Exhibit 10.1


 


FIRST
AMENDMENT TO 


AMENDED
AND RESTATED CREDIT AGREEMENT


 


THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (herein called
the “Amendment”) dated as of May 12, 2009, is among WARREN RESOURCES, INC., a Maryland corporation (“Borrower”),
GE BUSINESS FINANCIAL SERVICES INC., FKA Merrill
Lynch Business Financial Services Inc., as administrative agent (in
such capacity, “Administrative Agent” and individually as a “Lender”),
and the financial institutions or other entities from time to time party to the
Credit Agreement referred to below (collectively, “Lenders”).


 


W I T N E S S E T H:


 


WHEREAS, Borrower, Administrative Agent and Lenders entered into that
certain Amended and Restated Credit Agreement dated as of November 19,
2007 (as from time to time supplemented, amended, or restated, the “Original
Agreement”), pursuant to which Lenders have made certain extensions of
credit available to Borrower; and for the purpose and consideration therein
expressed, whereby Lenders became obligated to make loans to Borrower as
therein provided; and


 


WHEREAS, Borrower, Administrative Agent and Lenders desire to amend the
Original Agreement as set forth herein;


 


NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Agreement, in
consideration of the loans which may hereafter be made by Lenders to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:


 


ARTICLE I


 


DEFINITIONS
AND REFERENCES


 


Section 1.1.    Terms
Defined in the Original Agreement. 
Unless the context otherwise requires or unless otherwise expressly
defined herein, the terms defined in the Original Agreement shall have the same
meanings whenever used in this Amendment.


 


Section 1.2.    Other
Defined Terms.  Unless the context
otherwise requires, the following terms when used in this Amendment shall have
the meanings assigned to them in this Section 1.2.


 


“Amendment” means this First Amendment
to Amended and Restated Credit Agreement.


 


“Amendment Documents” means this
Amendment, the Consent and Agreement of the Guarantors relating to this
Amendment and all other documents or instruments delivered in connection
herewith or therewith.


 

















 


“Credit Agreement” means the Original
Agreement as amended hereby.


 


ARTICLE II


 


AMENDMENTS
AND BORROWING BASE


 


Section 2.1.    Definitions.


 


(a)           The following definitions in Section 1.1 of the
Original Agreement are hereby amended in their entirety to read as follows:


 


“Base Rate” means, for any day, a rate per annum equal to the
highest of the following:


 


(a)     the rate last quoted by The Wall Street
Journal as the “base rate on corporate loans posted by at least 75% of the
nation’s largest banks” in the United States or, if The Wall Street Journal
ceases to quote such rate, the highest per annum interest rate published by the
Federal Reserve Board in Federal Reserve Statistical Release H.15 (519)
(Selected Interest Rates) as the “bank prime loan” rate, or, if such rate is no
longer quoted therein, any similar rate quoted therein (as determined by the
Administrative Agent) or any similar release by the Federal Reserve Board (as
determined by the Administrative Agent);


 


(b)     the sum of (i) the Federal Funds Rate,
plus (ii) 3% per annum;


 


(c)     the sum of (i) the LIBOR that would be
determined as of such day for a LIBOR Loan having an Interest Period of three
months, plus (ii) the excess of the LIBOR Margin for LIBOR Loans over the
Base Rate Margin for Base Rate Loans, in each instance, as of such day.


 


“Overadvance” means, during the Overadvance Period, the
amount by which the Revolving Loan Outstandings exceed the Borrowing Base.


 


“Overadvance Amount” means, for any Borrowing Base Period
within the Overadvance Period, the amount, if any, determined pursuant to Section 2.16(e) and
as such amount may be reduced from time to time pursuant to Section 2.3(d).


 


2

















 


“Pricing Table” means the following table:


 


	
   

  	
   

  	
   

  	
   

  	
  Revolving Loans and all other

  Obligations

  	
   

  	
   

  	
   

  
	
  Tier

  Level

  	
   

  	
  Borrowing Base

  Utilization

  	
   

  	
  LIBOR

  Margin

  	
   

  	
  Base Rate

  Margin

  	
   

  	
  Commitment Fee

  	
   

  
	
  1

  	
   

  	
  Greater than or equal to
  90%

  	
   

  	
  3.50

  	
  %

  	
  2.25

  	
  %

  	
  0.500

  	
  %

  
	
  2

  	
   

