Document:

Exhibit

Exhibit 10.1
Execution Version
	
	
	 

TENTH AMENDMENT
TO
CREDIT AGREEMENT
DATED AS OF APRIL 30, 2020
AMONG
CALIFORNIA RESOURCES CORPORATION,
AS THE BORROWER,
JPMORGAN CHASE BANK, N.A.,
AS ADMINISTRATIVE AGENT,
AND
THE LENDERS
PARTY HERETO
	
	
	 

TENTH AMENDMENT TO CREDIT AGREEMENT
This Tenth Amendment to Credit Agreement (this “Amendment”) dated as of April 30, 2020, is among California Resources Corporation, a Delaware corporation (the “Borrower”), each of the undersigned Guarantors, each Lender party hereto, and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders (in such capacity, together with its successors and assigns, the “Administrative Agent”).
RECITALS
A.    The Borrower, the Administrative Agent and the Lenders from time to time party thereto have entered into that certain Credit Agreement dated as of September 24, 2014 (as amended by the First Amendment to Credit Agreement dated as of February 25, 2015, the Second Amendment to Credit Agreement dated as of November 2, 2015, the Third Amendment to Credit Agreement dated as of February 23, 2016, the Fourth Amendment to Credit Agreement dated as of April 22, 2016, the Fifth Amendment and Waiver to Credit Agreement dated as of August 12, 2016, the Sixth Amendment to Credit Agreement dated as of February 14, 2017, the Seventh Amendment to Credit Agreement dated as of November 9, 2017, the Eighth Amendment to Credit Agreement dated as of August 20, 2018, the Ninth Amendment to Credit Agreement dated as of August 28, 2019 and as further amended, restated, modified or supplemented from time to time, the “Credit Agreement”).
B.    The Borrower has requested and the Administrative Agent and the Lenders party hereto have agreed to postpone the Scheduled Redetermination of the Borrowing Base that was to be effective on May 1, 2020 and amend certain provisions of the Credit Agreement on the terms and conditions set forth herein.
C.    NOW, THEREFORE, to induce the Administrative Agent and the Lenders to enter into this Amendment and in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1.    Definitions.  Unless otherwise defined in this Amendment, each capitalized term used in this Amendment, including the recitals hereto, has the meaning assigned to such term in the Credit Agreement as amended hereby.  Unless otherwise indicated, all section references in this Amendment refer to sections of the Credit Agreement.
Section 2.    Postponement of Borrowing Base Redetermination.  In accordance with clause (ix) of the first proviso to Section 14.1, the Scheduled Redetermination of the Borrowing Base that was to be effective on May 1, 2020 shall be postponed such that the new Borrowing Base in connection with such Scheduled Redetermination shall be effective and applicable on May 15, 2020.
Section 3.    Amendment to Credit Agreement.  
3.1     Amendments to Section 1.1. 
(a)    The definition of “ABR” is hereby amended by amending and restating the final sentence of such definition as follows:

