under the Bankruptcy Code; provided that the waivers in this
clause (i) shall be without prejudice to the terms of the Final DIP Order with
respect to the period from and after the entry of the Final DIP Order and
(ii) subject to and effective only upon entry of the Final DIP Order, any rights
seeking marshalling;

(e)    financial reporting and other reports and notices delivered by the DIP
Term Facility Borrower under the DIP Term Facility; and

(f)    other adequate protection to be agreed.

Prepetition 1.5L Secured Parties:

(a)    payment of the reasonable and documented prepetition and post-petition
fees and expenses of the Prepetition 1.5L Agent and the ad hoc group of lenders
under the Prepetition 1.5L Facility, including the reasonable and documented
fees and expenses of the Ad Hoc Group Advisors; 

(b)    replacement liens on the DIP Collateral to secure the Prepetition 1.5L
Secured Party Adequate Protection Claims (as defined below) (the “Prepetition
1.5L Secured Party Replacement Liens”), senior to all other liens on the DIP
Collateral except (i) the Carve-Out, (ii) the Permitted Prior Liens, (iii) the
DIP Term Facility Liens, (iv) the Prepetition 1.25L Secured Party Replacement
Liens, (v) the Contingent Prepetition RBL Secured Party Replacement Liens and
(vi) the Senior DIP Facility Liens;

(c)    allowed superpriority claims as provided for in sections 503(b) and
507(b) of the Bankruptcy Code (the “Prepetition 1.5L Secured Party Adequate
Protection Claims”);

(d)    waivers for the benefit of the Prepetition 1.5L Secured Parties of
Section 506(c) of (i) Section 506(c) of the Bankruptcy Code and the “equities of
the case” exception under the Bankruptcy Code; provided that the waivers

9

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in this clause (i) shall be without prejudice to the terms of the Final DIP
Order with respect to the period from and after the entry of the Final DIP Order
and (ii) subject to and effective only upon entry of the Final DIP Order, any
rights seeking marshalling;

(e)    financial reporting and other reports and notices delivered by the DIP
Term Facility Borrower under the DIP Term Facility; and

(f)    other adequate protection to be agreed.

Prepetition 2L Secured Parties:

(a)    payment of the reasonable and documented prepetition and post-petition
fees and expenses of the Prepetition 2L Trustee; 

(b)    replacement liens on the DIP Collateral to secure the Prepetition 2L
Secured Party Adequate Protection Claims (as defined below), senior to all other
liens on the DIP Collateral except (i) the Carve-Out, (ii) the Permitted Prior
Liens, (iii) the DIP Term Facility Liens, (iv) the Prepetition 1.25L Secured
Party Replacement Liens, (v) the Prepetition 1.5L Secured Party Replacement
Liens, (vi) the Contingent Prepetition RBL Secured Party Replacement Liens and
(vii) the Senior DIP Facility Liens;

(c)    allowed superpriority claims as provided for in sections 503(b) and
507(b) of the Bankruptcy Code (the “Prepetition 2L Secured Party Adequate
Protection Claims”); and

(d)    financial reporting and other reports and notices delivered by the DIP
Term Facility Borrower under the DIP Term Facility.

All adequate protection described herein shall be subject to, as applicable, the
First Out Collateral Agency Agreement, the Existing Intercreditor Agreement and
the First Lien Intercreditor Agreement, each as defined in the Prepetition RBL
Credit Agreement. 
Milestones
To be consistent with the milestones set forth in the RSA (the “Milestones”).
Conditions Precedent to Closing and Funding
Usual and customary for debtor-in-possession financings of this type and
substantially consistent with the conditions precedent to closing and funding
under the Senior DIP Credit Agreement, including, without limitation:
(i) execution and delivery of the DIP Term Credit Agreement and the other DIP
Term Documents evidencing the DIP Term Facility; (ii) the Petition Date shall
have occurred, and the DIP Term Facility Borrower and each Guarantor shall be a
debtor and a debtor-in-possession; (iii) entry of the Interim DIP Order not
later than 5 calendar days following the Petition Date; (iv) delivery of an
initial DIP budget; (v) the RSA shall have become effective and binding in
accordance with its terms, (vi) the entry of all “first day” orders and related
pleadings with the Bankruptcy Court that are acceptable in form and substance to
the Required DIP Term Lenders (as defined herein), (vii) the Senior DIP Credit
Agreement and the other Senior DIP Documents shall have become effective and
binding on the terms set forth on Annex I attached hereto, (viii) no default or
event of default

d    

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and (ix) accuracy of representations and warranties. The date on which the
conditions precedent to closing are satisfied is referred to herein as the
“Closing Date”.
Representations and Warranties
Usual and customary for debtor-in-possession financings of this type and
substantially consistent with the representations and warranties under the
Senior DIP Documents, including, without limitation, representations with
respect to initial and updated DIP budgets, the Chapter 11 Cases and the DIP
Orders.
Information/Reporting Covenants
Usual and customary for debtor-in-possession financings of this type and
substantially consistent with the reporting and information covenants under the
Senior DIP Credit Agreement, including, without limitation, delivery and
approval by the Required DIP Term Lenders of initial and updated DIP budgets and
delivery of variance reports in respect thereof.
Other Affirmative Covenants
Usual and customary for debtor-in-possession financings of this type and
substantially consistent with the affirmative covenants under the Senior DIP
Credit Agreement, including, without limitation, customary related bankruptcy
matters and priority liens and claims.

In addition, the DIP Term Facility Borrower shall use commercially reasonable
efforts to obtain ratings in respect of the DIP Term Facility from each of
Moody’s and S&P within 45 days following the Closing Date; provided that if the
DIP Term Facility Borrower is unable to obtain both ratings for the DIP Term
Facility on or prior to such date, the DIP Term Facility Borrower shall
(i) thereafter use commercially reasonable efforts to obtain both ratings for
the DIP Term Facility as soon as possible and (ii) promptly provide to the DIP
Term Facility Agent and the DIP Term Lenders any other information,
documentation or other evidence reasonably requested by the DIP Agent or the
Required DIP Term Lenders in connection with the above subject matter.
Negative Covenants
Usual and customary for debtor-in-possession financings of this type and
substantially consistent with the negative covenants under the Senior DIP Credit
Agreement, including, without limitation, the Financial Covenants (as defined
herein), covenants related to bankruptcy matters and amendments to the Elk Hills
Power Agreements (as defined in the RSA), in each case, consistent with, and not
more restrictive than, the Senior DIP Credit Agreement.
Financial Covenants
The DIP Term Facility shall contain the same financial covenants (the “Financial
Covenants”) as the financial covenants under the Senior DIP Credit Agreement
(which shall include, for the avoidance of doubt, a budget variance covenant and
a minimum liquidity covenant).

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Events of Default
Usual and customary for debtor-in-possession financings of this type and
substantially consistent with the events of default under the Senior DIP Credit
Agreement, including, without limitation, cross-default to other material
indebtedness (including the Senior DIP Facility) and the occurrence of certain
events related to Elk Hills Power LLC (including (i) the loss of ability to
utilize the gas processing and other services or the ability to purchase power
or other commodities, or a change in the date and amount fixed for class C
distributions pursuant to the Elk Hills Power Agreements (without giving effect
to the exercise of rights under any ipso facto provision) or change in
composition of the board of Elk Hills Power LLC, in each case, as provided under
the Elk Hills Power Agreements (as defined in the RSA) and/or (ii) the
termination or rejection of the Elk Hills Power Agreements without the consent
of the Required DIP Term Lenders).
Voting
Amendments and waivers of the DIP Term Facility will require the approval of DIP
Term Lenders holding more than 50% of the outstanding Junior DIP Commitments and
DIP Term Loans (the “Required DIP Term Lenders”), subject to customary
exceptions for certain provisions which shall require the consent of each
affected DIP Term Lender or all DIP Term Lenders and customary protections for
the DIP Term Facility Agent.
Fees and Expenses; Indemnification
Loan Parties obligated under the DIP Term Facility shall pay all agency fees of
the DIP Term Facility Agent and all reasonable, documented out-of-pocket fees,
costs and expenses incurred or accrued by the DIP Term Facility Agent and the
DIP Term Lenders, including, without limitation, the reasonable and documented
fees and expenses of Ropes & Gray LLP as primary counsel to the DIP Term
Facility Agent and Davis Polk & Wardwell LLP as primary counsel to the DIP Term
Facility Lenders, Cox & Castle as California special counsel to the DIP Term
Facility Lenders, Rapp & Krock, PC, as Texas local counsel to the DIP Term
Facility Lenders and local counsel in each other relevant jurisdiction and
Evercore as financial advisor to the DIP Term Facility Lenders, in each case,
associated with the syndication of the DIP Term Facility and the preparation,
negotiation, execution, delivery and administration of the DIP Term Documents
and any amendment, waiver, supplement, consent, or modification with respect
thereto.

The Loan Parties will indemnify the DIP Term Facility Agent, the DIP Term
Lenders and their respective related parties, and hold them harmless from and
against all reasonable, documented out-of-pocket costs, expenses and liabilities
arising out of or relating to the transactions contemplated hereby or by the DIP
Term Documents, except solely for the gross negligence or willful misconduct of
such indemnified party, in each case to the extent determined by a court of
competent jurisdiction in a final and non-appealable judgment.
Assignments and Participations
Usual and customary for debtor-in-possession financings of this type.
Governing Law
The laws of the State of New York (except with respect to any mortgage or deed
of trust, in each case with respect to which the governing law shall be the law
of the state within which the properties subject to the applicable mortgage or
deed of trust are located) and, to the extent applicable, by the Bankruptcy
Code.

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Miscellaneous
The DIP Term Documents will include yield protection provisions usual and
customary for debtor-in-possession financings of this type and substantially
consistent with the yield protection provisions under the Senior DIP Credit
Agreement.
Counsel to the DIP Term Lenders
Davis Polk & Wardwell LLP.

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Annex C
Second Lien Exit Facility Term Sheet
[See Attached]

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

Annex C

CALIFORNIA RESOURCES CORPORATION
SECOND LIEN EXIT TERM LOAN FACILITY

This term sheet (this “Second Lien Exit Facility Term Sheet”) sets forth the
principal terms of a senior secured second lien exit term loan facility to be
provided to California Resources Corporation, as borrower and a reorganized
debtor. Capitalized terms used herein but not defined have the meaning ascribed
to such terms in the restructuring support agreement to which this Second Lien
Exit Facility Term Sheet is attached (including in the Exhibits and Annexes
attached thereto) (the “Restructuring Support Agreement”).

SUMMARY OF PRINCIPAL TERMS
Borrower
California Resources Corporation, a Delaware corporation, as borrower and a
reorganized debtor (the “Borrower”).
Guarantors
Each direct or indirect material wholly owned subsidiary of the Borrower,
subject to certain exceptions to be agreed (the “Guarantors” and, together with
the Borrower, the “Loan Parties”), it being understood and agreed that (i) each
subsidiary of the Borrower that is an obligor under the DIP Term Facility or the
First Lien Exit Facility (as defined herein) shall be a Guarantor and (ii) the
Elk Hills Entities (as defined herein) shall not be Guarantors.
Administrative Agent and Collateral Agent
A financial institution reasonably acceptable to the Required Second Lien Exit
Lenders (as defined herein) and the Borrower, as the administrative agent and
the collateral agent (in such capacities, the “Second Lien Exit Agent”).1
Second Lien Exit Lenders
The parties that have committed to provide the Second Lien Exit Facility
pursuant to the Restructuring Support Agreement (together with their permitted
assignees, the “Second Lien Exit Lenders”).
Amount & Type of Second Lien Exit Facility
A senior secured second lien exit term loan facility (the “Second Lien Exit
Facility” and, the loans thereunder, the “Second Lien Exit Term Loans”) in an
aggregate principal amount of up to $200.0 million. The Borrower may reduce the
facility amount by $10,000,000 or increments of $10,000,000 in excess thereof at
any time prior to the Emergence Date.

“Second Lien Exit Commitment” shall mean the several and not joint commitment of
each Second Lien Exit Lender to make Second Lien Exit Term Loans on the
Emergence Date in the amount set forth opposite such Second Lien Exit Lender’s
name in Exhibit B attached to the RSA.

The Second Lien Exit Commitment will automatically terminate on the earlier of
(i) the funding of the Second Lien Exit Term Loans and (ii) the date immediately
following the Emergence Date. Once repaid, Second Lien Exit Term Loans may not
be reborrowed.
First Lien Exit Facility
The Borrower will obtain the First Lien Exit Facility on the terms set forth in
the Restructuring Term Sheet under the heading “First Lien Exit Facility”.

__________
1 
It is understood and agreed that each of Alter Domus Products Corp., Ankura
Trust Company, LLC, Wilmington Savings Fund Society, FSB, Cantor Fitzgerald
Securities and GLASS USA LLC or, in each case, a designated affiliate thereof,
are deemed to be acceptable to the Borrower

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

Maturity Date
The Second Lien Exit Facility will mature on the fifth (5th) anniversary of the
closing date of the Second Lien Exit Facility or such other date as agreed by
the Required Consenting Creditors.
Use of Proceeds
The proceeds of the Second Lien Exit Term Loans will be used, together with the
proceeds of the Equity Rights Offering, to repay the Junior DIP Facility in full
on the Emergence Date.
Interest Rate
For each interest period commencing (a) prior to the second anniversary of the
Emergence Date, at the option of the Borrower, either (i) cash pay interest at a
rate equal to LIBOR plus 9.00% per annum (or if applicable, ABR plus 8.00% per
annum) or (ii) paid-in-kind interest at a rate equal to LIBOR plus 10.50% per
annum (or if applicable, ABR plus 9.50% per annum) and (b) on or after the
second anniversary of the Emergence Date, cash pay interest at a rate equal to
LIBOR plus 9.00% per annum (or if applicable, ABR plus 8.00% per annum);
provided that in no event shall LIBOR be less than 1.00% (nor shall ABR be less
than 2.00%).
Default Interest
Upon the occurrence and during the continuation of an event of default, unless
otherwise waived by the Required Second Lien Exit Lenders (as defined herein),
all obligations will bear interest at (i) in the case of principal and interest,
a rate equal to 2.00% per annum, plus the otherwise applicable rate to the
relevant Second Lien Exit Term Loans and (ii) in the case of all other amounts,
at a rate equal to 2.00% per annum plus the rate applicable to Second Lien Exit
Term Loans that are ABR loans.
Amortization
None.
Incremental Facilities
None.
Fees
Upfront Fee: An upfront fee (“Upfront Fee”) payable to the Second Lien Exit
Lenders in an amount equal to 1.00% on each Second Lien Exit Lender’s allocated
share of the $200 million Second Lien Exit Commitment in effect as of the
Execution Date, which shall be payable in cash on the Emergence Date and may be
netted from the amount of Second Lien Exit Term Loans funded by the Second Lien
Exit Lenders on the Emergence Date.

Second Lien Exit Agent Fees: To be set forth in a separate fee letter agreement
between the Second Lien Exit Agent and the Borrower.

Fronting Fee: To the extent required by any Second Lien Exit Lender, a
reasonable fronting fee (“Fronting Fee”) payable to a financial institution
acceptable to the Second Lien Exit Lenders (such financial institution, in its
capacity as a fronting lender, the “Fronting Lender”) in an amount not to exceed
$500,000 (or such greater amount as agreed by the Borrower), which Fronting Fee
shall be payable by or on behalf of the Borrower in cash on the Emergence Date
and may be netted from the amount of Second Lien Exit Term Loans funded by the
Fronting Lender on the Emergence Date. For the avoidance of doubt, the Fronting
Fee shall be in addition to (and not in replacement of) the Upfront Fee or any
other fees owed to the Fronting Lender, the Second Lien Exit Lenders or any
other party to the Second Lien Exit Loan Documents.
Mandatory Prepayments
Mandatory prepayments under the Second Lien Exit Facility shall be no more
restrictive than under the First Lien Exit Facility and shall be required with
100% of the net cash proceeds from (a) issuance of any indebtedness (with
exceptions for permitted indebtedness) and (b) sales or other dispositions
(including casualty

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events) of any assets in excess of amounts to be agreed and with reinvestment
rights to be agreed.

Notwithstanding the foregoing, no mandatory prepayments of the Second Lien Exit
Term Loans shall be required for so long as the First Lien Exit Facility is
outstanding, other than to the extent of mandatory prepayments declined by the
lenders under the First Lien Exit Facility.
Voluntary Prepayments
The Borrower may prepay the Second Lien Exit Term Loans, in whole or in part, in
minimum amounts to be agreed, subject to notice, customary breakage costs and
the prepayment premium as set forth below.
Prepayment Premium: Par for the first 90 days following the closing date,
thereafter 105% prior to the first anniversary, 103% on or after the first
anniversary and prior to the second anniversary; 102% on or after the second
anniversary and prior to the third anniversary, 101% on or after the third
anniversary and prior to the fourth anniversary, and par on the fourth
anniversary and thereafter.
Second Lien Exit Facility Documentation
The Second Lien Exit Facility will be evidenced by (a) a credit agreement (the
“Second Lien Exit Credit Agreement”) based on the credit agreement governing the
First Lien Exit Facility (the “First Lien Exit Credit Agreement”) and with terms
not more restrictive in any material respect than those provided for in the
First Lien Exit Credit Agreement (with such modifications as are necessary or
appropriate to reflect the terms set forth in this Second Lien Exit Facility
Term Sheet and the nature of the Second Lien Exit Facility as a junior lien exit
term loan facility, including, with respect to financial covenants and baskets,
a reasonable cushion to be agreed to the financial covenants and baskets under
the First Lien Exit Credit Agreement, and to reflect (i) administrative agency
and operational matters of the Second Lien Exit Agent, (ii) EU and UK bail-in
provisions, (iii) Delaware limited liability company division provisions, (iv)
beneficial ownership certification, (v) QFC stay rules (as applicable) and (vi)
other modifications (including (x) adjustments to dollar baskets and dollar
thresholds for negative covenants, events of default and other threshold amounts
and (y) additions of baskets and thresholds based on financial ratios) as may be
reasonably agreed among the Second Lien Exit Agent, the Required Second Lien
Exit Lenders and the Borrower), (b) security and guarantee documents based on
the corresponding security and guarantee documents entered into in connection
with the First Lien Exit Facility, and the Intercreditor Agreement (as defined
herein) and (c) other legal documentation (collectively, together with the
Second Lien Exit Credit Agreement, the security and guarantee documents and the
Intercreditor Agreement, the “Second Lien Exit Loan Documents”), which Second
Lien Exit Loan Documents shall be in form and substance consistent with the
foregoing documentation principles and, subject to the consent provisions set
forth in Section 3.02(c) of the Restructuring Supporting Agreement, otherwise
satisfactory to the Second Lien Exit Agent, the Required Second Lien Exit
Lenders and the Borrower; provided that notwithstanding the foregoing, (A)
Intermediate HoldCo (as defined in the Restructuring Term Sheet), the Issuer (as
defined in the Restructuring Term Sheet) and their respective subsidiaries
(collectively, the “Elk Hills Entities”) shall be “restricted” subsidiaries
subject to, among other things, the representations and warranties, covenants
and events of default under the Second Lien Exit Credit Agreement on terms to be
agreed, (B) Intermediate HoldCo shall be a passive holding company and the
Second Lien Exit Lenders shall have a first priority security interest in the
equity interests of Intermediate Holdco and (C) the Borrower and the other
Subsidiaries shall be restricted from making investments

3

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in, transferring assets to, incurring indebtedness funded by and otherwise
entering into transactions with the Elk Hills Entities, subject to exceptions
for transactions in the ordinary course of business to be agreed between the
Required Second Lien Exit Lenders and the Borrower (collectively, the “Second
Lien Documentation Principles”)).
Collateral/Intercreditor Agreement
There will be granted to the Second Lien Exit Agent, for the benefit of the
Second Lien Exit Lenders, valid and perfected second priority liens on, and
security interests in, all existing and after-acquired assets and property
(whether tangible, intangible, real, personal or mixed) of the Loan Parties that
secure the Loan Parties’ obligations under the First Lien Exit Facility, with
customary exceptions and exclusions consistent with the First Lien Exit Credit
Agreement and the security documents related thereto (the “Collateral”).

An intercreditor agreement (the “Intercreditor Agreement”) shall be entered into
with the administrative agent under the First Lien Exit Facility, which shall
provide, among other things, that the liens securing the Second Lien Exit
Facility shall be subordinate and junior to the liens securing the First Lien
Exit Facility, and contain other terms that are generally customary and
appropriate for a first-second lien intercreditor agreement for facilities of
these types.
Excluded/Unrestricted Subsidiaries
Usual and customary for exit term loan financings of this type for exploration
and production companies in the current market, subject to qualifications and
limitations for materiality consistent with the Second Lien Documentation
Principles.
Representations and Warranties
Usual and customary for exit term loan financings of this type for exploration
and production companies in the current market, subject to qualifications and
limitations for materiality consistent with the Second Lien Documentation
Principles.
Affirmative Covenants
Usual and customary for exit term loan financings of this type for exploration
and production companies in the current market (including minimum hedging
requirements substantially consistent with those under the First Lien Exit
Facility), subject to exclusions, qualifications and limitations for materiality
consistent with the Second Lien Documentation Principles, and which shall
include a requirement to obtain and maintain ratings in respect of the Second
Lien Exit Facility.
Negative Covenants
Usual and customary for exit term loan financings of this type for exploration
and production companies in the current market, subject to exclusions,
qualifications and limitations for materiality consistent with the Second Lien
Documentation Principles, and which (a) will not restrict the payment of
regularly scheduled obligations under the Elk Hill Power Agreements and
regularly scheduled payments in respect of the Eligible Notes, (b) will permit
the prepayment of the Eligible Notes subject to limitations to be reasonably
agreed in the definitive documentation, (c) shall include restrictions on
amendments and modifications to the Eligible Notes documentation on terms to be
agreed and (d) shall include a customary anti-layering covenant.
Financial Covenants
The Second Lien Exit Facility shall contain financial covenants that are
substantially consistent with the financial covenants under the First Lien Exit
Facility, subject to the Second Lien Documentation Principles.
Events of Default
Usual and customary for exit term loan financings of this type for exploration
and production companies in the current market, subject to materiality
thresholds, exceptions and grace periods consistent with the Second Lien
Documentation Principles.

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Conditions Precedent to Closing and Funding
Usual and customary for exit term loan financings of this type and substantially
consistent with the conditions precedent to closing and funding under the First
Lien Exit Facility, including, without limitation:

(a)    all of the representations and warranties in the Second Lien Exit Loan
Documents shall be true and correct in all material respects (or if qualified by
materiality or material adverse effect, in all respects) as of the Emergence
Date, or if any such representation or warranty relates to an earlier date, as
of such earlier date;

(b)    no default or event of default under the Second Lien Exit Facility shall
have occurred and be continuing or would result from the funding of the Second
Lien Exit Term Loans on the Emergence Date;

(c)    delivery of a customary borrowing notice; and

(d)    the satisfaction of each of the conditions precedent listed on Annex I
hereto.

“Emergence Date” shall mean the date on which all conditions precedent listed
above and in Annex I attached hereto shall have been satisfied.
Voting/Required Second Lien Exit Lenders
Amendments and waivers of the Second Lien Exit Facility will require the
approval of Second Lien Exit Lenders holding more than 50% of the outstanding
Second Lien Exit Term Loans (or, prior to the Emergence Date and the funding of
the Second Lien Exit Term Loans, Second Lien Exit Lenders holding more than 50%
of the aggregate amount of the Second Lien Exit Commitment) (the “Required
Second Lien Exit Lenders”), subject to customary exceptions for certain
provisions which shall require the consent of each affected Second Lien Exit
Lender or all Second Lien Exit Lenders and customary protections for the Second
Lien Exit Agent.
Assignments and Participations
Usual and customary for exit term loan financings of this type for exploration
and production companies in the current market; provided that the reasonable
consent of the Borrower shall be required for assignments of Second Lien Exit
Term Loans, except for assignments (a) during the continuance of an event of
default or (b) to another Second Lien Exit Lender or to an affiliate or an
approved fund of a Second Lien Exit Lender; provided, further, that such consent
shall be deemed to be given if the Borrower has not responded within ten (10)
business days.

The Borrower shall be permitted to repurchase Second Lien Exit Term Loans
through open market purchase on a non-pro rata basis or Dutch auctions on a pro
rata basis.
Other Provisions
The Second Lien Exit Loan Documents shall include customary provisions regarding
increased costs, illegality, tax indemnities, waiver of trial by jury and other
similar provisions.
Governing Law
The laws of the State of New York (except with respect to any mortgage or deed
of trust, in each case with respect to which the governing law shall be the law
of the state within which the properties subject to the applicable mortgage or
deed of trust are located).
Counsel to the Second Lien Exit Lenders
Davis Polk & Wardwell LLP.

 

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Annex I
ADDITIONAL CONDITIONS TO CLOSING
The effectiveness of the Second Lien Exit Facility shall be subject to the
satisfaction (or waiver by the Required Second Lien Exit Lenders) of each of the
following additional conditions precedent:
1.    A final non-appealable order of the Bankruptcy Court confirming the plan
of reorganization approved by the proponents of such plan in accordance with the
Restructuring Support Agreement (the “Confirmation Order”), which shall not have
been stayed, reversed, vacated, amended, supplemented or otherwise modified and
authorizing the Borrower to execute, deliver and perform under all documents
contemplated under the Second Lien Exit Loan Documents shall have been entered
and shall have become a final order of the Bankruptcy Court. Such plan of
reorganization shall have been consummated substantially simultaneously with the
closing of the Second Lien Exit Facility.
2.    The execution and delivery by each of the Loan Parties of (i) the Second
Lien Exit Loan Documents (including the Intercreditor Agreement (which may be in
the form of an acknowledgement by the Loan Parties)), (ii) customary legal
opinions, customary evidence of authorization, customary officer’s certificates,
good standing certificates (to the extent applicable) in the jurisdiction of
organization of each Loan Party, (iii) a solvency certificate executed by the
chief financial officer or other officer of equivalent duties and (iv) all
documents and instruments required to create and perfect the Second Lien Exit
Agent’s security interests in the Collateral under the Second Lien Exit Facility
which shall be, if applicable, in proper form for filing (it being understood
and agreed that mortgages or amended mortgages may be provided within a number
of days to be agreed after the Emergence Date).
3.    The Second Lien Exit Agent and the Second Lien Exit Lenders shall have
received such historical and pro forma financial information and projections to
be agreed.
4.    The Second Lien Exit Agent and the Second Lien Exit Lenders shall have
received, at least three (3) business days prior to the Emergence Date, all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including, without limitation, the PATRIOT Act and, to the extent the Borrower
qualifies as a “legal entity customer” under the Beneficial Ownership
Regulation, a Beneficial Ownership Certification in relation to the Borrower,
that has been requested in writing by the Second Lien Exit Agent or a Second
Lien Exit Lender at least five (5) business days prior to the Emergence Date.
5.    All fees required to be paid to the Second Lien Exit Agent and the Second
Lien Exit Lenders on the Emergence Date and reasonable and documented
out-of-pocket expenses (including legal fees and expenses) required to be paid
to or for the benefit of the Second Lien Exit Agent and/or the Second Lien Exit
Lenders on the Emergence Date, to the extent invoiced at least three (3)
business days prior to the Emergence Date, shall, upon the initial borrowing (or
deemed borrowing) of the First Lien Exit Facility, have been paid.
6.    All necessary governmental and third party approvals, consents, licenses
and permits in connection with the Second Lien Exit Facility and the operation
by the Borrower of its business shall have been obtained and remain in full
force and effect.
7.    As of the Emergence Date, there shall not be any litigation pending or
known by the Loan Parties to be threatened against any Loan Party drawing into
question any credit transaction contemplated by the Second Lien Exit Facility,
or that could reasonably be expected to have a material adverse effect.
8.    Since the date of approval of the disclosure statement with respect to the
confirmed plan of reorganization, other than the Chapter 11 Cases, there shall
not have occurred any event, change, occurrence

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or circumstance that, individually or in the aggregate, has had or could
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Loan Parties and their subsidiaries, taken as a whole.
9.    The First Lien Exit Facility shall have become effective on terms and
pursuant to loan documentation consistent with the terms described under the
heading “First Lien Exit Facility” in the Second Lien Exit Facility Term Sheet
to which this Annex I is attached and otherwise reasonably acceptable to the
Required Second Lien Exit Lenders.

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Annex D
Backstop Commitment Term Sheet

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California Resources Corporation Chapter 11 Restructuring
Backstop Commitment Agreement Term Sheet

THIS TERM SHEET IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION
OF ACCEPTANCES OF A CHAPTER 11 PLAN (THE “PLAN”) WITHIN THE MEANING OF SECTION
1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR SOLICITATION WILL COMPLY WITH ALL
APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE. NOTHING
CONTAINED IN THIS TERM SHEET SHALL BE AN ADMISSION OF FACT OR LIABILITY OR,
UNTIL THE OCCURRENCE OF THE AGREEMENT EFFECTIVE DATE ON THE TERMS DESCRIBED
HEREIN AND IN THE RESTRUCTURING SUPPORT AGREEMENT, DEEMED BINDING ON ANY OF THE
PARTIES HERETO.
This term sheet (this “Term Sheet”), which is Annex D to a Restructuring Support
Agreement dated July 15, 2020 (the “Restructuring Support Agreement”), by and
among California Resources Corporation and the other parties thereto, describes
the material terms relating to the BCA (as defined below) in connection with the
restructuring (the “Restructuring”) of California Resources Corporation, a
company incorporated under the laws of Delaware (including, as applicable,
Reorganized CRC (or an affiliate or successor), the “Company” and, together with
its debtor affiliates, the “Debtors”).
Capitalized terms used but not otherwise defined herein have the meanings
ascribed to them in the Restructuring Support Agreement and the Restructuring
Term Sheet that is Exhibit A to the Restructuring Support Agreement (the
“Restructuring Term Sheet”).
BACKSTOP COMMITMENT AGREEMENT
Equity Rights Offering:
An Equity Rights Offering for shares of the New Common Stock (the “Rights
Offering Shares”) of Reorganized CRC (or an affiliate or successor), of which
25% shall be reserved for the Backstop Parties (as defined below) and the
remaining 75% shall be offered to holders of claims in the percentage
allocations set forth in the Restructuring Term Sheet, at an aggregate purchase
price of $450 million (the “Rights Offering Amount”) at a price per share (the
“Per Share Price”) of $13.00 which constitutes a 35% discount to the Plan equity
value of $1.65 billion for 42% of the fully diluted New Common Stock (excluding
New Common Stock issued as the Backstop Commitment Premium (as defined below)
prior to taking into account the MIP); provided that, if during the five trading
days preceding the business day prior to the approval of the Disclosure
Statement by the Court, the average closing price of the ICE Brent strip price
for the period of December 2020 to November 2021 (to be determined by taking the
arithmetic average of the 12 monthly contracts available for Brent Crude (ICE)
as provided by Bloomberg, L.P. utilizing the ticker symbol COA COMDTY during the
period from December 2020 to November 2021) is less than $40.00/Bbl, the Set-Up
Equity Value for the Subscription Rights will be $1.3 billion. The

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Equity Rights Offering shall be implemented in connection with the Rights
Offering Procedures (as defined below).
Rights Offering Procedures:
Customary procedures for a rights offering (the “Rights Offering Procedures”).
There will be no oversubscription rights for the Equity Rights Offering.
The Rights Offering Procedures shall include that:
●    The Subscription Commencement Date (as defined in the BCA) shall be a date
determined by the Debtors with the consent of the Required Backstop Parties not
more than 10 days after approval of the Disclosure Statement.
●    The Subscription Record Date (as defined below) shall be the Subscription
Commencement Date.
●    The Subscription Expiration Deadline (as defined in the BCA) shall be 28
days after the Subscription Commencement Date.
Outside Date:
No later than 150 days after the Petition Date (the “Outside Date”), subject to
extension by the Required Backstop Parties; provided that no Backstop Party’s
commitment may be extended to a date beyond 180 days after the Petition Date
without its individual consent.
Backstop Parties:
In their capacities as Backstop Parties under the BCA (as defined below),
certain of the Consenting Creditors (collectively, the “Backstop Parties”) that
are signatories to the Restructuring Support Agreement and whose Backstop
Commitments are set forth on Exhibit A attached hereto (the “Backstop Commitment
Schedule”).
Definitive Documentation:
The Backstop Parties and the Debtors shall enter into a backstop commitment
agreement (the “BCA”), in form and substance consistent with this Term Sheet and
otherwise reasonably acceptable to the Debtors and the Backstop Parties.
Commitment to Participate in the Equity Rights Offering:
Subject to the terms described herein, each Backstop Party hereby agrees to
fully exercise all subscription rights issued to it pursuant to the Plan based
on the amount of 2017 Term Loan Claims or Deficiency/Unsecured Debt Claims that
such party owns as of a record date (“Subscription Record Date”), in the Equity
Rights Offering to purchase Rights Offering Shares.
Backstop Commitment:
Subject to the terms described herein, each Backstop Party will commit (such
commitment, the “Backstop Commitment”) to purchase, on a several and not joint
basis, and the Company will agree to sell to such Backstop Party, the Rights
Offering Shares that are not purchased as part of the Equity Rights Offering
(the “Backstop Shares”) based on the percentages set forth in the Backstop
Commitment Schedule (each a, “Backstop Commitment Percentage”).