  	
  Greater than or equal to
  75%, but less than 90%

  	
   

  	
  3.25

  	
  %

  	
  2.00

  	
  %

  	
  0.500

  	
  %

  
	
  3

  	
   

  	
  Greater than or equal to
  50%, but less than 75%

  	
   

  	
  3.00

  	
  %

  	
  1.75

  	
  %

  	
  0.500

  	
  %

  
	
  4

  	
   

  	
  Less than 50%

  	
   

  	
  2.75

  	
  %

  	
  1.50

  	
  %

  	
  0.500

  	
  %

  



 


Notwithstanding the
foregoing and notwithstanding the actual Borrowing Base Utilization on any day,
from and following May 12, 2009 until the later to occur of (i) November 12,
2009 or (ii) the date on which the Permitted Second Lien Debt is retired,
Revolving Loans and other Obligations shall accrue interest at “Tier Level 1”
rates as set forth in the Pricing Table.


 


(b)           The
following definitions are hereby added to Section 1.1 of the Original
Agreement in alphabetical order to read as follows:


 


“Defaulting Lender” means any Lender, as determined by the
Administrative Agent, that has (i) failed to fund any portion of its Loans
or participations in Letters of Credit within three Business Days of the date
required to be funded by it hereunder, (ii) notified the Borrower, the
Administrative Agent, the LC Issuer or any Lender in writing that it does not
intend to comply with any of its funding obligations under this Agreement or
has made a public statement to the effect that it does not intend to comply
with its funding obligations under this Agreement or under other agreements in
which it commits to extend credit, (iii) otherwise failed to pay over to
the Administrative Agent or any other Lender any other amount required to be
paid by it hereunder within three Business Days of the date when due, unless
the subject of a good faith dispute, or (iv) (A) become or is insolvent
or has a parent company that has become or is insolvent or (B) become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in
any such proceeding or appointment or has a parent company that has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in
any such proceeding or appointment.


 


3

















 


“Permitted Second Lien Debt” means Debt in respect of notes
(whether issued under a definitive loan agreement or indenture) issued by
Borrower from time to time (including guarantees thereof by its Restricted
Subsidiaries), that complies with all of the following requirements:


 


(a)           such
Debt is issued prior to November 12, 2009;


 


(b)           the
aggregate principal amount of such Debt does not exceed $30,000,000;


 


(c)           no
scheduled payment of principal, scheduled mandatory redemption or scheduled
sinking fund payment of such Debt is due on or before April 19, 2013;
provided that such Debt may be prepaid in connection with a refinancing thereof
with other Debt which is permitted by this Agreement;


 


(d)           payments
of interest on such Debt are not due more frequently than once each calendar
quarter;


 


(e)           the
financial covenants governing such Debt are no more restrictive with respect to
the Restricted Persons than the financial covenants under this Agreement and
all of the covenants and events of default governing such Debt are not, taken
as a whole, materially more restrictive with respect to the Restricted Persons
than the covenants and Events of Default under this Agreement;


 


(f)            on
each date on which such Debt is issued (in this definition, a “Date of
Issuance”) and immediately after giving effect to such Debt, Borrower is in
compliance on a pro forma basis with the financial covenants in Article 6
of this Agreement, calculated for the most recent fiscal quarter or four
consecutive fiscal quarters, as applicable, for which the financial statements
described in Sections 4.1 (a) and (b) are available to Lenders;


 


(g)           no
Default or Event of Default exists on the Date of Issuance or will occur as a
result of the issuance of the notes evidencing such Debt;


 


(h)           if
such Debt is secured by Liens, such Liens are second, junior and subordinate to
the Liens securing the Obligations on the terms referred to in Section 5.2(h);


 


(i)            such
Debt is not guaranteed by any Person who is not a Guarantor of all of the
Obligations and is not secured by any Lien on property which is not subject to
prior Lien securing the Obligations; and


 


(j)            Borrower
shall have delivered to Administrative Agent a certificate in reasonable detail
and satisfactory to the Administrative Agent reflecting compliance with the
foregoing requirements.


 


4

















 


Section 2.2.    Letters
of Credit and Letter of Credit Fees. 
Section 2.9 of the Original Agreement is hereby amended by adding a
new subsection (g) at the end thereof to read as follows:


 


“(g)         Defaulting Lenders.  If  any
Letter of Credit Liabilities exist while a Lender is a Defaulting Lender, the
Borrower shall, within one Business Day following notice by the Administrative
Agent, cash collateralize such Defaulting Lender’s Pro Rata Share of the Letter
of Credit Liabilities in accordance with the procedures set forth in Section 2.9(e) for
so long as such Letter of Credit Liabilities are outstanding.”


