Exhibit 10.44

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT (as amended, restated, amended and restated, supplemented
or otherwise modified from time to time, this “Agreement”) is dated as of
May 22, 2015 and is among WARREN RESOURCES, INC., a Maryland corporation (the
“Borrower”), WARREN RESOURCES OF CALIFORNIA, INC., a California corporation
(“Warren California”), WARREN RESOURCES E&P, a New Mexico corporation (“Warren
E&P”), WARREN MARCELLUS LLC, a Delaware limited liability company (“Warren
Marcellus” and together with the Borrower, Warren California and Warren E&P, the
“Pledgors”), and WILMINGTON TRUST, NATIONAL ASSOCIATION, in its capacity as
Administrative Agent under the Credit Agreement described below (“Administrative
Agent”).

 

W I T N E S S E T H

 

WHEREAS, the Borrower is party to that certain Credit Agreement (as amended,
restated, amended and restated, supplemented or otherwise modified in writing
from time to time, the “Credit Agreement”; capitalized terms used and not
otherwise defined herein shall have the respective meanings provided for in the
Credit Agreement) dated as of even date herewith among the Borrower, the
financial institutions or other entities from time to time party thereto (the
“Lenders”) and the Administrative Agent;

 

WHEREAS, Warren California, Warren E&P and Warren Marcellus are Subsidiaries of
the Borrower; and

 

WHEREAS, it is a condition precedent to the availability of such loans and other
financial accommodations under the Credit Agreement that each Pledgor shall have
made the pledges and granted the security interests contemplated by this
Agreement in order to secure the payment and performance of the Obligations.

 

NOW, THEREFORE, in consideration of the foregoing, and in order to induce
Lenders to make the Loans and other financial accommodations available to the
Borrower under the Credit Agreement, each Pledgor hereby agrees with
Administrative Agent, for its benefit and the benefit of Lenders, as follows:

 

1.                                      Definitions.  Capitalized terms defined
in the Credit Agreement and not otherwise defined herein shall have the
respective meanings provided for in the Credit Agreement.  References to
“Sections” shall be to Sections of this Agreement unless otherwise specifically
provided.  For purposes hereof, “including” is not limiting and “or” is not
exclusive.  All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations.

 

2.                                      Pledge.  To secure the payment and
performance of the Obligations, each Pledgor hereby pledges to Administrative
Agent, for its benefit and the benefit of the Lenders, and grants to
Administrative Agent, for its benefit and the benefit of the Lenders, a security
interest in, any and all right, title and interest in and to the following (the
“Pledged Collateral”):

 

PLEDGE AGREEMENT

 

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(a)                                 all of the shares of the Capital Stock,
membership interests, partnership interests and all other equity interests of
each corporation, limited liability company, limited partnership or other legal
entity (collectively, the “Issuers” and each, an “Issuer”), identified on
Exhibit A attached hereto held by each Pledgor (the “Pledged Securities”), and
the certificates (if any), representing the Pledged Securities, all options,
warrants and other rights to acquire additional shares of Capital Stock,
membership interests, partnership interests and all other equity interests of
each Issuer, and the shares, membership interests, partnership interests and
other equity interests underlying such rights and all distributions, dividends
(in the form of cash, securities or otherwise), cash, instruments, chattel paper
and other rights, property or proceeds and products from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Securities;

 

(b)                                 all additional shares of the Capital Stock,
membership interests, partnership interests and all other equity interests of
each Issuer at any time acquired by the Pledgors in any manner, and the
certificates (if any), representing such additional shares, membership
interests, partnership interests and other equity interests (and any such
additional shares, membership interests, partnership interests and other equity
interests, with respect to which the Pledgors shall execute and deliver to
Administrative Agent a pledge supplement in the form of Exhibit B attached
hereto (a “Pledge Supplement”), shall constitute part of the Pledged Securities
under this Agreement), together with all distributions, dividends (in the form
of cash, securities or otherwise), cash, instruments, chattel paper and other
rights, property or proceeds and products from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
additional shares, membership interests, partnership interests and other equity
interests; and

 

(c)                                  all proceeds of any of the foregoing.

 

Notwithstanding the foregoing or anything else to the contrary herein, the
Pledged Collateral shall not include any Excluded Capital Stock.