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For the avoidance of doubt, if the ABR shall be less than 2.0%, such rate shall be deemed to be 2.0% for purposes of this Agreement.
(b)    The definition of “LIBOR Rate” is hereby amended by amending and restating the proviso at the end of such definition as follows
provided that if the LIBOR Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) then the LIBOR Rate shall be the Interpolated Rate, provided, that, if any Interpolated Rate shall be less than 1.0%, such rate shall be deemed to be 1.0% for purposes of this Agreement.
(c)    The definition of “LIBOR Screen Rate” is hereby amended by amending and restating the proviso at the end of such definition as follows:
provided that if the LIBOR Screen Rate shall be less than 1.0%, such rate shall be deemed to be 1.0% for the purposes of this Agreement.
(d)    Clause (a) of the definition of “Revolving Loan Limit” is hereby amended and restated as follows:
(a) at any time during a Borrowing Base Trigger Period (other than as set forth in clause (b)), (i) the least of (x) the Total Revolving Commitments at such time, (y) the Borrowing Base at such time (including as it may be reduced pursuant to Section 2.14(h)) and (z) $900,000,000 minus (ii) the aggregate Total Term Loan Exposure
3.2    Amendment to Section 2.17(b). Section 2.17(b) is hereby amended by amending and restating the proviso at the end of such section as follows:
provided that, if such alternate rate of interest shall be less than 1.0%, such rate shall be deemed to be 1.0% for the purposes of this Agreement.
3.3    A copy of the Credit Agreement as amended by this Amendment is attached hereto as Exhibit B.
Section 4.    Certification of Consolidated Cash Balance. As a condition precedent to any Credit Event, substantially concurrently with the Borrower’s request for such Credit Event, the Borrower shall provide the Administrative Agent with an officer’s certification of the Consolidated Cash Balance both prior to and after giving pro forma effect to such Credit Event on the form attached hereto as Exhibit A.   
Section 5.    Effectiveness.  This Amendment shall become effective on the first date on which each of the conditions set forth in this Section 5 is satisfied (the “Effective Date”):
5.1    The Administrative Agent shall have received duly executed counterparts (in such number as may be requested by the Administrative Agent) of this Amendment from the Borrower, each Guarantor and Lenders constituting the Majority Lenders and Majority Revolving Lenders.

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5.2    The Borrower shall have paid, to the extent invoiced, all fees and other amounts due and payable on or prior to the Effective Date, including all reasonable out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement.
5.3    No Borrowing Base Deficiency, Default or Event of Default shall have occurred and be continuing as of the date hereof, after giving effect to the terms of this Amendment.
Section 6.    Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 7.    Miscellaneous.  
7.1    (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in each other Credit Document to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended or otherwise modified by this Amendment; (b) the execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any default of the Borrower or any right, power or remedy of the Administrative Agent or the Lenders under any of the Credit Documents, nor constitute a waiver of any provision of any of the Credit Documents; (c) this Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart; (d) delivery of an executed counterpart of a signature page to this Amendment by telecopier or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment; and (e) unless otherwise specified, each Lender’s executed signature page to this Amendment constitutes such Lender’s signature in all its capacities under the Credit Agreement.
7.2    Neither the execution by the Administrative Agent or the Lenders of this Amendment, nor any other act or omission by the Administrative Agent or the Lenders or their officers in connection herewith, shall be deemed a waiver by the Administrative Agent or the Lenders of any defaults which may exist or which may occur in the future under the Credit Agreement and/or the other Credit Documents (collectively “Violations”). Similarly, nothing contained in this Amendment shall directly or indirectly in any way whatsoever either: (a) impair, prejudice or otherwise adversely affect the Administrative Agent’s or the Lenders’ right at any time to exercise any right, privilege or remedy in connection with the Credit Documents with respect to any Violations; (b) except for the amendments set forth herein, amend or alter any provision of the Credit Agreement, the other Credit Documents, or any other contract or instrument; or (c) constitute any course of dealing or other basis for altering any obligation of the Borrower or any right, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Credit Documents, or any other contract or instrument. Nothing in this letter shall be construed to be a consent by the Administrative Agent or the Lenders to any Violations.
7.3    The Borrower and each Guarantor hereby (a) acknowledges the terms of this Amendment; (b) ratifies and affirms its obligations under, and acknowledges, renews and extends

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its continued liability under, each Credit Document to which it is a party and agrees that each Credit Document to which it is a party remains in full force and effect, except as expressly amended or modified hereby; and (c) represents and warrants to the Lenders that as of the Effective Date, after giving effect to the terms of this Amendment: (i) all of the representations and warranties contained in each Credit Document to which it is a party are true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct) as of such specified earlier date, and (ii) no Borrowing Base Deficiency, Default or Event of Default has occurred and is continuing.
7.4    This Amendment is a Credit Document as defined and described in the Credit Agreement and all of the terms and provisions of the Credit Agreement relating to Credit Documents shall apply hereto.
7.5      THE CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS, INCLUDING THIS AMENDMENT, EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their officers thereunto duly authorized as of the date first above written.
	