 


Section 2.3.    Debt.  Section 5.1 of the Original Agreement is
hereby amended by deleting the word “and” at the end of clause (l), deleting the
period at the end of clause (m), substituting “; and” therefor, and adding a
new subsection (n) to read as follows:


 


“(n)         Permitted Second Lien Debt.”


 


Section 2.4.    Liens.  Section 5.2 of the Original Agreement is
hereby amended by deleting the word “and” at the end of clause (f), deleting
the period at the end of clause (g), substituting “; and” therefor, and adding
a new subsection (h) to read as follows:


 


“(h)         Liens securing Permitted Second Lien Debt, which are second,
junior and subordinate to the Liens securing the Obligations on terms
acceptable to each of the Lenders, as set forth in an intercreditor agreement
among the holders of Permitted Second Lien Debt or an agent acting on behalf of
such holders, Administrative Agent and Borrower, in form and substance
acceptable to each of the Lenders.”


 


Section 2.5.    Borrowing
Base.  Section 2.16 of the
Original Agreement is hereby amended by (i) renaming subsections (d), (e),
and (f) thereof as subsections (e), (f), and (g), respectively, and (ii) adding
the following new subsection (d) thereto immediately following subsection (c) thereof
to read as follows:


 


“(d)         Reduction of Borrowing Base Upon
Issuance of Permitted Second Lien Debt. 
Notwithstanding anything to the contrary contained herein, in the event
that Borrower issues Permitted Second Lien Debt, on the date of each issuance
thereof the Borrowing Base then in effect shall be reduced by an amount equal
to thirty-three and one-third percent (33 1/3%) of the stated principal amount of the Permitted Second Lien Debt so
issued.  The Borrowing Base as so reduced
shall become the new Borrowing Base immediately upon such date of issuance and
shall remain in effect until the next date as of which the Borrowing Base is
redetermined pursuant to this Agreement.”


 


Section 2.6.    Borrowing
Base and Overadvance Amount.  On the
Effective Date (as defined herein) of this Amendment, the Borrowing Base shall
be $120,000,000 and the Overadvance Amount shall be zero.  Such Borrowing Base and Overadvance Amount
shall be applicable until the next determination of the Borrowing  Base or the Overadvance Amount.


 


5

















 


ARTICLE III


 


CONDITIONS
OF EFFECTIVENESS


 


Section 3.1.    Conditions
to Effectiveness of Amendment. This Amendment shall become effective (the
date such conditions are so satisfied herein called the “Effective Date”)
when and only when Administrative Agent shall have received the following, each
of which shall be originals or telecopies (followed promptly by originals) each
properly executed by each Lender and by a Responsible Officer of the signing
Credit Party, each dated the Effective Date (or, in the case of certificates of
governmental officials, a recent date before the Effective Date) and each in
form and substance satisfactory to Administrative Agent:


 


(a)           counterparts
of this Amendment and the other Amendment Documents executed by the applicable
Credit Parties;


 


(b)           a certificate of the Secretary of each Credit Party
certifying that none of the resolutions, incumbency certificates and/or
organizational documents of any Credit Party as Administrative Agent has
previously required have been amended, modified or terminated since they were
delivered, and certifying resolutions authorizing this Amendment; and


 


(c)           such documents and certifications as Administrative Agent
may reasonably require to evidence that each Credit Party is duly organized or
formed, and that each Credit Party is validly existing, in good standing and
qualified to engage in business in each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification.


 


ARTICLE IV


 


REPRESENTATIONS
AND WARRANTIES


 


Section 4.1.    Representations
and Warranties.  In order to induce
Administrative Agent to enter into this Amendment, Borrower represents and
warrants to Administrative Agent that the representations and warranties
contained in Article 3 of the Original Agreement or any other Financing
Document are true and correct on the Effective Date (including, for all
purposes, after giving effect to the Amendment Documents), except to the extent
such representations and warranties specifically refer to an earlier date, in
which case they are true and correct as of such earlier date.