2

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Backstop Commitment Premium:
A premium in an amount equal to 8% of the Rights Offering Amount payable in
shares of New Common Stock (the “Backstop Commitment Premium”) calculated at the
same Per Share Price as the Equity Rights Offering which shall be deemed fully
earned by the Backstop Parties upon the execution of the Restructuring Support
Agreement. The Company shall cause the Backstop Commitment Premium to be paid to
the Backstop Parties on the Plan Effective Date. Subject to Bankruptcy Court
approval, the Backstop Commitment Premium shall constitute an allowed
administrative expense of the Debtors’ estates under Sections 503(b) and 507 of
the Bankruptcy Code. The Backstop Commitment Premium shall be allocated to each
Backstop Party pro rata based on each Backstop Party’s Backstop Commitment
Percentage.
Transfer of Backstop Commitment:
Each Backstop Party’s Backstop Commitment shall be transferable in whole or in
part to a Permitted Transferee (as defined below); provided that the
transferring Backstop Party shall give notice of its intent to transfer its
Backstop Commitment (other than to a Related Fund (as defined below) or any
other Backstop Party), whether in whole or in part (“Backstop Transfer Notice”),
to the Company and the non-transferring Backstop Parties and each such
non-transferring Backstop Party shall have a right, but not an obligation, for a
period of five (5) days following receipt of the Backstop Transfer Notice to
purchase its pro rata share thereof based on the proportion of its Backstop
Commitment to the aggregate amount of Backstop Commitments of all
non-transferring Backstop Parties purchasing such transferring Backstop Party’s
Backstop Commitment, on the terms described in the Backstop Transfer Notice. If
any non-transferring Backstop Party does not elect to purchase its full pro
rata share of the Backstop Commitment offered in the Backstop Transfer Notice,
then within five (5) days after the expiration of the initial five (5) day
period, the transferring Backstop Commitment Party shall notify each
non-transferring Backstop Commitment Party that elected to purchase its full pro
rata share of the Backstop Commitment proposed to be transferred and each such
non-transferring Backstop Commitment Party shall have a right, but not an
obligation, for a period of five (5) days following receipt of such notice to
purchase its pro rata share of such unsubscribed portion of the Backstop
Commitments proposed to be transferred in such Backstop Transfer Notice based on
the proportion of its Backstop Commitment to the aggregate amount of Backstop
Commitments of all non-transferring Backstop Commitment Parties that exercise
their respective rights to purchase such transferring Backstop Commitment
Party's Backstop Commitment in full, on the terms described in the Backstop
Transfer Notice. In the event that following the elections described above, the
non-transferring Backstop Parties do not elect to purchase all of the Backstop
Commitment offered in the Backstop Transfer Notice, the transferring Backstop
Party shall have the right to complete such transfer to any such Permitted
Transferee at a price no lower than the price set forth in the Backstop Transfer
Notice and on other

3

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terms and conditions that are at least as favorable in the aggregate to such
transferring Backstop Party as such other terms and conditions set forth in the
Backstop Transfer Notice. Any third party Permitted Transferee of a Backstop
Commitment shall agree in writing to be bound by the representations,
warranties, covenants and obligations of such transferring Backstop Party under
the BCA and the Restructuring Support Agreement and any Permitted Transferee
(other than a Related Fund or any other Backstop Party) shall, as a condition of
such transfer, provide the Company and the non-transferring Backstop Parties
with evidence reasonably satisfactory to the Company that such transferee is
reasonably capable of fulfilling such obligations, including such financial
information as may reasonably be requested by the Company demonstrating the
ability of such Permitted Transferee to fund the entire amount of its existing
Backstop Commitment plus the amount of the Backstop Commitment transferred to
such Permitted Transferee.
“Permitted Transferee” means (i) a Related Fund, (ii) any other Backstop Party
and (iii) any other person that is a party to the Restructuring Support
Agreement or executes a joinder thereto with the consent (not to be unreasonably
withheld, conditioned or delayed) of the Required Backstop Parties and the
Company (including, as part of such joinder, making the necessary
representations and warranties under the BCA); provided that absent such
consent, such transferee shall be deemed a Permitted Transferee to the extent
such proposed transferee deposits with the rights offering agent or escrow
agent, pursuant to escrow arrangements satisfactory to the Company, an amount of
funds sufficient, in the reasonable determination of the Company, to satisfy the
transferring Backstop Party’s obligations under the BCA.
Notwithstanding the foregoing, (i) a Backstop Party or any Affiliates thereof
may assign its Backstop Commitment and Subscription Rights to any other Backstop
Party without submitting a Backstop Transfer Notice or complying with the terms
of the two preceding paragraphs, in which case such assigning Backstop Party
shall notify the Company reasonably promptly and (ii) a Backstop Party or any
Affiliates thereof may assign its Backstop Commitment and Subscription Rights to
any fund, account (including any separately managed accounts) or investment
vehicle that is controlled, managed, advised or sub-advised by such Backstop
Party, an Affiliate thereof or the same investment manager, advisor or
subadvisor as the Backstop Party or an Affiliate of such investment manager,
advisor or subadvisor (each, a “Related Fund”) without submitting a Backstop
Transfer Notice or complying with the terms of the two preceding paragraphs, in
which case such assigning Backstop Party shall notify the Company and the
non-transferring Backstop Parties and such Related Fund transferee shall agree
in writing to be bound by the representations, warranties, covenants and
obligations of such transferring Backstop Party under the BCA and the
Restructuring Support Agreement, shall make the representations set forth in

4

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Section 6 of the BCA as of the date of such transfer as if it was a Backstop
Party, and shall, as a condition of such transfer, provide the Company and the
non-transferring Backstop Parties with evidence reasonably satisfactory to the
Company that such transferee is reasonably capable of fulfilling such
obligations. Solely in the case of transfers to a Related Fund, the assigning
Backstop Party shall remain fully obligated for its Backstop Commitment (which,
for the avoidance of doubt, includes such assigned amount).
Any transferee pursuant to the preceding two paragraphs shall be deemed a
Backstop Party, subject to the terms of the BCA. Notwithstanding anything to the
contrary set forth herein, the transfer of any Claims by any Backstop Party
shall not have any effect on a Backstop Party’s Backstop Commitment Percentage.
Furthermore, each Backstop Party shall have the right to designate by written
notice to the Company no later than two (2) business days prior to the Plan
Effective Date that some or all of the Rights Offering Shares, the Backstop
Shares, shares issued pursuant to the Backstop Commitment Premium and
unsubscribed shares (collectively, the “Backstop Party Shares”) be issued in the
name of, and delivered to, one or more of its Affiliates or Related Funds upon
receipt by the Company of payment therefor in accordance with the terms hereof,
which notice of designation shall (i) be addressed to the Company and signed by
such Backstop Party and each such Affiliate or Related Fund, (ii) specify the
number of Backstop Party Shares to be delivered to or issued in the name of such
Affiliate or Related Fund and (iii) contain a confirmation by each such
Affiliate or Related Fund of the accuracy of the necessary representations and
warranties set forth in the BCA, as if such Affiliate or Related Fund was a
Backstop Party.
Any transfer in violation of these transfer procedures shall be void ab initio;
provided that a transfer shall not be void ab initio solely on account of a
failure of a Backstop Party to provide the Company or the non-transferring
Backstop Parties with the Backstop Transfer Notice.
Transfer of Subscription Rights:
Other than as provided herein, Subscription Rights in the Equity Rights Offering
are not separately transferable or detachable from Claims and may only be
transferred together with the applicable Claims. Transfers of Claims shall not
impact a Backstop Party’s Backstop Commitment Percentage.
Funding Procedures:
No later than five (5) business days following the subscription deadline for the
Equity Rights Offering, the Company shall deliver a written notice to each
Backstop Party of: (i) the number of Rights Offering Shares elected to be
purchased and the aggregate purchase price therefor; (ii) the aggregate number
of unsubscribed shares, if any, and the aggregate purchase price; (iii) the
aggregate number of unsubscribed shares based upon such Backstop Party’s
Backstop Commitment Percentage to be issued and sold by the Company to such
Backstop Party and the aggregate purchase price therefor

5

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(the “Funding Amount”); (iv) wire instructions for a segregated account (the
“Account”) established with an escrow agent or the rights offering agent
reasonably acceptable to the Required Backstop Parties to which such Backstop
Party shall deliver the Funding Amount; and (v) the estimated deadline for
delivery of the Funding Amount which shall be no greater than five (5) business
days before the expected Plan Effective Date (the “Funding Deadline”). The
Company shall cause an additional notice of the Funding Deadline to be provided
after the Confirmation Order has been entered by the Bankruptcy Court;
provided that the Funding Deadline shall be a minimum of five (5) business days
after date of such notice (unless an earlier date is required to ensure the
Funding Deadline is no more than three (3) business days before the expected
Plan Effective Date).
Each Backstop Party shall deliver and pay its applicable Funding Amount by wire
transfer in immediately available funds in U.S. dollars into the Account;
provided that any Backstop Party that is subject to the Investment Company Act
of 1940 may deliver and pay its applicable Funding Amount by wire transfer in
immediately available funds in U.S. dollars on the Plan Effective Date. If the
BCA is terminated in accordance with its terms after such delivery, such funds
shall be released to the Backstop Parties, without any interest accrued thereon,
promptly following such termination. 
Backstop Party Default:
Any Backstop Party that fails to timely fund its Backstop Commitment by the
Funding Deadline or to fully exercise all subscription rights held by it in the
Equity Rights Offering after written notice thereof and a two-day opportunity to
cure (a “Defaulting Backstop Party”) will be liable for the consequences of its
breach and the Company can enforce rights of money damages and/or specific
performance upon the failure to timely fund by the Defaulting Backstop Party.
Each Backstop Party that is not a Defaulting Backstop Party (each, a
“Non-Defaulting Backstop Party”) shall have the right, but not the obligation,
to assume its Adjusted Commitment Percentage (or such other proportion as agreed
by the Non-Defaulting Backstop Parties) of such Defaulting Backstop Party’s
Backstop Commitment. For this purpose, the “Adjusted Commitment Percentage”
means, with respect to any Non-Defaulting Backstop Party, a fraction, expressed
as a percentage, the numerator of which is the Backstop Commitment Percentage of
such Non-

__________
1 
On the Plan Effective Date, the Junior DIP Facility shall be repaid in full in
cash with the proceeds of the Equity Rights Offering and the Second Lien Exit
Facility; provided that, for administrative convenience, at the direction and at
the option of any Junior DIP Commitment Party that is also a Backstop Party or a
Related Fund of any Backstop Party, all or any portion of the cash to be
received by such Junior DIP Commitment Party on account of the principal amount
of outstanding Junior DIP Obligations owed to it shall be set off or otherwise
applied on a dollar for dollar basis towards the cash payment obligations of
such Backstop Party or Related Fund under the BCA pursuant to such documentation
as the Company may reasonably require to evidence the discharge of the
applicable Junior DIP Obligations to the extent of the amounts so applied;
provided further for the avoidance of doubt, that such obligations may be
applied to satisfy the obligations of any Related Fund of such Backstop Party,
at the option thereof.

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Defaulting Backstop Party and the denominator of which is the aggregate Backstop
Commitment Percentages of all Non-Defaulting Backstop Parties. If any
Non-Defaulting Backstop Party does not elect to assume its full pro rata share
of the Backstop Commitment of the Defaulting Backstop Party, then each
Non-Defaulting Backstop Party that assumed its full pro rata share of the
Defaulting Backstop Party’s Backstop Commitment shall have customary
oversubscription rights to assume the unsubscribed portion of the Defaulting
Backstop Party’s Backstop Commitment.
Any Defaulting Backstop Party shall not be entitled to the Backstop Commitment
Premium and the portion of the Backstop Commitment Premium otherwise payable to
any Defaulting Backstop Party shall be paid pro rata to any Backstop Parties
that assume all or a portion of the Defaulting Backstop Party’s Backstop
Commitment. All distributions of New Common Stock distributable to a Defaulting
Backstop Party, including on account of the Backstop Commitment Premium, shall
be either (i) to the extent assumed by Non-Defaulting Backstop Parties,
re-allocated contractually and turned over as liquidated damages (including any
Backstop Commitment Premium) to those Non-Defaulting Backstop Parties that have
elected to subscribe for their full Adjusted Commitment Percentage or (ii) if
not assumed by the Non-Defaulting Backstop Parties, forfeited and retained by
the Company, as applicable.
Required Backstop Parties:
Backstop Parties holding at least 50.0% in aggregate amount of the Backstop
Commitments of all Backstop Parties (excluding any Defaulting Backstop Parties
and their corresponding Backstop Commitments) (the “Required Backstop Parties”)
shall have certain consent rights as specified herein and in the Restructuring
Support Agreement.
Debtors’ Representations and Warranties:
The BCA shall contain customary representations and warranties on the part of
the Debtors, including:
●    corporate organization and good standing;
●    requisite corporate power and authority with respect to execution and
delivery of transaction documents;
●    due execution and delivery and enforceability of transaction documents;
●    no Debtor is considering, or has any agreement or understanding with
respect to, any Alternative Restructuring Proposal that has not been disclosed
to the Backstop Parties;
●    due issuance and authorization of New Common Stock;
●    no consents or approvals (other than Bankruptcy Court approval);
●    no conflicts; and
●    other representations and warranties to be agreed upon by the Company and
the Backstop Parties.

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Backstop Parties’ Representations and Warranties:
The BCA shall contain customary representations and warranties on the part of
the Backstop Parties, to be provided severally and not jointly, including:
●    corporate organization and good standing;
●    requisite corporate power and authority with respect to execution and
delivery of transaction documents;
●    party to the Restructuring Support Agreement;
●    due execution and delivery and enforceability of transaction documents;
●    acknowledgement of no registration under the Securities Act;
●    no consents or approvals;
●    no conflicts;
●    sufficiency of funds;
●    no undisclosed agreement or understanding with any other Consenting
Creditor with respect to the Plan or distributions to be received under the
Plan;
●    institutional accredited investor or qualified institutional buyer status
and other customary private placement representations and warranties; and
●    other representations and warranties to be agreed upon by the Company and
the Backstop Parties.
Debtors’ Covenants:
Customary covenants of the Debtors, including to:
●    support the Restructuring, consistent with Restructuring Support Agreement;
●    seek approval of the BCA;
●    comply with securities laws and any blue sky law or similar compliance; and
●    make any filings in connection with the BCA required by HSR and any other
applicable antitrust laws or other applicable laws (and assist any Backstop
Party in making any such filings).
Backstop Parties’ Covenants:
Customary covenants of the Backstop Parties, including to:
●    support the Restructuring, subject to the terms and conditions of
Restructuring Support Agreement; and
●    make any filings in connection with the BCA required by HSR and any other
applicable antitrust laws.
Interim Operating Covenants:
Before and through the Plan Effective Date, except as set forth in the
Restructuring Support Agreement, BCA or Plan or with the written consent of the
Required Backstop Parties (not to be unreasonably withheld, conditioned or
delayed), the Company shall, and shall cause its subsidiaries to, use
commercially reasonable efforts to:
●    operate their business in the ordinary course based on historical practices
or otherwise reasonably acceptable to the Required Backstop Parties; and

8

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●    use commercially reasonable efforts to keep available the services of their
current executive officers and employees and preserve its material relationships
with customers, suppliers, lessors, licensors, licensees, distributors and
others having material business dealings with the Company or its subsidiaries.
Any of the following transactions require approval by the Required Backstop
Parties, such approval not to be unreasonably withheld, conditioned or delayed,
except for scheduled exceptions to be set forth in the BCA: 
●    any acquisition, merger with or other change of control of another business
or any assets in excess of a threshold to be agreed;
●    disposal of any assets with a value in excess of a threshold to be agreed;
●    entry into, material amendment or termination of any Material Contract (to
be defined in the BCA);
●    termination of one or more contracts that, in the aggregate, results in a
reduction of $25 million or more of the Company’s revenue on an annualized
basis;
●    agreement to new employee compensation, new deferred compensation,
severance arrangements or termination agreements unless required by contract or
for non-executives in the ordinary course of business, in each case other than
as contemplated by the Restructuring Support Agreement;
●    significant non-maintenance capital expenditures (in an amount to be
agreed) not contemplated by the applicable DIP budget; and
●    other customary operating covenants to be mutually agreed.
Any of the following transactions require approval by the Required Backstop
Parties: 
●    resolution of any claims or issues related to Elk Hills Power other than in
a manner consistent with the Restructuring Support Agreement and the
Restructuring Term Sheet; and
●    amendment, alteration, supplementation, restatement or other modification
of any of the Elk Hills Power Agreements (or the course of dealing thereunder),
other than as set forth in the Restructuring Support Agreement and the
Restructuring Term Sheet.
Conditions Precedent:
All Backstop Party conditions shall be subject to waiver by the Required
Backstop Parties.
Conditions for Company and Backstop Parties:
●    Entry of a confirmation order giving effect to the transactions
contemplated by the Restructuring Term Sheet in form and substance reasonably
acceptable to Required Backstop Parties (“Confirmation Order”).

9

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●    The Confirmation Order shall have become a final and non-appealable order,
which shall not have been stayed, reversed, vacated, amended, supplemented or
otherwise modified, unless waived by the Required Backstop Parties.
●    All conditions to Confirmation Order and Plan satisfied or waived by the
Required Backstop Parties, and Plan consistent with the Restructuring Support
Agreement and Restructuring Term Sheet.
●    Equity Rights Offering conducted and concluded as agreed in Rights Offering
Procedures.
●    All required HSR, antitrust and other specified regulatory approvals and
consents obtained.
●    The Plan Effective Date shall have occurred or shall be deemed to have
occurred concurrently with the closing.
●    No termination event has occurred under Section 10 of the Restructuring
Support Agreement.
Conditions for Backstop Parties only shall include:
●    Bringdown of Company’s representations and warranties.
●    Performance by Company of all covenants in all material respects.
●    No MAE (as defined below).
●    Restructuring Support Agreement shall have been assumed pursuant to the
Confirmation Order, unless otherwise agreed or waived by the Required Backstop
Parties.
●    Exit financing that is consistent with the Exit Financing Terms.
●    Other usual and customary conditions.
Conditions for Company only:
●    Backstop Parties wire all funds.
●    Bringdown of Backstop Parties’ representations and warranties and material
compliance with all covenants in the BCA.
MAE / MAC:
A material adverse effect (“MAE”) on, and/or material adverse developments that
would reasonably be expected to result in an MAE with respect to, (a) the
business, operations, properties, assets or financial condition of the Company
and its subsidiaries, in each case taken as a whole; or (b) the ability of the
Company or any of its subsidiaries, taken as a whole, to perform their material
obligations under the BCA, in the case of each of clauses (a) and (b), except to
the extent arising from or attributable to the following (either alone or in
combination): (i) the filing of the Chapter 11 Cases; (ii) any change after the
date hereof in global, national or regional political conditions (including
hostilities, acts of war, sabotage, terrorism or military actions, or any
escalation or material worsening of any such hostilities, acts of war, sabotage,
terrorism, military actions existing or underway, acts of God or pandemics) or
in the general business, market, financial or economic conditions affecting the
industries, regions and markets in which the Debtors operate, including any

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any change in the United States or applicable foreign economies or securities,
commodities or financial markets, or force majeure events or “acts of God”;
(iii) the price of oil and gas products or derivative products or the price of
power or other inputs or goods or services; (iv) COVID-19, (v) the filing of the
Plan, Restructuring Support Agreement and the other documents contemplated
thereby, or any action required by the Plan or Restructuring Support Agreement
that is made in compliance with the Bankruptcy Code; (vi) any changes in
applicable Law or generally accepted accounting principles in the United States;
(vii) declarations of national emergencies in the United States or natural
disasters in the United States; provided that the exceptions set forth in
clauses (ii), (iii), (iv), (vi) and (vii) of this definition shall not apply to
the extent that such described change has a disproportionately adverse impact on
the Debtors, taken as a whole, as compared to other companies in the industries
in which the Debtors operate.
No Shop and
Alternative Restructuring Proposals:
No-shop provision not to directly or indirectly, through any Person, seek,
solicit, propose, support, assist, engage in negotiations in connection with or
participate in the formulation, preparation, filing, or prosecution of any
Alternative Restructuring Proposal or object to or take any other action that
would reasonably be expected to prevent, interfere with, delay, or impede the
solicitation, approval of the Disclosure Statement, or the confirmation and
consummation of the Plan and the Restructuring Transactions, in each case
applicable to the Company and each Backstop Party.
Notwithstanding anything to the contrary in this Term Sheet, upon receipt of an
Alternative Restructuring Proposal, each Company Party and their respective
directors, managers, officers, employees, investment bankers, attorneys,
accountants, consultants, and other advisors or representatives (including any
Governing Body members) shall have the right to consider, consistent with their
fiduciary duties, such Alternative Restructuring Proposal; provided that if any
Company Party receives an Alternative Restructuring Proposal, then such Company
Party shall (A) within one calendar day of receiving such proposal, notify the
Ad Hoc Group Advisors and Ares Advisors of the receipt of such proposal and
deliver a copy of such proposal to the Ad Hoc Group Advisors and Ares Advisors;
(B) provide the Ad Hoc Group Advisors and Ares Advisors with regular updates as
to the status and progress of such Alternative Restructuring Proposal; and (C)
use commercially reasonable efforts to respond promptly to reasonable
information requests and questions from the Ad Hoc Group Advisors and Ares
Advisors relating to such Alternative Restructuring Proposal.
If the Company Parties decide to file, support, make a written proposal or
counterproposal to any party relating to an Alternative Restructuring Proposal,
the Company Parties must provide notice to the Ad Hoc Group Advisors and Ares
Advisors prior to taking any such action. Upon receipt of

11

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such notice, the Required Backstop Parties shall have the right to terminate the
BCA.
Window Shop: The Company shall not enter into any confidentiality agreement with
a party in connection with an Alternative Restructuring Proposal unless the
Company notifies the Ad Hoc Group Advisors prior to such entry into the
non-disclosure agreement, as well as upon execution thereof.
Break Premium:
If the BCA is terminated for any reason, a premium shall be paid in cash within
ten (10) business days of such termination to each Backstop Party in an amount
equal to such Backstop Party’s pro rata portion based on each Backstop Party’s
Backstop Commitment Percentage of $22.5 million (which, for the avoidance of
doubt, is an amount equal to 5% of the Rights Offering Amount) (plus any Expense
Reimbursement (as defined below)) (the “Break Premium”); provided that (i) no
Backstop Party shall be paid its share of the Break Premium if such Backstop
Party is a Defaulting Backstop Party at the time of termination and such
Defaulting Backstop Party’s share of the Break Premium shall be forfeited and
retained by the Company and (ii) no Break Premium shall be paid to any Backstop
Party if the BCA or RSA shall have been terminated (A) by the Company or the
Required Consenting Creditors in accordance with its terms as a result a
material breach by one or more Backstop Parties constituting the Required
Backstop Parties or (B) by the Required Consenting Creditors due to the failure
of the Company to satisfy any of the Milestones set to occur prior to the
Outside Date.
Expense Reimbursement:
The BCA to provide for payment to the Backstop Parties of all reasonable and
documented Backstop Party expenses related to the Restructuring (including upon
a Termination), to the extent not paid pursuant to the Restructuring Support
Agreement or in connection with the Chapter 11 Cases or another order of the
Bankruptcy Court, including all reasonable and documented expenses of financial,
legal and other advisors, whether incurred before, on or after the date hereof
(the “Expense Reimbursement”); provided that no success, transaction or similar
fees shall be paid except to the extent set forth in written agreements approved
by the Company.
Termination:
Customary termination events including the following:
a. Mutual written consent of the Company and Required Backstop Parties

b. By the Company upon:

1.    Termination of the Restructuring Support Agreement in accordance with its
terms other than due to a breach thereunder by the Company Parties;
2.    The occurrence of any Termination Event set forth in Section 12.03 of the
Restructuring Support Agreement;

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3.    Material breaches by Backstop Parties constituting Required Backstop
Parties of representations, warranties, covenants and failure to cure;
4.    The Bankruptcy Court denies entry of the Backstop Commitment Agreement
Order (as defined in the BCA) or an order to assume the Restructuring Support
Agreement, or the Backstop Commitment Agreement Order or any order approving the
Restructuring Support Agreement is reversed, stayed, dismissed or vacated
(unless otherwise agreed or waived by the Required Backstop Parties);
5.    A failure to satisfy a Milestone or any other event or condition that
could reasonably be expected to cause any condition precedent to commitments of
the Backstop Parties not to be satisfied when required by the BCA (in each case
other than as a result of any breach by a Company Party) and the Backstop
Parties shall not have waived such condition precedent and otherwise provided
adequate assurances of performance promptly (and in no event more than 10 days)
after the occurrence of such event or condition;
6.    Any Company Party providing notice to the Backstop Parties that its board
of directors or similar governing body has determined in good faith that it is
necessary or appropriate in the exercise of its fiduciary duties to terminate
the BCA to pursue an Alternative Restructuring Proposal; or
7.    The issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any ruling, judgment or order
enjoining the consummation of or rendering illegal the Restructuring, the Equity
Rights Offering, or any material aspect of the transactions contemplated by the
Restructuring Support Agreement or this Term Sheet.

c. By the Required Backstop Parties upon:

1.    The termination of the Restructuring Support Agreement in accordance with
its terms other than due to a breach thereunder by Backstop Parties constituting
the Required Backstop Parties;
2.    The occurrence of any Termination Event set forth in Section 12.01 of the
Restructuring Support Agreement;
3.    The issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any ruling, judgment or order
enjoining the consummation of or rendering illegal the Restructuring, the Equity
Rights Offering, or any material aspect of the transactions contemplated by the
Restructuring Support Agreement or this Term Sheet;
4.    Material breach of no-shop provisions by the Company;
5.    The Bankruptcy Court denies entry of the Backstop Commitment Agreement
Order or approves the Final DIP Order or Final 9019 Order prior to approval of
the Backstop Commitment Agreement

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Order (unless otherwise agreed or waived by the Required Backstop Parties);
6.    The Bankruptcy Court denies entry of the Backstop Commitment Agreement
Order or an order to assume the Restructuring Support Agreement, or the Backstop
Commitment Agreement Order or any order approving the Restructuring Support
Agreement is reversed, stayed, dismissed or vacated (unless otherwise agreed or
waived by the Required Backstop Parties);
7.    Provided that the Company has complied with the “no shop” provisions
described above, the Company Board reasonably determining in good faith based
upon the advice of counsel that failing to enter into an Alternative
Restructuring Proposal would be inconsistent with the exercise of its fiduciary
duties under Delaware law; or
8.    Material breaches of representations, warranties, covenants by the Company
and failure to cure.

d. Automatically if the Plan Effective Date has not occurred by the Outside
Date, unless the Outside Date is extended by the Required Backstop Parties.
Amendment / Waiver:
The BCA may only be amended (i) in writing signed by each Company Party and the
Required Backstop Parties, or (ii) by email by both counsel to the Company
Parties and counsel to the Ad Hoc Group representing that it is acting with the
authority of the Required Backstop Parties; provided that each Backstop Party’s
prior written consent shall be required for any amendment that would have the
effect of:
●    modifying such Backstop Party’s Backstop Commitment Percentage;
●    increasing the purchase price to be paid in respect of the Backstop Shares;
●    changing the terms of or conditions to the payment of the Backstop
Commitment Premium;
●    changing any of the termination rights applicable to the Backstop Parties;
or
●    otherwise disproportionately and materially adversely affecting such
Backstop Party.
Securities Law Matters:
The Company shall use commercially reasonable efforts to provide that the Rights
Offering Shares, the Backstop Shares and the Backstop Commitment Premium are
exempt from the registration requirements of the U.S. federal securities laws
under Section 1145 of the Bankruptcy Code to the extent, if any, permitted
thereby or otherwise pursuant to Section 4(a)(2) of the Securities Act or
another exemption promulgated thereunder. Any of the Rights Offering Shares,
Backstop Shares and the Backstop Commitment Premium will be “restricted
securities” subject to certain transfer restrictions under the U.S. federal
securities laws unless sold pursuant to an exemption or a registration
statement.

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Specific Performance:
Each of the Company and the Backstop Parties agree that irreparable damage would
occur if any provision of the BCA were not performed in accordance with the
terms thereof and that each of the parties thereto shall be entitled to an
injunction or injunctions without the necessity of posting a bond to prevent
breaches of the BCA or to enforce specifically the performance of the terms and
provisions thereof and hereof, in addition to any other remedy to which they are
entitled at law or in equity. Unless otherwise expressly stated in the BCA or
herein, no right or remedy described or provided in the BCA or herein is
intended to be exclusive or to preclude a party thereto from pursuing other
rights and remedies to the extent available under such agreement, herein, at law
or in equity.
Confidentiality:
Confidentiality arrangements to be reasonably agreed for purposes of receiving
confidential information as Backstop Parties under the BCA.
Other Provisions:
Such other covenants and agreements, mutually and reasonably agreed by the
Company and the Backstop Parties, as are customary for backstop commitment
agreements.
Governing Law / Jurisdiction:
New York law and, to the extent applicable, the Bankruptcy Code; Bankruptcy
Court exclusive jurisdiction and jury trial waiver to be included.
Tax Treatment:
The Backstop Commitment Premium and the Break Premium shall be treated as a “put
premium” paid to the Backstop Parties, for all U.S. federal income tax purposes
(and, to the extent applicable, for state, local and non-U.S. tax purposes).

15

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Exhibit A
Backstop Commitment Schedule
[*****]

16

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Annex E
[Reserved]

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Annex F
Governance Term Sheet
[See Attached]

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CALIFORNIA RESOURCES CORPORATION
GOVERNANCE TERM SHEET
This term sheet (this “Term Sheet”) describes certain corporate governance
provisions to be in effect after the Restructuring of California Resources
Corporation and the other Company Parties. Capitalized terms used in this Term
Sheet but not defined herein shall have the meanings set forth in the RSA and
the Restructuring Term Sheet, as applicable, of which this Term Sheet forms a
part.
Reorganized Company
Reorganized CRC (the “Company”) will be a Delaware corporation.
Capital Stock
One class of voting common stock (the “New Common Stock”) and authorized but
unissued “blank check” preferred stock, having such designations, preferences,
limitations and relative rights, including preferences over the New Common Stock
with respect to dividends and distributions, as the New Board may determine.
Board of Directors
The New Board to consist of nine directors initially composed of: (i) the chief
executive officer of the Company; (ii) one director selected by Ares (not
employed by or affiliated with Ares); (iii) one director selected by Fidelity
(not employed by or affiliated with Fidelity); (iv) one director selected by
GTAM (not employed by or affiliated with GTAM); and (v) the remaining directors
selected by the Required Consenting Creditors. The Chairman shall (x) be an
independent member of the New Board, (y) not be employed by or affiliated with
Ares, Fidelity, GTAM or the Company and (z) shall be selected by the Required
Consenting Creditors.
After the Plan Emergence Date, the members of the New Board will be elected by
the holders of the New Common Stock annually pursuant to a plurality voting
standard.
Board Committees
On the Plan Emergence Date, the New Board shall constitute any committees
required by the New York Stock Exchange and such other committees as the New
Board approves. The Audit Committee shall review and approve all related party
transactions pursuant to a customary related party transactions policy.
Transfer Restrictions
The New Common Stock will be transferrable without Company consent, subject to
compliance with applicable securities laws.
If requested by the Required Consenting Creditors before the Plan Effective
Date, (a) the New Organizational Documents will include transfer restrictions
designed to limit an “ownership change” for purposes of Section 382 of the U.S.
Internal Revenue Code and/or (b) the Company will implement a stockholder rights
plan designed for such purpose, in each case effective upon the Plan Effective
Date.
Registration Rights
Each holder of at least 1% of the shares of New Common Stock outstanding on the
Plan Effective Date to have customary registration rights for the New Common
Stock to be provided for in a registration rights agreement (the “RRA”).

1

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Listing
Prior to the Plan Effective Date, the Company shall cause the New Common Stock
to be listed on the New York Stock Exchange on the Plan Effective Date.
SEC Filings
The RRA will provide that at any time the Company is not required to file public
reports with the SEC, the Company shall continue to file such public reports on
EDGAR as a voluntary filer, unless approved by the holders of a majority of the
outstanding shares of New Common Stock.
DTC
The New Common Stock is to be DTC-eligible, other than any shares of New Common
Stock required to bear a “restricted” legend under applicable securities laws
(which shall be in DTC under a restricted CUSIP if feasible, otherwise in book
entry form). The Company shall use commercially reasonable efforts to remove any
such restricted legends when permitted under applicable securities laws,
including obtaining any necessary legal opinions. The Company shall provide
certificated shares upon reasonable request.
280G Gross-Ups
The Company will not be party to any 280G gross-up arrangements as of the Plan
Effective Date.
Other Terms
Consistent with Section 3.02 of the RSA, all other corporate governance terms,
the New Organizational Documents and the RRA shall be in form and substance
reasonably satisfactory to the Required Consenting Creditors, the Required
Consenting Parties, the Company Parties and the Required Backstop Parties. The
New Organizational Documents shall also provide for the indemnification and
exculpation of directors, officers and appropriate persons to the fullest extent
permitted by applicable law.