 

“Excluded Capital Stock” shall mean (a) any Capital Stock with respect to which,
in the reasonable judgment of the Lead Lenders and the Borrower, the cost or
other consequences of pledging such Capital Stock shall be excessive in view of
the benefits to be obtained by Administrative Agent and the Lenders therefrom,
(b) solely in the case of any pledge of Capital Stock of any Foreign Subsidiary
or FSHCO (in each case, that is owned directly by the Borrower or a Guarantor)
to secure the Obligations, any Capital Stock that is voting stock of such
Foreign Subsidiary or FSHCO in excess of 65% of the voting stock of such
Subsidiary, (c) any Capital Stock to the extent the pledge thereof would be
prohibited by any Requirement of Law, (d) Capital Stock of any Person other than
a Subsidiary to the extent the pledge of such Capital Stock is prohibited by
contractual obligations existing on the Closing Date or at the time such Capital
Stock is acquired, (e) Capital Stock of any Subsidiary of a Foreign Subsidiary
or FSHCO and (f) any Capital Stock of any Subsidiary to the extent that the
pledge of such Equity Interests would result in material adverse tax
consequences to the Borrower or any Subsidiary as reasonably determined by the
Borrower in consultation with the Lead Lenders (such consultation limited to the
tax consequences of such pledge of such Capital Stock).  For the avoidance of
doubt, “Capital Stock” shall include Capital Stock an membership interests,
partnership interests and all other equity interests of each Issuer.

 

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3.                                      Delivery of Pledged Collateral; UCC
Financing Statements.

 

(a)                                 All certificates or instruments (if any),
representing or evidencing any Pledged Collateral shall be delivered to and held
by or on behalf of Administrative Agent pursuant hereto and shall either be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
undated instruments of transfer or assignment in blank, all in form and
substance satisfactory to Administrative Agent.  Notwithstanding the preceding
sentence, all Pledge Collateral must be delivered or transferred in such manner,
and each Pledgor shall take all such further action as may be requested by
Administrative Agent, as to permit Administrative Agent to be a “protected
purchaser” to the extent of its security interest as provided in Section 8-303
of the UCC (if Administrative Agent otherwise qualifies as a protected
purchaser).

 

(b)                                 Each Pledgor hereby authorizes
Administrative Agent to file one or more UCC financing or continuation
statements, and amendments thereto (or similar documents required by any laws of
any applicable jurisdiction), relating to all or any part of the Pledged
Collateral without the signature of such Pledgor (to the extent such signature
is required under the laws of any applicable jurisdiction).

 

4.                                      Representations and Warranties.  Each
Pledgor represents and warrants as follows:

 

(a)                                 Exhibit A attached hereto completely and
accurately identifies, as of the Closing Date, (i) the number of issued and
outstanding equity interests of each Issuer held by each Pledgor and (ii) the
percentage of each Pledgor’s ownership of the aggregate issued and outstanding
equity interests of each Issuer.  Each Pledged Security has been duly and
validly authorized and issued to each Pledgor and, if applicable, is fully paid
and non-assessable.

 

(b)                                 The delivery of the Pledged Securities to
Administrative Agent pursuant to this Agreement (and, with respect to Pledged
Securities consisting of membership interests or partnership interests that are
not “securities” under Article 8 of the UCC, the filing in the appropriate
filing office of a UCC financing statement describing the same as collateral),
is effective to create a valid and perfected first priority security interest in
the Pledged Collateral, free of any adverse claim, securing the payment of the
Obligations.  Subject only to the consummation of the delivery described in the
immediately preceding sentence (and, if applicable, the filing of a financing
statement described in such sentence), Administrative Agent has a valid and
perfected first priority security interest in the Pledged Collateral, securing
the payment of the Obligations, and such security interest is entitled to all of
the rights, priorities and benefits afforded by the UCC or other applicable law
as enacted in any relevant jurisdiction which relates to perfected security
interests.

 

(c)                                  To the extent any Pledged Security
consisting of either (i) a membership interest in an Issuer that is a limited
liability company or (ii) a partnership interest in an Issuer that is a
partnership, such Pledged Security shall, by its terms, provide that it is a
“security” governed by Article 8 of the UCC.

 

(d)                                 This Agreement constitutes a valid and
binding obligation of each Pledgor, enforceable against such Pledgor in
accordance with its terms, except as enforcement may be

 

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limited by bankruptcy, insolvency, or similar laws relating to the enforcement
of creditors’ rights generally and by general equitable principles.

 

(e)                                  No authorization, approval or other action
by, and no notice to or filing with, any domestic or foreign governmental
authority or regulatory body or consent of any other Person is required for
(i) the pledge and grant of a security interest by each Pledgor pursuant to this
Agreement, (ii) the execution, delivery or performance of this Agreement by each
Pledgor or (iii) the exercise by Administrative Agent of its rights and remedies
hereunder (except as may have been taken by or at the direction of such Pledgor
or Administrative Agent and except as may be required in connection with any
disposition of the Pledged Collateral by laws affecting the offering and sale of
securities generally).  Except for the filing of a UCC financing statement in
the case of any Pledged Securities consisting of membership interests or
partnership interests that are not “securities” under Article 8 of the UCC, no
authorization, approval or other action by, and no notice to or filing with, any
domestic or foreign governmental authority or regulatory body or consent of any
other Person is required for the perfection of Administrative Agent’s security
interest in the Pledged Collateral.