 


ARTICLE V


 


MISCELLANEOUS


 


Section 5.1.    Ratification
of Agreements.  The Original
Agreement as hereby amended is hereby ratified and confirmed in all
respects.  The other Financing Documents,
as they may be amended or affected by the Amendment Documents, are hereby
ratified and confirmed in all respects. 
Any reference to the Credit Agreement in any Financing Document shall be
deemed to be a reference to the Original Agreement as hereby amended.  The execution, delivery and 


 


6

















 


effectiveness of this Amendment and the other Amendment Documents shall
not, except as expressly provided herein or therein, operate as a waiver of any
right, power or remedy of Administrative Agent or Lenders under the Credit
Agreement, or any other Financing Document nor constitute a waiver of any
provision of the Credit Agreement, or any other Financing Document.


 


Section 5.2.    Survival
of Agreements.  All representations,
warranties, covenants and agreements of any Credit Party herein shall survive
the execution and delivery of this Amendment and the performance hereof, and
shall further survive until all of the Obligations are paid in full.  All statements and agreements contained in
any certificate or instrument delivered by any Credit Party hereunder or under
the Credit Agreement to Administrative Agent or any Lender shall be deemed to
constitute representations and warranties by, and/or agreements and covenants
of such Credit Party under this Amendment and under the Credit Agreement.


 


Section 5.3.    Financing
Documents.  This Amendment and the
other Amendment Documents are each a Financing Document, and all provisions in
the Credit Agreement pertaining to Financing Documents apply hereto and
thereto.


 


Section 5.4.    Governing
Law.  This Amendment shall be
governed by and construed in accordance with the Laws applicable to the Credit
Agreement.


 


Section 5.5.    Counterparts;
Fax.  This Amendment may be
separately executed in counterparts and by the different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
constitute one and the same Amendment. 
This Amendment and the other Amendment Documents may be validly executed
by facsimile or other electronic transmission.


 


THIS
AMENDMENT AND THE OTHER FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE
PARTIES.


 


7

















 


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


 


	
   

  	
  WARREN RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy A. Larkin

  
	
   

  	
   

  	
  Name: Timothy A. Larkin

  
	
   

  	
   

  	
  Title: Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GE BUSINESS FINANCIAL
  SERVICES INC., FKA Merrill Lynch Business Financial Services Inc., as
  Administrative Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mathew A. Toth III

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mathew A. Toth III

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Divisional President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  BANK OF
  SCOTLAND PLC, as a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Julia R. Franklin

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Julia R. Franklin

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  CAPITAL
  ONE, N.A., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David R. Reid

  
	
   

  	
   

  	
   

  	
  Name:

  	
  David R. Reid

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  



 


Signature
Page


 

















 


	
   

  	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Monte E. Deckert

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Monte E. Deckert

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  BMO
  CAPITAL MARKETS FINANCING, INC.,
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James Whitmore

  
	
   

  	
   

  	
   

  	
  Name:

  	
  James Whitmore

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  COMERICA
  BANK, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Peter L. Sefzik

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter L. Sefzik

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  



 


Signature
Page


 

















 


Consent
and Agreement to First Amendment to


Amended
and Restated Credit Agreement dated as of May 12, 2009


 


The undersigned each hereby (a) consents to the provisions of this
First Amendment to Amended and Restated Credit Agreement dated as of May 12,
2009, among Warren Resources, Inc., a Maryland corporation, GE Business Financial Services Inc., FKA
Merrill Lynch Business Financial Services Inc., as Administrative Agent,
and the Lenders party thereto and the transactions contemplated herein and
hereby, (b) ratifies and confirms the Amended and Restated Guaranty dated
as of November 19, 2007 made by it in favor of GE Business Financial Services Inc., FKA Merrill Lynch Business Financial
Services Inc., as Administrative Agent, and the other Financing
Documents to which it is a party and (c) agrees that its obligations and
covenants under the Financing Documents are unimpaired hereby and shall remain
in full force and effect.


 


	
   

  	
  WARREN
  RESOURCES OF CALIFORNIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Timothy A. Larkin

  
	
   

  	
   

  	
  Name: Timothy A. Larkin

  
	
   

  	
   

  	
  Title: Vice President and
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARREN
  E&P, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Norman F. Swanton

  
	
   

  	
   

  	
  Name: Norman F. Swanton

  
	
   

  	
   

  	
  Title: Chairman &
  Chief Executive Officer

  



 


Consent and Agreement