					
	BORROWER:
	CALIFORNIA RESOURCES CORPORATION

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ Marshall D. Smith
	 

	 
	Name:
	Marshall D. Smith
	 

	 
	Title:
	Senior Executive Vice President and Chief Financial Officer

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
					
	GUARANTORS:
	CALIFORNIA HEAVY OIL, INC. 
CALIFORNIA RESOURCES LONG BEACH, INC.
CALIFORNIA RESOURCES PETROLEUM CORPORATION 
CALIFORNIA RESOURCES PRODUCTION CORPORATION 
CALIFORNIA RESOURCES TIDELANDS, INC.
SOUTHERN SAN JOAQUIN PRODUCTION, INC.
THUMS LONG BEACH COMPANY

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ Marshall D. Smith
	 

	 
	Name:
	Marshall D. Smith
	 

	 
	Title:
	Senior Executive Vice President and
Chief Financial Officer

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
					
	 
	CALIFORNIA RESOURCES ELK HILLS, LLC 
CRC CONSTRUCTION SERVICES, LLC 
CRC SERVICES, LLC
SOCAL HOLDING, LLC

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ Marshall D. Smith
	 

	 
	Name:
	Marshall D. Smith
	 

	 
	Title:
	Senior Executive Vice President and
Chief Financial Officer of California Resources Corporation, its Sole Member

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
					
	 
	CALIFORNIA RESOURCES WILMINGTON, LLC

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ Marshall D. Smith
	 

	 
	Name:
	Marshall D. Smith
	 

	 
	Title:
	Senior Executive Vice President and
Chief Financial Officer of California Resources Corporation, its Sole Member

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
					
	 
	CRC MARKETING, INC.

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ D. Adam Smith
	 

	 
	Name:
	D. Adam Smith
	 

	 
	Title:
	Assistant Secretary

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
					
	 
	TIDELANDS OIL PRODUCTION COMPANY

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ Joanna Park
	 

	 
	Name:
	Joanna Park
	 

	 
	Title:
	Vice President and Treasurer of California Resources Tidelands, Inc.,
its Managing Partner

	
					
	 
	CALIFORNIA RESOURCES COLES LEVEE, LLC

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ Joanna Park
	 

	 
	Name:
	Joanna Park
	 

	 
	Title:
	Vice President and Treasurer

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
					
	 
	CALIFORNIA RESOURCES COLES LEVEE, L.P.

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ Joanna Park
	 

	 
	Name:
	Joanna Park
	 

	 
	Title:
	Vice President and Treasurer of California Resources Coles Levee, LLC, its General Partner

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
					
	 
	CALIFORNIA RESOURCES REAL ESTATE VENTURES, LLC

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ Marshall D. Smith
	 

	 
	Name:
	Marshall D. Smith
	 

	 
	Title:
	Senior Executive Vice President and Chief Financial Officer

	
					
	 
	CALIFORNIA RESOURCES ROYALTY HOLDINGS, LLC

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	By:
	/s/ Marshall D. Smith
	 

	 
	Name:
	Marshall D. Smith
	 

	 
	Title:
	Senior Executive Vice President and Chief Financial Officer

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	JPMORGAN CHASE BANK, N.A., as Administrative Agent and Lender

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Sandeep Parihar
	 

	 
	Name:
	Sandeep Parihar
	 

	 
	Title:
	Executive Director
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	BANK OF AMERICA, N.A.

	 
	as Lender for $________ share of the $1.0Bn Revolving Credit Facility

	 
	 
	 
	 