 

(f)                                   None of the Pledged Securities constitutes
margin stock, as defined in Regulation T, U or X of the Board of Governors of
the Federal Reserve System.

 

(g)                                  All information heretofore, herein or
hereafter supplied to Administrative Agent by or on behalf of each Pledgor with
respect to the Pledged Collateral is and will be accurate and complete in all
material respects.

 

(h)                                 Each Pledgor has caused each Issuer to
record on its books and records that the Pledged Securities are subject to the
pledge and security interest created hereby.

 

(i)                                     All representations and warranties of
each Pledgor contained in this Agreement shall survive the execution and
delivery of this Agreement.

 

5.                                      Covenants; Further Assurances.

 

(a)                                 Each Pledgor shall, from time to time, at
its expense, promptly execute and deliver all further instruments, documents and
notices and take all further action that Administrative Agent or Lenders may
reasonably request, in order to create, perfect and protect any security
interest granted or purported to be granted by this Agreement or to enable
Administrative Agent to exercise and enforce its rights and remedies hereunder. 
Without limiting the generality of the foregoing, each Pledgor will, upon
Administrative Agent or Lenders’ request, appear in and defend any action or
proceeding that may affect each Pledgor’s title to or Administrative Agent’s
security interest in the Pledged Collateral.

 

(b)                                 Each Pledgor shall furnish to Administrative
Agent, from time to time upon request, statements and schedules further
identifying, updating, and describing the Pledged Collateral and such other
information, reports and evidence concerning the Pledged Collateral as
Administrative Agent or Lenders may reasonably request, all in reasonable
detail.

 

(c)                                  Each Pledgor shall not change its name,
type of organization or jurisdiction of organization.

 

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(d)                                 Except as otherwise permitted herein or by
the Credit Agreement, each Pledgor shall not (i) sell, assign (by operation of
law or otherwise), or otherwise dispose of, or grant any option or similar right
with respect to, any of the Pledged Collateral; or (ii) create or suffer to
exist any Lien upon or with respect to any of the Pledged Collateral except for
the Lien in favor of Administrative Agent securing the Obligations.  In
addition, each Pledgor shall not use or permit the use of any Pledged Collateral
in violation of any provision of applicable law and shall not do anything to
impair the rights of Administrative Agent in any of the Pledged Collateral.

 

(e)                                  Except as otherwise permitted herein or by
the Credit Agreement, each Pledgor agrees that it will not vote to enable, and
will not otherwise permit, any Issuer to (i) issue any stock, membership
interests or other securities (including any warrants, options, subscriptions or
the like for the purchase of stock, membership interests or other securities),
in addition to or in substitution for any of the Pledged Securities to any
Person other than the Pledgors or a Wholly Owned Subsidiary of the Pledgors or
(ii) dissolve, liquidate, retire any of its stock or membership interests,
reduce its capital or merge or otherwise consolidate with any other Person.

 

(f)                                   If, while this Agreement is in effect, the
Pledgors shall become entitled to receive or shall receive any shares of Capital
Stock, membership interests, partnership interests or any other equity interests
of any Issuer, the Pledgors agree, in each case, to accept the same as
Administrative Agent’s agent and to hold the same in trust for Administrative
Agent, and to deliver the same forthwith to Administrative Agent in the exact
form received, with the endorsement of the Pledgors where necessary and/or with
duly executed undated instruments of transfer or assignment, in blank, all in
form and substance satisfactory to Administrative Agent, to be held by
Administrative Agent, subject to the terms hereof, as part of the Pledged
Securities.  Each Pledgor shall promptly deliver to Administrative Agent a
Pledge Supplement, duly executed by such Pledgor, with respect to such
additional equity interests.  Each Pledgor hereby authorizes Administrative
Agent to attach each Pledge Supplement to this Agreement.

 

(g)                                  Each Pledgor shall at all times cause any
membership interest or partnership interest comprising the Pledged Collateral to
be a “security” within the meaning of, and to be governed by Article 8 of the
UCC as in effect under the laws of any state having jurisdiction and shall not
cause or permit any Issuer to “opt out” or to take any other action seeking to
establish that any membership interest or partnership interest of the Pledged
Collateral is not as a “security” or is not be certificated.

 

6.                                      [Reserved].