2

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Annex G
Plan Releases and Exculpation
Releases by the Debtors
Notwithstanding anything contained herein to the contrary, to the fullest extent
permitted by applicable law and approved by the Bankruptcy Court, pursuant to
section 1123(b) of the Bankruptcy Code, for good and valuable consideration, the
adequacy of which is hereby confirmed, effective on and after the Plan Effective
Date, the Released Parties (defined below) shall be deemed to have conclusively,
absolutely, unconditionally, irrevocably, finally, and forever been released and
discharged by the Debtors, the Reorganized Debtors and their estates, including
any successors to the Debtors or any estates representatives appointed or
selected pursuant to section 1123(b)(3) of the Bankruptcy Code, in each case on
behalf of themselves and their respective successors, assigns, and
representatives, and any and all other persons or entities who may purport to
assert any Cause of Action, directly or derivatively, by, through, for, or
because of the foregoing entities, from any and all past or present Claims,
Equity Interests, indebtedness and obligations, rights, suits, losses, damages,
injuries, costs, expenses, causes of action, remedies, and liabilities
whatsoever, including any derivative Claims, asserted or assertable on behalf of
the Debtors, whether known or unknown, foreseen or unforeseen, matured or
unmatured, asserted or unasserted, suspected or unsuspected, accrued or
unaccrued, fixed, contingent or noncontingent, pending or threatened, existing
or hereafter arising, in law, equity, or otherwise, whether for tort, fraud,
contract violations of federal or state laws or otherwise, those causes of
action based on veil piercing or alter-ego theories of liability, contribution,
indemnification, joint or several liability or otherwise that the Debtors, the
Reorganized Debtors, their estates, or their Affiliates would have been legally
entitled to assert in their own right (whether individually or collectively) or
on behalf of the holder of any Claim against, or Equity Interest in, in a Debtor
or other entity, or that any holder of any Claim against, or interest in, a
Debtor or other Entity could have asserted on behalf of the Debtors, based on or
relating to any act, omission, transaction, event, or other occurrence taking
place on or prior to the Plan Effective Date (collectively, “Debtor Released
Claims”) based on or relating to, or in any manner arising from or in connection
with, in whole or in part, the Debtors’ (including the capital structure,
management, ownership, or operation thereof), the Debtors’ restructuring
efforts, the Chapter 11 Cases, the Restructuring, the subject matter of, or the
transactions or events giving rise to, any Claim or Equity Interest that is
treated in the Plan, the business or contractual arrangements between any Debtor
and any Released Party, the restructuring of Claims and Equity Interests prior
to or during the Chapter 11 Cases, the negotiation, formulation, or preparation
of the Restructuring, the RSA, Plan, the Disclosure Statement, the Plan
Supplement or any related agreements, instruments, or other documents, the
pursuit of confirmation, any action or actions taken in furtherance of or
consistent with the administration or implementation of the Plan or the
distributions and related documents or other property under the Plan, or upon
any other act or omission, transaction, agreement, event, or other occurrence

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taking place on or before the Plan Effective Date arising from or relating to
any of the foregoing other than claims or liabilities arising out of or relating
to any act or omission of a Released Party that constitutes actual fraud,
willful misconduct, or gross negligence, each solely to the extent as determined
by a final order of a court of competent jurisdiction; provided, however, that
the foregoing “Debtor Releases” shall not operate to waive, release or adversely
impact any post-Plan Effective Date obligations of any party under the Plan, the
Confirmation Order, any Restructuring Transaction, any Definitive Document, or
any other document, instrument, or agreement (including those set forth in the
Plan Supplement) executed or implemented in connection with or relating to the
Plan, including the Exit Facilities Documents, or any claim or obligation
arising under the Plan. Entry of the Confirmation Order shall constitute the
Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Debtors’
release, which includes by reference each of the related provisions and
definitions contained in the Plan, and further, shall constitute the Bankruptcy
Court’s finding that the Debtor Releases are: (a) in exchange for the good and
valuable consideration provided by the Released Parties, including, without
limitation, the Released Parties’ contributions to facilitating the
Restructuring and implementing the Plan; (b) a good faith settlement and
compromise of the Claims released by the Debtor Releases; (c) in the best
interests of the Debtors and their estates and all holders of Claims and
interests; (d) fair, equitable, and reasonable; (e) given and made after due
notice and opportunity for hearing; and (f) a bar to any of the Debtors, the
Reorganized Debtors, or the Debtors’ estates asserting any Claim or cause of
action released pursuant to the Debtor Releases.
“Released Parties” means: (a) the Company and Reorganized CRC; (b) the RBL Agent
and RBL Lenders; (c) the Senior DIP Agent, Junior DIP Agent and DIP lenders; (d)
the First Lien Exit Facility lenders and agent; (e) the Second Lien Exit Lenders
and agent (f) the Consenting Creditors; (g) Ares; (h) Elk Hills Power; (i) the
Non-Defaulting Backstop Parties; and (j) each of the foregoing’s current and
former Affiliates, and each such entity’s and its current and former Affiliates’
current and former directors, managers, officers, equity holders (regardless of
whether such interests are held directly or indirectly), predecessors,
successors, and assigns, subsidiaries, and each of their current and former
officers, members, managers, directors, equity holders (regardless of whether
such interests are held directly or indirectly), principals, members, employees,
agents, managed accounts or funds, management companies, fund advisors,
investment advisors, advisory board members, financial advisors, partners
(including both general and limited partners), attorneys, accountants,
investment bankers, consultants, representatives and other professionals and any
and all other persons or entities that may purport to assert any cause of action
derivatively, by or through the foregoing entities; provided, however, that any
holder of a Claim or Equity Interest that opts out of the releases contained in,
or otherwise objects to such releases in, the Plan shall not be a Released
Party.
Releases by Holders of Claims and Interests
Notwithstanding anything contained herein to the contrary, to the fullest extent
permitted by applicable law and approved by the Bankruptcy Court, pursuant to
section 1123(b) of the

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Bankruptcy Code, for good and valuable consideration, the adequacy of which is
hereby confirmed, effective on and after the Plan Effective Date, each Releasing
Party (defined below) shall be deemed to have conclusively, absolutely,
unconditionally, irrevocably, finally, and forever released and discharged the
Debtors and the other Released Parties, including any successors to the Debtors
or any estates representatives appointed or selected pursuant to section
1123(b)(3) of the Bankruptcy Code, in each case on behalf of themselves and
their respective successors, assigns, and representatives, and any and all other
persons or entities who may purport to assert any Cause of Action, directly or
derivatively, by, through, for, or because of the foregoing entities, from any
and all past or present Claims, Equity Interests, indebtedness and obligations,
rights, suits, losses, damages, injuries, costs, expenses, causes of action,
remedies, and liabilities whatsoever, including any derivative Claims, asserted
or assertable on behalf of a Debtor, whether known or unknown, foreseen or
unforeseen, matured or unmatured, asserted or unasserted, suspected or
unsuspected, accrued or unaccrued, fixed, contingent or noncontingent, pending
or threatened, existing or hereafter arising, in law, equity, or otherwise,
whether for tort, fraud, contract violations of federal or state laws or
otherwise, those causes of action based on veil piercing or alter-ego theories
of liability, contribution, indemnification, joint or several liability or
otherwise that such Releasing Party would have been legally entitled to assert
(whether individually or collectively), based on or relating to any act,
omission, transaction, event, or other occurrence taking place on or prior to
the Plan Effective Date (collectively “Third-Party Released Claims”) based on or
relating to, or in any manner arising from or in connection with, in whole or in
part, the Debtors (including the capital structure, management, ownership, or
operation thereof), the Debtors’ restructuring efforts, the Chapter 11 Cases,
the Restructuring, the subject matter of, or the transactions or events giving
rise to, any Claim or Equity Interest that is treated in the Plan, the business
or contractual arrangements between any Debtor or any other Released Party, on
the one hand, and any Releasing Party, on the other hand, the restructuring of
Claims and Equity Interests prior to or during the Chapter 11 Cases, the
negotiation, formulation, or preparation of the Restructuring, the RSA, the
Plan, the Disclosure Statement, the Plan Supplement or any related agreements,
instruments, or other documents, the pursuit of confirmation, any action or
actions taken in furtherance of or consistent with the administration or
implementation of the Plan or the distributions and related documents or other
property under the Plan, or upon any other act or omission, transaction,
agreement, event, or other occurrence taking place on or before the Plan
Effective Date arising from or relating to any of the foregoing other than
claims or liabilities arising out of or relating to any act or omission of a
Released Party that constitutes actual fraud, willful misconduct, or gross
negligence, each solely to the extent as determined by a final order of a court
of competent jurisdiction; provided, however, that the foregoing “Third-Party
Releases” shall not operate to waive or release any post-Plan Effective Date
obligations of any party under the Plan, the Confirmation Order, any
Restructuring Transaction, and Definitive Document, or any other document,
instrument, or agreement (including those set forth in the Plan Supplement)
executed or implemented in connection with or relating to the Plan, including
the Exit Facilities Documents, or any claim or obligation arising under the
Plan. Entry of the Confirmation Order shall constitute the Bankruptcy Court’s
approval, pursuant to Bankruptcy Rule 9019, of the

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Third-Party Releases, which includes by reference each of the related provisions
and definitions contained herein, and, further, shall constitute the Bankruptcy
Court’s finding that the Third-Party Releases are: (a) consensual; (b) essential
to the confirmation of the Plan; (c) given in exchange for the good and valuable
consideration provided by the Released Parties; (d) a good faith settlement and
compromise of the Claims released by the Third-Party Releases; (e) in the best
interests of the Debtors and their estates; (f) fair, equitable, and reasonable;
(g) given and made after due notice and opportunity for hearing; and (h) a bar
to any of the Releasing Parties asserting any claim or cause of action released
pursuant to the Third-Party Releases.
“Releasing Parties” means: (a) any Released Party; (b) all holders of Claims or
Equity Interests that are deemed to accept this Plan; (c) all holders of Claims
or Equity Interests who either (i) vote to accept or (ii) receive or are deemed
to receive a ballot but abstain from voting on this Plan; (d) all holders of
Claims or Equity Interests entitled to vote who vote to reject this Plan that do
not elect on their ballot to opt-out of the release granted pursuant to this
Plan; (e) all other holders of Claims or Equity Interests to the extent
permitted by law; and (f) each of the foregoing’s current and former Affiliates,
and each such entity’s and its current and former Affiliates’ current and former
directors, managers, officers, principals, members, employees, equity holders
(regardless of whether such interests are held directly or indirectly),
predecessors, successors, assigns, subsidiaries, agents, advisory board members,
financial advisors, partners (including both general and limited partners),
attorneys, accountants, investment bankers, investment advisors, consultants,
representatives and other professionals, each in their capacity as such.
Exculpation
Except as otherwise specifically provided in the Plan or the Confirmation Order,
no Exculpated Party (defined below) shall have or incur liability for, and each
Exculpated Party shall be released and exculpated from, any Claims and causes of
action for any claim related to any act or omission in connection with, relating
to, or arising out of, the Chapter 11 Cases, the formulation, preparation,
dissemination, negotiation, filing or termination of the RSA and related
prepetition transactions, the Disclosure Statement, the Plan, the DIP
Facilities, the Plan Supplement, the Equity Rights Offering, or any
Restructuring Transaction, contract, instrument release or other agreement or
document (including any legal opinion requested by any entity regarding any
transaction, contract, instrument, document or other agreement contemplated by
the Plan or the reliance by any Released Party on the Plan or the Confirmation
Order in lieu of such legal opinion), including any Definitive Documentation,
created or entered into before or during the Chapter 11 Cases, any preference,
fraudulent transfer, or other avoidance claim arising pursuant to chapter 5 of
the Bankruptcy Code or other applicable law, the filing of the Chapter 11 Cases,
the pursuit of confirmation, the administration and implementation of the Plan,
including the issuance of or distribution of any securities pursuant to the
Plan, or the distribution of property under the Plan or any other related
agreement, or upon any other related act or omission, transaction, agreement,
event, or other occurrence taking place on or before the

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Plan Effective Date, except for claims related to any act or omission that is
determined in a final order by a court of competent jurisdiction to have
constituted actual fraud, willful misconduct or gross negligence, but in all
respects such entities shall be entitled to reasonably rely upon the advice of
counsel with respect to their duties and responsibilities pursuant to the Plan.
The Exculpated Parties have, and upon confirmation of the Plan shall be deemed
to have, participated in good faith and in compliance with the applicable laws
with regard to the solicitation of votes and distribution of consideration
pursuant to the Plan and, therefore, are not, and on account of such
distributions shall not be, liable at any time for the violation of any
applicable law, rule, or regulation governing the solicitation of acceptances or
rejections of the Plan or such distributions made pursuant to the Plan.
“Exculpated Parties” means: (a) the Company; (b) the RBL Agent and RBL Lenders;
(c) the Senior DIP Agent, Junior DIP Agent and DIP lenders; (d) the First Lien
Exit Facility lenders and agent; (e) the Second Lien Exit Lenders and agent; (f)
the Consenting Creditors; (g) Ares; (h) Elk Hills Power; (i) the Non-Defaulting
Backstop Parties; and (j) each of the foregoing’s current and former Affiliates,
and each such entity’s and its current and former Affiliates’ current and former
directors, managers, officers, equity holders (regardless of whether such
interests are held directly or indirectly), predecessors, successors, and
assigns, subsidiaries, and each of their current and former officers, members,
managers, directors, equity holders (regardless of whether such interests are
held directly or indirectly), principals, members, employees, agents, managed
accounts or funds, management companies, fund advisors, investment advisors,
advisory board members, financial advisors, partners (including both general and
limited partners), attorneys, accountants, investment bankers, consultants,
representatives and other professionals.

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Annex H
Interim DIP Order
[See Attached]

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
___________________________________________

In re

CALIFORNIA RESOURCES CORPORATION, et al.,

Debtors.
___________________________________________
x
:
:
:
:
:
:
:
x

Chapter 11

Case No. (20-_____) (__)

        Jointly Administered

INTERIM ORDER (I) AUTHORIZING THE DEBTORS TO OBTAIN POSTPETITION FINANCING,
(II) GRANTING LIENS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS,
(III) AUTHORIZING THE USE OF CASH COLLATERAL,
(IV) GRANTING ADEQUATE PROTECTION, (V) MODIFYING THE
AUTOMATIC STAY AND (VI) GRANTING RELATED RELIEF
Upon the motion (the “Motion”),2 of the above-captioned debtors and debtors in
possession (collectively, the “Debtors”) in the above-captioned chapter 11 cases
(collectively, the “Chapter 11 Cases”), seeking entry of an interim order
(together with all annexes, schedules and exhibits hereto, this “Interim Order”)
and the Final Order (as defined below) pursuant to sections 105, 361, 362,
363(b), 363(c)(2), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1), 364(e), 503,
506(c), and 507 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq.
(the “Bankruptcy Code”), and rules 2002, 4001, 6003, 6004, and 9014 of the
Federal Rules of Bankruptcy Procedure (the “Bankruptcy
__________
1 
The Debtors in these chapter 11 cases and the last four digits of their U.S.
taxpayer identification numbers are:  California Resources Corporation (0947);
California Heavy Oil, Inc. (4630); California Resources Coles Levee, L.P.
(2995); California Resources Coles Levee, LLC (2087); California Resources Elk
Hills, LLC (7310); California Resources Long Beach, Inc. (6046); California
Resources Mineral Holdings LLC (4443); California Resources Petroleum
Corporation (9218); California Resources Production Corporation (5342);
California Resources Production Mineral Holdings, LLC (9071); California
Resources Real Estate Ventures, LLC (6931); California Resources Royalty
Holdings, LLC (6393); California Resources Tidelands, Inc. (0192); California
Resources Wilmington, LLC (0263); CRC Construction Services, LLC (7030); CRC
Marketing, Inc. (0941); CRC Services, LLC (6989); Monument Production, Inc.
(0782); Oso Verde Farms, LLC (7436); Socal Holding, LLC (3524); Southern San
Joaquin Production, Inc. (4423); Thums Long Beach Company (1774); Tidelands Oil
Production Company LLC (5764). The Debtors’ corporate headquarters is located at
27200 Tourney Road, Suite 200, Santa Clarita, CA 91355.

2 
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Motion.

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Rules”) and Rules 2002-1, 4001-1(b), 4002-1(i) and 9013-1 of the Local Rules of
Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the
Southern District of Texas (the “Bankruptcy Local Rules”) and the Procedures for
Complex Chapter 11 Bankruptcy Cases (the “Complex Case Procedures”) promulgated
by the United States Bankruptcy Court for the Southern District of Texas,
providing, among other things:
(1)    authorizing the Debtors to obtain debtor-in-possession financing in the
aggregate principal amount of up to $1,133,010,655.62, consisting of:
(A) a senior secured superpriority debtor-in-possession revolving credit
facility (the “Senior DIP Facility”) in the aggregate principal amount of up to
$483,010,655.62, consisting of (i) a $400,139,598.62 new money subfacility (the
“Senior New Money Subfacility”), including $150,139,598.62 to deem the RBL
Letters of Credit (as defined below) as being issued under the Senior New Money
Subfacility and a sublimit of not more than $35,000,000 for additional letters
of credit (together, the “DIP Letters of Credit”), and (ii) a $82,871,057.00
“roll-up” term loan subfacility (the “Senior Roll-Up Subfacility”) (all
extensions of credit, including the issuance or deemed issuance of DIP Letters
of Credit, under the Senior DIP Facility, the “Senior DIP Loans”) pursuant to
the terms and conditions of this Interim Order and that certain Senior Secured
Superpriority Debtor-In-Possession Credit Agreement substantially in the form
attached hereto as Exhibit A (as amended, supplemented, restated, refunded,
refinanced, replaced or otherwise modified from time to time in accordance with
the terms thereof, the “Senior DIP Credit Agreement”, and together with all
agreements, commitment and fee letters, documents, instruments and certificates
executed, delivered or filed in connection therewith, as amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof, collectively, the “Senior DIP Loan Documents”), by and among California
Resources Corporation, as borrower (“CRC” or the “Senior DIP Borrower”), each of
the other Debtors, as guarantors (the “Senior DIP Guarantors”), JPMorgan Chase
Bank, N.A. (or any successor or assign), as administrative agent and collateral
agent (in such capacities, the “Senior DIP Agent”), JPMorgan Chase Bank, N.A.,
Bank of America, N.A. and Citibank, N.A. in their capacity as the issuing banks
for DIP Letters of Credit (the “Senior Issuing Banks”) and the financial
institutions party thereto from time to time as lenders (the “Senior DIP
Lenders”, and together with the Senior DIP Agent, the Senior Issuing Banks and
each other Secured Party (as defined in the Senior DIP Credit Agreement), the
“Senior DIP Secured Parties”); and
(B) a junior secured superpriority debtor-in-possession term loan facility (the
“Junior DIP Facility”, together with the Senior DIP Facility, the “DIP
Facilities”) in the aggregate principal amount of $650,000,000 (all extensions
of credit under the Junior DIP Facility, the “Junior DIP Loans”, and together
with the Senior DIP Loans, the “DIP Loans”) pursuant to the terms and conditions
of this Interim Order and that certain Junior Secured

2

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Superpriority Debtor-In-Possession Credit Agreement substantially in the form
attached hereto as Exhibit B (as amended, supplemented, restated, refunded,
refinanced, replaced or otherwise modified from time to time in accordance with
the terms thereof, the “Junior DIP Credit Agreement”, and together with all
agreements, commitment and fee letters, documents, instruments and certificates
executed, delivered or filed in connection therewith, as amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof, collectively, the “Junior DIP Loan Documents”; the Junior DIP Credit
Agreement together with the Senior DIP Credit Agreement, the “DIP Credit
Agreements”, and the Junior DIP Loan Documents together with the Senior DIP Loan
Documents, the “DIP Loan Documents”), by and among CRC, as borrower (the “Junior
DIP Borrower”, and together with the Senior DIP Borrower, the “DIP Borrowers”),
each of the other Debtors, as guarantors (the “Junior DIP Guarantors”, and
together with the Senior DIP Guarantors, the “DIP Guarantors”), Alter Domus
Products Corp. (or any successor or assign), as administrative agent (in such
capacity, the “Junior DIP Agent”, and together with the Senior DIP Agent, the
“DIP Agents”), and the financial institutions party thereto from time to time as
lenders (the “Junior DIP Lenders”, and together with the Junior DIP Agent, and
each other Secured Party (as defined in the Junior DIP Credit Agreement), the
“Junior DIP Secured Parties”; the Junior DIP Lenders together with the Senior
DIP Lenders, the “DIP Lenders”, and the Junior DIP Secured Parties together with
the Senior DIP Secured Parties, the “DIP Secured Parties”);
(2)    authorizing the Debtors to draw up to $266,139,598.62 of Senior DIP Loans
under the Senior New Money Subfacility during the interim period pending entry
of the Final Order to be used in accordance with this Interim Order and the
Senior DIP Loan Documents, including to repay any reimbursement obligations in
respect of drawn DIP Letters of Credit;
(3)    authorizing the Debtors to fully draw $82,871,057.00 of Senior DIP Loans
under the Roll-Up Subfacility on the closing date of the Senior DIP Facility and
to use the proceeds thereof to refund, refinance, replace and repay
$82,871,057.00 of the RBL Loans (as defined below);
(4)    authorizing the Debtors to fully draw $650,000,000 of Junior DIP Loans
under the Junior DIP Facility on the closing date of the Junior DIP Facility to
repay $650,000,000 of the RBL Loans;
(5)    authorizing the Debtors to issue DIP Letters of Credit, including deeming
all of the RBL Letters of Credit to be DIP Letters of Credit issued under the
Senior New Money Subfacility;
(6)    authorizing the Debtors to execute and deliver to the DIP Secured Parties
and perform under the DIP Credit Agreements and the other DIP Loan Documents and
to perform such other and further acts as may be necessary or desirable in
connection with the DIP Loan Documents;
(7)    authorizing and directing the Debtors to incur and pay all DIP
Obligations (as defined below), subject to the terms of the respective DIP Loan
Documents and this Interim Order;

3

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(8)    granting each DIP Agent, for the benefit of itself and the other DIP
Secured Parties for which it is the agent, and authorizing the Debtors to incur,
valid, enforceable, non-avoidable, automatically and fully perfected priming
liens on and security interests in all DIP Collateral (as defined below),
including, without limitation, all Cash Collateral (as defined below), to secure
the respective DIP Obligations, which liens and security interests shall be
subject to the rankings and priorities set forth herein;
(9)    granting to the Senior DIP Secured Parties and Junior DIP Secured Parties
allowed superpriority administrative expense claims against each of the Debtors,
on a joint and several basis, in respect of all Senior DIP Obligations and
Junior DIP Obligations (each as defined below), respectively, as set forth
herein, which claims shall be subject to the ranking and priorities set forth
herein;
(10)    authorizing the Debtors’ use of the proceeds of the DIP Facilities and
Cash Collateral, in each case solely in accordance with the Approved Budget (as
defined below and subject to Permitted Variances (as defined below)), and
subject to the terms and conditions set forth in this Interim Order and the DIP
Loan Documents;
(11)    providing adequate protection, as and to the extent set forth herein, to
the Prepetition RBL Secured Parties, Prepetition FLMO Secured Parties,
Prepetition FLLO Secured Parties and Prepetition Second Lien Secured Parties
(each as defined below) for any Diminution in Value (as defined below) of their
respective interests in the Prepetition Collateral (as defined below), including
Cash Collateral;
(12)    subject to the limitations set forth herein, approving certain
stipulations by the Debtors with respect to the Prepetition RBL Credit
Agreement, the Prepetition RBL Obligations, the Prepetition Senior Liens, the
Prepetition FLMO Term Credit Agreement, the Prepetition FLMO Obligations, the
Prepetition FLLO Term Credit Agreement, the Prepetition FLLO Obligations, the
Prepetition FLLO Liens, the Prepetition Second Lien Indenture, the Prepetition
Second Lien Note Obligations, the Prepetition Second Liens and the Prepetition
Collateral (each as defined below);
(13)    waiving the rights of the Debtors to surcharge the DIP Collateral or
Prepetition Collateral pursuant to section 506(c) of the Bankruptcy Code,
subject to the provisions in paragraph 31 below;
(14)    waiving the application of the “equities of the case” exception under
section 552(b) of the Bankruptcy Code as to the Prepetition Secured Parties (as
defined below) with respect to proceeds, product, offspring or profits of any of
the Prepetition Collateral, subject to the provisions in paragraph 32 below;
(15)    waiving the equitable doctrine of “marshaling” and other similar
doctrines as to the DIP Secured Parties and the Prepetition Secured Parties,
subject to the provisions in paragraphs 33 and 34 below;

4

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(16)    modifying or vacating the automatic stay imposed by section 362 of the
Bankruptcy Code or otherwise to the extent necessary to implement and effectuate
the terms and provisions of this Interim Order and the DIP Loan Documents, and
waiving any applicable stay (including under Bankruptcy Rule 6004) with respect
to the effectiveness and enforceability of this Interim Order, and providing for
the immediate effectiveness of this Interim Order; and
(17)    scheduling a final hearing (the “Final Hearing”) to consider entry of a
final order (the “Final Order”) authorizing the relief requested in the Motion
on a final basis, and approving the form of notice with respect to the Final
Hearing, which order shall be in form and substance and on terms satisfactory in
all respects to each DIP Agent.
The Court (as defined below) having considered the Motion, the DIP Loan
Documents on file with the Court, the Declaration of Todd A. Stevens in Support
of the Debtors’ Chapter 11 Petitions and First Day Pleadings (the “Stevens First
Day Declaration”) and the Declaration of Mark Rajcevich in Support of the
Debtors’ Chapter 11 Petitions and First Day Pleadings (the “Rajcevich First Day
Declaration” and together with the Stevens First Day Declaration, the “First Day
Declarations”), the Declaration of Bruce Mendelsohn in support of the Motion
(the “Mendelsohn Declaration”), the pleadings filed with the Court, and the
evidence proffered or adduced at the interim hearing held on July 17, 2020 (the
“Interim Hearing”); and notice of the Interim Hearing having been given in
accordance with Bankruptcy Rules 4001 and 9014 and all applicable Bankruptcy
Local Rules and Complex Case Procedures; and all objections, if any, to the
interim relief requested in the Motion having been withdrawn, resolved or
overruled by the Court; and it appearing to the Court that granting the interim
relief requested in the Motion is necessary to avoid immediate and irreparable
harm to the Debtors and their estates pending the Final Hearing, and otherwise
is fair and reasonable and in the best interests of the Debtors, their estates
and their creditors, represents a sound exercise of the Debtors’ business
judgment and is necessary for the continued operation of the Debtors’
businesses; and upon the record of these Chapter 11 Cases; after due
deliberation and consideration, and for good and sufficient cause appearing
therefor:

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IT IS HEREBY FOUND, DETERMINED, ORDERED AND ADJUDGED:3 
A.    Petition Date. On July, 15, 2020 (the “Petition Date”), the Debtors filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of Texas (this “Court”)
commencing these Chapter 11 Cases.
B.    Debtors-in-Possession. The Debtors continue to manage and operate their
businesses and properties as debtors-in-possession pursuant to sections 1107 and
1108 of the Bankruptcy Code. No trustee or examiner has been appointed in any of
the Chapter 11 Cases.
C.    Committee Formation. As of the date hereof, the United States Trustee (the
“U.S. Trustee”) has not appointed an official committee of unsecured creditors
in these Chapter 11 Cases (the “Committee”).
D.    Jurisdiction and Venue. The Court has jurisdiction, pursuant to 28 U.S.C.
§ 1334, over these proceedings, and over the persons and property affected
thereby. Consideration of the Motion constitutes a core proceeding under 28
U.S.C. § 157(b)(2). The statutory predicates for the relief set forth herein are
sections 105, 361, 362, 363, 364 and 507 of the Bankruptcy Code and Rules 2002,
4001, 6004 and 9014 of the Bankruptcy Rules and Rules 2002-1, 4001-1(b),
4002-1(i) and 9013-1 of the Bankruptcy Local Rules. Venue for these Chapter 11
Cases and proceedings on the Motion is proper in this district pursuant to 28
U.S.C. §§ 1408 and 1409.
E.    Debtors’ Stipulations. In requesting the DIP Facilities, and in exchange
for and as a material inducement to the DIP Lenders for their commitments to
provide the respective DIP Facilities, and in exchange for and in recognition of
the priming of the Prepetition Senior Liens,
__________
3 
Where appropriate in this Interim Order, findings of fact shall be construed as
conclusions of law and vice versa pursuant to Bankruptcy Rule 7052, made
applicable to this proceeding pursuant to Bankruptcy Rule 9014.

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the Prepetition FLLO Liens and the Prepetition Second Liens (each as defined
below), subject to paragraph 29 hereof, the Debtors hereby admit, stipulate,
acknowledge and agree that:
(i)    Prepetition RBL Facility. Pursuant to the Credit Agreement, dated as of
September 24, 2014 (as amended, supplemented, restated or otherwise modified
from time to time, the “Prepetition RBL Credit Agreement”, and together with all
other agreements, documents, instruments and certificates executed or delivered
in connection therewith, including the Security Documents (as defined therein),
collectively, the “Prepetition RBL Loan Documents”) by and among (a) CRC, as
borrower (the “RBL Borrower”), (b) the guarantors party thereto (together with
the RBL Borrower, the “Prepetition RBL Loan Parties”), (c) JPMorgan Chase Bank,
N.A., as administrative agent (in such capacity, the “Prepetition RBL Agent”),
(d) the lenders party thereto (the “Prepetition RBL Lenders”) and (e) the Letter
of Credit Issuers party thereto (together with any other Secured Parties (as
defined in the Prepetition RBL Credit Agreement), collectively, the “Prepetition
RBL Secured Parties”), the Prepetition RBL Secured Parties provided revolving
loans and other extensions of credit (the “RBL Loans”) to the RBL Borrower, and
the Letter of Credit Issuers issued letters of credit (the “RBL Letters of
Credit”) for the account of the RBL Borrower.
(ii)    Prepetition RBL Obligations. As of the Petition Date, without defense,
counterclaim or offset of any kind, the Prepetition RBL Loan Parties were
jointly and severally indebted to the Prepetition RBL Secured Parties in the
aggregate principal amount of $732,871,057 on account of RBL Loans, plus
$150,139,598.62 with respect to issued and outstanding RBL Letters of Credit,
plus accrued but unpaid interest, fees and expenses plus any other amounts
incurred or accrued but unpaid prior to the Petition Date in accordance with the
Prepetition RBL Loan Documents, including, without limitation, principal,
accrued and unpaid interest, premiums, any reimbursement obligations (contingent
or otherwise), any fees, expenses and disbursements (including, without
limitation, attorneys’ fees, financial advisors’ fees, related expenses and
disbursements), indemnification obligations, any other charges, amounts and
costs of whatever nature owing, whether or not contingent, whenever arising,
accrued, accruing, due, owing or chargeable in respect thereof, in each case, to
the extent provided in the Prepetition RBL Loan Documents (collectively,
including any “Obligations” as provided solely in clause (a)(i) of the term
“Obligations” in the Prepetition RBL Credit Agreement, the “Prepetition RBL
Obligations”).
(iii)    Prepetition First Lien Mid-Out Term Facility. Pursuant to the Credit
Agreement, dated as of November 17, 2017 (as amended, supplemented, restated or
otherwise modified from time to time, the “Prepetition FLMO Term Credit
Agreement”, and together with all other agreements, documents, instruments and
certificates executed or delivered in connection therewith, including the
Security Documents (as defined therein), collectively, the “Prepetition FLMO
Term Loan Documents”) by and among (a) CRC, as borrower (the “FLMO Term Loan
Borrower”), (b) the lenders party thereto (the “Prepetition FLMO Term Loan
Lenders”, and together with any Secured Parties (as defined in the Prepetition
FLMO Term Credit Agreement), collectively, the “Prepetition FLMO Secured
Parties”) and (c) The Bank of New York Mellon Trust Company N.A. (“BNYM”), as
administrative agent (in such capacity, the “Prepetition FLMO Term Loan Agent”),
the Prepetition FLMO Term Loan Lenders provided term loans (the “Prepetition
FLMO Term Loans”) and other financial accommodations to the FLMO Term Loan

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Borrower, which were guaranteed by the guarantors party to the Guarantee, dated
as of November 17, 2017 (together with the FLMO Term Loan Borrower, the
“Prepetition FLMO Term Loan Parties”, and together with the Prepetition RBL Loan
Parties, the “Prepetition Senior Loan Parties”).
(iv)    Prepetition First Lien Mid-Out Obligations. As of the Petition Date,
without defense, counterclaim or offset of any kind, the Prepetition FLMO Term
Loan Parties were jointly and severally indebted to the Prepetition FLMO Term
Loan Lenders in the aggregate principal amount of $1,300,000,000, plus accrued
but unpaid interest, fees and expenses, plus any other amounts incurred or
accrued but unpaid prior to the Petition Date in accordance with the Prepetition
FLMO Term Loan Documents, including, without limitation, principal, accrued and
unpaid interest, premiums, any reimbursement obligations (contingent or
otherwise), any fees, expenses and disbursements (including, without limitation,
attorneys’ fees, financial advisors’ fees, related expenses and disbursements),
indemnification obligations, any other charges, amounts and costs of whatever
nature owing, whether or not contingent, whenever arising, accrued, accruing,
due, owing or chargeable in respect thereof, in each case, to the extent
provided in the Prepetition FLMO Term Loan Documents (collectively, including
any Obligations (as defined in the Prepetition FLMO Term Credit Agreement), the
“Prepetition FLMO Obligations”).
(v)    Prepetition Senior Liens and Prepetition Senior Collateral. Pursuant to
(i) the Second Amended and Restated Security Agreement, dated as of November 17,
2017, (ii) the Amended and Restated Pledge Agreement, dated as November 17,
2017, and (iii) the other Security Documents (as defined in the Prepetition RBL
Credit Agreement and the Prepetition FLMO Term Credit Agreement), in order to
secure the Prepetition RBL Obligations and the Prepetition FLMO Obligations, the
Prepetition Senior Loan Parties granted to BNYM, as collateral agent for each of
the Prepetition RBL Secured Parties and Prepetition FLMO Secured Parties (in
such capacity, the “Prepetition Senior Secured Collateral Agent”), for the
benefit of itself and the Prepetition RBL Secured Parties and Prepetition FLMO
Secured Parties, properly perfected and continuing first-priority liens,
mortgages and security interests (such interests the “Prepetition Senior Liens”)
in the Collateral (as defined in the Prepetition RBL Loan Documents and the
Prepetition FLMO Term Loan Documents) (collectively, the “Prepetition
Collateral”); provided, that the term Prepetition Collateral does not include
any Collateral (as defined in the Prepetition RBL Loan Documents and the
Prepetition FLMO Term Loan Documents) in which a lien, mortgage and security
interest was not required to be (and was not as of the Petition Date) granted
and perfected by the Prepetition RBL Loan Documents and the Prepetition FLMO
Term Loan Documents, and which Collateral is not otherwise subject to a properly
perfected lien, mortgage or security interest of the Prepetition Secured
Parties.
(vi)    Collateral Agency Agreement. The relative rights and remedies of the
Prepetition RBL Secured Parties and the Prepetition FLMO Secured Parties in
respect of the Prepetition Collateral and the relative priority of their rights
to the proceeds of the Prepetition Collateral are governed by that certain
Collateral Agency Agreement, dated as of November 17, 2017, by and among the
Prepetition RBL Agent, the Prepetition FLMO Term Loan Agent and the Prepetition
Senior Secured Collateral Agent, and the grantors party thereto (as amended,
supplemented or otherwise modified from time to time, the “Collateral Agency
Agreement”).

