Exhibit 10.3

 

December 24, 2013

 

Re: OFFER OF EMPLOYMENT

 

Dear Ms. Somalya:

 

On behalf of Warren Resources, Inc. (“Warren” or the “Company”), I am pleased to
extend this offer of employment to you effective February 17, 2014 (the “Start
Date”), and look forward to you joining Warren in our New York, NY office. I am
confident you will find your position with Warren both challenging and
rewarding. The basic terms are as follows:

 

Start Date: February 17, 2014.

 

Job Title: Senior Vice President, General Counsel and Corporate Secretary.

 

Responsibilities: You will be responsible for performing the duties and
responsibilities as are commensurate and consistent with your positions as
Senior Vice President, General Counsel and Corporate Secretary and will devote
your full working time, attention and efforts to the Company and to discharging
the responsibilities of your position, and such other duties and
responsibilities as may be assigned from time to time by the Company which
relate to the business of the Company. You will report directly to the Chief
Executive Officer. You agree to comply with the Company’s standard policies and
procedures, including the Employee Handbook previously delivered and accepted by
you, and with all applicable laws and regulations.

 

Annual Base Salary: $250,000, payable bi-weekly in 26 equal installments less
all required or elected taxes and other withholdings.

 

Signing Bonus: $68,000 cash signing bonus (“Signing Bonus”) paid within 10 days
after your first day of employment. In the event you voluntarily terminate your
employment with Warren (other than “Resignation for Good Reason,” as defined
below) during the first 24 months of employment, you will be required to repay a
pro-rated amount of the $68,000 Signing Bonus. The repayment amount will be
calculated by dividing the total amount of your Signing Bonus by 24 months and
multiplying that number by the number of months remaining until the 24 month
anniversary of your first date of employment. After the 24 month period, you
have no obligation to repay the Signing Bonus if you leave Warren voluntarily.
In addition, on the first date of your employment, you will be granted an
initial award of options (“Options”) to purchase 40,000 shares of Warren common
stock at an exercise price equal to the closing price of Warren common stock on
the date of grant for a term of five years from the date of grant, subject to
the express terms of the Warren Stock Incentive Plan (the “Plan”). Your
participation in the Plan is governed by the Plan terms; however, by way of
summary only, your Options will vest equally on an annual basis over a three
year

 

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period with the initial 1/3 portion vesting on the one year anniversary of the
initial grant date. The unvested portion of the 40,000 Options will accelerate
upon your “Resignation for Good Reason,” “Termination without cause,” or upon a
“Change in control” (as defined in the Severance Plan described below).

 

Annual Bonus: At the end of each calendar year, you will be considered for a
bonus of up to 62.5% of your annual base salary based on Company and individual
performance. As with all bonus compensation at Warren, whether you are awarded a
bonus and, if so, the amount of any bonus is within the sole and exclusive
discretion of Warren and subject to the approval of the Compensation Committee
of the Board of Directors (the “Compensation Committee”). Any bonuses Warren
decides to award for a calendar year will be paid no later than March 15 of the
following year. You will be eligible beginning in 2015 for any discretionary
bonus payments for prior calendar years, including calendar year 2014. You must
be actively employed by Warren at the time the bonus is actually paid to be
considered eligible to receive the bonus.

 

Long-term Equity Award: You will be eligible to participate in the Plan, along
with other employees of Warren, commencing in 2014 and you may be considered for
an annual stock option award during the first quarter of 2014. The amount of any
equity awards granted under the Plan will be determined by the Compensation
Committee in its sole discretion. Subject to the terms of the Plan, equity
awards vest equally over a three-year period, meaning that you will have the
vested right to exercise: (1) one-third (1/3) of the equity awards after the
first anniversary of award; (2) one-third (1/3) of the equity awards after the
second year; and (3) one-third (1/3) of the equity awards after the third year.

 

Vacation and Benefits: You shall be entitled to take four weeks of paid annual
vacation (‘‘Vacation Time”) during each calendar year of employment, plus 3
personal days and 5 days of sick leave (“PTO”), all in accordance with the
Warren Resources Employee Handbook , which you acknowledge receiving and
reviewing as shown by your signature on Exhibit A hereto.  Up to fifty percent
(50%) of any accrued, unused Vacation Time may be carried over into the year
following the year for which it was granted. Accrued, unused PTO may not be
carried over from year-to-year or paid upon termination. Warren also offers
group health and dental insurance plans, with eligibility criteria set forth in
the plans. You will also be eligible to participate in Warren’s
401(k) retirement plan, under which Warren may choose to match a portion of your
contributions (currently up to a maximum of 4% of your base salary), in its sole
discretion.