 

7.                                      Additional Pledgors.  The initial
Pledgors hereunder shall be the Persons that are signatories hereto.  From time
to time subsequent to the date hereof, additional Persons may become parties
hereto as additional Pledgors (each an “Additional Pledgor”) by executing a
Pledge Supplement in the form of Exhibit B attached hereto (or such other form
as may be satisfactory to the Lead Lenders and Administrative Agent).  Upon
delivery of any such Pledge Supplement to Administrative Agent, notice of which
is hereby waived by Pledgors, each such Additional Pledgor shall be a Pledgor
and shall be a party hereto as if such Additional Pledgor were an original
signatory hereof.  Each Pledgor expressly agrees that its obligations arising

 

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hereunder shall not be affected or diminished by the addition or release of any
other Pledgor hereunder, or by any election by Administrative Agent or any
Lenders not to cause any Subsidiary of the Borrower to become an Additional
Pledgor hereunder.  This Agreement shall be fully effective as to any Pledgor
that is or becomes a party hereto regardless of whether any such Person becomes
or fails to become or ceases to be a Pledgor hereunder.

 

8.                                      Voting Rights; Dividends; Etc.

 

(a)                                 So long as no Event of Default has occurred
and is then continuing:

 

(i)                                     Each Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Pledged Collateral, or any part thereof, for any purpose not inconsistent with
the terms of this Agreement or the Credit Agreement; and

 

(ii)                                  To the extent permitted under the Credit
Agreement, each Pledgor shall be entitled to receive all distributions,
dividends (in the form of cash, securities or otherwise), cash, instruments,
chattel paper and other rights, property or proceeds and products from time to
time received, receivable or otherwise distributed in respect of the Pledged
Collateral.

 

(b)                                 At any time that an Event of Default has
occurred and is then continuing:

 

(i)                                     All rights of each Pledgor to exercise
voting and other consensual rights in respect of the Pledged Collateral shall
immediately cease to be effective and all such voting and other consensual
rights shall become vested in Administrative Agent and Administrative Agent
shall thereupon have the sole right to exercise such voting and other consensual
rights (including, without limitation, the right to vote in favor of, and to
exchange any or all of the Pledged Collateral upon, the consolidation,
recapitalization, merger or other reorganization with respect to an Issuer).  In
order to effect the foregoing, each Pledgor hereby grants to Administrative
Agent an irrevocable proxy to vote the Pledged Collateral and, any time that an
Event of Default exists, each Pledgor agrees to execute such other proxies as
Administrative Agent may request; and

 

(ii)                                  All rights of each Pledgor to receive and
retain any distributions, dividends (in the form of cash, securities or
otherwise), instruments, chattel paper or other property paid or payable with
respect to any of the Pledged Collateral shall immediately cease and any such
distributions, dividends (in the form of cash, securities or otherwise),
instruments, chattel paper or other property paid or payable with respect to any
of the Pledged Collateral shall be paid to Administrative Agent (for application
to the Obligations as set forth in Section 14, with respect to any cash or cash
equivalents, or to be held by Administrative Agent as additional security for
the Obligations, with respect to any other type of property).  Any
distributions, dividends (in the form of cash, securities or otherwise),
instruments, chattel paper or other property paid or payable with respect to any
of the Pledged Collateral and received by each Pledgor contrary to the
provisions of this Agreement shall be received in trust for the benefit of
Administrative Agent, shall be segregated from other assets (including, in the
case of cash or cash equivalents, other funds), of the Pledgors and shall be
forthwith paid to Administrative Agent (for application to the Obligations as
set forth in Section 14, with respect to any cash or

 

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cash equivalents, or to be held by Administrative Agent as additional security
for the Obligations, with respect to any other type of property).

 

9.                                      Administrative Agent Appointed
Attorney-in-Fact.  Each Pledgor hereby irrevocably appoints Administrative
Agent, its nominee, and any other Person whom Administrative Agent may
designate, as each Pledgor’s attorney-in-fact, with full power during the
existence of any Event of Default to take any action (including the completion
and presentation of any proxy) and to execute any instrument that such
attorney-in-fact may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation, to (i) receive, endorse and
collect all instruments (or other property, as applicable), made payable to each
Pledgor representing any distribution in respect of the Pledged Collateral or
any part thereof; (ii) exercise the voting and other consensual rights
pertaining to the Pledged Collateral; and (iii) sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Pledged Collateral
as fully and completely as though such attorney-in-fact was the absolute owner
thereof for all purposes, and to do, at such attorney-in-fact’s option and each
Pledgor’s expense, at any time or from time to time, all acts and things that
such attorney-in-fact deems necessary to protect, preserve or realize upon the
Pledged Collateral.  Each Pledgor hereby ratifies and approves all acts of any
such attorney-in-fact made or taken pursuant to this Section 9 and agrees that
neither Administrative Agent nor any other Person designated as an
attorney-in-fact by Administrative Agent shall be liable for any acts,
omissions, errors of judgment or mistakes of fact or law (other than, and only
to the extent of, such Person’s gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction).  The foregoing powers of attorney, being coupled with an
interest, are irrevocable until the Obligations have been fully paid.