	 
	By:
	/s/ Kathryn (Katie) Pounds
	 

	 
	Name:
	Kathryn (Katie) Pounds
	 

	 
	Title:
	Vice President
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	ROYAL BANK OF CANADA, as Lender

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Josh Brant
	 

	 
	Name:
	Josh Brant
	 

	 
	Title:
	Director
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	CITIBANK, N.A., as Lender

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Phil Ballard
	 

	 
	Name:
	Phil Ballard
	 

	 
	Title:
	Vice President
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	Goldman Sachs Bank USA, as a lender

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Jamie Minieri
	 

	 
	Name:
	Jamie Minieri
	 

	 
	Title:
	Authorized Signatory
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	HSBC BANK USA, NATIONAL ASSOCIATION

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Temesgen Haile
	 

	 
	Name:
	Temesgen Haile
	 

	 
	Title:
	Vice President
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	Wells Fargo Bank, N.A.
as Lender

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Constantin E. Chepurny
	 

	 
	Name:
	Constantin E. Chepurny
	 

	 
	Title:
	EVP
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	BBVA USA,

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Gabriela Azcarate
	 

	 
	Name:
	Gabriela Azcarate
	 

	 
	Title:
	Senior Vice President
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	Morgan Stanley Bank, N.A.

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Kevin Newman
	 

	 
	Name:
	Kevin Newman
	 

	 
	Title:
	Authorized Signatory
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	SOCIETE GENERALE

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Diego Medina
	 

	 
	Name:
	Diego Medina
	 

	 
	Title:
	Director.
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

	
				
	 
	THE BANK OF NEW YORK MELLON

	 
	 
	 
	 

	 
	 
	 
	 

	 
	By:
	/s/ Richard K. Fronapfel, Jr.
	 

	 
	Name:
	Richard K. Fronapfel, Jr.
	 

	 
	Title:
	Director
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - Tenth Amendment

Exhibit A
Certification of Consolidated Cash Balance
Reference is made to that certain Credit Agreement, dated as of September 24, 2014, among, inter alia, California Resources Corporation, a Delaware corporation (the “Borrower”), JPMorgan Chase Bank, N.A., as Administrative Agent and the Lenders party thereto (as amended by the First Amendment to Credit Agreement dated as of February 25, 2015, the Second Amendment to Credit Agreement dated as of November 2, 2015, the Third Amendment to Credit Agreement dated as of February 23, 2016, the Fourth Amendment to Credit Agreement dated as of April 22, 2016, the Fifth Amendment and Waiver to Credit Agreement dated as of August 12, 2016, the Sixth Amendment to Credit Agreement dated as of February 14, 2017, the Seventh Amendment to Credit Agreement dated as of November 9, 2017, the Eighth Amendment to Credit Agreement dated as of August 20, 2018, the Ninth Amendment to Credit Agreement dated as of August 28, 2019, the Tenth Amendment to Credit Agreement, dated as of April 30, 2020, and as further amended, restated, modified or supplemented from time to time, the “Credit Agreement”). Unless otherwise defined in this Amendment, each capitalized term used in this Amendment, including the recitals hereto, has the meaning assigned to such term in the Credit Agreement as amended hereby
The undersigned, in their capacity as an officer of the Borrower and not in an individual capacity hereby certifies that the Consolidated Cash Balance:
(a) prior to the Credit Event requested on or about the date hereof is $[•]; and
(b) after giving pro forma effect to the Credit Event requested on or about the date hereof is $[•].
	
				
	 
	California Resources Corporation

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 

	 
	Name:
	 

	 
	Title:
	 

	 
	 
	 
	 

	 
	Date:
	___________________, 20__

Exhibit B
AMENDED CREDIT AGREEMENT
See attached.Exhibit 10.1

 

 

 

 

	SBA Loan #	1750627301
	SBA Loan Name	KBS Builders, Inc.