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Pursuant to the Collateral Agency Agreement, the Prepetition FLMO Term Loan
Agent, on behalf of the Prepetition FLMO Secured Parties, agreed, among other
things: (a) to subordinate the Prepetition FLMO Secured Parties’ rights in the
Prepetition Collateral (and proceeds thereof) to those of the Prepetition RBL
Secured Parties; (b) to be bound by the waterfall and turnover provisions
contained therein; and (c) to (I) consent to, or not oppose, certain actions
taken, or rights asserted, by the Prepetition RBL Secured Parties and (II)
refrain from taking certain actions with respect to the Prepetition Collateral,
including in connection with a bankruptcy proceeding.
(vii)    Prepetition First Lien Last-Out Term Facility. Pursuant to the Credit
Agreement, dated as of August 12, 2016 (as amended, supplemented, restated or
otherwise modified from time to time, the “Prepetition FLLO Term Credit
Agreement”, and together with all other agreements, documents, instruments and
certificates executed or delivered in connection therewith, including the
Security Documents (as defined in the Prepetition FLLO Term Credit Agreement),
collectively, the “Prepetition FLLO Term Loan Documents”) by and among (a) CRC,
as borrower (the “FLLO Term Loan Borrower”), (b) the lenders party thereto
(collectively, the “Prepetition FLLO Term Loan Lenders”, and together with the
Secured Parties (as defined in the Prepetition FLLO Term Credit Agreement), the
“Prepetition FLLO Secured Parties”, and together with the Prepetition RBL
Secured Parties and the Prepetition FLMO Secured Parties, the “Prepetition
Senior Secured Parties”) and (c) BNYM, as administrative agent and collateral
agent (in such capacities, the “Prepetition FLLO Term Loan Agent”), the FLLO
Term Loan Lenders provided term loans and other financial accommodations to the
FLLO Term Loan Borrower, which were guaranteed by the guarantors party to the
Guarantee, dated as of August 12, 2016 (together with the FLLO Term Loan
Borrower, the “Prepetition FLLO Term Loan Parties”).
(viii)    Prepetition First Lien Last-Out Obligations. As of the Petition Date,
without defense, counterclaim or offset of any kind, the Prepetition FLLO Term
Loan Parties were jointly and severally indebted to the Prepetition FLLO Term
Loan Lenders in the aggregate principal amount of $1,000,000,000, plus accrued
but unpaid interest, plus any other amounts incurred or accrued but unpaid prior
to the Petition Date in accordance with the FLLO Term Loan Documents, including,
without limitation, principal, accrued and unpaid interest, premiums, any
reimbursement obligations (contingent or otherwise), any fees, expenses and
disbursements (including, without limitation, attorneys’ fees, financial
advisors’ fees, related expenses and disbursements), indemnification
obligations, any other charges, amounts and costs of whatever nature owing,
whether or not contingent, whenever arising, accrued, accruing, due, owing or
chargeable in respect thereof, in each case, to the extent provided in the
Prepetition FLLO Term Loan Documents (collectively, including any Obligations
(as defined in the Prepetition FLLO Term Credit Agreement), the “Prepetition
FLLO Obligations”, and together with the Prepetition RBL Obligations and
Prepetition FLMO Obligations, the “Prepetition Senior Obligations”).
(ix)    Prepetition FLLO Liens. To secure the Prepetition FLLO Obligations, the
Prepetition FLLO Term Loan Parties granted to BNYM, as Prepetition FLLO Term
Loan Agent, for the benefit of itself and the Prepetition FLLO Secured Parties,
properly perfected and continuing first-priority “last-out” liens, mortgages and
security interests (collectively, the “Prepetition FLLO Liens”) in the
Prepetition Collateral. The Prepetition FLLO Liens are pari

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passu with the Prepetition Senior Liens, subject to the terms of the Pari Passu
Intercreditor Agreement (as defined below).
(x)    Pari Passu Intercreditor Agreement. The Prepetition RBL Agent,
Prepetition FLMO Term Loan Agent and Prepetition FLLO Term Loan Agent are party
to the Pari Passu Intercreditor Agreement, dated as of August 15, 2016 (as
amended, supplemented or otherwise modified from time to time, the “Pari Passu
Intercreditor Agreement”), which governs the relative rights and remedies of the
Prepetition RBL Secured Parties and Prepetition FLMO Secured Parties, on the one
hand, and the Prepetition FLLO Secured Parties, on the other hand, and the
relative priority of their respective security interests in the Prepetition
Collateral. Pursuant to the Pari Passu Intercreditor Agreement, the Prepetition
FLLO Term Loan Agent, on behalf of the Prepetition FLLO Secured Parties, agreed,
among other things: (a) to subordinate the Prepetition FLLO Secured Parties’
rights in the Prepetition Collateral (and proceeds thereof) to those of the
Prepetition RBL Secured Parties and Prepetition FLMO Secured Parties; (b) to be
bound by the waterfall and turnover provisions contained therein; and (c) to (I)
consent to, or not oppose, certain actions taken, or rights asserted, by the
Prepetition RBL Secured Parties and Prepetition FLMO Secured Parties and (II)
refrain from taking certain actions with respect to the Prepetition Collateral,
including in connection with a bankruptcy proceeding.
(xi)    Prepetition Second Lien Notes. CRC issued its 8.00% Senior Secured
Second Lien Notes due 2022 (the “Prepetition Second Lien Notes”) pursuant to
that certain Indenture, dated as of December 15, 2015 (as amended, supplemented,
restated or otherwise modified from time to time, the “Prepetition Second Lien
Indenture”, and together with all other agreements, documents, instruments and
certificates executed or delivered in connection, collectively, the “Prepetition
Second Lien Documents”, and together with the Prepetition RBL Loan Documents,
the Prepetition FLMO Term Loan Documents and the Prepetition FLLO Term Loan
Documents, the “Prepetition Debt Documents”), by and among (a) CRC, as issuer
(the “Second Lien Issuer”), (b) the guarantors party thereto (together with the
Second Lien Issuer, the “Prepetition Second Lien Note Parties”) and (c) BNYM, as
trustee and collateral trustee (in such capacities, the “Prepetition Second Lien
Collateral Trustee”) for the equal and ratable benefit of the holders of notes
issued pursuant thereto (the “Prepetition Second Lien Noteholders”, and together
with the Prepetition Second Lien Collateral Trustee, the “Prepetition Second
Lien Secured Parties”, and together with the Prepetition Senior Secured Parties,
the “Prepetition Secured Parties”).
(xii)    Prepetition Second Lien Note Obligations. As of the Petition Date,
without defense, counterclaim or offset of any kind, the Prepetition Second Lien
Note Parties were jointly and severally indebted to the Prepetition Second Lien
Noteholders in the aggregate principal amount of $1,809,000,000, plus any other
amounts incurred or accrued but unpaid prior to the Petition Date in accordance
with the Prepetition Second Lien Documents, including, without limitation,
principal, accrued and unpaid interest, premiums, any reimbursement obligations
(contingent or otherwise), any fees, expenses and disbursements (including,
without limitation, attorneys’ fees, financial advisors’ fees, related expenses
and disbursements), indemnification obligations, any other charges, amounts and
costs of whatever nature owing, whether or not contingent, whenever arising,
accrued, accruing, due, owing or chargeable in respect thereof, in

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each case, to the extent provided in the Prepetition Second Lien Documents
(collectively, including any Obligations (as defined in the Prepetition Second
Lien Indenture), the “Prepetition Second Lien Note Obligations”, and together
with the Prepetition RBL Obligations, the Prepetition FLMO Obligations and the
Prepetition FLLO Obligations, the “Prepetition Obligations”).
(xiii)    Prepetition Second Lien Collateral. To secure the Prepetition Second
Lien Note Obligations, the Second Lien Note Parties granted to the Prepetition
Second Lien Collateral Trustee, for the benefit of itself and the Prepetition
Second Lien Secured Parties, properly perfected and continuing junior-priority
liens, mortgages and security interests (collectively, the “Prepetition Second
Liens”, and together with the Prepetition Senior Liens and the Prepetition FLLO
Liens, the “Prepetition Liens”) in the Prepetition Collateral.4 
(xiv)    Second Lien Intercreditor Agreement. The Prepetition RBL Agent, the
Prepetition FLMO Term Loan Agent, the Prepetition FLLO Term Loan Agent and the
Prepetition Second Lien Collateral Trustee are party to that certain
Intercreditor Agreement dated as of December 15, 2015 (as amended, supplemented
or otherwise modified from time to time, the “Second Lien Intercreditor
Agreement”, and together with the Pari Passu Intercreditor Agreement and
Collateral Agency Agreement, the “Intercreditor Agreements”). Pursuant to the
Second Lien Intercreditor Agreement, the Prepetition Second Lien Collateral
Trustee, on behalf of the Prepetition Second Lien Secured Parties agreed, among
other things: (a) that the Prepetition Senior Liens and the Prepetition FLLO
Liens on the Prepetition Collateral are senior in all respects to the
Prepetition Second Liens; (b) to be bound by the waterfall and turnover
provisions contained therein; and (c) to (I) consent to, or not oppose, certain
actions taken, or rights asserted, by the Prepetition RBL Secured Parties, the
Prepetition FLMO Secured Parties, and the Prepetition FLLO Secured Parties, and
(II) refrain from taking certain actions with respect to the Prepetition
Collateral, including in connection with a bankruptcy proceeding.
(xv)    Validity and Enforceability of Prepetition RBL Obligations and
Prepetition Senior Liens. (a) The Prepetition Senior Liens are valid, binding,
enforceable, non-avoidable and properly perfected liens granted to, or for the
benefit of, the Prepetition RBL Secured Parties for fair consideration and
reasonably equivalent value, and were granted contemporaneously with, or
covenanted to be provided as inducement for, the making of the loans and/or
commitments and other financial accommodations secured thereby; (b) the
Prepetition Senior Liens are senior in priority over any and all other liens on
the Prepetition Collateral (other than (x) liens expressly permitted to be
senior to all Prepetition Senior Liens under the Prepetition RBL Credit
Agreement, solely to the extent such permitted liens were existing, valid,
enforceable, properly perfected and non-avoidable as of the Petition Date or
that are perfected subsequent thereto as permitted by section 546(b) of the
Bankruptcy Code (the “Permitted Prior Liens”) and (y) the Prepetition FLLO Liens
(which are pari passu with the Prepetition Senior Liens)); (c) the Prepetition
RBL Obligations constitute legal, valid, binding and non-avoidable obligations
of the Prepetition RBL
__________
4 
For purposes of these stipulations, all references to Prepetition Collateral as
to the Prepetition RBL Secured Parties, the Prepetition FLMO Secured Parties,
the Prepetition FLLO Secured Parties and the Prepetition Second Lien Secured
Parties excludes the “Excluded Property” as defined in each of the Prepetition
RBL Credit Agreement, Prepetition FLMO Credit Agreement, Prepetition FLLO Credit
Agreement and Prepetition Second Lien Indenture, respectively.

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Loan Parties, enforceable in accordance with the terms of the Prepetition RBL
Loan Documents; and (d) the Debtors and their estates hold no (and the Debtors
hereby waive, discharge and release any) valid or enforceable Claims (as defined
in the Bankruptcy Code), counterclaims, causes of action, defenses or setoff
rights of any kind, and forever and the Debtors irrevocably waive, discharge and
release any right they may have to (A) challenge the validity, enforceability,
priority, security, perfection and non-avoidability of any of the Prepetition
RBL Obligations, the Prepetition RBL Loan Documents or the Prepetition Senior
Liens and (B) assert any and all Claims or causes of action, offsets,
counterclaims, set off rights, objections, challenges, choses in action,
liabilities, losses, damages, responsibilities, disputes, remedies, actions,
suits, controversies, reimbursement obligations, costs, expenses, judgments or
defenses against the Prepetition RBL Secured Parties and each of their
respective former, current or future officers, directors, equityholders,
members, partners, subsidiaries, affiliates, funds, managers, managing members,
employees, advisors, principals, attorneys, professionals, accountants,
investment bankers, consultants, agents and other representatives, whether
arising at law or in equity, including (without limitation) any claims arising
from actions relating to any aspect of the relationship between the Prepetition
RBL Secured Parties and the Debtors, including any recharacterization,
subordination, avoidance or other claim arising under or pursuant to section 105
or chapter 5 of the Bankruptcy Code or under any other similar provisions of
applicable state or federal law, in each case, arising out of, based upon or
related to the Prepetition RBL Loan Documents, the Prepetition Senior Liens or
the Prepetition RBL Obligations, the Debtors’ attempts to restructure the
Prepetition RBL Obligations, any of the Debtors’ other long-term indebtedness,
consenting to the terms of this Interim Order and the use of Cash Collateral
hereunder, or any and all Claims and causes of action arising under the
Bankruptcy Code as applicable.
(xvi)    Validity and Enforceability of Prepetition FLMO Obligations and
Prepetition Senior Liens. (a) The Prepetition Senior Liens are valid, binding,
enforceable, non-avoidable and properly perfected liens granted to, or for the
benefit of, the Prepetition FLMO Secured Parties for fair consideration and
reasonably equivalent value, and were granted contemporaneously with, or
covenanted to be provided as inducement for, the making of the loans and/or
commitments and other financial accommodations secured thereby; (b) the
Prepetition Senior Liens are senior in priority over any and all other liens on
the Prepetition Collateral (other than (x) Permitted Prior Liens and (y) the
Prepetition FLLO Liens (which are pari passu with the Prepetition Senior
Liens)); (c) the Prepetition FLMO Obligations constitute legal, valid, binding
and non-avoidable obligations of the Prepetition FLMO Term Loan Parties,
enforceable in accordance with the terms of the Prepetition FLMO Term Loan
Documents; and (d) the Debtors and their estates hold no (and the Debtors hereby
waive, discharge and release any) valid or enforceable Claims, counterclaims,
causes of action, defenses or setoff rights of any kind, and forever and the
Debtors irrevocably waive, discharge and release any right they may have to (A)
challenge the validity, enforceability, priority, security, perfection and
non-avoidability of any of the Prepetition FLMO Obligations, the Prepetition
FLMO Term Loan Documents or the Prepetition Senior Liens and (B) assert any and
all Claims, causes of action, offsets, counterclaims, set off rights,
objections, challenges, choses in action, liabilities, losses, damages,
responsibilities, disputes, remedies, actions, suits, controversies,
reimbursement obligations, costs, expenses, judgments or defenses against the
Prepetition FLMO Secured Parties, and each of their respective former, current
or future officers, directors, equityholders, members, partners, subsidiaries,

12

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affiliates, funds, managers, managing members, employees, advisors, principals,
attorneys, professionals, accountants, investment bankers, consultants, agents,
and other representatives, whether arising at law or in equity, including
(without limitation) any claims arising from actions relating to any aspect of
the relationship between the Prepetition FLMO Secured Parties and the Debtors,
including any recharacterization, subordination, avoidance or other claim
arising under or pursuant to section 105 or chapter 5 of the Bankruptcy Code or
under any other similar provisions of applicable state or federal law, in each
case, arising out of, based upon or related to the Prepetition FLMO Term Loan
Documents, the Prepetition Senior Liens, the Prepetition FLMO Obligations, the
Debtors’ attempts to restructure the Prepetition FLMO Obligations, any of the
Debtors’ other long-term indebtedness, consenting to the terms of this Interim
Order and the use of Cash Collateral hereunder, or any and all Claims and causes
of action arising under the Bankruptcy Code as applicable.
(xvii)    Validity and Enforceability of Prepetition FLLO Liens and Prepetition
FLLO Obligations. (a) The Prepetition FLLO Liens are valid, binding,
enforceable, non-avoidable and properly perfected liens granted to, or for the
benefit of, the Prepetition FLLO Secured Parties for fair consideration and
reasonably equivalent value, and were granted contemporaneously with, or
covenanted to be provided as inducement for, the making of the loans and/or
commitments and other financial accommodations secured thereby; (b) the
Prepetition FLLO Liens are pari passu with the Prepetition Senior Liens, subject
to the Pari Passu Intercreditor Agreement, and senior in priority over any and
all other liens on the Prepetition Collateral (other than any Permitted Prior
Liens); (c) the Prepetition FLLO Obligations constitute legal, valid, binding
and non-avoidable obligations of the Prepetition FLLO Term Loan Parties,
enforceable in accordance with the terms of the Prepetition FLLO Term Loan
Documents; and (d) the Debtors and their estates hold no (and the Debtors hereby
waive, discharge and release any) valid or enforceable Claims, counterclaims,
causes of action, defenses or setoff rights of any kind, and forever and the
Debtors irrevocably waive, discharge and release any right they may have to (A)
challenge the validity, enforceability, priority, security, perfection and
non-avoidability of any of the Prepetition FLLO Obligations, the Prepetition
FLLO Term Loan Documents or the Prepetition FLLO Liens, respectively, and (B)
assert any and all Claims, causes of action, offsets, counterclaims, set off
rights, objections, challenges, choses in action, liabilities, losses, damages,
responsibilities, disputes, remedies, actions, suits, controversies,
reimbursement obligations, costs, expenses, judgments or defenses against the
Prepetition FLLO Secured Parties, and each of their respective former, current
or future officers, directors, equityholders, members, partners, subsidiaries,
affiliates, funds, managers, managing members, employees, advisors, principals,
attorneys, professionals, accountants, investment bankers, consultants, agents,
and other representatives, whether arising at law or in equity, including
(without limitation) any claims arising from actions relating to any aspect of
the relationship between the Prepetition FLLO Secured Parties and the Debtors,
including any recharacterization, subordination, avoidance or other claim
arising under or pursuant to section 105 or chapter 5 of the Bankruptcy Code or
under any other similar provisions of applicable state or federal law, in each
case, arising out of, based upon or related to the Prepetition FLLO Term Loan
Documents, the Prepetition FLLO Liens, the Prepetition FLLO Obligations, the
Debtors’ attempts to restructure the Prepetition FLLO Obligations, any of the
Debtors’ other long-term indebtedness, consenting to the terms of this Interim
Order and the use of Cash Collateral

13

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hereunder, or any and all Claims and causes of action arising under the
Bankruptcy Code as applicable.
(xviii)    Validity and Enforceability of Prepetition Second Liens and
Prepetition Second Lien Note Obligations. The Debtors acknowledge and agree
that, as of the Petition Date: (a) The Prepetition Second Liens are valid,
binding, enforceable, non-avoidable and properly perfected liens that were
granted to, or for the benefit of, the Prepetition Second Lien Secured Parties
for fair consideration and reasonably equivalent value, and were granted
contemporaneously with, or covenanted to be provided as inducement for, the
making of the loans and/or commitments and other financial accommodations
secured thereby; (b) the Prepetition Second Liens are junior in priority to the
Permitted Prior Liens, the Prepetition Senior Liens and the Prepetition FLLO
Liens, and are subject to the Second Lien Intercreditor Agreement; (c) the
Prepetition Second Lien Note Obligations constitute legal, valid, binding and
non-avoidable obligations of the Second Lien Note Parties, enforceable in
accordance with the terms of the Prepetition Second Lien Documents; and (d) the
Debtors and their estates hold no (and the Debtors hereby waive, discharge and
release any) valid or enforceable Claims, counterclaims, causes of action,
defenses or setoff rights of any kind, and forever and the Debtors irrevocably
waive, discharge and release any right they may have to (A) challenge the
validity, enforceability, priority, security, perfection and non-avoidability of
any of the Prepetition Second Lien Note Obligations, the Prepetition Second Lien
Documents or the Prepetition Second Liens, respectively, and (B) assert any and
all Claims or causes of action, offsets, counterclaims, set off rights,
objections, challenges, choses in action, liabilities, losses, damages,
responsibilities, disputes, remedies, actions, suits, controversies,
reimbursement obligations, costs, expenses, judgments or defenses against the
Prepetition Second Lien Secured Parties, and each of their respective former,
current or future officers, directors, equityholders, members, partners,
subsidiaries, affiliates, funds, managers, managing members, employees,
advisors, principals, attorneys, professionals, accountants, investment bankers,
consultants, agents and other representatives, whether arising at law or in
equity, including (without limitation) any claims arising from actions relating
to any aspect of the relationship between the Prepetition Second Lien Secured
Parties and the Debtors, including any recharacterization, subordination,
avoidance or other claim arising under or pursuant to section 105 or chapter 5
of the Bankruptcy Code or under any other similar provisions of applicable state
or federal law, in each case, arising out of, based upon or related to the
Prepetition Second Lien Documents, the Prepetition Second Liens or the
Prepetition Second Lien Note Obligations, the Debtors’ attempts to restructure
the Prepetition Second Lien Obligations, any of the Debtors’ other long-term
indebtedness, consenting to the terms of this Interim Order and the use of Cash
Collateral hereunder, or any and all Claims and causes of action arising under
the Bankruptcy Code as applicable.
(xix)    Cash Collateral. All of the Debtors’ cash existing on the Petition
Date, wherever located (including, without limitation, any cash in deposit
accounts of the Debtors or otherwise) constitutes cash collateral of the
Prepetition Secured Parties within the meaning of section 363(a) of the
Bankruptcy Code to the extent that such cash constitutes Prepetition Collateral
(subject in all respects to the Intercreditor Agreements) (the “Cash
Collateral”).

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(xx)    No Control. None of the Prepetition Secured Parties controls the Debtors
or their properties or operations, has authority to determine the manner in
which any of the Debtors’ operations are conducted, or is a control person or
insider of the Debtors or any of their affiliates by virtue of the actions taken
with respect to, in connection with, related to, or arising from this Interim
Order, the DIP Facilities, the DIP Loan Documents or the Prepetition Debt
Documents.
F.    Findings Regarding Postpetition Financing.
(i)    Request for Postpetition Financing. The Debtors seek authority to
(a) enter into the DIP Facilities on the terms described herein and in the DIP
Loan Documents and (b) use Cash Collateral on the terms described herein and in
the DIP Loan Documents in order to administer the Chapter 11 Cases and fund
their operations. At the Final Hearing, the Debtors will seek final approval of
the DIP Loan Documents, the proposed postpetition financing arrangements, and
use of Cash Collateral arrangements pursuant to the Final Order. Notice of the
Final Hearing and Final Order will be provided in accordance with this Interim
Order.
(ii)    Good Cause. Good cause has been shown for entry of this Interim Order.
(iii)    Priming of Prepetition Liens. The priming of the Prepetition Liens on
the Prepetition Collateral under section 364(d)(1) of the Bankruptcy Code, as
contemplated by this Interim Order and the DIP Facilities and as further
described below, will enable the Debtors to obtain the DIP Facilities and to
preserve and maximize the value of their estates to the benefit of their
stakeholders. The Prepetition RBL Agent, on behalf of the Prepetition RBL
Secured Parties, consents to the priming of the Prepetition Senior Liens as
provided by and subject to the terms of this Interim Order and the DIP Loan
Documents and does not object to the adequate protection as provided in and
subject to the terms of this Interim Order; provided, that nothing in this
Interim Order or the DIP Loan Documents shall (x) be construed as the
affirmative consent by the Prepetition RBL Secured Parties for the use of Cash
Collateral other than on the terms set forth in

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this Interim Order and the DIP Loan Documents, (y) be construed as a consent by
the Prepetition RBL Secured Parties to the terms of any other financing, other
than the DIP Facilities, or any other lien encumbering the Prepetition
Collateral other than the DIP Liens (whether senior or junior) or (z) prejudice,
limit or otherwise impair the rights of the Prepetition RBL Secured Parties
(subject to the Intercreditor Agreements) to seek new, different or additional
adequate protection, or to assert the interests of any of the Prepetition RBL
Secured Parties. The Prepetition FLMO Term Loan Agent, on behalf of the
Prepetition FLMO Secured Parties, has consented or (pursuant to the Collateral
Agency Agreement) is deemed to consent to the priming of the Prepetition Senior
Liens, the use of Cash Collateral and the adequate protection pursuant to the
DIP Facilities as provided in this Interim Order on the date hereof and the DIP
Loan Documents and does not object to the adequate protection as provided in and
subject to the terms of this Interim Order; provided, that nothing in this
Interim Order or the DIP Loan Documents shall (x) be construed as the
affirmative consent by the Prepetition FLMO Secured Parties for the use of Cash
Collateral other than on the terms set forth in this Interim Order and the DIP
Loan Documents as in effect on the date hereof, (y) be construed as a consent by
the Prepetition FLMO Secured Parties to the terms of any other financing, other
than the DIP Facilities as in effect on the date hereof, or any other lien
encumbering the Prepetition Collateral other than the DIP Liens (whether senior
or junior) or (z) prejudice, limit or otherwise impair the rights of the
Prepetition FLMO Secured Parties (subject to the Intercreditor Agreements) to
seek new, different or additional adequate protection, or to assert the
interests of any of the Prepetition FLMO Secured Parties. The Prepetition FLLO
Term Loan Agent, on behalf of the Prepetition FLLO Secured Parties, has
consented or (pursuant to the Pari Passu Intercreditor Agreement) is deemed to
consent to the priming of the Prepetition FLLO Liens, the use of Cash Collateral
and the adequate protection pursuant to the DIP Facilities as provided

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in this Interim Order on the date hereof and the DIP Loan Documents and does not
object to the adequate protection as provided in and subject to the terms of
this Interim Order; provided, that nothing in this Interim Order or the DIP Loan
Documents shall (x) be construed as the affirmative consent by the Prepetition
FLLO Secured Parties for the use of Cash Collateral other than on the terms set
forth in this Interim Order and the DIP Loan Documents as in effect on the date
hereof, (y) be construed as a consent by the Prepetition FLLO Secured Parties to
the terms of any other financing, other than the DIP Facilities as in effect on
the date hereof, or any other lien encumbering the Prepetition Collateral other
than the DIP Liens (whether senior or junior) or (z) prejudice, limit or
otherwise impair the rights of the Prepetition FLLO Secured Parties (subject to
the Intercreditor Agreements) to seek new, different or additional adequate
protection, or to assert the interests of any of the Prepetition FLLO Secured
Parties. The Prepetition Second Lien Collateral Trustee, on behalf of the
Prepetition Second Lien Secured Parties, has consented or (pursuant to the
Second Lien Intercreditor Agreement) is deemed to consent to the priming of the
Prepetition Second Liens, the use of Cash Collateral and the adequate protection
provided in this Interim Order and the DIP Loan Documents and does not object to
the adequate protection as provided in and subject to the terms of this Interim
Order; provided, that nothing in this Interim Order or the DIP Loan Documents
shall (x) be construed as the affirmative consent by the Prepetition Second Lien
Secured Parties for the use of Cash Collateral other than on the terms set forth
in this Interim Order and the DIP Loan Documents, (y) be construed as a consent
by the Prepetition Second Lien Secured Parties to the terms of any other
financing, other than the DIP Facilities, or any other lien encumbering the
Prepetition Collateral other than the DIP Liens (whether senior or junior) or
(z) prejudice, limit or otherwise impair the rights of the Prepetition Second
Lien Secured Parties (subject to the Intercreditor Agreements) to seek new,
different or

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additional adequate protection, or to assert the interests of any of the
Prepetition Second Lien Secured Parties;.
(iv)    Immediate Need for Postpetition Financing and Use of Cash Collateral.
The Debtors’ need to use Cash Collateral and to obtain credit pursuant to the
Senior DIP Facility as provided for herein is immediate and necessary to avoid
serious and irreparable harm to the Debtors, their estates, their creditors and
other parties-in-interest, and to enable the Debtors to, among other things,
fund the costs of these Chapter 11 Cases, make payroll and satisfy other working
capital and general corporate purposes, administer and preserve the value of
their estates. The Debtors’ need to obtain credit pursuant to the Junior DIP
Facility to refinance the Prepetition RBL Obligations is a critical requirement
to permit the Debtors to obtain financing under the Senior DIP Facility insofar
as the Senior DIP Lenders have informed the Debtors that they will not make the
Senior DIP Facility available without such refinancing. Repayment in full of the
Prepetition RBL Obligations with the initial proceeds of the DIP Loans is
appropriate because (i) the aggregate value of the Prepetition Collateral
securing the Prepetition RBL Obligations exceeds the aggregate amount of the
Prepetition RBL Obligations, (ii) the Prepetition RBL Lenders’ senior liens and
over-secured claims effectively preclude a non-consensual priming
debtor-in-possession or exit financing facility and will require the payment in
full of the Prepetition RBL Obligations in connection with these Chapter 11
Cases, (iii) it is a condition to closing the Senior DIP Credit Agreement, which
provides liquidity to fund these Chapter 11 Cases and working capital during
these Chapter 11 Cases, that the initial proceeds of the DIP Loans be used to
repay the Prepetition RBL Obligations so that the Debtors’ assets that secure
the Prepetition RBL Obligations on a first lien basis will be available to
secure on a priming lien basis the Senior DIP Obligations, and (iv)

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the Restructuring Support Agreement5 among the Debtors and the Consenting
Creditors (as defined therein) requires the Debtors to use the initial proceeds
from the DIP Loans to repay Prepetition RBL Obligations and the failure to make
such payment would give the Consenting Creditors the right to terminate the
Restructuring Support Agreement. The ability of the Debtors to finance their
operations, maintain business relationships with their vendors and suppliers,
and pay their employees requires the availability of working capital from the
Senior DIP Facility and the use of Cash Collateral. The Debtors’ inability to
access the interim financing under the DIP Facilities and use Cash Collateral
will immediately and irreparably harm the Debtors, their estates, their
creditors, and the Debtors’ chances to successfully reorganize. The Debtors do
not have sufficient available sources of unencumbered working capital and
financing to operate their businesses or maintain their properties in the
ordinary course of business without the DIP Facilities and authorized use of
Cash Collateral. The terms of the DIP Facilities, the DIP Loan Documents and
this Interim Order are fair and reasonable, reflect the Debtors’ exercise of
sound business judgment and are supported by reasonably equivalent value.
(v)    No Credit Available on More Favorable Terms. The DIP Facilities are the
best sources of debtor-in-possession financing available to the Debtors. Given
their current financial condition, financing arrangements, and capital
structure, the Debtors have been unable to obtain financing from sources other
than the DIP Lenders on terms more favorable than those provided under the DIP
Facilities and the DIP Loan Documents. The Debtors have been unable to obtain
sufficient unsecured credit allowable as an administrative expense under section
__________
5 
“Restructuring Support Agreement” refers to that certain Restructuring Support
Agreement, dated as of July 15, 2020, by and among CRC and each of its
affiliates party thereto, the Consenting 2016 Term Loan Lenders, the Consenting
2017 Term Loan Lenders, the Consenting Second Lien Noteholders, and Ares.

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503(b)(1) of the Bankruptcy Code. The Debtors also have been unable to obtain
sufficient credit (a) having priority over administrative expenses of the kind
specified in sections 503(b), 507(a) and 507(b) of the Bankruptcy Code,
(b) secured by a lien on property of the Debtors and their estates that is not
otherwise subject to a lien, or (c) secured solely by a junior lien on property
of the Debtors and their estates that is subject to a lien. Postpetition
financing is not otherwise available without granting each DIP Agent, for the
benefit of itself and the respective DIP Secured Parties: (1) the DIP Liens (as
defined below) on all DIP Collateral, as set forth herein; (2) the Superpriority
DIP Claims (as defined below); and (3) the refinancing of the Prepetition RBL
Obligations as set forth herein and the other protections set forth in this
Interim Order. After considering all alternatives, the Debtors have properly
concluded, in the exercise of their sound business judgment, that the DIP
Facilities represent the best financing available to them at this time, and is
in the best interests of all of their stakeholders.
(vi)    Use of Proceeds of the DIP Facilities and Cash Collateral. As a
condition to entry into the DIP Credit Agreements, the extension of credit under
the DIP Facilities and the authorization to use Cash Collateral (including,
without limitation, the proceeds of the DIP Facilities), the DIP Agents, the DIP
Lenders, and the Prepetition Secured Parties require, and the Debtors have
agreed, that Cash Collateral and the proceeds of the DIP Facilities shall be
used only in a manner consistent with the terms and conditions of the DIP Loan
Documents and this Interim Order (including to refund, refinance, replace and
repay the RBL Loans and to reimburse any drawn amount of the DIP Letters of
Credit), and solely in accordance with the Approved Budget (subject to Permitted
Variances).
G.    Adequate Protection. The Prepetition Secured Parties have consented, or
have been deemed to consent, as applicable, to the subordination of their
respective liens to the DIP Liens

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nd the Carve Out, and the Prepetition Secured Parties have agreed, or have been
deemed to agree, to permit the Debtors’ use of Prepetition Collateral (including
Cash Collateral), in each case, in accordance with and subject to the terms
hereof, the Approved Budget (subject to Permitted Variances) and the DIP Loan
Documents. Subject to the Intercreditor Agreements, the Prepetition Secured
Parties are entitled, pursuant to sections 361, 362, 363, 364 and 507 of the
Bankruptcy Code, to adequate protection against the diminution in value of their
respective interests in the Prepetition Collateral (including Cash Collateral)
for any reason provided for and allowed by the Bankruptcy Code (collectively,
the “Diminution in Value”), including, without limitation, any diminution
resulting from the sale, lease or use by the Debtors of the Prepetition
Collateral, the priming of the Prepetition Liens by the DIP Liens pursuant to
the DIP Documents and this Interim Order, the payment of any amounts under the
Carve Out or pursuant to this Interim Order, the Final Order or any other order
of the Court or provision of the Bankruptcy Code or otherwise, and the
imposition of the Automatic Stay.
H.    Sections 506(c), 552(b), and Waiver of Marshaling. As a material
inducement to the DIP Lenders to agree to provide the DIP Facilities, and in
light of (a) the DIP Secured Parties’ agreement to subordinate their liens and
superpriority claims to the Carve Out to the extent set forth herein, and
(b) the Prepetition Secured Parties’ agreement to (i) subordinate the
Prepetition Liens and the Adequate Protection Liens (as defined below) to the
DIP Liens, the Superpriority DIP Claims and the Carve Out (to the extent
provided herein), and (ii) consent to the use of Cash Collateral in accordance
with and subject to the Approved Budget (subject to Permitted Variances), the
DIP Loan Documents and the terms of this Interim Order: (a) the DIP Agents, the
DIP Lenders and the Prepetition Secured Parties are each entitled to receive a
waiver of (x) the provisions of section 506(c) of the Bankruptcy Code and (y)
application of the equitable doctrine

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of marshaling and other similar doctrines; and (b) the Prepetition Secured
Parties are each entitled to receive a waiver of any “equities of the case”
exceptions or claims under section 552(b) of the Bankruptcy Code, in each case,
subject to the terms and conditions set forth in this Interim Order;
I.    Good Faith of the DIP Agents and the DIP Lenders.
(i)    Willingness to Provide Financing. The DIP Secured Parties have indicated
a willingness to provide postpetition financing to the Debtors subject to, among
other things: (a) the entry by the Court of this Interim Order and the Final
Order; (b) approval by the Court of the terms and conditions of the DIP
Facilities and the DIP Loan Documents; and (c) entry of findings by the Court
that such financing is essential to the Debtors’ estates, that the DIP Agents
and the DIP Secured Parties are extending postpetition credit to the Debtors
pursuant to the DIP Loan Documents and this Interim Order in good faith, and
that the DIP Agents’ and DIP Secured Parties’ claims, superpriority claims,
security interests and liens and other protections granted pursuant to this
Interim Order and the DIP Loan Documents will have the protections provided in
section 364(e) of the Bankruptcy Code and will not be affected by any subsequent
reversal, modification, vacatur, amendment, reargument or reconsideration of
this Interim Order or any other order.
(ii)    Business Judgment and Good Faith Pursuant to Section 364(e). The terms
and conditions of the DIP Facilities, including the extension of credit, the
fees, and other amounts paid and to be paid thereunder, and the Cash Collateral
arrangements described therein and herein: (a) are fair and reasonable; (b) are
the best available to the Debtors under the circumstances; (c) reflect the
Debtors’ exercise of prudent business judgment consistent with their fiduciary
duties; and (d) are supported by reasonably equivalent value and fair
consideration. The DIP Facilities and the use of Cash Collateral were negotiated
in good faith and at arms’ length among

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the Debtors, the DIP Agents, the DIP Secured Parties and the applicable
Prepetition Secured Parties. The credit to be extended under the DIP Facilities
shall be deemed to have been so advanced, made, used and/or extended in good
faith, and for valid business purposes and uses, within the meaning of section
364(e) of the Bankruptcy Code, and the DIP Agents and the DIP Secured Parties
are therefore entitled to the protection and benefits of section 364(e) of the
Bankruptcy Code and this Interim Order.
J.    Notice. Notice of the Interim Hearing and the emergency relief requested
in the Motion has been provided by the Debtors, whether by email, facsimile,
overnight courier or hand delivery, to certain parties-in-interest, including:
(a) the U.S. Trustee; (b) the Debtors’ 30 largest unsecured creditors (on a
consolidated basis), (c) those persons who have formally appeared in these
chapter 11 cases and requested service pursuant to Bankruptcy Rule 2002; (d) the
Securities and Exchange Commission; (e) the Internal Revenue Service; (f) all
other applicable government agencies to the extent required by the Bankruptcy
Rules or the Bankruptcy Local Rules; (g) counsel to the Senior DIP Agent; (h)
counsel to the Junior DIP Agent; (i) counsel to the ad hoc group of Prepetition
FLMO Secured Parties and Prepetition FLLO Secured Parties (which includes as
members the Junior DIP Lenders) (the “Ad Hoc First Lien Group”); (j) counsel to
the ad hoc group of Prepetition Second Lien Noteholders; (k) counsel to the
Prepetition RBL Agent; (l) counsel to the Prepetition FLMO Term Loan Agent; (m)
counsel to the Prepetition FLLO Term Loan Agent; (n) counsel to the Prepetition
Second Lien Collateral Trustee; and (o) all other known parties with liens of
record on assets of the Debtors as of the Petition Date (collectively, the
“Notice Parties”). The Debtors have made reasonable efforts to afford the best
notice possible under the circumstances and such notice is good and sufficient
to permit the interim relief set forth in this Interim Order.