 

10.                               Administrative Agent May Perform.  If any
Pledgor fails to perform any agreement contained herein, Administrative Agent
may itself perform, or cause performance of, such agreement, and the expenses of
Administrative Agent incurred in connection therewith shall be payable by any
Pledgor under Section 15 hereof, and be a part of the Obligations.

 

11.                               Limitation on Duty of Administrative Agent
with Respect to the Pledged Collateral.  Beyond the safe custody thereof, each
Pledgor agrees that Administrative Agent shall have no duties concerning the
custody and preservation of any Pledged Collateral in its possession (or in the
possession of any agent of Administrative Agent), or with respect to any income
thereon or the preservation of rights against prior parties or any other rights
pertaining thereto.  Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which it accords its own property.  Administrative Agent shall not be
liable or responsible for any loss or damage to any of the Pledged Collateral,
or for any diminution in the value thereof, by reason of the act or omission of
any agent selected by Administrative Agent in good faith.  It is expressly
agreed that Administrative Agent shall have no responsibility for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not Administrative Agent has or is deemed to have knowledge of such matters,
or (ii) taking any necessary steps to preserve rights against any parties with
respect to any Pledged Collateral, but Administrative Agent may do so and all
expenses incurred in connection therewith shall be payable by and for the sole
account of each Pledgor.

 

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12.                               Remedial Provisions.

 

(a)                                 Upon the occurrence and during the
continuance of an Event of Default, Administrative Agent and its attorneys may
exercise in respect of the Pledged Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party under the UCC (whether or not the UCC applies to the
affected Pledged Collateral), and Administrative Agent may also, without demand,
advertisement or notice of any kind (other than the notice specified below
relating to a public or private sale), sell the Pledged Collateral or any part
thereof in one or more portions at one or more public or private sales or
dispositions, at any exchange, broker’s board or at any of Administrative
Agent’s offices (or those of Administrative Agent’s attorneys), or elsewhere,
for cash, on credit, or for future delivery, at such price or prices and upon
such other terms as Administrative Agent deems advisable.  Each Pledgor agrees
that, to the extent notice of sale shall be required by law, at least ten
(10) days’ notice to such Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification of such matters; provided, that no notification need be given to
such Pledgor if it has authenticated after default a statement renouncing or
modifying any right to notification of sale or other intended disposition.  At
any sale of the Pledged Collateral, if permitted by law, Administrative Agent
may bid (which bid may be, in whole or in part, in the form of cancellation of
indebtedness), for the purchase of the Pledged Collateral or any portion thereof
free of any right or equity of redemption in each Pledgor.  Administrative Agent
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given.  Administrative Agent may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.

 

(b)                                 Each Pledgor recognizes that Administrative
Agent may be unable to effect a public sale of all or part of the Pledged
Collateral and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof.  Each Pledgor
acknowledges that any such private sales may be at prices and on terms less
favorable to the seller than if sold at public sales and agrees that such
private sales shall be deemed to have been made in a commercially reasonable
manner, and that Administrative Agent shall be under no obligation to delay a
sale of any of the Pledged Collateral for the period of time necessary to permit
the Issuer of such Pledged Collateral to register such securities for public
sale under the Securities Act of 1933, or under any other applicable requirement
of law, even if such Issuer would agree to do so.  To the extent permitted by
law, each Pledgor hereby specifically waives (and, as applicable, releases), any
right or equity of redemption, and any right of stay or appraisal, which such
Pledgor has or may have under any law now existing or hereafter enacted.

 

(c)                                  Each Pledgor acknowledges that neither
Administrative Agent nor any of the Lenders shall be liable for any failure or
delay in realizing upon or collecting the Obligations, or any guaranty thereof
or collateral security therefore; and each Pledgor further acknowledges that
neither Administrative Agent nor any Lender shall have any duty to take any
action with respect thereto.

 

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13.                               Remedies Cumulative.  No failure on the part
of Administrative Agent to exercise, and no delay in exercising and no course of
dealing with respect to, any power, privilege or right under this Agreement or
any other Financing Document shall operate as a waiver thereof; nor shall any
single or partial exercise by Administrative Agent of any power, privilege or
right under this Agreement or any other Financing Document preclude any other or
further exercise thereof or the exercise of any other such power, privilege or
right.  The powers, privileges and rights in this Agreement and the other
Financing Documents are cumulative and are not exclusive of any other remedies
provided by law.

 

14.                               Application of Proceeds.  Upon the occurrence
and during the continuance of an Event of Default, the proceeds of any sale or
disposition of, or other realization upon, all or any part of the Pledged
Collateral shall be applied in a manner consistent with the provisions of
Section 8.6 of the Credit Agreement.  Any excess balance remaining shall be
delivered to each Pledgor, and each Pledgor shall remain liable for any
deficiency remaining unpaid after the foregoing application.

