Document:

Exhibit

	
	
	Execution Version

	
	
	 

FIRST AMENDMENT
TO
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 18, 2018
AMONG
CALIFORNIA RESOURCES CORPORATION,
AS THE BORROWER,
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
AS ADMINISTRATIVE AGENT,
AND
THE LENDERS
PARTY HERETO
	
	
	 

FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to the Credit Agreement (this “Amendment”) dated as of September 18, 2018, is among California Resources Corporation, a Delaware corporation (the “Borrower”), each of the undersigned Guarantors, each Lender party hereto, and The Bank of New York Mellon Trust Company, N.A., not in its individual capacity but solely 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 November 17, 2017 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”).
B.    The Borrower has requested and the Lenders party hereto have agreed to amend certain provisions of the Credit Agreement on the terms and conditions set forth herein.
C.    Section 14.1 of the Credit Agreement provides that the Majority Lenders may enter into amendments, supplements or modifications to the Credit Documents to effect certain changes which do not specifically require the consent of each Lender.  All acts and requirements necessary to make this Amendment the legal, valid and binding obligation of the Borrower and the Majority Lenders have been done.
D.    NOW, THEREFORE, to induce 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.    Amendments to Credit Agreement.
2.1    Amendments to Section 11.1.  
(a)    Section 11.1(z) of the Credit Agreement is hereby amended as follows:
(i)    An “(x)” is hereby added to the beginning of such Section 11.1(z);
(ii)    The phrase “and any Permitted Refinancing Indebtedness issued or incurred to Refinance such Existing Second Lien Notes” is hereby deleted; and
(iii)    A new phrase is hereby added to the end of such Section 11.1(z) to read in its entirety as follows:

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“and (y) any Permitted Refinancing Indebtedness issued or incurred to Refinance such Existing Second Lien Notes;”.
(b)    Section 11.1(bb) of the Credit Agreement is hereby amended as follows: 
(i)    An “(x)” is hereby added to the beginning of such Section 11.1(bb);
(ii)    The phrase “and any Permitted Refinancing Indebtedness issued or incurred to Refinance such 2016 Term Loans” is hereby deleted; and
(iii)    A new phrase is hereby added to the end of such Section 11.1(bb) to read in its entirety as follows:
“and (y) any Permitted Refinancing Indebtedness issued or incurred to Refinance such 2016 Term Loans;”.
2.2    Amendments to Section 11.7. 
(a)    Section 11.7(a)(iii) of the Credit Agreement is hereby amended as follows:
The phrase “within four months of the date of” at the beginning of such section is hereby replaced with the word “in connection with”.
(b)    The word “and” at the end of Section 11.7(a)(v) is hereby deleted.
(c)    Section 11.7(a)(vi) of the Credit Agreement is hereby amended by replacing the “.” at the end of such Section 11.7(a)(vi) with “; and”.
(d)    A new Section 11.7(a)(vii) is hereby added to the Credit Agreement to read in its entirety as follows:
“prepay, repurchase, redeem, defease or exchange any Permitted Junior Indebtedness, Existing Senior Notes, Permitted Additional Debt, 2016 Term Loans or any Permitted Refinancing Indebtedness in respect of the foregoing with Net Cash Proceeds of any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness.”
(e)    The proviso and the end of Section 11.7(a) is hereby amended as follows:
The phrase “for the purposes of this Section 11.7(a)” at the end of such proviso is hereby replaced with “for the purposes of Sections 11.7(a)(i) to (vi)”. 
Section 3.    Effectiveness.  This Amendment shall become effective on the first date on which each of the conditions set forth in this Section 3 is satisfied (the “Effective Date”):
3.1    The Borrower shall have received duly executed counterparts of this Amendment from the Administrative Agent, each Guarantor and Lenders constituting the Majority Lenders.

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3.2    The Borrower shall have paid (a) an amendment fee payable to the Administrative Agent for the account of each of the Lenders executing a counterpart of this Amendment in an amount equal to 25 basis points on each such Lender’s Commitment in effect on the date hereof and (b) to the extent invoiced to the Borrower, 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.
3.3    The Borrower shall have certified to the Administrative Agent that no 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 4.    Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 5.    Miscellaneous.  
5.1    (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) 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; (c) 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 (d) 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.
5.2    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”). 
5.3    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 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; (c) represents and warrants to the Lenders that as of the Effective Date, after giving effect to the terms of this Amendment, that no Default or Event of Default has occurred and is continuing; and (d) represents and warrants to the Administrative Agent that this Amendment complies with Section 14.1 of the Credit Agreement and that all conditions precedent to the execution of the Amendment have been satisfied.