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K.    Necessity of Immediate Entry. The Debtors have requested immediate entry
of this Interim Order pursuant to Bankruptcy Rules 4001(b)(2) and 4001(c)(2).
Absent entry of this Interim Order, the Debtors’ businesses, properties and
estates will be immediately and irreparably harmed. The Court concludes that
entry of this Interim Order is in the best interest of the Debtors’ estates and
creditors.
NOW THEREFORE, based upon the foregoing findings and conclusions, the Motion,
the First Day Declarations, the Mendelsohn Declaration and the record made
before the Court with respect to the Motion at the Interim Hearing and
otherwise, and after due consideration, and good and sufficient cause appearing
therefor,
IT IS HEREBY ORDERED, THAT:
1.    Motion Approved. The Motion is hereby granted on an interim basis, on the
terms and conditions set forth in this Interim Order and the DIP Loan Documents.
All formal and informal objections to the interim relief sought in the Motion or
to the entry of this Interim Order, to the extent not withdrawn or resolved, and
all reservation of rights included therein, are hereby overruled.
2.    Authorization of the DIP Facilities.
(a)    Each DIP Facility is hereby approved. The Debtors are hereby expressly
and immediately authorized and empowered (a) to establish the Senior DIP
Facility and the Junior DIP Facility, (b) to execute, deliver and perform under
the Senior DIP Loan Documents and the Junior DIP Loan Documents, and to borrow,
incur, guarantee (as applicable), perform and pay the Senior DIP Obligations and
the Junior DIP Obligations and create and grant the DIP Liens in the DIP
Collateral in favor of the Senior DIP Agent for the benefit of the Senior DIP
Secured Parties and in favor of the Junior DIP Agent for the benefit of the
Junior DIP Secured Parties, in each

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case, in accordance with and subject to the terms of this Interim Order, the
Approved Budget (subject to Permitted Variances) and the Senior DIP Loan
Documents and Junior DIP Loan Documents, as applicable, (c) to execute, deliver
and perform under any and all other instruments, certificates, agreements and
documents which may be requested by either DIP Agent or the DIP Secured Parties,
and (d) to take any and all other actions, which may be required, necessary or
prudent for the performance by the applicable Debtors under the Senior DIP
Facility, the Junior DIP Facility, the Senior DIP Loan Documents or the Junior
DIP Loan Documents, the creation and perfection of the DIP Liens or to implement
any of the transactions contemplated by the Senior DIP Loan Documents, the
Junior DIP Loan Documents or this Interim Order. Without limiting the foregoing,
the Debtors are hereby authorized and directed to pay, in accordance with this
Interim Order (subject to paragraph 22(c) hereof), all Senior DIP Obligations
and Junior DIP Obligations, which amounts are hereby approved, shall not be
subject to further approval of this Court and shall be non-refundable and not
subject to challenge in any respect. Upon execution and delivery, the Senior DIP
Loan Documents and the Junior DIP Loan Documents shall represent valid and
binding obligations of the Debtors, enforceable against each of the Debtors and
their estates, and the Senior DIP Obligations and Junior DIP Obligations shall
be due and payable, in each case, in accordance with the terms of this Interim
Order (subject to paragraph 22(c) hereof) and the Senior DIP Loan Documents and
Junior DIP Loan Documents, respectively.
(b)    For purposes hereof, the term “Senior DIP Obligations” means all
“Obligations” (or any similar term that has a comparable meaning) as defined in
the Senior DIP Credit Agreement, and shall include, without limitation,
principal, interest, fees, costs, premiums, original issue discount, expenses,
charges, prepayment premiums or similar amounts, any obligations in respect of
indemnity claims, whether contingent or absolute, or any other amounts

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that are or may become due under the Senior DIP Loan Documents, including the
Commitment Letter and the Fee Letter, in each case, whether or not such
obligations arose before or after the Petition Date, as such amounts become
earned, due and payable under the Senior DIP Loan Documents, without the need to
obtain further Court approval. For purposes hereof, the term “Junior DIP
Obligations” means all “Obligations” (or any similar term that has a comparable
meaning) as defined in the Junior DIP Credit Agreement, and shall include,
without limitation, principal, interest, fees, costs, premiums, original issue
discount, expenses, charges, prepayment premiums or similar amounts, any
obligations in respect of indemnity claims, whether contingent or absolute, or
any other amounts that are or may become due under the Junior DIP Loan Documents
whether or not such obligations arose before or after the Petition Date, as such
amounts become earned, due and payable under the Junior DIP Loan Documents,
without the need to obtain further Court approval. The rights and remedies, and
priority of payments, as between the Senior DIP Obligations and the Junior DIP
Obligations are set forth in this Interim Order, which provisions shall govern
notwithstanding anything to the contrary in any Senior DIP Loan Documents or
Junior DIP Loan Documents. For purposes hereof, the term “DIP Obligations” means
the Senior DIP Obligations and the Junior DIP Obligations.
(c)    All outstanding RBL Letters of Credit are hereby deemed reissued as DIP
Letters of Credit under the Senior DIP Facility.
3.    Authorization to Borrow. To prevent immediate and irreparable harm to the
Debtors’ estates, the Debtors are hereby authorized to borrow the Senior DIP
Loans from the Senior DIP Lenders under the Senior DIP Facility, issue DIP
Letters of Credit (including by having all RBL Letters of Credit deemed issued
as DIP Letters of Credit) and use Senior DIP Loans under the New Money
Subfacility to pay any reimbursement obligations in respect of any drawn DIP

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Letters of Credit (and the DIP Guarantors are hereby authorized to
unconditionally guarantee, on a joint and several basis, the repayment of the
Senior DIP Facility) up to an aggregate principal amount of $349,010,655.62,
comprised of (a) 266,139,598.62 of Senior DIP Loans under the Senior New Money
Subfacility, including (i) $150,139,598.62 to deem the RBL Letters of as being
issued under the Senior New Money Subfacility, and (ii) an additional amount not
to exceed $31,000,000 in the form of Letters of Credit to backstop surety bonds,
and (b) the $82,871,057.00 Senior Roll-Up Subfacility, subject to the terms and
conditions set forth in this Interim Order and the Senior DIP Loan Documents.
Subject to and effective upon entry of the Final Order, the Debtors shall be
authorized to borrow the full amount of the Senior DIP Loans from the Senior DIP
Lenders under the Senior DIP Facility ($483,010,655.62). To prevent immediate
and irreparable harm to the Debtors’ estates, the Debtors are also hereby
authorized to borrow the full amount of the Junior DIP Loans ($650,000,000) from
the Junior DIP Lenders under the Junior DIP Facility (and the DIP Guarantors are
hereby authorized to unconditionally guarantee, on a joint and several basis,
the repayment of the Junior DIP Facility), subject to the terms and conditions
set forth in this Interim Order and the Junior DIP Loan Documents. The Debtors
are authorized and directed to use the proceeds of the Senior Roll-Up
Subfacility ($82,871,057.00) and the Junior DIP Facility on the closing date of
the Senior DIP Facility and the Junior DIP Facility to repay the outstanding RBL
Loans, which repayment shall be subject to paragraph 29 hereof. The Senior DIP
Secured Parties and Junior DIP Secured Parties shall have no obligation to make
any loan or advance under the respective DIP Loan Documents or, with respect to
the Senior DIP Secured Parties, issue any DIP Letter of Credit unless all of the
conditions precedent to the making of such extension of credit under the
applicable DIP Loan Documents and this Interim Order have been satisfied in full
or waived in accordance with such DIP Loan Documents.

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4.    DIP Obligations. This Interim Order and the Senior DIP Loan Documents and
the Junior DIP Loan Documents shall evidence the Senior DIP Obligations and
Junior DIP Obligations respectively, which DIP Obligations shall, upon execution
of the Senior DIP Loan Documents and Junior DIP Loan Documents, as applicable,
be valid, binding and enforceable against the Debtors, their estates and any
successors thereto, including, without limitation, any estate representative or
trustee appointed in any of the Chapter 11 Cases, or any case under chapter 7 of
the Bankruptcy Code upon the conversion of any of the Chapter 11 Cases, or in
any other proceedings superseding or related to any of the foregoing, and/or
upon the dismissal of any of the Chapter 11 Cases or any such successor cases
(collectively, the “Successor Cases”), and their creditors and other
parties-in-interest, in each case, in accordance with the terms of this Interim
Order and the applicable DIP Loan Documents. All obligations incurred, payments
made, and transfers or grants of security and liens set forth in this Interim
Order and/or the DIP Loan Documents by any Debtor are granted to or for the
benefit of the Debtors for fair consideration and reasonably equivalent value,
and are granted contemporaneously with the making of the loans and/or
commitments and other financial accommodations secured thereby. Subject to
paragraph 29 hereof with respect to the repayment of the Prepetition RBL
Obligations, no obligation, payment, transfer, or grant of security or lien
hereunder and/or under any DIP Loan Documents (including any Senior DIP
Obligation, Junior DIP Obligations or DIP Liens) shall be stayed, restrained,
voidable, avoidable, or recoverable, under the Bankruptcy Code or under any
applicable law (including, without limitation, under sections 502(d), 544 and
547 to 550 of the Bankruptcy Code or under any applicable state Uniform Voidable
Transfer Act, Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act, or similar statute or common law), or subject to any avoidance, reduction,
setoff, recoupment, offset, recharacterization, subordination (whether
equitable, contractual or otherwise), counter-

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claim, cross-claim, defense, or any other challenge under the Bankruptcy Code or
any applicable law or regulation by any person or entity.
5.    DIP Liens.
(a)    As security for the Senior DIP Obligations, immediately upon entry of
this Interim Order, and effective as of the Petition Date, the Senior DIP Agent,
for the benefit of itself and each of the other Senior DIP Secured Parties, is
hereby granted continuing, valid, binding, enforceable, non-avoidable and
automatically and properly perfected security interests in and liens
(collectively, the “Senior DIP Liens”) on all DIP Collateral as collateral
security for the prompt and complete performance and payment when due (whether
at the stated maturity, by acceleration or otherwise) of all of the Senior DIP
Obligations. Subject in all respects to the priorities and relative rights set
forth herein, as security for the Junior DIP Obligations, immediately upon entry
of this Interim Order, and effective as of the Petition Date, the Junior DIP
Agent, for the benefit of itself and each of the other Junior DIP Secured
Parties, is hereby granted continuing, valid, binding, enforceable,
non-avoidable and automatically and properly perfected security interests in and
liens (collectively, the “Junior DIP Liens”, together with the Senior DIP Liens,
the “DIP Liens”) on all DIP Collateral as collateral security for the prompt and
complete performance and payment when due (whether at the stated maturity, by
acceleration or otherwise) of all of the Junior DIP Obligations.
(b)    The term “DIP Collateral” means, without limitation, all assets and
properties (whether tangible, intangible, real, personal or mixed) of the
Debtors, whether now owned by or owing to, or hereafter acquired by, or arising
in favor of, the Debtors (including under any trade names, styles, or
derivations thereof), and whether owned or consigned by or to, or leased from or
to, the Debtors, and regardless of where located, including, without limitation,
all of the

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Debtors’ rights, title and interest in: (i) all Prepetition Collateral
(including any Cash Collateral); (ii) all cash and cash equivalents; (iii) all
funds in any deposit account, securities account or other account of the Debtors
and all money, cash, cash equivalents, instruments and other property deposited
therein or credited thereto from time to time; (iv) all accounts and other
receivables; (v) all contract rights; (vi) all instruments, documents and
chattel paper; (vii) all securities (whether or not marketable); (viii) all
goods, as-extracted collateral, furniture, equipment, inventory and fixtures;
(ix) all real property interests; (x) all interests in leaseholds, (xi) all
franchise rights; (xii) all patents, tradenames, trademarks (other than
intent-to-use trademarks), copyrights, licenses and all other intellectual
property; (xiii) all general intangibles, tax or other refunds, or insurance
proceeds; (xiv) all equity interests, capital stock, limited liability company
interests, partnership interests and financial assets; (xv) all investment
property; (xvi) all supporting obligations; (xvii) all letters of credit issued
to the Debtors and letter of credit rights; (xviii)  commercial tort claims,
claims and causes of action and all substitutions; (xix) all books and records
(including, without limitation, customers lists, credit files, computer
programs, printouts and other computer materials and records); (xxi) to the
extent not covered by the foregoing, all other assets or properties of the
Debtors, whether tangible, intangible, real, personal or mixed; (xxii) all oil
reserves; (xxiii) all proceeds and products of each of the foregoing clauses
(i)-(xxii) and all accessions to, substitutions and replacements for, and rents,
profits and products of, each of the foregoing, including any and all proceeds
of any insurance, indemnity, warranty or guaranty payable to such Debtor from
time to time with respect to any of the foregoing; and (xxiv) all proceeds or
property recovered in connection with actions under chapter 5 of the Bankruptcy
Code (“Avoidance Actions”), provided, that (x) the DIP Liens on proceeds and
property recovered in connection with Avoidance Actions shall attach only upon
entry of the Final Order and (y) the

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DIP Collateral shall not include Excluded Property (as defined in the Senior DIP
Credit Agreement).
(c)    To the fullest extent permitted by the Bankruptcy Code or applicable law,
any provision of any lease, loan document, easement, use agreement, proffer,
covenant, license, contract, organizational document, or other instrument or
agreement that requires the consent or the payment of any fees or obligations to
any governmental entity or non-governmental entity in order for the Debtors to
pledge, grant, mortgage, sell, assign, or otherwise transfer any fee or
leasehold interest or the proceeds thereof or other DIP Collateral, shall have
no force or effect with respect to the grant, attachment or perfection of DIP
Liens on such leasehold interests or other applicable DIP Collateral or the
proceeds of any assignment and/or sale thereof by any Debtor in favor of the DIP
Secured Parties in accordance with the terms of the applicable DIP Loan
Documents and this Interim Order or in favor of the Prepetition Secured Parties
in accordance with this Interim Order.
6.    Priority of Senior DIP Liens.
(a)    The Senior DIP Liens shall have the following priorities:
(i)    pursuant to section 364(c)(2) of the Bankruptcy Code, the Senior DIP
Liens shall be valid, enforceable, non-avoidable and automatically and fully
perfected first priority liens on and security interests in all DIP Collateral
that is not otherwise subject to valid, perfected, non-avoidable and enforceable
liens in existence on or as of the Petition Date or valid liens perfected (but
not granted) after the Petition Date to the extent such post-petition perfection
is permitted by section 546(b) of the Bankruptcy Code, subject only to the Carve
Out, including without limitation, any and all unencumbered cash, hydrocarbons
and other inventory generated or produced after the Petition Date, accounts
receivable, inventory, general intangibles, contracts, securities, chattel

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paper, owned real estate, real property leaseholds, fixtures, machinery,
equipment, vehicles, deposit accounts, patents, copyrights, trademarks,
tradenames, rights under license agreements and other intellectual property,
capital stock of the subsidiaries of the Debtors and the proceeds of all of the
foregoing (collectively, such DIP Collateral, “Unencumbered Assets”);
(ii)    pursuant to section 364(c)(3) of the Bankruptcy Code, the Senior DIP
Liens shall be valid, enforceable, non-avoidable and automatically and fully
perfected junior liens on and security interests in all DIP Collateral other
than Prepetition Collateral, that on or as of the Petition Date is subject to
valid, perfected and unavoidable liens in existence immediately prior to the
Petition Date or to valid and unavoidable liens in existence immediately prior
to the Petition Date that are perfected after the Petition Date as permitted by
section 546(b) of the Bankruptcy Code, subject only to the Carve Out and such
Permitted Prior Liens; and
(iii)    pursuant to section 364(d)(1) of the Bankruptcy Code, the Senior DIP
Liens shall be valid, enforceable, non-avoidable automatically and fully
perfected first priority senior priming liens on and security interests in all
DIP Collateral that also constitutes Prepetition Collateral, wherever located,
which senior priming liens and security interests in favor of the Senior DIP
Agent shall prime and be senior to each of the Prepetition Liens, and shall be
subject only to the Carve Out.
(b)    Except as expressly set forth herein, the Senior DIP Liens and the Senior
Superpriority DIP Claims: (i) shall not be made subject to or pari passu with
(A) any lien, security interest or claim heretofore or hereinafter granted in
any of the Chapter 11 Cases or any Successor Cases and shall be valid and
enforceable against the Debtors, their estates, any trustee or any other estate
representative appointed or elected in the Chapter 11 Cases or any Successor
Cases and/or upon the dismissal of any of the Chapter 11 Cases or any Successor
Cases, (B) any lien that is

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avoided and preserved for the benefit of the Debtors and their estates under
section 551 of the Bankruptcy Code or otherwise, and (C) any intercompany or
affiliate lien or claim; and (ii) shall not be subject to sections 510, 549, 550
or 551 of the Bankruptcy Code or, subject to entry of the Final Order, section
506(c) of the Bankruptcy Code.
7.    Priority of Junior DIP Liens.
(a)    The Junior DIP Liens shall have the following priorities:
(i)    pursuant to section 364(c)(2) of the Bankruptcy Code, the Junior DIP
Liens shall be valid, enforceable, non-avoidable and automatically and fully
perfected second priority liens on and security interests in all Unencumbered
Assets, subject only to the Carve Out, the Senior DIP Liens and RBL Adequate
Protection Liens (as defined below);
(ii)    pursuant to section 364(c)(3) of the Bankruptcy Code, the Junior DIP
Liens shall be valid, enforceable, non-avoidable and automatically and fully
perfected junior liens on and security interests in all DIP Collateral other
than Prepetition Collateral, that on or as of the Petition Date is subject to
valid, perfected and unavoidable liens in existence immediately prior to the
Petition Date or to valid and unavoidable liens in existence immediately prior
to the Petition Date that are perfected after the Petition Date as permitted by
section 546(b) of the Bankruptcy Code, subject only to the Carve Out, such
Permitted Prior Liens, the Senior DIP Liens and any RBL Adequate Protection
Liens; and
(iii)    pursuant to section 364(d)(1) of the Bankruptcy Code, the Junior DIP
Liens shall be valid, enforceable, non-avoidable automatically and fully
perfected second priority senior priming liens on and security interests in all
DIP Collateral that also constitutes Prepetition Collateral, wherever located,
which senior priming liens and security interests in favor of the Junior DIP
Agent shall prime and be senior to each of the Prepetition Liens (other than any
liens

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securing the Prepetition RBL Obligations), and shall be subject only to the
Carve Out, Permitted Prior Liens, the Senior DIP Liens and liens securing the
Prepetition RBL Obligations.
(b)    Except as expressly set forth herein (including paragraph 22(c) hereof),
the Junior DIP Liens and the Junior Superpriority DIP Claims: (i) shall not be
made subject to or pari passu with (A) any lien, security interest or claim
heretofore or hereinafter granted in any of the Chapter 11 Cases or any
Successor Cases and shall be valid and enforceable against the Debtors, their
estates, any trustee or any other estate representative appointed or elected in
the Chapter 11 Cases or any Successor Cases and/or upon the dismissal of any of
the Chapter 11 Cases or any Successor Cases, (B) any lien that is avoided and
preserved for the benefit of the Debtors and their estates under section 551 of
the Bankruptcy Code or otherwise, and (C) any intercompany or affiliate lien or
claim; and (ii) shall not be subject to sections 510, 549, 550 or 551 of the
Bankruptcy Code or, subject to entry of the Final Order, section 506(c) of the
Bankruptcy Code.
8.    Superpriority DIP Claims.
(a)    Senior Superpriority Claims. Subject only to the Carve Out, immediately
upon entry of this Interim Order, and effective as of the Petition Date, the
Senior DIP Agent, for itself and for the benefit of the Senior DIP Lenders, is
hereby granted, pursuant to section 364(c)(1) and 364(e) of the Bankruptcy Code,
an allowed superpriority administrative expense claim in each of the Chapter 11
Cases or any Successor Cases (the “Senior Superpriority DIP Claims”), on account
of the Senior DIP Obligations, (a) with priority over any and all administrative
expense claims, unsecured claims and all other claims against the Debtors or
their estates in any of the Chapter 11 Cases or any Successor Cases, at any time
existing or arising, of any kind or nature whatsoever, including, without
limitation, administrative expenses, unsecured claims, or other claims of the
kinds specified in or ordered pursuant to sections 105, 326, 328, 330, 331,
364(c)(1),

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365, 503(a), 503(b), 506(c) (subject to entry of the Final Order), 507(a),
507(b), 546(c), 546(d), 726, 1113 and 1114 of the Bankruptcy Code, and any other
provision of the Bankruptcy Code, whether or not such expenses or claims may
become secured by a judgment lien or other non-consensual lien, levy, or
attachment, and (b) which shall at all times be senior to the rights of the
Debtors or their estates, and any trustee appointed in the Chapter 11 Cases or
any Successor Cases to the extent permitted by law. The Senior Superpriority DIP
Claims shall, for purposes of section 1129(a)(9)(A) of the Bankruptcy Code, be
considered administrative expenses allowed under section 503(b) of the
Bankruptcy Code, shall be against each Debtor on a joint and several basis.
(b)    Junior Superpriority Claims. Subject only to the Carve Out, the Senior
Superpriority Claims and the RBL Adequate Protection Claims, immediately upon
entry of this Interim Order, and effective as of the Petition Date, the Junior
DIP Agent, for itself and for the benefit of the Junior DIP Lenders, is hereby
granted, pursuant to section 364(c)(1) and 364(e) of the Bankruptcy Code, an
allowed superpriority administrative expense claim in each of the Chapter 11
Cases or any Successor Cases (the “Junior Superpriority DIP Claims”, and
together with the Senior Superpriority DIP Claims, the “Superpriority DIP
Claims”), on account of the Junior DIP Obligations, (a) with priority over any
and all administrative expense claims, unsecured claims and all other claims
against the Debtors or their estates in any of the Chapter 11 Cases or any
Successor Cases, at any time existing or arising, of any kind or nature
whatsoever, including, without limitation, administrative expenses, unsecured
claims, or other claims of the kinds specified in or ordered pursuant to
sections 105, 326, 328, 330, 331, 364(c)(1), 365, 503(a), 503(b), 506(c)
(subject to entry of the Final Order), 507(a), 507(b), 546(c), 546(d), 726, 1113
and 1114 of the Bankruptcy Code, and any other provision of the Bankruptcy Code,
whether or not such expenses or claims may become secured by a judgment lien or
other non-consensual lien, levy, or

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attachment, and (b) which shall at all times be senior to the rights of the
Debtors or their estates, and any trustee appointed in the Chapter 11 Cases or
any Successor Cases to the extent permitted by law. The Junior Superpriority DIP
Claims shall, for purposes of section 1129(a)(9)(A) of the Bankruptcy Code, be
considered administrative expenses allowed under section 503(b) of the
Bankruptcy Code, shall be against each Debtor on a joint and several basis.
9.    Use of DIP Facility Proceeds. From and after the Closing Date, the Debtors
shall be permitted to use the proceeds of the DIP Facilities and Cash Collateral
only for the following purposes, in each case, solely in accordance with and
subject to this Interim Order, the DIP Loan Documents and the Approved Budget
(subject to Permitted Variances): (a) to pay interest, fees, costs and expenses
related to the DIP Loans; (ii) to pay the reasonable, documented and invoiced
fees, costs and expenses of the estate professionals retained in the Chapter 11
Cases and approved by the Court (the “Estate Professionals”); (iii) to pay the
fees, costs, disbursements and expenses of the DIP Secured Parties to the extent
provided by the respective DIP Loan Documents; (iv) to make all permitted
payments of costs of administration of the Chapter 11 Cases; (v) to pay such
prepetition expenses as are consented to in writing by the Senior DIP Agent and
the Majority Junior DIP Lenders (as defined below) and approved by the Court;
(vi) to satisfy any adequate protection obligations owing under this Interim
Order; (vii) to fully repay the Prepetition RBL Obligations; and (viii) for
general corporate and working capital purposes of the Debtors during the Chapter
11 Cases.
10.    Authorization to Use Cash Collateral. The Debtors are authorized to use
Cash Collateral in accordance with the Approved Budget (subject to Permitted
Variances) and subject to the terms and conditions of the DIP Loan Documents and
this Interim Order, provided that the Prepetition Secured Parties are granted
the Adequate Protections as hereinafter set forth. Nothing

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in this Interim Order shall authorize the disposition of any assets of the
Debtors or their estates outside the ordinary course of business, or any of the
Debtors’ use of any Cash Collateral or other proceeds resulting therefrom,
except as permitted under this Interim Order and the DIP Loan Documents and in
accordance with the Approved Budget (subject to Permitted Variances). The
Prepetition Liens in the Prepetition Collateral, subject to the Intercreditor
Agreements, shall continue to attach to the Cash Collateral irrespective of the
commingling of the Cash Collateral with other cash of the Debtors (if any). Any
failure by the Debtors on or after the Petition Date to comply with the
segregation requirements of section 363(c)(4) of the Bankruptcy Code in respect
of any Cash Collateral shall not be used as a basis to challenge the Prepetition
Obligations, or the extent, validity, enforceability or perfected status of the
Prepetition Liens.
11.    Adequate Protection. In consideration for the Debtors’ use of the
Prepetition Collateral (including Cash Collateral), and to protect the
Prepetition Secured Parties against any Diminution in Value of their respective
interests in the Prepetition Collateral, the Prepetition Secured Parties shall
receive, subject to the Intercreditor Agreements, the following adequate
protection:
(a)    RBL Adequate Protection Liens. Pursuant to sections 361, 363(e) and
364(d) of the Bankruptcy Code, the Prepetition Senior Secured Collateral Agent,
for the benefit of the Prepetition RBL Secured Parties, immediately upon entry
of this Interim Order and effective as of the Petition Date, is hereby granted
continuing, valid, binding, enforceable and automatically perfected postpetition
security interests and liens on all DIP Collateral (the “RBL Adequate Protection
Liens”) (i) to the extent of any Diminution in Value and (ii) to the extent of
any remaining unpaid portion of any Prepetition RBL Obligations (including any
indemnity claims arising after the Petition Date and any Prepetition RBL
Obligations subsequently reinstated after

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the repayment thereof because such payment (or any portion thereof) is required
to be returned or repaid and the liens securing the Prepetition RBL Obligations
shall not have been avoided), which security interests and liens will be junior
only to the Senior DIP Liens, the Permitted Prior Liens and the Carve Out, and
shall be senior in priority to all other liens, including the Junior DIP Liens,
the FLMO Adequate Protection Liens (as defined below), the FLLO Adequate
Protection Liens (as defined below), the Second Lien Adequate Protection Liens
(as defined below) and the Prepetition Liens; provided, that the RBL Adequate
Protection Liens, the rights and remedies with respect thereto and the right to
receive DIP Collateral and proceeds therefrom shall be subject in all respects
to the terms and conditions of the Collateral Agency Agreement, and, without
limiting the foregoing or any other terms of the Collateral Agency Agreement,
any DIP Collateral proceeds distributed on account of the RBL Adequate
Protection Liens shall be made in accordance with the Allocation Provisions
contained in Section 3.06 of the Collateral Agency Agreement. Except for with
respect to the Senior DIP Liens, the Permitted Prior Liens and the Carve Out,
the Senior Adequate Protection Liens shall not be made subject to or pari passu
with any lien or security interest heretofore or hereinafter granted or created
in any of the Chapter 11 Cases or any Successor Cases and shall be valid and
enforceable against the Debtors, their estates and any successors thereto,
including, without limitation, any trustee appointed in any of the Chapter 11
Cases or any Successor Cases until such time as the Prepetition RBL Obligations
are discharged. The RBL Adequate Protection Liens shall not be subject to
sections 549 or 550 of the Bankruptcy Code. No lien or interest avoided and
preserved for the benefit of the estates pursuant to section 551 of the
Bankruptcy Code shall be pari passu with or senior to the RBL Adequate
Protection Liens.
(b)    RBL Adequate Protection Claim. Pursuant to section 507(b) of the
Bankruptcy Code, the Prepetition RBL Secured Parties, immediately upon entry of
this Interim

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Order and effective as of the Petition Date, are hereby granted an allowed
superpriority administrative expense claim (the “RBL Adequate Protection Claim”)
to the extent of any Diminution in Value and to the extent any unpaid portion of
any Prepetition RBL Obligations (including any indemnity claims arising after
the Petition Date and any Prepetition RBL Obligations subsequently reinstated
after the repayment thereof because such payment (or any portion thereof) is
required to be returned or repaid and the liens securing the Prepetition RBL
Obligations shall not have been avoided), which claim shall be junior to the
Senior Superiority DIP Claims and the Carve Out, but shall be senior to and have
priority over any other administrative expense claims, unsecured claims and all
other claims against the Debtors or their estates in any of the Chapter 11 Cases
or any Successor Cases, at any time existing or arising, of any kind or nature
whatsoever, including, without limitation, administrative expenses or other
claims of the kinds specified in or ordered pursuant to sections 105, 326, 328,
330, 331, 365, 503(a), 503(b), 506(c), 507(a), 507(b), 546(c), 546(d), 726, 1113
and 1114 of the Bankruptcy Code, and any other provision of the Bankruptcy Code,
whether or not such expenses or claims may become secured by a judgment lien or
other non-consensual lien, levy or attachment. The RBL Adequate Protection Claim
shall, for purposes of section 1129(a)(9)(A) of the Bankruptcy Code, be
considered administrative expenses allowed under section 503(b) of the
Bankruptcy Code and shall be against each Debtor on a joint and several basis.
Except for the Senior Superiority DIP Claims and the Carve Out, the RBL Adequate
Protection Claim shall not be made subject to or pari passu with any claim
heretofore or hereinafter granted or created in any of the Chapter 11 Cases or
any Successor Cases and shall be valid and enforceable against the Debtors,
their estates and any successors thereto, including, without limitation, any
trustee appointed in any of the

39

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Chapter 11 Cases or any Successor Cases until such time as the Prepetition RBL
Obligations are paid in full.
(c)    RBL Interest. As further adequate protection for the Prepetition RBL
Secured Parties, the Debtors shall pay to the Prepetition RBL Agent for the
ratable benefit of the Prepetition RBL Lenders, (i) no later than the earlier of
(x) three (3) business days after entry of this Interim Order and (y) the
closing date of the DIP Facilities, all accrued and unpaid interest, fees and
costs due and payable under the Prepetition RBL Loan Documents as of such
earlier date, in each case, calculated based on the applicable non-default rate
set forth in the Prepetition RBL Credit Agreement; and (ii) to the extent any
Prepetition RBL Obligations remain outstanding following the date described in
the foregoing clause (i) (including any amount that is outstanding after any
Prepetition RBL Obligations are reinstated), on the last business day of each
calendar month beginning the last business day of July, all accrued and unpaid
postpetition interest, fees and costs due and payable under the Prepetition RBL
Loan Documents, in each case, calculated based on the ABR non-default rate as
set forth in the Prepetition RBL Credit Agreement. All parties’ rights are
reserved as to whether any interest paid pursuant to the foregoing clause (ii)
shall be subject to recharacterization by the Court as payment of principal to
the extent the Prepetition RBL Obligations are determined to be under-secured
for purposes of section 506(b) of the Bankruptcy Code.
(d)    Prepetition Fees and Expenses. The Debtors shall pay all prepetition and
postpetition reasonable and documented fees, costs and expenses incurred by (i)
the Prepetition RBL Agent, including all reasonable and documented fees and
expenses of Simpson Thacher & Bartlett LLP (“Simpson Thacher”), Norton Rose
Fulbright US LLP (“Norton Rose Fulbright”), Opportune LLP (“Opportune”) and such
other consultants or other professionals as may be