 

15.                               Expenses.  Without limiting each Pledgor’s
obligations under the Credit Agreement or any other Financing Document, each
Pledgor hereby agrees to promptly pay all fees, costs and expenses (including
attorney’s fees and expenses), in connection with (a) maintaining the Pledged
Collateral, (b) creating, perfecting, protecting and enforcing Administrative
Agent’s Lien on the Pledged Collateral, (c) selling or otherwise disposing of
the Pledged Collateral, (d) paying any amount required under any provision of
applicable law (including, without limitation, Section 9-615(a)(3) of the UCC)
or (e) any other matters contemplated by or arising out of this Agreement with
respect to the Pledged Collateral.  If any Pledgor fails to promptly pay any
portion of the above fees, costs and expenses when due or to perform any other
obligation of such Pledgor under this Agreement, Administrative Agent or any
Lender may, at its option, but shall not be required to, pay or perform the same
and charge such Pledgor’s account for all fees, costs and expenses incurred
therefor, and such Pledgor agrees to reimburse Administrative Agent or such
Lender therefor on demand.  All sums so paid or incurred by Administrative Agent
or any Lender for any of the foregoing, any and all other sums for which any
Pledgor may become liable hereunder and all fees, costs and expenses (including
attorneys’ fees, legal expenses and court costs) incurred by Administrative
Agent or any Lender in enforcing or protecting any of their rights or remedies
under this Agreement shall be payable on demand, shall constitute Obligations,
shall bear interest until paid at the highest rate provided in the Credit
Agreement and shall be secured by the Pledged Collateral.  Notwithstanding the
forgoing, it is understood and agreed that the expense provisions of Section 9.1
of the Credit Agreement shall be incorporated herein as is specifically set
forth herein, mutatis mutandis.

 

16.                               Termination of Lien; Release of Pledged
Collateral.  Administrative Agent and Lenders agree that upon payment in full of
all Obligations and the termination of all Revolving Loan Commitments and all
Support Agreements, the Lien provided for hereunder shall terminate and all
rights to the Pledged Collateral shall revert to each Pledgor.  Administrative
Agent and Lenders further agree that upon such termination, Administrative Agent
shall, at the expense of the Pledgors, execute and deliver to the Pledgors such
documents as the Pledgors shall reasonably request to evidence such termination.

 

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17.                               Changes in Writing.  No amendment,
modification, termination or waiver of any provision of this Agreement shall be
effective except by a written instrument executed by the affected Pledgor(s) and
Administrative Agent in accordance with Section 11.5 of the Credit Agreement;
provided, however, that this Agreement may be supplemented (but no existing
provisions may be modified and no Collateral may be released) through agreements
substantially in the form of Exhibit B, in each case duly executed by each
Pledgor directly affected thereby.

 

18.                               Notices.  All notices, approvals, requests,
demands and other communications hereunder shall be given in accordance with the
notice provision of the Credit Agreement.

 

19.                               Successors and Assigns.  This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Pledgors may not assign its
rights or obligations hereunder without the prior written consent of
Administrative Agent.  No sales of participations, other sales, assignments,
transfers or other dispositions of any agreement governing or instrument
evidencing the Obligations or any portion thereof or interest therein shall in
any manner impair the Lien granted to Administrative Agent, for the benefit of
Administrative Agent and Lenders, hereunder.

 

20.                               Waivers.  In addition to, and not in lieu of,
any other waivers herein, each Pledgor waives to the greatest extent it may
lawfully do so, and agrees that it shall not at any time insist upon, plead or
in any manner whatever claim or take the benefit or advantage of, any appraisal,
valuation, stay, extension, marshalling of assets, redemption or similar law, or
exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by each Pledgor of its obligations
under, or the enforcement by Administrative Agent of, this Agreement.  Each
Pledgor hereby waives diligence, presentment and demand (whether for nonpayment
or protest or of acceptance, maturity, extension of time, change in nature or
form of the Obligations, acceptance of further security, release of further
security, composition or agreement arrived at as to the amount of, or the terms
of the Obligations, notice of adverse change in any Person’s financial condition
or any other fact which might materially increase the risk to each Pledgor),
with respect to any of the Obligations or all other demands whatsoever and
waives the benefit of all provisions of law which are or might be in conflict
with the terms of this Agreement.