	Date	April
30, 2020
	Loan Amount	$ 822,200.00
	Interest Rate	Fixed rate at 1.00% per annum
	Borrower	KBS Builders, Inc.
	Operating Company	N/A
	Lender	Bremer Bank, National Association
	 	 	 	 

 

 

 

		1.	PROMISE TO PAY:

  
In return for the Loan, Borrower promises to pay to the order of Lender the amount of

 

eight hundred twenty-two thousand two hundred dollars and zero cents                         Dollars,

 

interest on the unpaid
principal balance, and all other amounts required by this Note.

 

		2.	DEFINITIONS:

“Collateral” means any property taken
as security for payment of this Note or any guarantee of this Note.

 “Guarantor” means each person or entity that signs a guarantee of payment of this Note.

“Loan” means the loan evidenced by this
Note.

“Loan Documents”
means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.

“SBA” means the Small Business Administration,
an Agency of the United States of America.

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		3.	PAYMENT TERMS:

 

Borrower must make all payments at the place Lender designates.
The payment terms for this Note are:

 

The interest rate on
this Note will be fixed at one percent (1.00%) per annum.

 

By execution hereof, Borrower
acknowledges and agrees that all, or a portion of, the principal balance of the loan may be forgiven, which forgiveness is subject
to the terms and conditions of the Coronavirus Aid, Relief, and Economic Security Act, as amended (the "CARES Act"),
the Interim Final Rule related to the Paycheck Protection Program (issued by the U.S. Small Business Administration ("SBA")
on April 2, 2020), and the Paycheck Protection Program Borrower Application Form 2483, and all documents related thereto, submitted
by Borrower to Lender.

 

Borrower further acknowledges and agrees that Borrower
shall submit an application to Lender for forgiveness of the loan pursuant to the requirements of the the CARES Act and the Interim
Final Rule. Borrower further acknowledges and agrees that any portion of the loan not forgiven shall be due and payable on or before
a date that is two (2) years from the date of this Note (the "Maturity Date"), and such unforgiven principal and interest
balance of the loan shall be paid pursuant to the payment terms set forth below. Borrower shall hold Lender harmless against any
and all claims related to, or arising out of, the non-forgiveness of the loan or any portion thereof.

 

No payments are due on this loan for 6 months from
the date of first disbursement of this loan. Interest will continue to accrue during the deferment period. Commencing seven (7)
months from the date of this Note, unless fully forgiven prior thereto, Borrower shall pay to Lender monthly principal and interest
payments, each in an amount that would fully amortize the unpaid principal balance of this Note over the then remaining term of
this Note ("Monthly Installment").

The Monthly Installment shall be due and payable
on the same day of each subsequent calendar month. All remaining amounts shall be fully due and payable on the Maturity Date.

 

Lender shall apply each Monthly Installment and other
payment first to pay interest accrued to the day Lender receives the payment, then to pay any late fees, and shall apply any remaining
amount of each Monthly Installment to the outstanding principal balance.

 

Borrower may prepay the principal under this Note
at any time and from time to time, in whole or in part, without premium or penalty. No partial prepayment shall postpone the due
date of any Monthly Installment or reduce the amount of any such Monthly Installment unless Lender agrees otherwise in writing.

 

Late Charge: If a payment on this Note is more than
10 days late, Lender may charge Borrower a late fee of up to 5.00% of the unpaid portion of the regularly scheduled payment.

 

Borrower expressly acknowledges, agrees, and understands
that this Note was made pursuant to the rules and requirements set forth under the Paycheck Protection Program as described in
the CARES Act and the Interim Final Rule related to the Paycheck Protection Program (issued by the U.S. Small Business Administration
on April 2, 2020), and that the SBA has the right and ability to interpret the CARES Act and to change and revise certain rules,
policies and requirements under the Paycheck Protection Program. Borrower agrees to provide and/or execute all new, revised, amended
and updated information, signatures, and documentation that Lender may request and require in order to comply with SBA’s
rules and requirements under the Paycheck Protection Program or any other applicable SBA loan program. Additionally, Borrower hereby
expressly grants Lender the unilateral authority to adjust the Maturity Date, amortization period and/or amount of the Monthly
Installment to the extent necessary for Lender to comply with any new or revised rules, regulations, requirements or policies issued
by the SBA and related to the Paycheck Protection Program.