40

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retained by the Prepetition RBL Agent in accordance with the terms of the
Prepetition RBL Credit Agreement, (collectively, the “RBL Agent Professionals”),
(ii) one primary counsel and one local counsel retained by the Prepetition
Senior Secured Collateral Agent, (iii) the Prepetition FLMO Term Loan Agent,
including all reasonable and documented fees and expenses of Emmet, Marvin &
Martin LLP (“Emmet Marvin”), (iv) the Prepetition FLLO Term Loan Agent,
including all reasonable and documented fees and expenses of Emmet Marvin, (v)
the Junior DIP Agent, including all documented fees and expenses of Ropes & Gray
LLP (“Ropes”), (vi) the Ad Hoc First Lien Group (including all reasonable and
documented fees and expenses of Davis Polk & Wardwell LLP (“Davis Polk”),
Evercore Inc. (“Evercore”), Haynes and Boone, LLP (“Haynes and Boone”), Cox,
Castle & Nicholson LLP (“Cox Castle”), Trimeric Corporation (“Trimeric”),
Cornerstone Engineering, Inc. (“Cornerstone”), ERM Consulting and Engineering
Inc. (“ERM”), and Rapp & Krock, PC (“Rapp & Krock,” collectively, the “Ad Hoc
First Lien Group Professionals”)), and (vii) Ares, including all reasonable and
documented fees and expenses of incurred by Ares in connection with the Debtors’
restructuring, including, but not limited to, Kirkland & Ellis LLP, Lazard,
Ramboll Group A/S, E3 Consulting, Netherland, Sewell & Associates, Inc.,
Brownstein Hyatt Farber Schreck, LLP, Mayer Brown LLP, Capstone LLC, Lockston
Companies, and Petru Corporation. The Debtors shall continue to pay any such
fees, costs and expenses incurred by the Prepetition RBL Agent, including the
reasonable and documented fees and expenses of the RBL Agent Professionals
(including any such fees, costs and expenses incurred defending any Challenge)
notwithstanding the repayment of the Prepetition RBL Obligations. The invoices
for the reasonable and documented fees and expenses to be paid pursuant to this
paragraph shall not be required to comply with the U.S. Trustee guidelines and
shall not be required to contain time detail (and may contain redactions of
privileged,

41

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confidential or otherwise sensitive information), and shall be provided to
counsel to the Debtors, with a copy to the U.S. Trustee and counsel to any
Committee appointed in the Chapter 11 Cases (collectively, the “Fee Notice
Parties”). If no objection to payment of the requested fees and expenses are
made, in writing and delivered to the applicable professionals and counsel to
the Debtors (which delivery may be made via electronic mail) by any of the Fee
Notice Parties within ten (10) calendar days after delivery of such invoices
(the “Fee Objection Period”), then, without further order of, or application to,
the Court or notice to any other party, such fees and expenses shall be promptly
paid by the Debtors. If an objection (solely as to reasonableness) is made by
any of the Fee Notice Parties within the Fee Objection Period to payment of the
requested fees and expenses, then only the disputed portion of such fees and
expenses shall not be paid until the objection is resolved by the applicable
parties in good faith or by order of the Court, and the undisputed portion shall
be promptly paid by the Debtors. Notwithstanding the foregoing, the Debtors are
authorized and directed to pay on the Closing Date the reasonable and documented
fees, costs and expenses of the RBL Agent Professionals and Ad Hoc First Lien
Group Professionals incurred on or prior to such date without the need to
provide notice to any other party or otherwise comply with the procedures set
forth in this paragraph.
(e)    FLMO Adequate Protection Liens. To the extent of any Diminution in Value,
pursuant to sections 361, 363(e) and 364(d) of the Bankruptcy Code, the
Prepetition Senior Secured Collateral Agent, for the benefit of the Prepetition
FLMO Secured Parties, immediately upon entry of this Interim Order and effective
as of the Petition Date, is hereby granted continuing, valid, binding,
enforceable and automatically perfected postpetition security interests and
liens on all DIP Collateral (the “Prepetition FLMO Adequate Protection Liens”),
which security interests and liens will be junior only to the DIP Liens, the
Permitted Prior Liens, the RBL Adequate

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Protection Liens and the Carve Out, and shall be senior in priority to all other
liens, including the FLLO Adequate Protection Liens, the Second Lien Adequate
Protection Liens) and the Prepetition Liens; provided, that the FLMO Adequate
Protection Liens, the rights and remedies with respect thereto and the right to
receive DIP Collateral and proceeds therefrom shall be subject in all respects
to the terms and conditions of the Collateral Agency Agreement, and, without
limiting the foregoing or any other terms of the Collateral Agency Agreement,
any DIP Collateral proceeds distributed on account of the FLMO Adequate
Protection Liens shall be made in accordance with the Allocation Provisions
contained in Section 3.06 of the Collateral Agency Agreement. Except for with
respect to the DIP Liens, the Permitted Prior Liens, the RBL Adequate Protection
Liens and the Carve Out, the FLMO Adequate Protection Liens shall not be made
subject to or pari passu with any lien or security interest heretofore or
hereinafter granted or created in any of the Chapter 11 Cases or any Successor
Cases and shall be valid and enforceable against the Debtors, their estates and
any successors thereto, including, without limitation, any trustee appointed in
any of the Chapter 11 Cases or any Successor Cases until such time as the
Prepetition FLMO Obligations are paid in full. The FLMO Adequate Protection
Liens shall not be subject to sections 549 or 550 of the Bankruptcy Code. No
lien or interest avoided and preserved for the benefit of the estates pursuant
to section 551 of the Bankruptcy Code shall be pari passu with or senior to the
FLMO Adequate Protection Liens.
(f)    FLMO Adequate Protection Claim. To the extent of any Diminution in Value,
pursuant to section 507(b) of the Bankruptcy Code, the Prepetition FLMO Secured
Parties, immediately upon entry of this Interim Order and effective as of the
Petition Date, are hereby granted an allowed superpriority administrative
expense claim (the “FLMO Adequate Protection Claim”), which claim shall be
junior to the Superpriority DIP Claims, the RBL Adequate

43

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Protection Claim and the Carve Out, but shall be senior to and have priority
over any other administrative expense claims, unsecured claims and all other
claims against the Debtors or their estates in any of the Chapter 11 Cases or
any Successor Cases, at any time existing or arising, of any kind or nature
whatsoever, including, without limitation, administrative expenses or other
claims of the kinds specified in or ordered pursuant to sections 105, 326, 328,
330, 331, 365, 503(a), 503(b), 506(c), 507(a), 507(b), 546(c), 546(d), 726, 1113
and 1114 of the Bankruptcy Code, and any other provision of the Bankruptcy Code,
whether or not such expenses or claims may become secured by a judgment lien or
other non-consensual lien, levy or attachment. The FLMO Adequate Protection
Claim shall, for purposes of section 1129(a)(9)(A) of the Bankruptcy Code, be
considered administrative expenses allowed under section 503(b) of the
Bankruptcy Code, shall be against each Debtor on a joint and several basis, and
shall be payable from and have recourse to all DIP Collateral. Except for the
Superpriority DIP Claims, the RBL Adequate Protection Claim and the Carve Out,
the FLMO Adequate Protection Claim shall not be made subject to or pari passu
with any claim heretofore or hereinafter granted or created in any of the
Chapter 11 Cases or any Successor Cases and shall be valid and enforceable
against the Debtors, their estates and any successors thereto, including,
without limitation, any trustee appointed in any of the Chapter 11 Cases or any
Successor Cases until such time as the Prepetition FLMO Obligations are paid in
full.
(g)    FLLO Adequate Protection Liens. To the extent of any Diminution in Value,
pursuant to sections 361, 363(e) and 364(d) of the Bankruptcy Code, the
Prepetition FLLO Term Loan Agent, for the benefit of itself and the other
Prepetition FLLO Secured Parties, immediately upon the entry of this Interim
Order and effective as of the Petition Date, is hereby granted continuing,
valid, binding, enforceable and automatically perfected postpetition security

44

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interests and liens on all DIP Collateral (the “FLLO Adequate Protection
Liens”), which security interests and liens will be junior only to the Carve
Out, the DIP Liens, the Permitted Prior Liens, the RBL Adequate Protection Liens
and the FLMO Adequate Protection Liens, and shall be senior in priority to all
other liens, including the Second Lien Adequate Protection Liens and the
Prepetition Liens; provided, that the RBL Adequate Protection Liens, the FLMO
Adequate Protection Liens and the FLLO Adequate Protection Liens, the rights and
remedies with respect thereto and the right to receive DIP Collateral or
proceeds therefrom shall be subject in all respects to the terms and conditions
of the Pari Passu Intercreditor Agreement, and, without limiting the foregoing
or any other terms of the Pari Passu Intercreditor Agreement, any DIP Collateral
proceeds distributed on account of the FLLO Adequate Protection Liens shall be
made in accordance with the Allocation Provisions contained in Section 6.01 of
the Pari Passu Intercreditor Agreement. Except for with respect to the Carve
Out, the DIP Liens, the Permitted Prior Liens, the RBL Adequate Protection
Liens, the FLMO Adequate Protection Liens and the FLLO Adequate Protection Liens
shall not be made subject to or pari passu with any lien or security interest
heretofore or hereinafter granted or created in any of the Chapter 11 Cases or
any Successor Cases and shall be valid and enforceable against the Debtors,
their estates and any successors thereto, including, without limitation, any
trustee appointed in any of the Chapter 11 Cases or any Successor Cases until
such time as the Prepetition FLLO Obligations are paid in full. The FLLO
Adequate Protection Liens shall not be subject to sections 549 or 550 of the
Bankruptcy Code. No lien or interest avoided and preserved for the benefit of
the estates pursuant to section 551 of the Bankruptcy Code shall be pari passu
with or senior to the FLLO Adequate Protection Liens.
(h)    FLLO Adequate Protection Claim. To the extent of any Diminution in Value,
pursuant to section 507(b) of the Bankruptcy Code, the Prepetition FLLO Secured
Parties,

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immediately upon entry of this Interim Order and effective as of the Petition
Date, are hereby granted an allowed superpriority administrative expense claim
(the “FLLO Adequate Protection Claim”), which claim shall be junior to the
Superpriority DIP Claims, the RBL Adequate Protection Claim, the FLMO Adequate
Protection Claim and the Carve Out, but shall be senior to and have priority
over any other administrative expense claims, unsecured claims and all other
claims against the Debtors or their estates in any of the Chapter 11 Cases or
any Successor Cases, at any time existing or arising, of any kind or nature
whatsoever, including, without limitation, administrative expenses or other
claims of the kinds specified in or ordered pursuant to sections 105, 326, 328,
330, 331, 365, 503(a), 503(b), 506(c), 507(a), 507(b), 546(c), 546(d), 726, 1113
and 1114 of the Bankruptcy Code, and any other provision of the Bankruptcy Code,
whether or not such expenses or claims may become secured by a judgment lien or
other non-consensual lien, levy or attachment. The FLLO Adequate Protection
Claim shall, for purposes of section 1129(a)(9)(A) of the Bankruptcy Code, be
considered administrative expenses allowed under section 503(b) of the
Bankruptcy Code, shall be against each Debtor on a joint and several basis, and
shall be payable from and have recourse to all DIP Collateral. Except for the
Superpriority DIP Claims, the RBL Adequate Protection Claim, the FLMO Adequate
Protection Claim and the Carve Out, the FLLO Adequate Protection Claim shall not
be made subject to or pari passu with any claim heretofore or hereinafter
granted or created in any of the Chapter 11 Cases or any Successor Cases and
shall be valid and enforceable against the Debtors, their estates and any
successors thereto, including, without limitation, any trustee appointed in any
of the Chapter 11 Cases or any Successor Cases until such time as the
Prepetition FLLO Obligations are paid in full.
(i)    Second Lien Adequate Protection Liens. To the extent of any Diminution in
Value, pursuant to sections 361, 363(e) and 364(d) of the Bankruptcy Code, the
Prepetition

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Second Lien Collateral Trustee, for the benefit of itself and the other
Prepetition Second Lien Secured Parties, immediately upon entry of this Interim
Order and effective as of the Petition Date, is hereby granted continuing,
valid, binding, enforceable and automatically perfected postpetition security
interests and liens on all DIP Collateral (the “Second Lien Adequate Protection
Liens”, and together with the RBL Adequate Protection Liens, the FLMO Adequate
Protection Liens and the FLLO Adequate Protection Liens, the “Adequate
Protection Liens”), which security interests and liens will be junior to the
Carve Out, the DIP Liens, the Permitted Prior Liens, the RBL Adequate Protection
Liens, the FLMO Adequate Protection Liens, the FLLO Adequate Protection Liens,
the Prepetition Senior Liens and the Prepetition FLLO Liens, and shall be senior
in priority to all other liens. Except with respect to the Carve Out, the DIP
Liens, the Permitted Prior Liens, the RBL Adequate Protection Liens, the FLMO
Adequate Protection Liens the FLLO Adequate Protection Liens, the Prepetition
Senior Liens and the Prepetition FLLO Liens, the Second Lien Adequate Protection
Liens shall not be made subject to or pari passu with any lien or security
interest heretofore or hereinafter granted or created in any of the Chapter 11
Cases or any Successor Cases and shall be valid and enforceable against the
Debtors, their estates and any successors thereto, including, without
limitation, any trustee appointed in any of the Chapter 11 Cases or any
Successor Cases until such time as the Prepetition Second Lien Note Obligations
are paid in full. The Second Lien Adequate Protection Liens shall not be subject
to sections 549 or 550 of the Bankruptcy Code. No lien or interest avoided and
preserved for the benefit of the estates pursuant to section 551 of the
Bankruptcy Code shall be pari passu with or senior to the Second Lien Adequate
Protection Liens.
(j)    Second Lien Adequate Protection Claim. To the extent of any Diminution in
Value, pursuant to section 507(b) of the Bankruptcy Code, the Prepetition Second
Lien Secured

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Parties, immediately upon entry of this Interim Order and effective as of the
Petition Date, are hereby granted an allowed superpriority administrative
expense claim (the “Second Lien Adequate Protection Claim”, and together with
the RBL Adequate Protection Claim, the FLMO Adequate Protection Claim and the
FLLO Adequate Protection Claim, the “Adequate Protection Claims”), which claim
shall be junior to the Superpriority DIP Claims, the RBL Adequate Protection
Claim, the FLMO Adequate Protection Claim, the FLLO Adequate Protection Claim
and the Carve Out, but shall be senior to and have priority over any other
administrative expense claims, unsecured claims and all other claims against the
Debtors or their estates in any of the Chapter 11 Cases or any Successor Cases,
at any time existing or arising, of any kind or nature whatsoever, including,
without limitation, administrative expenses or other claims of the kinds
specified in or ordered pursuant to sections 105, 326, 328, 330, 331, 365,
503(a), 503(b), 506(c), 507(a), 507(b), 546(c), 546(d), 726, 1113 and 1114 of
the Bankruptcy Code, and any other provision of the Bankruptcy Code, whether or
not such expenses or claims may become secured by a judgment lien or other
non-consensual lien, levy or attachment. The Second Lien Adequate Protection
Claim shall, for purposes of section 1129(a)(9)(A) of the Bankruptcy Code, be
considered administrative expenses allowed under section 503(b) of the
Bankruptcy Code, shall be against each Debtor on a joint and several basis, and
shall be payable from and have recourse to all DIP Collateral. Except for the
Superpriority DIP Claims, the RBL Adequate Protection Claim, the FLMO Adequate
Protection Claim, the FLLO Adequate Protection Claim and the Carve Out, the
Second Lien Adequate Protection Claim shall not be made subject to or pari passu
with any claim heretofore or hereinafter granted or created in any of the
Chapter 11 Cases or any Successor Cases and shall be valid and enforceable
against the Debtors, their estates and any successors thereto, including,
without

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limitation, any trustee appointed in any of the Chapter 11 Cases or any
Successor Cases until such time as the Prepetition Second Lien Obligations are
paid in full.
(k)    Additional Adequate Protection.
(i)    Information; Access to Books and Records. The Debtors will provide to the
Prepetition RBL Agent (so long the Prepetition RBL Obligations have not been
discharged), the Prepetition Senior Secured Collateral Agent, the Prepetition
FLMO Term Loan Agent, the Prepetition FLLO Term Loan Agent and the Prepetition
Second Lien Collateral Trustee (and subject to any restrictions on posting
material non-public information to public lenders set forth in the Prepetition
Debt Documents) any and all reports and information required to be delivered
pursuant to the DIP Credit Agreement, including any Updated Budget and variance
reports.
(ii)    Maintenance of Collateral. The Debtors shall continue to maintain and
insure the Prepetition Collateral in amounts and for the risks, and by the
entities, as required under the Prepetition RBL Documents (as long as the
Prepetition RBL Obligations have not been discharged), the Prepetition FLMO Tem
Loan Documents the Prepetition FLLO Term Loan Documents and the Prepetition
Second Lien Documents.
(l)    Termination of Consent to Use Cash Collateral. Upon indefeasible payment
in full of all DIP Obligations, the following events shall permit Majority
Prepetition FMLO Secured Parties to immediately seek to terminate the Debtors’
right to use Cash Collateral pursuant to this Interim Order, and to immediately
seek relief from the automatic stay to proceed to protect, enforce and exercise
all other rights and remedies provided under the Prepetition FLMO Term Loan
Documents or applicable law: (1) the Debtors fail to satisfy any Milestone in
Section 10.15 of the Senior DIP Credit Agreement; (2) the Debtors fail to update
the Approved Budget as

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contemplated by the Senior DIP Credit Agreement or to comply with the provisions
relating to permitted variances from such Approved Budget; (3) the Debtors file,
support, make a written proposal or counterproposal to any party relating to, or
take any other similar action in furtherance of a chapter 11 plan, sale process
or other restructuring transaction that (A) does not provide for the
indefeasible payment on the effective date thereof of all claims on account of
the Prepetition FLMO Obligations in full in cash or (B) is not approved by the
Required FLMO Term Lenders (as defined below) (in each case, a “Non-Consensual
Action”); or (4) the Debtors provide notice to counsel to the Ad Hoc First Lien
Group of any such Non-Consensual Action (the “Non-Consensual Restructuring
Notice”). The Debtors shall provide a Non-Consensual Restructuring Notice to
counsel to the Ad Hoc First Lien Group not less than seven (7) days before
taking any Non-Consensual Action provided, that the Debtors’ obligation to
provide such notice will terminate in the event that either (x) the
Restructuring Support Agreement has been terminated by the Debtors due to a
material breach by the Required Consenting Creditors or (y) the Backstop
Commitment Agreement has been terminated due to the Backstop Parties terminating
their Backstop Commitments (each, as defined in the Restructuring Support
Agreement).
(m)    Adequate Protection Reservation. The receipt by the Prepetition Secured
Parties of the adequate protection provided pursuant to this Interim Order shall
not be deemed an admission that the interests of the Prepetition Secured Parties
are indeed adequately protected. Further, this Interim Order shall not prejudice
or limit the rights of the Prepetition RBL Secured Parties (so long any
Prepetition RBL Obligations are outstanding) or the other Prepetition Secured
Parties (subject to the terms of the applicable Intercreditor Agreements) to
seek additional relief with respect to the use of Cash Collateral or for
additional adequate protection, including without limitation in the event of
termination of the Restructuring Support Agreement or any failure of any

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of the milestones in the Restructuring Agreement to be timely achieved, provided
that (a) any such additional or alternative adequate protection approved by the
Court in respect of the Prepetition RBL Obligations shall at all times be
subordinate and junior to the Carve Out, the Senior DIP Obligations and the
Senior DIP Liens granted under this Interim Order and the DIP Loan Documents and
(b) any such additional or alternative adequate protection approved by the Court
in respect of the Prepetition FLMO Obligations, Prepetition FLLO Obligations and
Prepetition Second Obligations shall at all times be subordinate and junior to
the Carve Out, the Superpriority DIP Claims, the DIP Obligations and the DIP
Liens granted under this Interim Order and the DIP Loan Documents. Without
limiting the foregoing, nothing herein shall impair or modify the application of
section 507(b) of the Bankruptcy Code in the event that the adequate protection
provided hereunder is insufficient to compensate for any Diminution in Value
during any of the Chapter 11 Cases.
12.    Amendments. (x) The Debtors, the Senior DIP Agent and the Senior DIP
Secured Parties, are hereby authorized to enter into the Senior DIP Loan
Documents and implement, in accordance with the terms of the Senior DIP Loan
Documents one or more amendments, waivers, consents or other modifications to
and under the Senior DIP Loan Documents, in each case in such form as the
Debtors, the Senior DIP Agent and the Majority Lenders (as defined in the Senior
DIP Credit Agreement) (the “Majority Senior DIP Lenders”) may agree, and no
further approval of the Court shall be required for non-material amendments,
waivers, consents or other modifications to and under the Senior DIP Loan
Documents (and any reasonable fees and expenses paid in connection therewith);
and (y) the Debtors, the Junior DIP Agent and the Junior DIP Secured Parties,
are hereby authorized to enter into the Junior DIP Loan Documents and implement,
in accordance with the terms of the Junior DIP Loan Documents one or more
amendments, waivers,

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consents or other modifications to and under the Junior DIP Loan Documents, in
each case in such form as the Debtors, the Junior DIP Agent and the Majority
Lenders (as defined in the Junior DIP Credit Agreement) (the “Majority Junior
DIP Lenders”) may agree, and no further approval of the Court shall be required
for non-material amendments, waivers, consents or other modifications to and
under the Junior DIP Loan Documents (and any reasonable fees and expenses paid
in connection therewith); provided, however, that in the case of both of the
foregoing clauses (x) and (y), the Debtors shall provide notice of any material
amendment, waiver, consent or other modification under the Senior DIP Loan
Documents or Junior DIP Loan Documents, as applicable, to counsel to any
Committee, counsel to the applicable non-amending DIP Agent, counsel to the
applicable non-amending DIP Secured Parties, and the United States Trustee three
(3) calendar days prior to the effective date thereof to the extent practicable.
If no objections are timely received (or if the U.S. Trustee, such DIP Agent,
such DIP Secured Parties or the Committee indicate via electronic mail or
otherwise that they have no objection) to a material amendment within three (3)
calendar days from the date of delivery of such notice, the Debtors may proceed
to execute such amendment, which shall become effective immediately upon
execution.
13.    Budget Covenants.
(a)    Initial Budget and Updated Budget. The use of Cash Collateral and
borrowings and other extensions of credit under the DIP Loan Documents shall be
in accordance with the Approved Budget (subject to Permitted Variances). The
Debtors have prepared and delivered to the Senior DIP Agent and Majority Junior
DIP Lenders, and the Senior DIP Agent and Majority Junior DIP Lenders have
approved, an initial budget, a copy of which is attached hereto as Exhibit C
(the “Initial Budget”), which reflects the Debtors’ anticipated cash receipts
and all anticipated necessary and required disbursements of the DIP Borrower and
its restricted subsidiaries,

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including (i) individual line items for “Total Receipts,” “Total Operating
Disbursements,” “Professional Fees,” “Operating AP Payments,” “Payroll/Payroll
Taxes,” and “Elk Hills Power Capacity/Reimbursement” and (ii) anticipated uses
of the DIP Facilities for such period, for each calendar week during the period
from the Petition Date through and including the end of the thirteenth (13th)
calendar week following the Petition Date. The Initial Budget, and each Updated
Budget (as defined below), once approved in accordance herewith, shall be deemed
the “Approved Budget” for all purposes hereof until superseded by another
Approved Budget pursuant to the provisions set forth below.
(b)    Updated Budget. Beginning on July 28, 2020, and every four (4) weeks
thereafter while any DIP Obligations are outstanding, the Debtors shall prepare
in good faith and deliver to the DIP Agents, the DIP Agents’ professional
advisors, and the professional advisors to the Majority Junior DIP Lenders an
updated 13-week cash flow forecast consistent in form and substance with the
Initial Budget and otherwise in form and substance acceptable to the Senior DIP
Agent, the Majority Senior DIP Lenders, and reasonably acceptable to the
Majority Junior DIP Lenders, as and to the extent required by the DIP Credit
Agreements (each such updated forecast, an “Updated Budget”). Each Updated
Budget shall be accompanied by such supporting documentation in accordance with
the terms of the DIP Credit Agreements. For the avoidance of doubt, no
amendment, modification or update to an Approved Budget shall be effective
without the approval of the Senior DIP Agent, Majority Senior DIP Lenders and,
so long as no Senior DIP Event of Default (as defined below) has occurred and is
continuing, the Majority Junior DIP Lenders, and in accordance with the terms of
the applicable DIP Credit Agreements.     
(c)    Variance Reporting. The Debtors are subject to the variance reporting and
testing as set forth in, and in accordance with the terms of, the DIP Credit
Agreements.

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Concurrently with the delivery of each Updated Budget, the Debtors shall deliver
to the DIP Agents, the DIP Agents’ professional advisors, and the professional
advisors to the Majority Junior DIP Lenders the weekly cash balance reporting
and variance reporting required under the DIP Credit Agreements. Variances in
excess of the Permitted Variance (as defined in each DIP Credit Agreement) from
the Approved Budget, and any proposed changes to the Approved Budget, shall be
subject to written agreement by the Debtors and the Senior DIP Agent and, so
long as no Senior DIP Event of Default has occurred and is continuing, the
Majority Junior DIP Lenders, in each case without further notice, motion or
application to, order of, or hearing before, the Court.
14.    Modification of Automatic Stay. The automatic stay imposed by section
362(a) of the Bankruptcy Code is hereby modified as necessary to permit: (a) the
Debtors to grant the DIP Liens and the Superpriority DIP Claims, and to perform
such acts as the DIP Agents or the Majority Senior DIP Lenders or Majority
Junior DIP Lenders may request to assure the perfection and priority of the DIP
Liens; (b) the Debtors to take all appropriate action to grant the Adequate
Protection Liens and the Adequate Protection Claims set forth herein, and to
take all appropriate action to ensure that the Adequate Protection Liens granted
hereunder are perfected and maintain the priority set forth herein; (c) the
Debtors to incur all liabilities and obligations, including all the DIP
Obligations, to the DIP Secured Parties and the Prepetition Secured Parties as
contemplated under this Interim Order and/or the DIP Loan Documents; (d) the
Debtors to pay all amounts referred to, required under, in accordance with, and
subject to the DIP Loan Documents and this Interim Order; (e) the DIP Secured
Parties and the Prepetition Secured Parties to retain and apply payments made in
accordance with the DIP Loan Documents and/or this Interim Order; (f) subject to
paragraph 22 hereof, the DIP Agents and the DIP Lenders to exercise, upon the
occurrence and during the continuance of an Event of Default (as defined in the
Senior DIP Credit Agreement) (a

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“Senior DIP Event of Default”) or an Event of Default (as defined in the Junior
DIP Credit Agreement) (a “Junior DIP Event of Default”), subject to the Remedies
Notice Period (as defined below), all rights and remedies provided for in the
DIP Loan Documents and take any or all actions provided therein; (g) the Debtors
to perform under the DIP Loan Documents and any and all other instruments,
certificates, agreements and documents which may be required, necessary or
prudent for the performance by the applicable Debtors under the DIP Loan
Documents and any transactions contemplated therein or in this Interim Order;
and (h) the implementation of all of the terms, rights, benefits, privileges,
remedies and provisions of this Interim Order and the DIP Loan Documents, in
each case, without further notice, motion or application to, or order of, or
hearing before, this Court, subject to the terms of this Interim Order.
15.    Perfection of DIP Liens and Postpetition Liens. This Interim Order shall
be sufficient and conclusive evidence of the validity, perfection and priority
of all security interests and liens granted herein, including, without
limitation, the DIP Liens and the Adequate Protection Liens, without the
necessity of executing, filing or recording any financing statement, mortgage,
notice or other instrument or document that may otherwise be required under the
law or regulation of any jurisdiction or the taking of any other action
(including, for the avoidance of doubt, entering into any securities or deposit
account control agreement or taking possession of any possessory collateral) to
validate or perfect (in accordance with applicable law) such liens, or to
entitle the Prepetition Secured Parties and the DIP Secured Parties to the
priorities granted herein. Notwithstanding the foregoing, each of the Senior DIP
Agent, Junior DIP Agent, the Prepetition RBL Agent, the Prepetition Senior
Secured Collateral Agent, the Prepetition FLMO Term Loan Agent, the Prepetition
FLLO Term Loan Agent and the Prepetition Second Lien Collateral Trustee, without
any further consent of any party, is authorized to execute, file or record, and
the Senior

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DIP Agent, Junior DIP Agent, the Prepetition RBL Agent, the Prepetition Senior
Secured Collateral Agent, the Prepetition FLMO Term Loan Agent, the Prepetition
FLLO Term Loan Agent and the Prepetition Second Lien Collateral Trustee, as
applicable, may require the execution, filing or recording, as each, in its sole
discretion deems necessary, of such financing statements, mortgages, notices of
lien, and other similar documents to enable the Senior DIP Agent, the Junior DIP
Agent, the Prepetition RBL Agent, the Prepetition Senior Secured Collateral
Agent, the Prepetition FLMO Term Loan Agent, the Prepetition FLLO Term Loan
Agent and the Prepetition Second Lien Collateral Trustee, as applicable, to
further validate, perfect, preserve and enforce the DIP Liens or other liens and
security interests granted hereunder, or perfect in accordance with applicable
law or to otherwise evidence the DIP Liens and/or the Adequate Protection Liens,
as applicable, and all such financing statements, mortgages, notices, and other
documents shall be deemed to have been executed, filed or recorded as of the
Petition Date; provided, however, that no such execution, filing or recordation
shall be necessary or required in order to create or perfect the DIP Liens
and/or the Adequate Protection Liens. The Debtors are authorized and directed to
execute and deliver promptly upon demand to the Senior DIP Agent, the Junior DIP
Agent, the Prepetition RBL Agent, the Prepetition Senior Secured Collateral
Agent, the Prepetition FLMO Term Loan Agent, the Prepetition FLLO Term Loan
Agent and the Prepetition Second Lien Collateral Trustee, as applicable, all
such financing statements, notices, and other documents as the Senior DIP Agent,
the Junior DIP Agent, the Prepetition RBL Agent, the Prepetition Senior Secured
Collateral Agent, the Prepetition FLMO Term Loan Agent, the Prepetition FLLO
Term Loan Agent and the Prepetition Second Lien Collateral Trustee, as
applicable, may reasonably request. The Senior DIP Agent, the Junior DIP Agent,
the Prepetition RBL Agent, the Prepetition Senior Secured Collateral Agent, the
Prepetition FLMO Term Loan

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Agent, the Prepetition FLLO Term Loan Agent and the Prepetition Second Lien
Collateral Trustee, each in its discretion, may file a photocopy of this Interim
Order as a financing statement with any filing or recording office or with any
registry of deeds or similar office, in addition to or in lieu of such financing
statements, notices of lien, or similar instruments, and in such event, the
filing or recording office shall be authorized to file or record such photocopy
of this Interim Order.
16.    Protection of DIP Lenders’ Rights and Adequate Protection Liens. So long
as there are any DIP Obligations outstanding, the Prepetition Secured Parties
(other than the Prepetition RBL Secured Parties as set forth in paragraph 22(c)
hereof) shall (a) absent the written consent of the DIP Agents, have no right
to, and take no action to, foreclose upon or recover in connection with the
liens granted thereto pursuant to the Prepetition Debt Documents or this Interim
Order or otherwise seek or exercise any enforcement rights or remedies against
any DIP Collateral or in connection with the debt and obligations underlying the
Prepetition Debt Documents or the Adequate Protection Liens, including, without
limitation, in respect of the occurrence or continuance of any Event of Default
(as defined in each of the applicable Prepetition Debt Documents), (b) be deemed
to have consented to any release of DIP Collateral authorized under the DIP Loan
Documents (but not any proceeds of such transfer, disposition or sale to the
extent remaining after payment in full in cash of the DIP Obligations), (c) not
file any further financing statements, patent filings, trademark filings,
copyright filings, mortgages, memoranda of lease, notices of lien or similar
instruments, or otherwise take any action to perfect their security interests in
the DIP Collateral unless, solely as to this clause (c), the DIP Agents file
financing statements or other documents to perfect the liens granted pursuant to
the DIP Loan Documents and/or this Interim Order, or as may be required by
applicable state law to continue the perfection of valid and unavoidable liens
or security interests as of the date of filing, and (d) deliver or cause to be
delivered,

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at the Debtors’ costs and expense (for which the Prepetition RBL Agent, the
Prepetition Senior Secured Collateral Agent, the Prepetition FLMO Term Loan
Agent, the Prepetition FLLO Term Loan Agent and the Prepetition Second Lien
Collateral Trustee shall be reimbursed upon submission to the Debtors of
invoices or billing statements), any termination statements, releases and/or
assignments (to the extent provided for herein) in favor of the DIP Agents and
the DIP Lenders or other documents necessary to effectuate and/or evidence the
release, termination and/or assignment of Adequate Protection Liens, the
Prepetition Senior Liens, the Prepetition FLLO Liens or the Prepetition Second
Liens on any portion of the DIP Collateral subject to any sale or disposition
approved or arranged for by any DIP Agent.
17.    Protection of DIP Lenders Rights. To the extent any Prepetition Secured
Party has possession of any Prepetition Collateral or DIP Collateral or has
control with respect to any Prepetition Collateral or DIP Collateral, or has
been noted as secured party on any certificate of title for a titled good
constitution Prepetition Collateral or DIP Collateral, then such
Prepetition Secured Party shall be deemed to maintain such possession or
notation or exercise such control as a gratuitous bailee and/or gratuitous agent
for perfection for the benefit of the Senior DIP Agent, the Senior DIP Secured
Parties, the Junior DIP Agent and the Junior DIP Secured Parties, and such
Prepetition Secured Party and the applicable Prepetition RBL Agent, Prepetition
FLMO Term Loan Agent, Prepetition FLLO Term Loan Agent, or the Prepetition
Second Lien Collateral Trustee shall comply with the instruction of the Senior
DIP Agent, acting at the direction of the Majority Senior DIP Lenders, with
respect to the exercise of such control. To the extent that the Senior DIP Agent
or any other Senior DIP Secured Party has possession of any Prepetition
Collateral or DIP Collateral or has control with respect to any Prepetition
Collateral or DIP Collateral, or has been noted as secured party on any
certificate of title for a titled good constituting

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Prepetition Collateral or DIP Collateral, then such Senior DIP Secured Party
shall be deemed to maintain such possession or notation or exercise such control
as a gratuitous bailee and/or gratuitous agent for perfection for the benefit of
the Junior DIP Agent and the Junior DIP Secured Parties, subject to the
priorities set forth in paragraph 6 above and other terms of this Order;
provided that following the Discharge of the Senior DIP Obligations, the Senior
DIP Agent shall deliver Junior DIP Agent, at the Debtors’ sole cost and expense,
the Prepetition Collateral or DIP Collateral in its possession together with any
necessary endorsements to the extent required by the Junior DIP Documents.
18.    Proceeds of Subsequent Financing. Without limiting the provisions of the
immediately preceding paragraph, if the Debtors, any trustee, any examiner with
enlarged powers or any responsible officer subsequently appointed in any of the
Chapter 11 Cases or any Successor Cases shall obtain credit or incur debt
pursuant to sections 364(b), (c), or (d) of the Bankruptcy Code in violation of
this Interim Order or the DIP Loan Documents at any time prior to the
indefeasible payment in full in cash of all of the DIP Obligations, the
satisfaction of the Superpriority DIP  Claims, and the termination of the DIP
Agents’ and the DIP Lenders’ obligations to extend credit under the DIP
Facilities and this Interim Order, including subsequent to the confirmation of
any plan with respect to any or all of the Debtors and the Debtors’ estates,
then unless otherwise agreed by the DIP Agents all of the cash proceeds derived
from such credit or debt shall immediately be turned over first, to the Senior
DIP Agent to be applied to the Senior DIP Obligations pursuant to the Senior DIP
Credit Agreement until the Discharge of Senior DIP Obligations (as defined
below) occurs and second (but subject to paragraph 22(c) hereof), to the Junior
DIP Agent to be applied to the Junior DIP Obligations pursuant to the Junior DIP
Credit Agreement.