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5.4    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.
5.5      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.
5.6    The Administrative Agent shall not be responsible for the validity or sufficiency of this Amendment or for the recitals contained herein, which shall be deemed to be statements of the Borrower.  In acting hereunder, the Administrative Agent shall have the benefit of all of the rights, protections and immunities granted to it under the Credit Agreement, all of which are incorporated by reference herein, mutatis mutandis.
5.7    The Majority Lenders hereby direct the Administrative Agent to execute this Amendment.
[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 - First 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 - First Amendment

	
			
	 
	CALIFORNIA RESOURCES ELK HILLS, LLC 
CRC CONSTRUCTION SERVICES, LLC 
CRC SERVICES, LLC
SOCAL HOLDING, LLC
CALIFORNIA RESOURCES REAL ESTATE VENTURES, 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 - First 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 - First Amendment

	
			
	 
	CRC MARKETING, INC.

	 
	 
	 

	 
	By: 
	/s/ D. Adam Smith

	 
	Name:
	D. Adam Smith

	 
	Title:
	Assistant Secretary

Signature Page
CALIFORNIA RESOURCES CORPORATION - First Amendment

	
			
	 
	TIDELANDS OIL PRODUCTION COMPANY

	 
	 
	 

	 
	By: 
	/s/ Ivan Gaydarov

	 
	Name:
	Ivan Gaydarov

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

	
			
	 
	CALIFORNIA RESOURCES COLES LEVEE, LLC

	 
	 
	 

	 
	By: 
	/s/ Ivan Gaydarov

	 
	Name:
	Ivan Gaydarov

	 
	Title:
	Vice President and Treasurer

Signature Page
CALIFORNIA RESOURCES CORPORATION - First Amendment

	
			
	 
	CALIFORNIA RESOURCES COLES LEVEE, L.P.

	 
	 
	 

	 
	By: 
	/s/ Ivan Gaydarov

	 
	Name:
	Ivan Gaydarov

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

Signature Page
CALIFORNIA RESOURCES CORPORATION - First Amendment

	
			
	 
	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Administrative Agent

	 
	 
	 

	 
	 
	 

	 
	By:
	/s/ Bruce C. Boyd

	 
	Name:
	Bruce C. Boyd

	 
	Title:
	Vice President

Signature Page
CALIFORNIA RESOURCES CORPORATION - First Amendment

	
		
	 
	OTHER LENDERS PARTY THERETO, as Lenders

	 
	 

Signature Page
CALIFORNIA RESOURCES CORPORATION - First AmendmentEX-10.1

 Exhibit 10.1 

AMENDMENT TO GRANT OF PHANTOM UNITS AGREEMENT 

This AMENDMENT TO GRANT OF PHANTOM UNITS AGREEMENT (this “Amendment”), dated as of
[                ], 2018 by and between Legacy Reserves LP (the “Partnership”), Legacy Reserves Inc. (the “Corporation”) and
[                ] (the “Grantee” and, collectively, the “Parties”). 

RECITALS 

WHEREAS, the Partnership and the Grantee are parties to certain grants of Phantom Units Agreement on the dates and with respect to the
amounts, in each case, set forth in the following table, (together the “Phantom Unit Agreements”): 
  

							
	 Date
	 	 Settlement Form
	 	 Total Phantom Units Granted
	 	 Total Phantom Units Vesting

	 June 22, 2016
	 	 Cash
	 		 	
	 June 22, 2016
	 	 Cash
	 		 	
	 March 1, 2017
	 	 Cash
	 		 	
	 March 1, 2017
	 	 Cash
	 		 	
	 March 1, 2018
	 	 Cash
	 		 	
	 March 1, 2018
	 	 Cash
	 		 	

 WHEREAS, the Partnership has proposed to consummate a transaction (such transaction, the
“Corporate Reorganization”) whereby the Partnership will become a wholly-owned subsidiary of the Corporation, which is currently a subsidiary of Legacy Reserves GP, LLC, a Delaware limited liability company (the “General
Partner”), which is the general partner of the Partnership, through a merger transaction in which the units representing limited partnership interests in the Partnership will be exchanged for shares of common stock of the Corporation; 

WHEREAS, the consummation of the Corporate Reorganization (the “Closing”) will constitute a “Change of
Control” under the Phantom Unit Agreements and the Amended and Restated Legacy Reserves LP Long-Term Incentive Plan, as amended, and will result in immediate vesting of the awards granted pursuant to the Phantom Unit Agreements; 

WHEREAS, under the terms of the Phantom Unit Agreements, the Company is required to pay the Grantee a lump sum cash payment as
settlement of the Phantom Units on a date selected by the Company within seventy-four (74) days after the Phantom Units vest, and the Parties have agreed to allow that settlement to be made in multiple payments; 

WHEREAS, the Corporation has agreed to allow the Grantee to elect to reinvest a portion of such cash proceeds to which he or she is
otherwise entitled in shares of common stock of the Corporation (the “Common Stock”) at the fair market of such Common Stock (the “Purchased Shares”); 

 WHEREAS, to the extent the Grantee elects to so reinvest any such cash proceeds in
Purchased Shares, the Corporation hereby agrees to issue the Grantee the Purchased Shares in accordance with NASDAQ Listing Requirement 5635(c)(2); and 

WHEREAS, the Parties desire to amend the Phantom Unit Agreements, according to the terms and conditions set forth in this Amendment.