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		4.	DEFAULT:

Borrower is in default under this Note
if Borrower does not make a payment when due under this Note, or if Borrower or Operating Company:

		A.	Fails to do anything required by this Note and other Loan Documents;

		B.	Defaults on any other loan with Lender;

		C.	Does not preserve, or account to Lender’s satisfaction for, any of the Collateral or its proceeds;

		D.	Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender or SBA;

		E.	Makes, or anyone acting on their behalf makes, a materially false or misleading representation
to Lender or SBA;

		F.	Defaults on any loan or agreement with another creditor, if Lender believes the default may
materially affect Borrower’s ability to pay this Note;

		G.	Fails to pay any taxes when due;

		H.	Becomes the subject of a proceeding under any bankruptcy or insolvency law;

		I.	Has a receiver or liquidator appointed for any part of their business or property;

		J.	Makes an assignment for the benefit of creditors;

		K.	Has any adverse change in financial condition or business operation that Lender believes may
materially affect Borrower’s ability to pay this Note;

		L.	Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without
Lender’s prior written consent; or

		M.	Becomes the subject of a civil or criminal action that Lender believes may materially affect Borrower’s
ability to pay this Note.

  

		5.	LENDER’S RIGHTS IF THERE IS A DEFAULT:

 

Without notice or demand and without giving up any of
its rights, Lender may: 

 

		A.	Require immediate payment of all amounts owing under this Note;

		B.	Collect all amounts owing from any Borrower or Guarantor;

		C.	File suit and obtain judgment;

		D.	Take possession of any Collateral; or

		E.	Sell, lease, or otherwise dispose of, any Collateral at public or private sale, with or without advertisement.

 

		6.	LENDER’S GENERAL POWERS:

 

Without notice and without Borrower’s consent, Lender
may:

 

		A.	Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;

		B.	Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other
Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for property taxes,
prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and costs. If Lender
incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance;

		C.	Release anyone obligated to pay this Note;

		D.	Compromise, release, renew, extend or substitute any of the Collateral; and

		E.	Take any action necessary to protect the Collateral or collect amounts owing on this Note.

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		7.	WHEN FEDERAL LAW APPLIES:

When SBA is the holder, this Note will be
interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing
papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive
any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert
against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

 

		8.	SUCCESSORS AND ASSIGNS:

 

Under this Note, Borrower and Operating Company include
the successors of each, and Lender includes its successors and assigns.

 

		9.	GENERAL PROVISIONS:

 

		A.	All individuals and entities signing this Note are jointly and severally liable.

		B.	Borrower waives all suretyship defenses.

		C.	Borrower must sign all documents necessary at any time to comply with the Loan Documents and
to enable Lender to acquire, perfect, or maintain Lender’s liens on Collateral.

		D.	Lender may exercise any of its rights separately or together, as many times and in any order
it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

		E.	Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.

		F.	If any part of this Note is unenforceable, all other parts remain in effect.

		G.	To the extent allowed by law, Borrower waives all demands and notices in connection with this
Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that
Lender did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not
obtain the fair market value of Collateral at a sale.

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		10.	STATE-SPECIFIC PROVISIONS:

 

None

    	5

     

    

  

		11.	BORROWER’S
NAME(S) AND SIGNATURE(S):

 

By signing below, each individual or entity becomes
obligated under this Note as Borrower.

 

Borrower: KBS Builders, Inc.

 

                        E-SIGNED
by Jeff Sanborn

By: on
04-30-2020- 18:06:25 GMT

 

Name and Title: Jeff Sanborn

                           CFO

 

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