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19.    Maintenance of DIP Collateral. The Debtors shall continue to maintain all
property, operational and other insurance as required and as specified in the
DIP Loan Documents. The Debtors shall provide the DIP Agents and their
respective counsel (for distribution to the DIP Secured Parties) with
commercially reasonable evidence of such insurance upon a request to counsel for
the Debtors. Upon entry of this Interim Order and to the fullest extent provided
by applicable law, the DIP Agents (on behalf of the DIP Secured Parties) shall
be, and shall be deemed to be, without any further action or notice, named as
additional insureds and lender’s loss payees on each insurance policy maintained
by the Debtors that in any way relates to the DIP Collateral. The Debtors shall
also maintain the cash management system in effect as of the Petition Date, as
modified by this Interim Order and any order of the Court authorizing the
continued use of the cash management system.
20.    Disposition of DIP Collateral. The Debtors shall not sell, transfer,
lease, encumber or otherwise dispose of any portion of the DIP Collateral (or
enter into any binding agreement to do so) other than in the ordinary course of
business without the prior written consent of the Majority Senior DIP Lenders or
as otherwise provided for in the Senior DIP Loan Documents and, so long as no
Senior DIP Event of Default has occurred and is continuing, the prior written
consent of the Majority Junior DIP Lenders or as otherwise provided for in the
Junior DIP Loan Documents.
21.    Termination Date. Each of the following shall constitute a termination
event under this Interim Order (each a “Termination Event”, and the date upon
which such Termination Event occurs, the “Termination Date”), unless waived in
writing (delivery by email or other electronic means being sufficient) by both
DIP Agents and the Majority Junior DIP Lenders: (a) the occurrence of the
maturity date of either DIP Facility; (b) the date that is thirty-five (35) days
after

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the Petition Date if the Final Order, in form and substance acceptable to each
DIP Agent and the Majority Junior DIP Lenders, has not been entered by the
Court; (c) the occurrence of a Senior DIP Event of Default; or (d) the
occurrence of a Junior DIP Event of Default.
22.    Rights and Remedies Upon Termination Event.
(a)    Upon the occurrence and during the continuation of a Termination Event,
either DIP Agent may (and any automatic stay otherwise applicable to the DIP
Secured Parties, whether arising under sections 105 or 362 of the Bankruptcy
Code or otherwise, but subject to the terms of this Interim Order (including
this paragraph) is hereby modified, without further notice to, hearing of, or
order from this Court, to the extent necessary to permit each DIP Agent to, upon
delivery of written notice (a “Termination Notice”) (including by e-mail) to
lead restructuring counsel to the Debtors, lead restructuring counsel to the
other DIP Agent, lead restructuring counsel to the other applicable DIP Secured
Parties, lead restructuring counsel to any Committee, lead restructuring counsel
to the Prepetition RBL Agent, lead restructuring counsel to the Prepetition
Senior Secured Collateral Agent, lead restructuring counsel to the Prepetition
FLMO Term Loan Agent, lead restructuring counsel to the Prepetition FLLO Term
Loan Agent, lead restructuring counsel to the Prepetition Second Lien Collateral
Trustee and the U.S. Trustee, (the “Remedies Notice Parties”), unless the Court
orders otherwise prior to five (5) business days after delivery of such
Termination Notice (such five (5) business day period, the “Remedies Notice
Period”): (a) immediately terminate and/or revoke the Debtors’ right under this
Interim Order and any other Senior DIP Loan Documents or Junior DIP Loan
Documents, as applicable, to use any Cash Collateral; (b) terminate the
applicable DIP Facility and any applicable DIP Loan Document as to any future
liability or obligation of the Senior DIP Secured Parties or Junior DIP Secured
Parties, as applicable, but without affecting any of the DIP Obligations or the
DIP Liens securing

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such DIP Obligations; (c) declare all Senior DIP Obligations or Junior DIP
Obligations, as applicable, to be immediately due and payable; and (d) invoke
the right to charge interest at the default rate under the Senior DIP Loan
Documents or Junior DIP Loan Documents, as applicable. Upon delivery of such
Termination Notice by either DIP Agent, without further notice or order of the
Court, the DIP Secured Parties’ and the Prepetition Secured Parties’ consent to
use Cash Collateral and the Debtors’ ability to incur additional DIP Obligations
hereunder will, subject to the expiration of the Remedies Notice Period,
automatically terminate and the DIP Secured Parties will have no obligation to
provide any DIP Loans or other financial accommodations.
(b)    Following a Termination Event, but prior to exercising the remedies set
forth in this sentence below, the Senior DIP Secured Parties shall be required
to file a motion with the Court seeking emergency relief (the “Stay Relief
Motion”) on five (5) business days’ notice to the Remedies Notice Parties (which
shall run concurrently with the Remedies Notice Period) for a further order of
the Court modifying the automatic stay in the Chapter 11 Cases to permit the
Senior DIP Secured Parties (but not the Junior DIP Secured Parties) to: (a)
freeze monies or balances in the Debtors’ accounts; (b) immediately set-off any
and all amounts in accounts maintained by the Debtors with the Senior DIP Agent
or the Senior DIP Secured Parties against the Senior DIP Obligations, (c)
enforce any and all rights against the DIP Collateral, including,
without limitation, foreclosure on all or any portion of the DIP Collateral,
collection of accounts receivable, occupying the Debtors’ premises, sale or
disposition of the DIP Collateral; and (d) take any other actions or exercise
any other rights or remedies permitted under this Interim Order, the Senior DIP
Loan Documents or applicable law. The rights and remedies of the Senior DIP
Secured Parties specified herein are cumulative and not exclusive of any rights
or remedies that the Senior DIP Secured Parties have under the Senior DIP Loan
Documents or otherwise. If the

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Senior DIP Secured Parties are permitted by the Court to take any enforcement
action with respect to the DIP Collateral following the hearing on the Stay
Relief Motion, the Debtors shall cooperate with the Senior DIP Secured Parties
in their efforts to enforce their security interest in the DIP Collateral, and
shall not take or direct any entity to take any action designed or intended to
hinder or restrict in any respect such Senior DIP Secured Parties from enforcing
their security interests in the DIP Collateral. Until the Discharge of Senior
DIP Obligations, the Junior DIP Agent and Junior DIP Secured Parties shall not
have the right to exercise or enforce any rights and remedies against the
Debtors or the DIP Collateral (other than as set forth in paragraph 22(a)
above). Following the Discharge of Senior DIP Obligations, the Junior DIP Agent
on behalf of the Junior DIP Secured Parties may exercise the rights and remedies
set forth in this paragraph 22(b).
(c)    Notwithstanding anything herein to the contrary in this Interim Order or
any DIP Loan Document, until the Senior DIP Obligations are indefeasibly paid in
full in cash (other than (i) secured hedge obligations that, at the time of such
determination, are allowed by the person to whom such secured hedge obligations
are owing to remain outstanding or are not required to be repaid or cash
collateralized pursuant to the provisions of any document governing such secured
hedge obligations or have been assigned or novated concurrently with such
payment, (ii) secured cash management obligations and (iii) contingent
indemnification obligations not then due and payable), the commitments to
advance credit thereunder are terminated and all issued and undrawn DIP Letters
of Credit are replaced or cash collateralized in accordance with the Senior DIP
Credit Agreement (collectively, the “Discharge of Senior DIP Obligations”), the
Junior DIP Agent and the Junior DIP Secured Parties shall not receive or retain
any payments, distributions or other amounts on account of the Junior DIP
Obligations (other than the agency fees, the upfront  fee) and expenses payable
under the Junior DIP Loan Documents and this Interim Order,

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including professional fees and expenses), whether such payments, distributions
or amounts are from proceeds of the DIP Collateral or refinancing of the Junior
DIP Facility or from any other source (including debt or equity issued or
distributed in connection with a plan of reorganization or any proceeds of such
debt or equity) and whether such payments, distributions or amounts are
distributed or made in connection with or pursuant to a plan of reorganization
or liquidation, sale pursuant to section 363 of the Bankruptcy Code, foreclosure
or otherwise. If the Junior DIP Agent or any Junior DIP Secured Parties receive
any payments, distributions or other amounts in violation of this paragraph
22(c), then the Junior DIP Agent (to the extent the Junior DIP Agent has actual
notice of such violation and has not distributed such amounts to the other
Junior DIP Secured Parties) or such Junior DIP Secured Party, as applicable,
shall hold such amounts in trust for the benefit of the Senior DIP Agent, the
Senior DIP Secured Parties, the Prepetition RBL Agent and the Prepetition RBL
Secured Parties and shall promptly turn over such amounts to the Senior DIP
Agent. Notwithstanding the foregoing, so long as a Senior DIP Event of Default
has not occurred and is continuing, the Junior DIP Secured Parties shall be
entitled to receive interest at the contract rate as and when due and the
upfront fee in connection with the closing of the Junior DIP Facility. For any
Prepetition RBL Obligations that remain outstanding after the closing of the
Junior DIP Facility, including any amount due and payable on account of
indemnity claims that are Prepetition RBL Obligations and any Prepetition RBL
Obligations that are subsequently reinstated after the repayment thereof because
such payment (or any portion thereof) is required to be returned or repaid, the
liens securing such Prepetition RBL Obligations shall be subordinate to the
Senior DIP Liens and the Junior DIP Liens; provided that, any such Prepetition
RBL Obligations shall be (i) deemed Senior DIP Obligations for all purposes of
this paragraph 22 and (ii) subject to the Senior DIP Purchase Option (as defined
below) (notwithstanding

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anything to the contrary in the Collateral Agency Agreement). The term
“Discharge of Senior DIP Obligations” as used in this Interim Order shall be
deemed to require the repayment of such Prepetition RBL Obligations in full in
cash.
(d)    The payment in full of the Prepetition RBL Obligations on and at all
times following the Closing Date with the proceeds of the DIP Facilities as set
forth in the DIP Loan Documents  and this Interim Order shall constitute a
“Discharge of Existing Senior Obligations” subject to, and as such term is
defined in, the Collateral Agency Agreement for all purposes thereunder.
(e)    Senior DIP Purchase Option. At any time upon written notice to the Senior
DIP Agent (the “Senior DIP Purchase Notice”), any group of Junior DIP Lenders
holding a majority in principal amount of the Junior DIP Loans or any group of
Prepetition FLMO Term Loan Lenders holding a majority in principal amount of the
Prepetition FLMO Term Loans (any such group, the “Senior DIP Purchasers”) shall
have the right, without the consent of the Debtors, to purchase from the Senior
DIP Secured Parties all (but not less than all) Senior DIP Obligations
(including, for the avoidance of doubt and notwithstanding anything to the
contrary herein or in the Collateral Agency Agreement all Senior DIP Obligations
that are refinanced, refunded, or replaced) (such right, the “Senior DIP
Purchase Option”) for a purchase price in an amount equal to (i) the amount of
Senior DIP Obligations outstanding (including principal, fees, reasonable
attorneys’ fees and legal expenses (but excluding contingent indemnification
obligations for which no claim or demand for payment has been made at or prior
to such time, provided that “Senior DIP Obligations” shall include all
contingent or actual rights and claims relating to, arising from, or in
connection with the reservation of rights under paragraph 29, whether asserted
as Senior DIP Obligations, Prepetition RBL Obligations, or otherwise, provided
further that in the case of secured hedge

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obligations, the Senior DIP Purchasers shall cause the applicable agreements
governing such hedge obligations to be assigned and novated or, if such
agreements have been terminated, such purchase price shall include an amount
equal to the sum of any unpaid amounts then due in respect of such hedge
obligations, calculated using the market quotation method and after giving
effect to any netting arrangements and (ii) a cash collateral deposit in such
amount as the Senior DIP Agent determines is reasonably necessary to secure the
payment of any outstanding letters of credit constituting Senior DIP Obligations
that may be come due and payable after such sale (but in any event in an amount
not to exceed 105% of the amount then reasonably estimated by the Senior DIP
Agent to be the aggregate outstanding amount of such letters of credit at such
time), which cash collateral shall be (A) held by the Senior DIP Agent as
security solely to reimburse the issuers of letters of credit that become due
and payable after such sale and any fees and expenses incurred in connection
with such letters of credit and (B) returned to the Senior DIP Purchasers
(except as otherwise be required by applicable law or any order of any court or
other governmental authority) promptly after the expiration or termination from
time to time of all payment contingencies affecting such letters of credit. The
Senior DIP Purchasers shall have twenty (20) Business Days following delivery of
the Senior DIP Purchase Notice to consummate the purchase of the Senior DIP
Obligations contemplated by this paragraph 22(e) and the right to purchase the
Senior DIP Obligations under this paragraph 22(e) shall terminate thereafter
unless such twenty (20) Business Day period is extended by the Senior DIP Agent
in its sole discretion, provided that if the Senior DIP Purchasers shall fail to
consummate such purchase within such twenty (20) Business Day period, no Junior
DIP Lenders or Prepetition FLMO Term Loan Lenders shall be permitted to exercise
the Senior DIP Purchase Option until the date that is at least five (5) Business
Days following the expiration of such twenty (20) Business Day period.

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(f)    Junior DIP Purchase Option. Upon written notice to the Junior DIP Agent
(the “Junior DIP Purchase Notice”) any group of Prepetition FLMO Term Loan
Lenders holding a majority in aggregate principal amount of the Prepetition FLMO
Term Loans (the “Junior DIP Purchasers”) shall have the right, without the
consent of the Debtors, to purchase from the Junior DIP Secured Parties all (but
not less than all) Junior DIP Obligations (including, for the avoidance of doubt
and notwithstanding anything to the contrary herein all Junior DIP Obligations
that are refinanced, refunded, or replaced (such right, the “Junior DIP Purchase
Option”) for a purchase price in an amount equal to the amount of Junior DIP
Obligations outstanding (including principal, fees, reasonable attorneys’ fees
and legal expenses (but excluding contingent indemnification obligations for
which no claim or demand for payment has been made at or prior to such time)).
The Junior DIP Purchasers shall have twenty (20) Business Days following
delivery of the Junior DIP Purchase Notice to consummate the purchase of the
Junior DIP Obligations contemplated by this paragraph 22(f) and the right to
purchase the Junior DIP Obligations under this paragraph 22(f) shall terminate
thereafter unless such twenty (20) Business Day period is extended by the
Majority Junior DIP Lenders in their sole discretion; provided that if the
Junior DIP Purchasers shall fail to consummate such purchase within such twenty
(20) Business Day period, no Prepetition FLMO Term Loan Lenders shall be
permitted to exercise the Junior DIP Purchase Option until the date that is at
least five (5) Business Days following the expiration of such twenty (20)
Business Day period.
(g)    In connection with the Senior DIP Purchase Option and the Junior DIP
Purchase Option, the Senior DIP Purchasers or the Junior DIP Purchasers, as
applicable, shall deliver to the applicable DIP Agent any customary agreements,
documents or instruments to which the applicable DIP Agent may reasonably
request pursuant to which the Senior DIP Purchasers or the

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Junior DIP Purchasers, as applicable, shall expressly assume and adopt all
obligations of the applicable DIP Agent and DIP Secured Parties.
23.    Good Faith under Section 364(e) of the Bankruptcy Code; No Modification
or Stay of this Interim Order. The DIP Secured Parties have acted in good faith
in connection with the DIP Facilities, the DIP Loan Documents, the interim
financing provided by the DIP Facilities, and with this Interim Order, and their
reliance on this Interim Order is in good faith. Based on the findings set forth
in this Interim Order and the record made during the Interim Hearing, and in
accordance with section 364(e) of the Bankruptcy Code, in the event any or all
of the provisions of this Interim Order are hereafter modified, reversed,
amended or vacated by a subsequent order of the Court or any other court, the
DIP Secured Parties and the Prepetition Secured Parties are entitled to the
benefits and protections provided in section 364(e) of the Bankruptcy Code. Any
such modification, reversal, amendment or vacatur shall not affect the validity
and enforceability of any advances previously made or made hereunder, or lien,
claim or priority authorized or created hereby. Any security interests, liens or
claims granted to the DIP Secured Parties arising prior to the effective date of
any such modification, reversal, amendment or vacatur of this Interim Order
shall be governed in all respects by the original provisions of this Interim
Order, including entitlement to all rights, remedies, privileges and benefits
granted herein.
24.    DIP and Other Expenses. The Debtors are authorized and directed to pay,
in cash and on a current basis, all reasonable and documented fees, costs,
disbursements and expenses of the DIP Agents and the Ad Hoc First Lien Group
incurred at any time, to the extent provided by the DIP Loan Documents and this
Interim Order, whether or not the transactions contemplated hereby are
consummated, including, without limitation, legal, accounting, collateral
examination, monitoring and appraisal fees and expenses, agency fees, financial
advisory fees and expenses,

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fees and expenses of other consultants and indemnification and reimbursement of
fees and expenses (including, without limitation, the reasonable and documented
prepetition and postpetition fees, costs and expenses of (A) Simpson Thacher and
Norton Rose Fulbright; (B) Opportune; (C) Davis Polk, Haynes and Boone, Cox
Castle, Trimeric, Cornerstone, ERM, and Rapp & Krock; (D) Evercore; (E) Ropes &
Gray, and (F) any other necessary or appropriate counsel, advisors,
professionals or consultants in connection with advising the DIP Agents or the
Ad Hoc First Lien Group (collectively the “DIP Secured Party Advisors”)). The
invoices for such fees and expenses shall not be required to comply with the
U.S. Trustee guidelines, may be in summary form only (and may contain redactions
of privileged, confidential or otherwise sensitive information), and shall not
be subject to application or allowance by the Court. Such fees and expenses
shall not be subject to any offset, defense, claim, counterclaim or diminution
of any type, kind or nature whatsoever. The invoices for fees and expenses to be
paid pursuant to this paragraph 24 shall be provided to the Fee Notice Parties.
Within ten (10) calendar days after delivery of such invoices, the (“Fee
Objection Period”), then, without further order of, or application to, the Court
or notice to any other party, such fees and expenses shall be promptly paid by
the Debtors. If an objection (solely as to reasonableness) is made by any of the
Fee Notice Parties within the Fee Objection Period to payment of the requested
fees and expenses, then only the disputed portion of such fees and expenses
shall not be paid until the objection is resolved by the applicable parties in
good faith or by order of the Court, and the undisputed portion shall be
promptly paid by the Debtors. Notwithstanding the foregoing, the Debtors are
authorized and directed to pay on the Closing Date the fees and expenses of the
DIP Secured Party Advisors incurred on or prior to such date without the need to
provide notice to any other party or otherwise comply with the procedures set
forth in this paragraph 24.

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25.    Indemnification. The Debtors are authorized to jointly and severally
indemnify and hold harmless each of the DIP Agents (solely in their capacity as
DIP Agents), each DIP Secured Party (solely in its capacity as a DIP Secured
Party) and each other party entitled to an indemnity in accordance and subject
to the terms and conditions set forth in the DIP Credit Agreements.
26.    Proofs of Claim. The DIP Secured Parties and each of the Prepetition
Secured Parties shall not be required to file proofs of claim in any of the
Chapter 11 Cases or any Successor Cases for any claim against the Debtors for
payment of the Prepetition Obligations arising under the Prepetition Debt
Documents. The statements of claims in respect of such indebtedness set forth in
this Interim Order, together with any evidence accompanying this Motion and
presented at the Interim Hearing, are deemed sufficient to and do constitute
proofs of claim in respect of such debt and such secured status. However, in
order to facilitate the processing of claims, to ease the burden upon the Court
and to reduce any unnecessary expense to the Debtors’ estates, each of the
Prepetition RBL Agent, Prepetition FLMO Term Loan Agent, Prepetition FLLO Term
Loan Agent and Prepetition Second Lien Collateral Trustee is authorized to file
in the Debtors’ lead chapter 11 case In re California Resources Corporation,
Case No. __-____ (___), a master proof of claim on behalf of its respective
Prepetition Secured Parties on account of any and all of their respective claims
arising under the applicable Prepetition Debt Documents and hereunder (each, a
“Master Proof of Claim”) against each of the Debtors. Upon the filing of any
such Master Proof of Claim, the Prepetition RBL Agent, Prepetition FLMO Term
Loan Agent, Prepetition FLLO Term Loan Agent or Prepetition Second Lien
Collateral Trustee, as applicable, shall be deemed to have filed a proof of
claim in the amount set forth opposite its name therein in respect of its claims
of any type or nature whatsoever with respect to the applicable Prepetition Debt
Documents, and the claim of each applicable Prepetition Secured Party (and each
of its successors and assigns) named in a

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Master Proof of Claim shall be treated as if such entity had filed a separate
proof of claim in each of the Chapter 11 Cases. The Master Proofs of Claim shall
not be required to identify whether any such party acquired its claim from
another party and the identity of any such party or to be amended to reflect a
change in the holders of the claims set forth therein or a reallocation among
such holders of the claims asserted therein resulting from the transfer of all
or any portion of such claims. The Master Proofs of Claim shall not be required
to attach any instruments, agreements or other documents evidencing the
obligations owing by each of the Debtors to the applicable Prepetition Secured
Parties. Any proof of claim filed by the Prepetition RBL Agent, Prepetition FLMO
Term Loan Agent, Prepetition FLLO Term Loan Agent or Prepetition Second Lien
Collateral Trustee shall be deemed to be in addition to and not in lieu of any
other proof of claim that may be filed by any of the Prepetition Secured
Parties. Any order entered by the Court in relation to the establishment of a
bar date in any of the Chapter 11 Cases or Successor Cases shall not apply to
the DIP Secured Parties or Prepetition Secured Parties.
27.    Carve Out.
(a)    Carve Out. Subject to the terms and conditions set forth herein, the DIP
Liens, Superpriority DIP Claims, Prepetition Liens, Adequate Protection Liens
and Adequate Protection Claims shall be subject to the payment of the Carve Out.
As used in this Interim Order, the “Carve Out” means, without duplication, the
following expenses, subject, in each case, to application of any retainers that
may be held by the applicable professionals as well as proceeds  from
unencumbered assets then currently available: (I) the payment of unpaid fees,
expenses and disbursements incurred after delivery of a Carve Out Trigger Notice
(as defined below) in connection with the Chapter 11 Cases by professionals
employed by the Debtors pursuant to sections 327, 328 or 363 of the Bankruptcy
Code and by professionals employed by any Committee

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pursuant to sections 328 or 1103 of the Bankruptcy Code in the aggregate amount
not in excess of $7 million for all such professionals (the “Case
Professionals”) to the extent such fees, expenses and disbursements are allowed
by the Court at any time, regardless of whether allowed by interim order,
procedural order or otherwise, excluding for purposes of this clause (I) any
success fee, completion fee, transaction fee or similar investment banking fee
(the amounts described in this clause (I), the “Wind-Down Carve Out Amounts”);
(II) all accrued and unpaid professional fees and disbursements incurred by Case
Professionals on or prior to the delivery of a Carve Out Trigger Notice to the
extent allowed by the Court at any time, regardless of whether allowed by
interim order, procedural order or otherwise (the amounts described in this
clause (II), collectively, the “Pre-Trigger Amount Professional Fees”); (III)
all fees to be paid to the clerk of the Court and to the U.S. Trustee pursuant
to 28 U.S.C. § 1930 and 31 U.S.C. § 3717 plus interest at the statutory rate;
and (IV) all reasonable and documented fees and expenses incurred by a trustee
under section 726(b) of the Bankruptcy Code in aggregate amount not in excess of
$100,000. As used in this Interim Order, the term “Carve Out Trigger Notice”
means the delivery by the Senior DIP Agent of a written notice to the Debtors,
the U.S. Trustee and counsel to any Committee following the occurrence and
during the continuation of a Termination Event, expressly stating that the
Wind-Down Carve Out Amounts are invoked. Upon the Debtors’ receipt of a Carve
Out Trigger Notice, the Wind-Down Carve Out Amounts and the Pre-Trigger Amount
Professional Fees (collectively, the “Carved-Out Professional Fees”) shall
immediately be funded by the Debtors to an escrow account (the “Professional
Fee Escrow”) with an escrow agent selected by the Debtors and approved by the
Senior DIP Agent (which such approval shall not be unreasonably withheld,
conditioned or delayed) pursuant to an escrow agreement reasonably acceptable to
the Senior DIP Agent, from any and all available Cash Collateral or cash held by
the Debtors and, if the then-

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available cash and Cash Collateral is not sufficient to cover the Carved-Out
Professional Fees, the first proceeds from the sale of the DIP Collateral until
the Carved-Out Professional Fees are fully funded into the Professional Fee
Escrow; provided, that the funding of the Pre-Trigger Amount Professional Fees
into the Professional Fee Escrow shall be based on good faith estimates obtained
by the applicable professionals. The Professional Fee Escrow shall be subject to
a first-priority lien securing the Carved-Out Professional Fees, a second
priority lien securing the Senior DIP Obligations, a third priority lien
securing the Junior DIP Obligations and a fourth priority lien securing the
Adequate Protection Claims. Notwithstanding anything to the contrary herein,
upon the delivery of a Carve Out Trigger Notice, the Senior DIP Agent or the
Junior DIP Agent shall be required to transfer cash that it sweeps, receives or
forecloses upon at any time from and after the delivery of a Carve Out Trigger
Notice into the Professional Fee Escrow until such time as the Carved-Out
Professional Fees have been fully funded into the Professional Fee Escrow. For
the avoidance of doubt, upon delivery of a Carve Out Trigger Notice, in no
instance shall any DIP Obligations or Prepetition Obligations be repaid until
the Professional Fee Escrow is fully funded or as further set forth in other
order(s) of the Court. So long as no Carve Out Trigger Notice has been
delivered, the Debtors shall be permitted to pay compensation and reimbursement
of expenses to Case Professionals allowed and payable under sections 330 and 331
of the Bankruptcy Code, but solely to the extent the same are allowed at any
time by the Court, regardless of whether allowed by interim order, procedural
order or otherwise; provided, that, for the avoidance of doubt, the payment of
such compensation and reimbursement of such expenses prior to the delivery of a
Carve Out Trigger Notice shall not reduce the applicable Wind-Down Carve Out
Amount. No portion of the Carve Out may be used in contravention of the
restrictions or the limitations on the use of the Carve Out set forth in this
Interim Order.

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(b)    The DIP Agents and the DIP Lenders shall retain automatically perfected
and continuing security interests in any residual amount in the Professional Fee
Escrow Account available following satisfaction in full of all obligations
benefiting from the Carve-Out (the “Residual Carve-Out Amount”). Promptly (but
in no event later than 5 business days) following the satisfaction in full of
all obligations benefiting from the Carve-Out, the Debtors shall deliver the
Residual Carve-Out Amount, if any, to the Senior DIP Agent (or, following a
Discharge of Senior DIP Obligations, the Junior DIP Agent).
(c)    No Direct Obligation to Pay Professional Fees. Neither the DIP Agents,
the DIP Secured Parties nor the Prepetition Secured Parties shall be responsible
for the payment or reimbursement of any fees or disbursements of any Case
Professionals incurred in connection with the Chapter 11 Cases or any Successor
Cases under any chapter of the Bankruptcy Code. Nothing in this Interim Order or
otherwise shall be construed to obligate the DIP Agents, DIP Secured Parties or
Prepetition Secured Parties in any way to pay compensation to or to reimburse
expenses of any Case Professionals, or to guarantee that the Debtors have
sufficient funds to pay such compensation or reimbursement.
(d)    Payment of Carve Out After Carve Out Trigger Notice. Any payment or
reimbursement made on or after the date of the delivery of the Carve Out Trigger
Notice in respect of any Carved-Out Professional Fees accrued or incurred after
delivery of the Carve Out Trigger Notice shall permanently reduce the Wind-Down
Carve Out Amount on a dollar-for-dollar basis.
28.    Limitations on the DIP Facilities, the DIP Collateral, the Prepetition
Collateral, the Cash Collateral and the Carve Out. No DIP Collateral,
Prepetition Collateral, DIP Loans, Cash Collateral, proceeds of any of the
foregoing, any portion of the Carve Out or any other amounts may be used,
directly or indirectly, by any of the Debtors, any Committee, if any, or any
trustee or other estate representative appointed in the Chapter 11 Cases or any
Successor Cases or any other

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person or entity (or to pay any professional fees, disbursements, costs or
expenses incurred in connection therewith): (a) to object to, prevent, hinder,
or delay the DIP Agents’, the DIP Secured Parties’ enforcement or realization
upon any of the DIP Collateral, Prepetition Collateral or Cash Collateral, once
a Termination Event occurs; (b) to use or seek to use Cash Collateral other than
as provided pursuant to this Interim Order or, except to the extent permitted
under the terms of the DIP Loan Documents, selling or otherwise disposing of DIP
Collateral, in each case, without the consent of both DIP Agents; (c) to seek
authorization to obtain liens or security interests that are senior to, or on a
parity with, the DIP Liens or the Superpriority DIP Claims, the Adequate
Protection Liens, the Adequate Protection Claims or the Prepetition Liens; (d)
to request or seek any modification of this Interim Order in any manner not
approved by both DIP Agents to the extent such modification would adversely
affect the rights of the DIP Secured Parties or the Prepetition Secured Parties;
or (e) to investigate (including by way of examinations or discovery
proceedings), prepare, assert, join, commence, support or prosecute any
challenge (including any litigation or other action) for any claim,
counter-claim, action, proceeding, application, motion, objection, defense, or
other contested matter seeking any order, judgment, determination or similar
relief against any or all of the DIP Agents, DIP Secured Parties or Prepetition
Secured Parties, or their respective affiliates, assigns or successors and the
respective officers, directors, employees, agents, attorneys, representatives
and other advisors of the foregoing, with respect to any
transaction, occurrence, omission, action or other matter (including formal or
informal discovery  proceedings  in anticipation thereof) with respect to
(A) any claims or causes of action arising under chapter 5 of the Bankruptcy
Code, (B) any so-called “lender liability” claims and causes of
action, (C) any action with respect to the amount, validity, enforceability,
priority and extent of, or asserting any defense, counterclaim, or offset to,
the DIP Obligations, the Superpriority DIP

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Claims, the DIP Liens, the DIP Loan Documents, the Adequate Protection Liens,
the Adequate Protection Claims, the Prepetition RBL Loan Documents, the
Prepetition RBL Obligations, the Prepetition FLMO Term Loan Documents, the
Prepetition FLMO Obligations, the Prepetition FLLO Term Loan Documents, the
Prepetition FLLO Obligations, the Prepetition Senior Liens, the Prepetition FLLO
Liens, the Prepetition Second Lien Documents, the Prepetition Second Lien Note
Obligations or the Prepetition Second Liens, (D) any action seeking to
challenge, invalidate, modify, set aside, avoid, marshal, recharacterize or
subordinate (other than as contemplated by the Intercreditor Agreements), in
whole or in part, the DIP Obligations, the DIP Liens, the Superpriority DIP
Claims, the DIP Collateral, the Prepetition Collateral, the Prepetition Liens,
the Adequate Protection Liens, the Adequate Protection Claims or the Prepetition
Obligations, (E) any action seeking to modify any of the rights, remedies,
priorities, privileges, protections and benefits granted to the DIP Secured
Parties hereunder or under any of the DIP Loan Documents or prepetition
agreements including the Elk Hills Power Agreements (as defined in the
Restructuring Support Agreement) or to any of the Prepetition Secured Parties
hereunder or under any of the Prepetition Debt Documents (in each case,
including, without limitation, claims, proceedings or actions that might
prevent, hinder or delay any of the DIP Agents’ or the DIP Lenders’ assertions,
enforcements, realizations or remedies on or against the DIP Collateral in
accordance with the applicable DIP Loan Documents and this Interim Order and/or
the Final Order (as applicable)), or (F) objecting to, contesting, or
interfering with, in any way, the DIP Agents’ and the DIP Secured Parties’
enforcement or realization upon any of the DIP Collateral once a Senior DIP
Event of Default or Junior DIP Event of Default has occurred; provided, however,
that no more than $75,000 in the aggregate of the DIP Collateral, the Carve Out,
and proceeds from the borrowings under the DIP Facilities or Prepetition
Collateral, may be used by any Committee to investigate claims and/or