 

21.                               Indemnity.  Each Pledgor hereby agrees to
indemnify, pay and hold harmless Administrative Agent and the Lenders and the
officers, directors, employees and counsel of Administrative Agent and the
Lenders (collectively called the “Indemnitees”), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the fees and disbursements of counsel for such Indemnitee), in
connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitee shall be designated a party thereto and including
any such proceeding initiated by or on behalf of any Pledgor or an Issuer, which
may be imposed on, incurred by or asserted against such Indemnitee as a result
of or in connection with this Agreement or the enforcement by Administrative
Agent or any Lender of its rights and remedies hereunder, except that each
Pledgor shall have no obligation hereunder to an Indemnitee with respect to any
liability resulting from the gross negligence or willful misconduct of such
Indemnitee, as determined by a final non-appealable judgment of court of
competent jurisdiction.  To the extent that the undertaking set forth in the
immediately preceding sentence

 

10

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may be unenforceable, each Pledgor shall contribute the maximum portion which it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all such indemnified liabilities incurred by the Indemnitees or
any of them.  The obligations to indemnify and pay the Indemnitees for fees and
disbursements of counsel in connection with any litigation, dispute, suit or
proceeding relating to any Financing Document and in connection with any
workout, collection, bankruptcy, insolvency and other enforcement proceedings
under any and all Financing Documents shall be limited to such costs and
expenses for counsel to Administrative Agent and for only one counsel acting for
all Lenders (other than Administrative Agent).  Notwithstanding the forgoing, it
is understood and agreed that the indemnity provisions of Section 9.2 of the
Credit Agreement shall be incorporated herein as is specifically set forth
herein, mutatis mutandis.

 

22.                               GOVERNING LAW; SUBMISSION TO JURISDICTION. 
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.  EACH PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE BOROUGH OF MANHATTAN, CITY OF NEW
YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO ADMINISTRATIVE
AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE LITIGATED IN SUCH COURTS.  EACH PLEDGOR EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS.  EACH PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON EACH
PLEDGOR BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
EACH PLEDGOR IN ACCORDANCE WITH THE PROVISIONS OF SECTION 18 HEREOF AND SERVICE
SO MADE SHALL BE DEEMED TO BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN
POSTED.

 

23.                               WAIVER OF JURY TRIAL.  EACH OF THE PLEDGORS
AND ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

24.                               Counterparts; Integration.  This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument.  Delivery of an executed signature page by facsimile or other
electronic transmission (e.g.  “pdf” or “tif” format) shall be effective as
delivery of a manually executed counterparty hereof.  This Agreement constitutes
the entire agreement and understanding among the parties hereto and supersedes
any and all prior agreements and understandings, oral or written, relating to
the subject matter hereof.

 

11

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25.                               Intercreditor Agreements.  Notwithstanding
anything herein to the contrary, this Agreement and the exercise of any right or
remedy hereunder are subject to the provisions of any applicable Intercreditor
Agreements, and further, to the extent any provision herein contained shall be
inconsistent with any provision contained in any Intercreditor Agreement, the
provisions of such Intercreditor Agreement shall prevail.

 

26.                               Headings.  Headings and captions used in this
Agreement are included for convenience of reference and shall not be given any
substantive effect.

 

27.                               General Terms and Conditions.  In addition to
and without limitation of any of the foregoing, this Agreement shall be deemed
to be a Financing Document and shall otherwise be subject to all of general
terms and conditions contained in Article 11 of the Credit Agreement, mutatis
mutandi.

 

12

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Witness the due execution hereof by the respective duly authorized officer of
the undersigned as of the day first above written.

 

 

WARREN RESOURCES, INC., a Maryland

 

corporation, as Pledgor

 

 

 

 

 

 

 

By:

/s/ Stewart P. Skelly

 

Name:

Stewart P. Skelly

 

Title:

Vice President and Chief Financial Officer

 

 

 

 

 

WARREN RESOURCES OF CALIFORNIA, INC.,

 

a California corporation, as Pledgor

 

 

 

WARREN E&P, INC., a New Mexico corporation, as

 

Pledgor

 

 

 

WARREN MARCELLUS LLC, a Delaware limited

 

liability company, as Pledgor

 

 

 

 

 

 

 

By:

/s/ Stewart P. Skelly

 

Name:

Stewart P. Skelly

 

Title:

Vice President and Treasurer

 

Signature Page to
Pledge Agreement

 

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

 

 

WILMINGTON TRUST, NATIONAL

 

ASSOCIATION, as Administrative Agent

 

 

 

 

 

 

 

By:

/s/ Joshua G. James

 

Name:

Joshua G. James

 

Title:

Vice President

 

Signature Page to
Pledge Agreement

 

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Acknowledgement of Issuers

 

Dated May 22, 2015

 

Each of the undersigned Issuers (as defined in the foregoing Pledge Agreement;
capitalized terms used herein having the meanings assigned in such Pledge
Agreement), hereby (i) acknowledges that it has received an executed copy of the
Pledge Agreement, (ii) agrees to record in its records the pledge of the equity
interests of such Issuer as provided in the Pledge Agreement, and (iii) waives
any right to at any time hereafter be provided with a copy of the foregoing
Pledge Agreement in connection with any exercise by Administrative Agent (or its
agent or nominee) of voting or other consensual rights in respect of the Pledged
Collateral or any registration of any of the Pledged Collateral in the name of
Administrative Agent (or its agent or nominee

 

Each Issuer agrees to comply with instructions originated by Administrative
Agent with respect to the Pledged Collateral without further consent of the
Pledgors and acknowledges that it is the intention of the Pledge Agreement to
grant “control” to Administrative Agent within the meaning of Articles 8 and 9
of the UCC, to the extent the same may be applicable to the Pledged Collateral.

