Item 1.01 - Entry into a Material Definitive Agreement.

Amendments to Note Purchase Agreement, the 2017 Securities Purchase Agreement and the 2018 Securities Purchase Agreement.

On July 9, 2020, Carbon California Company, LLC ("Carbon California") (a majority-owned subsidiary of Carbon Energy Corporation ("Carbon" or the "Company"), a Delaware corporation), entered into (i) Amendment No. 4 to its existing Senior Secured Note Credit Facility with two institutional investors (Prudential Insurance Company of America and Prudential Insurance Legacy Company of New Jersey) (the "NPA Amendment No. 4"), (ii) Amendment No. 5 to its existing 2017 Securities Purchase Agreement with two other institutional investors (Prudential Capital Energy Partners, L.P. and Prudential Capital Energy Partners Management Fund, L.P.) (the "2017 SPA Amendment No. 5") and (iii) Amendment No. 3 to its existing 2018 Securities Purchase Agreement with Prudential Capital Energy Partners, L.P. and Prudential Capital Energy Partners Management Fund, L.P. (the "2018 SPA Amendment No. 3" and together with the NPA Amendment No. 4 and 2017 SPA Amendment No. 5, the "Amendments"). Pursuant to the Amendments, Carbon California and the counterparties (x) agreed to amend certain provisions of existing Senior Secured Note Credit Facility and each of the Securities Purchase Agreements (described below) and (ii) the lenders under the Senior Secured Note Credit Facility provided limited waivers of noncompliance with certain covenants under the Senior Secured Note Credit Facility (also described below).

Pursuant to NPA Amendment No. 4, the parties agreed to amend (i) the Total Leverage Ratio (i.e., the ratio of total indebtedness of Carbon California to its EBITDA for the period of four fiscal quarters most recently ended) for (a) fiscal quarters ending on June 30, 2020 through December 31, 2020 to be not greater than 6.00 to 1.00 and (b) for fiscal quarters ending on March 31, 2021 and at all times thereafter to be not greater than 4.00 to 1.00, (ii) the Senior Leverage Ratio (i.e., the ratio of indebtedness evidenced by the Notes issued to Carbon California under the Senior Secured Note Credit Facility to its EBITDA for the period of four fiscal quarters most recently ended) for (a) fiscal quarters ending on June 30, 2020 through December 31, 2020 to be not greater than 4.50 to 1.00 and (b) for fiscal quarters ending on March 31, 2021 and at all times thereafter to be not greater than 3.00 to 1.00 and (iii) the Interest Coverage Ratio (i.e., the ratio of Carbon California's EBITDA for the period of four fiscal quarters most recently ended to the aggregate amount of its payments in cash of interest with respect to its aggregate indebtedness for such period) for (a) fiscal quarters ending on June 30, 2020 through December 31, 2020 to be not less than 1.65 to 1.00 and (b) for fiscal quarters ending on March 31, 2021 and at all times thereafter to be not less than 2.00 to 1.00. In connection with NPA Amendment No. 4, the lenders provided limited waivers of the Borrower's noncompliance (xi) with the Total Leverage Ratio for the quarter ended March 31, 2020 and (xii) with its obligation to pay interest at the default rate after March 31, 2020.

Pursuant to each of the 2017 SPA Amendment No. 5 and the 2018 SPA Amendment No. 3, the parties agreed that all of the interest due and payable by Carbon California pursuant to each Note issues under either the 2017 SPA or the 2018 SPA on May 15, 2020, August 15, 2020 and November 15, 2020 would be paid in kind and added to the outstanding principal amount of each such Note. The parties further agreed to amend (i) the Total Leverage Ratio for (a) fiscal quarters ending on June 30, 2020 through December 31, 2020 to be not greater than 6.90 to 1.00 and (b) for fiscal quarters ending on March 31, 2021 and at all times thereafter to be not greater than 4.60 to 1.00, (ii) the Senior Leverage Ratio for (a) fiscal quarters ending on June 30, 2020 through December 31, 2020 to be not greater than 5.18 to 1.00 and (b) for fiscal quarters ending on March 31, 2021 and at all times thereafter to be not greater than 3.45 to 1.00 and (iii) the Interest Coverage Ratio for (a) fiscal quarters ending on June 30, 2020 through December 31, 2020 to be not less than 1.40 to 1.00 and (b) for fiscal quarters ending on March 31, 2021 and at all times thereafter to be not less than 1.60 to 1.00.

The above description of the terms of the Amendments does not purport to be complete and is qualified in its entirety by the full text of the Amendments.


                                       2

© Edgar Online, source Glimpses