 

Severance: You are entitled to the severance benefits set forth under Tier 3 of
the Warren Resources, Inc. Severance Plan as adopted by the Compensation
Committee of the Board of Directors on November 15, 2013 (the “Severance Plan “)
a copy of which has been provided to you; provided , however, that (x) Exhibit A
of the Severance Plan shall be adjusted in your case only for three years
following your Start Date (the “Initial 3 Years”) such that your severance upon
: (i) “Termination without cause” or “Resignation for Good Reason” shall be
(a) lx your annual base salary then in effect, plus (b) accelerated prorated
vesting of your then unvested equity-based awards that vest based solely on
continued employment or service with the Company (the “Time-Based Equity
Awards”) so that you would be vested on the unvested portion of the Time-Based
Equity Awards that would vest on the next vesting date following the termination
date had you remained employed with the Company, and (ii) termination within 2
years after a “Change in Control” shall be (a) lx your annual base salary then
in effect, plus (b) 1x the average of your 3 year prior incentive bonus, plus
(c) your pro-rata then current year incentive bonus, plus (d) accelerated
vesting of your then Time-Based Equity Awards pursuant to clause 13(ii)(B) of
the Company’s 2010 Incentive Stock Plan (whether or not a termination has
occurred), and (y) your rights to receive severance payments pursuant to clause
(x) above shall vest on the Start Date. In addition, during the Initial 3 Years,
upon a “Termination without

 

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cause”, “Resignation for Good Reason” or a termination within 2 years after a
“Change in control”, you shall be entitled to COBRA continuation coverage paid
in full by the Company, so long as you have not become actually covered by the
medical plan of a subsequent employer during any such month and are otherwise
entitled to COBRA continuation coverage, with such payments for a maximum of 9
months following the date of termination.

 

“Resignation for Good Reason “ shall mean a resignation of employment by you for
any of the following reasons: (i) any material decrease in your annual base
salary (except for reductions in connection with a general reduction in annual
salary for all executives of the Company by an average percentage that is not
less than the percentage reduction of your annual base salary), (ii) any
material breach by the Company of any material provisions of the severance terms
in this section of your Offer Letter, and (iii) any action by the Company
resulting in a material reduction in position, authority, duties or
responsibilities. Notwithstanding the foregoing, Resignation for Good Reason
will not be effective unless (1) you notify the Company in writing of the
existence of the condition which you believe constitutes Good Reason within
ninety (90) days of the initial existence of such condition (which notice
specifically identifies such condition), (2) the Company fails to remedy such
condition within thirty (30) days after the date on which it receives such
notice (the “Remedial Period”), and (3) you actually terminate your employment
within one year following the initial existence of the Good Reason condition. 
If you terminate employment before the expiration of the Remedial Period, then
your termination will not be considered to be Resignation for Good Reason.

 

Except as may lower the economic benefits due to you under the paragraph
entitled “Severance” above, Warren reserves the exclusive right to amend, modify
or terminate any of the foregoing plans in its sole discretion.

 

Employment at Will: Although Warren hopes for a lasting relationship with you,
your employment with the Company is and will remain strictly “at will”. This
means that both Warren and you have the absolute right to terminate your
employment at any time, with or without notice and with or without cause.

 

Background Check and Right to Work: Your employment is contingent upon the
successful completion of reference and background checks, drug-screening checks
and investigations prior to employment. You have represented to Warren that you
are not bound by any employment contract, restrictive covenant or other
restriction preventing you from entering into this employment relationship or
carrying out your responsibilities to Warren, as contemplated hereby.

 

Please confirm your acceptance of these terms by signing below and returning a
copy of this letter to me at the letterhead address.

 

Very truly yours,

 

 

 

WARREN RESOURCES, INC.

 

 

 

 

 

 

 

By:

/s/ Philip A. Epstein

 

 

Philip A. Epstein

 

 

Chairman and Chief Executive Officer

 

 

 

 

Accepted and agreed to

 

 

 

this 3rd day of January, 2014:

 

 

 

 

 

/s/ Saema Somalya

 

Saema Somalya

 

 

ph. 212.697.9660 · fax: 212.697.9466

 

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