 

Acknowledgment - 1

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

 

 

WARREN RESOURCES OF CALIFORNIA, INC.

 

 

 

 

WARREN E&P, INC.

 

 

 

 

By:

/s/ Stewart P. Skelly

 

Name:

Stewart P. Skelly

 

Title:

Vice President and Treasurer

 

Acknowledgment - 2

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

 

Exhibit A

 

Identification of Pledged Securities

 

Pledgor

 

Issuer

 

Class or 
Other 
Description 
of Pledged 
Securities

 

Certificate 
Number (if 
applicable)

 

Number of 
Pledged 
Securities

 

Total 
Outstanding 
Securities

 

Percentage of 
Total 
Outstanding 
Securities 
Pledged

Warren Resources, Inc.

 

Warren Resources of California, Inc., a California corporation

 

Common stock

 

2

 

100

 

100

 

100%

Warren Resources, Inc.

 

Warren E&P, Inc., a New Mexico corporation

 

Common stock

 

1

 

223,662

 

223,662

 

100%

 

Exhibit A - 1

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Exhibit B

 

Pledge Supplement

 

This Pledge Supplement is dated as of           , , 20      and is provided
in accordance with the terms of the Pledge Agreement referenced below.  The
undersigned directs that this Pledge Supplement be attached to the Pledge
Agreement, dated as of May 22, 2015, between the undersigned and WILMINGTON
TRUST, NATIONAL ASSOCIATION, in its capacity as Administrative Agent (the
“Pledge Agreement”; capitalized terms used and not defined herein having the
meanings assigned thereto in the Pledge Agreement), and that the equity
interests listed below shall be deemed to be part of the Pledged Collateral.

 

[The undersigned agrees by its signature below to become a Pledgor under the
Pledge Agreement with the same force and effect as if originally named therein
as a Pledgor, and the undersigned hereby agrees to all the terms and provisions
of the Pledge Agreement applicable to it as a Pledgor thereunder.]

 

The undersigned hereby certifies that the representations and warranties in
Section 4 of the Pledge Agreement are and continue to be true and correct, both
as to the shares, instruments and any other property pledged prior to this
Pledge Supplement and as to the shares, instruments and any other property
pledged pursuant to this Pledge Supplement.

 

The undersigned hereby represents and warrants that Exhibit A attached hereto
completely and accurately identifies, as of the date set forth above, (i) the
number of issued and outstanding equity interests of each Issuer held by the
undersigned and (ii) the percentage of the undersigned’s ownership of the
aggregate issued and outstanding equity interests of each Issuer.  Each Pledged
Security has been duly and validly authorized and issued to the undersigned and,
if applicable, is fully paid and non-assessable.

 

The undersigned further agrees that this Pledge Supplement may be attached to
the Pledge Agreement and that the Pledged Securities listed on this Pledge
Supplement are a part of the Pledged Securities referred to in the Pledge
Agreement and shall secure all Obligations referred to in the Pledge Agreement.

 

This Pledge Supplement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.  Delivery of an executed signature
page by facsimile or other electronic transmission (e.g.  “pdf” or “tif” format)
shall be effective as delivery of a manually executed counterparty hereof.  This
Pledge Supplement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.

 

THIS PLEDGE SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.

 

Exhibit B - 1

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Any provision of this Pledge Supplement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof and in the Pledge Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  The parties hereto
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

 

All notices, requests and demands pursuant hereto shall be made in accordance
with Section 18 of the Pledge Agreement.  All communications and notices
hereunder to each party that becomes a Pledgor pursuant to this Pledge
Supplement shall be given to it in care of the Borrower at the Borrower’s
address set forth in Section 13.2 of the Credit Agreement.

 

In witness whereof, the undersigned and Administrative Agent have duly executed
this Pledge Supplement as of the date first written above.

 

 

[NAME OF PLEDGOR], a [·], as Pledgor

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

WILMINGTON TRUST, NATIONAL

 

ASSOCIATION, as Administrative Agent

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit B - 2

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

 

Exhibit A to Pledge Supplement

 

Identification of Pledged Securities

 

Pledgor

 

Issuer

 

Class or 
Other 
Description 
of Pledged 
Securities

 

Certificate 
Number (if 
applicable)

 

Number of 
Pledged 
Securities

 

Total
Outstanding 
Securities

 

Percentage of 
Total
Outstanding
Securities

Pledged

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit B - 3

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