 NOW, THEREFORE, in consideration of the mutual promises, agreements, and consideration set forth below, the parties agree to the
following terms: 
 WITNESSETH 

1.    Upon the Closing, the Corporation shall be made a party to each Phantom Unit Agreement and shall be responsible for
satisfying all liabilities to the Grantee thereunder; 
 2.    Upon the Closing, Section 4(a) of each Phantom Unit
Agreement is hereby amended and restated in its entirety as follows: 
 “(i) Subject to the tax withholding requirements of
Section 5 below, not later than seventy-four (74) days following the date on which a Phantom Unit vests hereunder, the Corporation shall pay or cause to be paid to you in settlement thereof in one or more payments on a date or dates
selected by the Compensation Committee of the Board of Directors of the Corporation an amount of cash in respect of each Phantom Unit equal to the Fair Market Value of a Unit (determined as of the vesting date of the Phantom
Unit); provided, that upon your written request at least five (5) business days prior to such settlement in cash, the Corporation shall permit you to elect (a “Stock Purchase Election”) to reinvest any portion
of the cash to be received upon such settlement in shares of common stock of the Corporation (the “Common Stock”) for fair market value of such Common Stock (the “Purchased Shares”). In connection with any such
Stock Purchase Election, you also hereby agree to execute any additional documentation reasonably requested by the Corporation. Notwithstanding anything stated herein to the contrary, the aggregate amount of cash paid in settlement of the
vested Phantom Units (and any DERs granted in tandem with such vested Phantom Units) and any other incentive equity-based awards (whether granted to you or any other grantee) settled in cash in connection with the Corporate Reorganization shall
not exceed $30 million, measured as of the Closing (the “Cap Amount”), and you hereby agree to make the Stock Purchase Election and execute any additional documentation reasonably requested by the Corporation with respect
to any and all amounts payable to you hereunder in excess of the Cap Amount. 
 (ii) Notwithstanding the foregoing, the value of each Phantom
Unit granted in 2016 (the “2016 Awards”) will be capped at $10 per Phantom Unit. In addition, the amount paid to settle the 2016 Awards will be reduced by any amounts you have previously received, if any, pursuant to that certain
retention bonus agreement between you and Legacy Reserves Services, Inc., dated June 22, 2016, as the same may be amended from time to time. 

(iii) Upon vesting of a Phantom Unit, you will vest in all accrued cash distributions through such date, which will be paid at the same time
and in the same form (cash or Common Stock) as the related Phantom Unit. The related DER will be terminated upon settlement of the Phantom Unit. 

  
 2 

 3.    Upon the Closing, Section 5 of the Phantom Unit Agreements
shall be amended by adding the following sentence to the end thereof: 
 “Subject to the consent of the Corporation and
Section 4(a)(iv) above, to the extent you elect to reinvest any cash proceeds received hereunder in Purchased Shares, you may satisfy any taxes incurred in connection with the settlement of such Phantom Units by having withheld from your
Purchased Shares a number of shares of Common Stock having a Fair Market Value equal to the amount of such taxes, as determined in good faith by the Corporation.” 

4.    Construction. Except as specifically provided in this Amendment, the Phantom Unit Agreements will remain in
full force and effect and is hereby ratified and confirmed in all respects. To the extent a conflict arises between the terms of the Phantom Unit Agreements and this Amendment, the terms of this Amendment shall prevail. 

5.    Governing Law. This Amendment shall be construed under and enforced in accordance with the laws of the State
of Texas, in accordance with Section 13 of the Phantom Unit Agreements. 
 6.    Entire Agreement. The
Phantom Unit Agreements, as amended by this Amendment, embodies the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof. No agreements or
representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in the Phantom Unit Agreements and this Amendment. 

7.    Counterparts. This Amendment may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
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 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date
first written above. 
  

			
	LEGACY RESERVES LP
	By:	 	 Legacy Reserves GP, LLC,
 its general
partner

	
	 
	Name:	 	
	Title:	 	
	
	LEGACY RESERVES, INC.
	
	 
	Name:	 	
	Title:	 	
	
	GRANTEE
	
	 
	Name:	 	
	Address:	 	

  
 AMENDMENT TO PHANTOM
UNIT GRANT AGREEMENT

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