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liens of the Prepetition Secured Parties. For the avoidance of doubt, the Debtor
reserves the right to contest, and to use Cash Collateral to contest, the
existence or extent of any Diminution in Value for purposes of any Adequate
Protection Claim or Adequate Protection Lien.
29.    Reservation of Certain Third Party Rights and Bar of Challenges and
Claims.
(a)    Each stipulation, admission, and agreement contained in this Interim
Order including, without limitation, the Debtors’ stipulations set forth in
paragraph E hereof (collectively, the “Stipulations”), shall be binding on the
Debtors upon entry of this Interim Order. The Stipulations shall be binding on
any successor to the Debtors (including, without limitation, any chapter 7 or
chapter 11 trustee appointed or elected for any of the Debtors in the Chapter 11
Cases or any Successor Cases) under all circumstances and for all purposes, and
the Debtors are deemed to have irrevocably waived and relinquished all
Challenges (as defined below) as of the Petition Date.
(b)    Upon expiration of the Challenge Period (as defined below), the
Stipulations shall be binding upon all other parties in interest (including
without limitation, any Committee, if appointed) and any other person or entity
acting or seeking to act on behalf of the Debtors’ estates, in all circumstances
and for all purposes, unless (1) any Committee or a party in interest (in each
case, to the extent requisite standing is obtained pursuant to an order of this
Court entered prior to the expiration of the Challenge Period) has timely and
duly filed an adversary proceeding or contested matter (subject to the
limitations contained herein) (each, a “Challenge Proceeding”) by the expiration
of the Challenge Period (as defined below), objecting to or challenging the
amount, validity, perfection, enforceability, priority or extent of the
Prepetition Obligations, the Prepetition Liens or the Prepetition Debt
Documents, or otherwise asserting or prosecuting any avoidance action or any
other claim, counterclaim, cause of action, objection,

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contest or defense (a “Challenge”) against any of the Prepetition Secured
Parties, or any of their respective affiliates, subsidiaries, officers,
directors, managers, employees, agents, financial advisors, attorneys,
accountants, investment bankers, consultants, representatives and the respective
successors and assigns thereof (in each case, in their respective capacities as
such), arising under, in connection with or related to the Prepetition
Obligations, the Prepetition Liens or the Prepetition Debt Documents and (2)
there is entered a final non-appealable order in favor of the plaintiff in any
such timely filed Challenge Proceeding; provided, however, that any pleadings
filed in any Challenge Proceeding shall set forth with specificity the basis for
such Challenge (and any Challenges not so specified prior to the expiration of
the Challenge Period shall be deemed forever, waived, released and barred).
(c)    Only those parties in interest who properly obtain standing and commence
a Challenge within the Challenge Period may prosecute such Challenge. As to
(x) any parties in interest, including any Committee, who do not obtain standing
and fail to file a Challenge prior to the expiration of the Challenge Period, or
if any such Challenge is filed and overruled, or (y) any and all matters that
are not expressly the subject of a timely Challenge: (1) any and all such
Challenges by any party (including, without limitation, any Committee, any
chapter 11 trustee, any examiner or any other estate representative appointed in
the Chapter 11 Cases, or any chapter 7 trustee, any examiner or any other estate
representative appointed in any Successor Cases), shall be deemed to be forever
waived and barred; (2) all of the findings, Debtors’ stipulations, waivers, 
releases, affirmations and other Stipulations hereunder as to the priority,
extent, allowability, validity and perfection as to all Prepetition Obligations,
Prepetition Liens and Prepetition Debt Documents, shall be of full force and
effect and forever binding upon the applicable Debtors’ bankruptcy estates and
all creditors, interest holders and other parties in interest in the Chapter 11

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Cases and any Successor Cases; (3) the Debtors’ estates, all creditors, interest
holders and other parties in interest in the Chapter 11 Cases and any Successor
Cases shall be deemed to have released, waived and discharged the Prepetition
Secured Parties (in each case, whether in their prepetition or postpetition
capacity), together with each of their respective successors, assigns,
affiliates, parents, subsidiaries, partners, controlling persons,
representatives, agents, attorneys, advisors, financial advisors, consultants,
professionals, officers, directors, members, managers, shareholders, and
employees, from any and all claims and causes of action arising out of, based
upon or related to, in whole or in part, the Prepetition Obligations; (4) the
Prepetition Obligations shall constitute allowed claims and shall not be subject
to any defense, claim, counterclaim, recharacterization, subordination, offset,
avoidance, for all purposes in these Chapter 11 Cases and any Successor Cases;
(5) the Prepetition Debt Documents shall be deemed to have been valid, as of the
Petition Date, and enforceable against each of the Debtors in the Chapter 11
Cases and any Successor Cases; and (6) the Prepetition Liens shall be deemed to
have been, as of the Petition Date, legal, valid, binding, perfected, security
interests and liens, not subject to recharacterization, subordination, avoidance
or other defense;
(d)    The “Challenge Period” shall mean the earlier of (a) sixty (60) days
after the formation of any Committee, but in no event later than seventy-five
(75) days after the Petition Date, (b) if no Committee is formed, seventy-five
(75) days after the Petition Date and (c) the date of confirmation of a chapter
11 plan. The Challenge Period may only be extended (A) with the written consent
of the Prepetition RBL Agent with respect to the Prepetition RBL Obligations,
the Prepetition RBL Loan Documents or the Prepetition Senior Liens; the
Prepetition FLMO Term Loan Agent with respect to the Prepetition FLMO
Obligations, the Prepetition FLMO Term Loan Documents or the Prepetition Senior
Liens; the Prepetition FLLO Term Loan Agent with respect

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to the Prepetition FLLO Obligations, the Prepetition FLLO Term Loan Documents or
the Prepetition FLLO Liens; or the Prepetition Second Lien Collateral Trustee
with respect to the Prepetition Second Lien Obligations, the Prepetition Second
Lien Documents or the Prepetition Second Liens, or (B) by the Court, upon a
motion for cause shown, in each case, prior to the expiration of the Challenge
Period.
(e)    In the event there is a timely successful Challenge by a final
non-appealable order, pursuant and subject to the limitations contained in this
paragraph 29, to the repayment of any of the Prepetition RBL Obligations
pursuant to this Interim Order based upon a successful challenge to the
validity, enforceability, extent, perfection or priority of the Prepetition RBL
Obligations or the liens securing the same, this Court shall determine the
remedies as to the portion of the Prepetition RBL Obligations subject to the
successful Challenge, which may include the unwinding the repayment of and
reinstating such Prepetition RBL Obligations, and all parties’ rights are fully
reserved in respect of any such potential remedies . If any amount of
Prepetition RBL Obligations are reinstated or required to be repaid to the
Debtors or any third party, any portion of such Prepetition RBL Obligations that
are secured by valid and enforceable liens shall benefit from the RBL Adequate
Protection Claims and the RBL Adequate Protection Liens and the Prepetition RBL
Agent reserves all of its rights to seek additional or different adequate
protection.
(f)    Notwithstanding anything to the contrary herein: (x) if any Challenge is
timely commenced and standing is timely obtained, the Stipulations shall, upon
expiration of the Challenge Period, nonetheless remain binding and preclusive
(as provided in paragraph 29(b) hereof) on all parties-in-interest (other than
the party that has brought such Challenge in connection therewith and then only
with respect to the Stipulations that are subject to the Challenge and not

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to any Stipulations not subject to the Challenge), except to the extent that
such Stipulations were expressly and successfully challenged in such Challenge
Proceeding as set forth in a final, non-appealable order of a court of competent
jurisdiction; and (y) the Prepetition Secured Parties reserve all of their
respective rights to contest on any grounds any Challenge and preserve any and
all of their rights to appeal and stay any orders issued in connection with a
successful Challenge. Nothing in this Interim Order vests or confers on any
Person (as defined in the Bankruptcy Code), including any Committee or any
non-statutory committees appointed in the Chapter 11 Cases, standing or
authority to pursue any cause of action belonging to the Debtors or their
estates, and all rights to object to such standing are expressly reserved.
30.    No Third Party Rights. Except as explicitly provided for herein, this
Interim Order does not create any rights for the benefit of any third party,
creditor, equity holder or any direct, indirect or incidental beneficiary.
31.    Section 506(c). In partial consideration for, among other things, the
Carve Out and the payments made under the Approved Budget to administer the
Chapter 11 Cases with the use of Cash Collateral, no costs or expenses of
administration which have been or may be incurred in the Chapter 11 Cases at any
time shall be charged against the DIP Secured Parties or the Prepetition Secured
Parties, any of the DIP Obligations or the Prepetition Obligations, or any of
the DIP Collateral or the Prepetition Collateral pursuant to sections 105 or
506(c) of the Bankruptcy Code or otherwise for any costs and expenses incurred
in connection with the preservation, protection, enhancement or realization by
the DIP Secured Parties upon the DIP Collateral, or by the Prepetition Secured
Parties upon the Prepetition Collateral, as applicable or otherwise, without the
prior express written consent of the affected DIP Agent, Prepetition RBL Agent,
Prepetition Senior Secured Collateral Agent, Prepetition FLLO Term Loan Agent,
Prepetition FLMO Term Loan

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Agent or Prepetition Second Lien Collateral Trustee, in their sole discretion
(but subject to the Intercreditor Agreements where applicable), provided that
the foregoing shall be without prejudice to the terms of the Final Order with
respect to the period from and after entry of the Final Order. For the avoidance
of doubt, consent to the Carve Out or the approval of any budget hereunder shall
not be deemed a consent under this paragraph. Nothing contained in this Interim
Order shall be deemed to consent by the Senior DIP Agent, the Junior DIP Agent,
the DIP Secured Parties, or the Prepetition Secured Parties to any charge, lien,
assessment, or claims against any DIP Collateral, under section 506(c) of the
Bankruptcy Code or otherwise.
32.    Section 552(b). The Prepetition Secured Parties are and shall each be
entitled to all of the rights and benefits of section 552(b) of the Bankruptcy
Code, and the “equities of the case” exception under section 552(b) of the
Bankruptcy Code shall not apply to the Prepetition Secured Parties or the
Prepetition Obligations, provided that the foregoing shall be without prejudice
to the terms of the Final Order with respect to the period from and after the
entry of the Final Order.
33.    Waiver of Marshaling for DIP Secured Parties. In no event shall the DIP
Secured Parties be subject to the equitable doctrine of “marshaling” or any
similar doctrine with respect to any of the DIP Collateral, provided that the
foregoing shall be without prejudice to the terms of the Final Order with
respect to the period from and after entry of the Final Order.
34.    Waiver of Marshaling for Prepetition Secured Parties. Subject to the
Final Order, in no event shall the Prepetition Secured Parties be subject to the
equitable doctrine of “marshaling” or any similar doctrine with respect to any
of the Prepetition Collateral, provided, that, in the event that either (x) the
Restructuring Support Agreement has been terminated by the Debtors due to a
material breach by the Required Consenting Creditors or (y) the Backstop 
Commitment Agreement has been terminated due to the Backstop Parties terminating
their

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Backstop Commitments, the Prepetition Secured Parties shall be subject to, and
retain all arguments and defenses in connection with, such doctrines.
35.    Right to Credit Bid. Pursuant to section 363(k) of the Bankruptcy Code,
(a) the Senior DIP Agent, on behalf of the Senior DIP Secured Parties (subject
to the terms of the Senior DIP Loan Documents) shall have the right to “credit
bid” (without the need to submit a deposit) up to the full amount of the Senior
DIP Obligations, in connection with any sale or other disposition of all or any
portion of the DIP Collateral, including, without limitation, sales occurring
pursuant to section 363 of the Bankruptcy Code or included as part of any
restructuring plan subject to confirmation under section 1129(b)(2)(A)(iii) of
the Bankruptcy Code, and shall automatically be deemed a “qualified bidder” with
respect to any such sale or disposition of DIP Collateral; and (b) the Junior
DIP Agent, on behalf of the Junior DIP Secured Parties (subject to the terms of
the Junior DIP Loan Documents) shall have the right to “credit bid” up to the
full amount of the Junior DIP Obligations, in connection with any sale or other
disposition of all or any portion of the DIP Collateral, including, without
limitation, sales occurring pursuant to section 363 of the Bankruptcy Code or
included as part of any restructuring plan subject to confirmation under
section 1129(b)(2)(A)(iii) of the Bankruptcy Code but only if such bid by the
Junior DIP Agent includes a cash payment sufficient to provide for the Discharge
of Senior DIP Obligations and the Discharge of Senior DIP Obligations occurs
immediately after giving effect to such credit bid.
36.    Rights Preserved. Notwithstanding anything herein to the contrary, the
entry of this Interim Order is without prejudice to, and does not constitute a
waiver of, expressly or implicitly: (a) the rights of the DIP Secured Parties to
seek any other or supplemental relief in respect of the Debtors; (b) the rights
of the DIP Secured Parties under the DIP Loan Documents, the Bankruptcy Code or
applicable non-bankruptcy law, including, without limitation, the right to

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(i) request modification of the automatic stay of section 362 of the Bankruptcy
Code, (ii) request dismissal of any of the Chapter 11 Cases, conversion of any
or all of the Chapter 11 Cases to a case under chapter 7, or appointment of a
chapter 11 trustee or examiner with expanded powers, or (iii) propose, subject
to the provisions of section 1121 of the Bankruptcy Code, a chapter 11 plan or
plans of reorganization; or (c) any other rights, claims, or privileges (whether
legal, equitable or otherwise) of the DIP Secured Parties; provided, that
notwithstanding the foregoing, in no event shall the Junior DIP Agent or Junior
DIP Secured Parties seek additional or supplemental relief in respect of the
Debtors or propose any chapter 11 plan or plan of reorganization, in each case
that is inconsistent with the payment priority of the Senior DIP Obligations and
Prepetition RBL Obligations set forth in paragraph 22(c). Notwithstanding
anything herein to the contrary, the entry of this Interim Order is without
prejudice to, and does not constitute a waiver of, expressly or implicitly, the
Debtors’ or any party-in-interest’s right to oppose any of the relief requested
in accordance with the immediately preceding sentence, except as expressly set
forth in this Interim Order.
37.    Intercreditor Agreements. Nothing in this Interim Order shall amend or
otherwise modify the terms or enforceability of the Intercreditor Agreements,
including without limitation, the turnover and bankruptcy-related provisions
contained therein, and the Intercreditor Agreements shall each remain in full
force and effect. The rights of the Prepetition Secured Parties shall at all
times remain subject to the Intercreditor Agreements.
38.    No Waiver by Failure to Seek Relief. The failure, at any time or times
hereafter, of the DIP Secured Parties and the Prepetition Secured Parties, to
require strict performance by the Debtors of any provision of this Interim Order
shall not waive, affect or diminish any right of such parties thereafter to
demand strict compliance and performance therewith. No delay on the part of

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any party in the exercise of any right or remedy under this Interim Order shall
preclude any other or further exercise of any such right or remedy or the
exercise of any other right or remedy. No consents by any of the DIP Secured
Parties or the Prepetition Secured Parties shall be implied by any inaction or
acquiescence by any of the DIP Secured Parties or the Prepetition Secured
Parties.
39.    Binding Effect of this Interim Order. Immediately upon, and effective as
of, entry by the Court, this Interim Order shall inure to the benefit of the
Debtors, the DIP Secured Parties and the Prepetition Secured Parties and it
shall become valid and binding upon the Debtors, the DIP Secured Parties and the
Prepetition Secured Parties and any and all other creditors of the Debtors, any
Committee or other committee appointed in the Chapter 11 Cases, any and all
other parties in interest and their respective successors and assigns, including
any trustee or other fiduciary hereafter appointed as legal representative of
any of the Debtors in any of the Chapter 11 Cases, or upon dismissal of any of
the Chapter 11 Cases. Further, upon entry of this Interim Order, the DIP
Obligations shall constitute allowed claims for all purposes in each of the
Chapter 11 Cases.
40.    No Modification to Interim Order. Until and unless the DIP Obligations
and the Prepetition RBL Obligations, the Prepetition FLMO Obligations, and the
Prepetition FLLO Obligations have been indefeasibly paid in full in cash, the
Debtors irrevocably waive the right to seek and shall not seek or consent to,
directly or indirectly: without the prior written consent of the DIP Agents, the
Majority Junior DIP Lenders, the Prepetition RBL Agent, Prepetition FLMO Term
Lenders holding more than 50% of the loans under the Prepetition FLMO Credit
Agreement (the “Required FLMO Term Lenders”) and the Prepetition FLLO Term
Lenders holding more than 50% of the loans under the Prepetition FLLO Credit
Agreement (the “Required FLLO Term Lenders”) (a) a priority claim for any
administrative expense or unsecured claim against the Debtor

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(now existing or hereafter arising of any kind or nature whatsoever, including,
without limitation any administrative expense of the kind specified in sections
503(b), 506(c), 507(a) or 507(b) of the Bankruptcy Code) in the Chapter 11
Cases, equal or superior to the Superpriority DIP Claims, the RBL Adequate
Protection Claims, the FLMO Adequate Protection Claims or the FLLO Adequate
Proection Claims other than the Carve Out; (b) any order authorizing the use of
Cash Collateral resulting from the DIP Collateral or the Prepetition Collateral
that is inconsistent with this Interim Order; or (c) any lien on any of the DIP
Collateral or Prepetition Collateral with priority equal or superior to the DIP
Liens, the Senior Adequate Protection Liens or the FLLO Adequate Proection Liens
except as specifically provided in the DIP Loan Documents or this Interim Order.
The Debtors irrevocably waive any right to seek any amendment, vacatur, stay,
modification or extension of this Interim Order without the prior written
consent, as provided in the foregoing, of the DIP Agents, the Majority Junior
DIP Lenders, the Required FLMO Term Lenders and the Required FLLO Term Lenders,
and Ares to the extent such amendment, vacatur, stay, modification or extension
is adverse to Ares. Until the Discharge of Senior DIP Obligations, the Junior
DIP Agent and the Junior DIP Secured Parties may not seek to amend, modify,
vacate, supplement or waive the terms of this Interim Order in a manner adverse
to the interests or rights of the Senior DIP Secured Parties or, prior to the
Prepetition RBL Obligatoins being discharged, the Prepetition RBL Secured
Parties, in either case without the prior written consent of the Senior DIP
Agent and the Prepetition RBL Agent, as applicable.
41.    Order Controls. In the event of any inconsistency between the terms and
conditions of the DIP Loan Documents, any other document or any other order of
the Court and of this Interim Order, the provisions of this Interim Order shall
govern and control.

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42.    Limits on Lender Liability. Nothing in this Interim Order or in any of
the DIP Loan Documents or the Prepetition Debt Documents or any other documents
related to this transaction shall in any way be construed or interpreted to
impose or allow the imposition upon the DIP Secured Parties or the Prepetition
Secured Parties of any liability for any claims arising from any and all
activities by the Debtors in the operation of their businesses in connection
with the Debtors’ postpetition restructuring efforts.
43.    Survival. The provisions of this Interim Order and any actions taken
pursuant hereto shall survive, and shall not be modified, impaired or discharged
by, entry of any order that may be entered (a) confirming any plan of
reorganization in any of the Chapter 11 Cases, (b) converting any or all of the
Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code,
(c) dismissing any or all of the Chapter 11 Cases, or (d) pursuant to which the
Court abstains from hearing any of the Chapter 11 Cases. The terms and
provisions of this Interim Order, including the claims, liens, security
interests, and other protections (as applicable) granted to the DIP Secured
Parties and the Prepetition Secured Parties pursuant to this Interim Order,
notwithstanding the entry of any such order, shall continue in any of the
Chapter 11 Cases, following dismissal of any of the Chapter 11 Cases, or any
Successor Cases, and shall maintain their priority as provided by this Interim
Order. The DIP Protections (as defined below), as well as the terms and
provisions concerning the reimbursement and indemnification of the DIP Secured
Parties shall continue in any of the Chapter 11 Cases following dismissal of any
of the Chapter 11 Cases, termination of the provisions of this Interim Order,
and/or the indefeasible payment in full of the DIP Obligations.
44.    Dismissal. If any order dismissing any of the Chapter 11 Cases under
section 1112 of the Bankruptcy Code or otherwise is at any time entered, such
order shall provide (in accordance with sections 105 and 349 of the Bankruptcy
Code), that (i) the rights, privileges, benefits and

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protections afforded herein and in the DIP Loan Documents, including the DIP
Liens and the Superpriority DIP Claims (collectively, the “DIP Protections”),
shall continue in full force and effect and shall maintain their priorities as
provided in this Interim Order until all DIP Obligations have been paid in full
(and that all DIP Protections shall, notwithstanding such dismissal, remain
binding on all parties in interest), and (ii) this Court shall retain
jurisdiction, notwithstanding such dismissal, for the purposes of enforcing such
DIP Protections.
45.    Entry of this Interim Order/Waiver of Applicable Stay. The Clerk of the
Court is hereby directed to forthwith enter this Interim Order on the docket of
the Court maintained in regard to the Chapter 11 Cases. This Interim Order shall
be effective upon its entry and not subject to any stay (all of which are hereby
waived), notwithstanding anything to the contrary contained in Bankruptcy Rule
4001(a)(3).
46.    Final Hearing. The final hearing with respect to the relief requested in
the Motion shall be held on __________, 2020 at __________ (prevailing Central
Time) (the “Final Hearing”).  Any objections or responses to entry of the
proposed Final Order shall be filed on or before 4:00 p.m. (prevailing Central
Time) on __________, 2020 and served on the following parties: (a) the Debtors,
California Resources Corporation, 27200 Tourney Road, Suite 200, Santa Clarita,
CA 91355 (Attn: Michael L. Preston); (b) proposed counsel to the Debtors,
Sullivan & Cromwell LLP, 125 Broad Street, New York, New York 10004 (Attn: Alexa
J. Kranzley) and Vinson & Elkins LLP, 1001 Fannin Street, Suite 2500, Houston,
Texas 77002 (Attn: Paul E. Heath); (c) counsel to the administrative agent for
the Debtors’ Senior DIP Facility, Simpson Thacher & Bartlett LLP, 425 Lexington
Avenue, New York, New York 10017 (Attn: Sandy Qusba and Nicholas A. Baker) and
Norton Rose Fulbright US LLP, 2200 Ross Avenue, Suite 3600, Dallas, Texas
75201-7932 (Attn: Louis Strubeck and Jason L. Boland); (d) counsel to the Ad Hoc

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First Lien Group, Davis Polk & Wardwell LLP, 450 Lexington Avenue, New York, New
York, 11017 (Attn: Damian S. Schaible and Angela M. Libby); (e) counsel to Ares,
Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York, 10022 (Attn:
Steven Serajeddini); (f) counsel to the ad hoc group of Prepetition Second Lien
Noteholders; (g) counsel to any statutory committee appointed in these chapter
11 cases; (h) the U.S. Trustee; and (i) to the extent not listed herein, those
parties requesting notice pursuant to Bankruptcy Rule 2002. In the event the
Court modifies any of the provisions of this Interim Order or other documents
following the Final Hearing, such modifications shall not affect the rights and
priorities of the DIP Agents and the DIP Lenders pursuant to this Interim Order
with respect to the DIP Collateral and any portion of the DIP Facilities that
arises, or is incurred or is advanced prior to such modifications (or otherwise
arising prior to such modifications), and this Interim Order shall remain in
full force and effect except as specifically modified pursuant to the Final
Hearing.
47.    Effect of this Interim Order. Notwithstanding Bankruptcy Rules
4001(a)(3), 6004(h), 6006(d), 7062 and 9024 or any other Bankruptcy Rule, or
Rule 62(a) of the Federal Rules of Civil Procedure, this Interim Order shall be
immediately effective and enforceable upon its entry and there shall be no stay
of execution or effectiveness of this Interim Order.
48.    Retention of Jurisdiction. The Court shall retain exclusive jurisdiction
to hear, determine and, if applicable, enforce the terms of, any and all matters
arising from or related to the DIP Facilities and/or this Interim Order.

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Annex I
Interim 9019 Order
[See Attached]

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

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
___________________________________________

In re

CALIFORNIA RESOURCES CORPORATION, et al.,

Debtors.
___________________________________________
x
:
:
:
:
:
:
:
x

Chapter 11

Case No. (20-_____) (__)

        Jointly Administered

INTERIM ORDER (I) AUTHORIZING AND APPROVING THE
SETTLEMENT BY AND AMONG THE DEBTORS, ELK HILLS POWER, LLC, ECR CORPORATE
HOLDINGS L.P. AND CERTAIN AFFILIATES OF ARES MANAGEMENT LLC, (II) AUTHORIZING
THE DEBTORS TO ASSUME THE EHP
AGREEMENTS AS AMENDED AND (III) GRANTING RELATED RELIEF
Upon the motion (the “Motion”)2 of California Resources Corporation and its
affiliated debtors and debtors-in-possession (collectively, the “Debtors”), for
entry of an interim order (this “Interim Order”) (a) authorizing and approving
the Debtors’ entry into the Settlement Agreement, (b) authorizing the Debtors to
assume the EHP Agreements, as amended by the EHP LLC Amendment contemplated by
the Settlement Agreement, and (c) granting certain related relief; and this
Court having jurisdiction to consider the Motion pursuant to 28 U.S.C. § 1334;
and venue of these chapter 11 cases and the Motion in this district being proper
pursuant to 28
__________
1 
The Debtors in these chapter 11 cases and the last four digits of their U.S.
taxpayer identification numbers are:  California Resources Corporation (0947);
California Heavy Oil, Inc. (4630); California Resources Coles Levee, L.P.
(2995); California Resources Coles Levee, LLC (2087); California Resources Elk
Hills, LLC (7310); California Resources Long Beach, Inc. (6046); California
Resources Mineral Holdings LLC (4443); California Resources Petroleum
Corporation (9218); California Resources Production Corporation (5342);
California Resources Production Mineral Holdings, LLC (9071); California
Resources Real Estate Ventures, LLC (6931); California Resources Royalty
Holdings, LLC (6393); California Resources Tidelands, Inc. (0192); California
Resources Wilmington, LLC (0263); CRC Construction Services, LLC (7030); CRC
Marketing, Inc. (0941); CRC Services, LLC (6989); Monument Production, Inc.
(0782); Oso Verde Farms, LLC (7436); Socal Holding, LLC (3524); Southern San
Joaquin Production, Inc. (4423); Thums Long Beach Company (1774); Tidelands Oil
Production Company LLC (5764). The Debtors’ corporate headquarters is located at
27200 Tourney Road, Suite 200, Santa Clarita, CA 91355.

2 
Capitalized terms not otherwise defined herein are to be given the meanings
ascribed to them in the Motion.

1

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U.S.C. §§ 1408 and 1409; and this matter being a core proceeding pursuant to 28
U.S.C. § 157(b); and this Court having found that proper and adequate notice of
the Motion and the relief requested therein has been provided in accordance with
the Bankruptcy Rules, the Bankruptcy Local Rules and the Complex Case
Procedures, and that, except as otherwise ordered herein, no other or further
notice is necessary; and any objections (if any) to the Motion having been
withdrawn, resolved or overruled on the merits; and a hearing having been held
to consider the relief requested in the Motion and upon the record of the
hearing and all of the proceedings had before this Court; and this Court having
found and determined that the relief sought in the Motion is in the best
interests of the Debtors, their estates, their creditors and all other
parties-in-interest; and that the legal and factual bases set forth in the
Motion establish just cause for the relief granted herein; and after due
deliberation and sufficient cause appearing therefor;
IT IS HEREBY ORDERED THAT:
1.    The Debtors, EHP and Ares shall continue to perform, and cause their
respective affiliates to perform, all of their respective obligations under the
EHP Agreements in effect as of the date of the Settlement Agreement in the
ordinary course of business consistent with past practices as if these chapter
11 cases had not been commenced, except as expressly provided in the Settlement
Agreement.
2.    Until the earlier of the termination of the Settlement Agreement in
accordance with its terms and effectiveness of a chapter 11 plan of
reorganization, the Debtors shall not and shall cause their affiliates not to:
a.
develop, promote or otherwise pursue the Bypass Plan;

b.
commence any proceeding against EHP or Ares relating to any transfer or
conveyance of assets by CRC or CREH to EHP made prior to the date of the
Settlement Agreement, including but not limited to claims for fraudulent
conveyance or otherwise to avoid such transfers or conveyances and claims
related to the EHP Disputes;

2

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c.
commence any proceeding to obtain control or ownership of the assets of EHP,
including but not limited to claims for recharacterization or substantive
consolidation and claims related to the EHP Disputes; or

d.
take any action outside of the ordinary course of business, including filing any
motion, that is (i) not contemplated by the Settlement Agreement and (ii)
adverse to EHP in any material respect, including, but not limited to, any
rejection of any EHP Agreements and any such action related to the EHP Disputes.

3.    EHP shall pay (i) cash distributions on the Class B Preferred Units to
Ares at a rate per annum of 9.5%, calculated on an aggregate cumulative
liquidation preference for all Class B Preferred Units of $835,131,031 from and
after the Petition Date (as may be increased for any unpaid cash distributions
after the date of the Settlement Agreement) and otherwise consistent with
historical practices; and (ii) cash distributions on account of Ares’s ownership
of Class A Common Units and Class C Common Units and consistent with historical
practices in the case of each of clauses (i) and (ii), at the times and in the
manner contemplated by the EHP Agreements in effect as of the date of the
Settlement Agreement. EHP will also pay a cash distribution in the ordinary
course after the Petition Date with respect to the period from July 1, 2020
through the Petition Date at a rate, and in a manner, consistent with past
practice.
4.    The Debtors are authorized and empowered to execute and deliver such
documents, and to take and perform all actions necessary to implement and
effectuate the relief granted in this Interim Order.
5.    The Debtors shall promptly pay in cash, to the extent not paid in
accordance with the RSA, all reasonable and documented fees, costs and expenses
incurred by Ares in connection with the implementation of the Restructuring
Transactions (as defined in the RSA).
6.    Nothing in the Motion or this Interim Order, nor as a result of any
payment made pursuant to this Interim Order, shall be deemed or construed as an
admission as to

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the validity or priority of any claim against the Debtors, an approval or
assumption of any agreement, contract or lease pursuant to section 365 of the
Bankruptcy Code or a waiver of the right of the Debtors, or shall impair the
ability of the Debtors to contest the amount of any payment claimed by EHP to be
due under the EHP Agreements.
7.    The requirements set forth in Bankruptcy Local Rule 9013-1(i) are
satisfied.
8.    The requirements set forth in Bankruptcy Rule 6003(b) are satisfied.
9.    The requirements set forth in Bankruptcy Rule 6004(a) are satisfied.
10.    This Interim Order is immediately effective and enforceable,
notwithstanding the possible applicability of Bankruptcy Rule 6004(h) or
otherwise.
11.    This Court shall retain jurisdiction with respect to any matters, claims,
rights or disputes arising from or related to the Motion or the implementation
of this Interim Order.
12.    The final hearing with respect to the relief requested in the Motion
shall be held on __________, 2020 at __________ (prevailing Central Time) (the
“Final Hearing”).  Any objections or responses to entry of the proposed Final
Order shall be filed on or before 4:00 p.m. (prevailing Central Time) on
__________, 2020 and served on the following parties: (a) the Debtors,
California Resources Corporation, 27200 Tourney Road, Suite 200, Santa Clarita,
CA 91355 (Attn: Michael L. Preston); (b) proposed counsel to the Debtors,
Sullivan & Cromwell LLP, 125 Broad Street, New York, New York 10004 (Attn: Alexa
J. Kranzley), and Vinson & Elkins LLP, 1001 Fannin, Suite 2500, Houston, TX
77002 (Attn: Paul E. Heath); (c) counsel to the administrative agent for the
Debtors’ DIP credit facility; (d) counsel to the ad hoc group of prepetition
first lien lenders and second lien noteholders; (e) counsel to the ad hoc group
of

4

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prepetition second lien noteholders; (f) counsel to Ares; (g) counsel to any
statutory committee appointed in these chapter 11 cases; (h) the U.S. Trustee;
and (i) to the extent not listed herein, those parties requesting notice
pursuant to Bankruptcy Rule 2002.

Dated: _____________, 2020
Houston, Texas
 

United States Bankruptcy Judge

5

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Exhibit B
Second Lien Exit Lenders
[*****]

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

Exhibit C
Junior DIP Commitment Parties
[*****]

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

Exhibit D
Form of Transfer Agreement

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

TRANSFER AGREEMENT
The undersigned (“Transferee”) hereby acknowledges that it has read and
understands the Restructuring Support Agreement, dated as of July 15, 2020 (the
“Agreement”),1 by and among the Company Parties and the Consenting Creditors,
including the transferor to the Transferee of any Company Claims (each such
transferor, a “Transferor”), and agrees to be bound by the terms and conditions
thereof to the extent the Transferor was thereby bound, and shall be deemed a
“Consenting Creditor” and a “Consenting 2016 Term Loan Lender,” or a “Consenting
2017 Term Loan Lender” under the terms of the Agreement.
The Transferee specifically agrees to be bound by the terms and conditions of
the Agreement and makes all representations and warranties contained therein as
of the date of the Transfer, including the agreement to be bound by the vote of
the Transferor if such vote was cast before the effectiveness of the Transfer
discussed in this transfer agreement.
Date Executed:
______________________________________
Name:
Title:
Address:
E-mail address(es):

Aggregate Amounts Beneficially Owned or Managed on Account of:
2016 Term Loan Claims
 
2017 Term Loan Claims
 
Second Lien Notes Claims
 
Unsecured Notes Claims
 
Senior DIP Claims
 
Junior DIP Claims
 

______________________
1 
Capitalized terms not used but not otherwise defined in this transfer agreement
shall have the meanings ascribed to such terms in the Agreement.

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

Exhibit E
Form of Joinder

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

JOINDER
The undersigned (“Joinder Party”) hereby acknowledges that it has read and
understands the Restructuring Support Agreement, dated as of July 15, 2020 (the
“Agreement”),1 by and among Company Parties and the Consenting Creditors and
agrees to be bound by the terms and conditions thereof to the extent the other
Parties are thereby bound, and shall be deemed a “Consenting 2016 Term Loan
Lender,” or a “Consenting 2017 Term Loan Lender” under the terms of the
Agreement.
The Joinder Party specifically agrees to be bound by the terms and conditions of
the Agreement and makes all representations and warranties contained therein as
of the date of this joinder and any further date specified in the Agreement.
Date Executed:
______________________________________
Name:
Title:
Address:
E-mail address(es):

Aggregate Amounts Beneficially Owned or Managed on Account of:
2016 Term Loan Claims
 
2017 Term Loan Claims
 
Second Lien Notes Claims
 
Unsecured Notes Claims
 
Senior DIP Claims
 
Junior DIP Claims
 

______________________
1 
Capitalized terms not used but not otherwise defined in this joinder shall have
the meanings ascribed to such terms in the Agreement.