Exhibit 10.2

 

WARREN RESOURCES, INC.

1114 Avenue of the Americas

New York, NY 10036

 

STOCK OPTION GRANT

 

, 2012

 

Dear         :

 

Re:                        Grant of Stock Option

 

Reference is made to the 2010 Stock Incentive Plan (the “Plan”) of Warren
Resources, Inc., a Maryland corporation (the “Corporation”), which has been
adopted by the Corporation’s board of directors and shareholders in order to
advance the interests of the Corporation’s stockholders by enhancing the ability
of the Corporation to attract, retain and motivate persons who make (or are
expected to make) important contributions to the Corporation by providing such
persons with equity ownership opportunities and performance-based incentives,
thereby better aligning the interests of such persons with those of the
Corporation’s stockholders. The terms of the Plan shall be deemed a part of this
letter agreement as if fully set forth herein.  A copy will be provided to you
with this letter agreement or, if a copy is not so provided, upon your request. 
Unless the context otherwise requires, all terms defined in the Plan shall have
the same meaning when used herein.

 

1.                                      The Grant

 

The Corporation hereby grants to you (“Holder”), as a matter of separate
inducement and not in lieu of any salary or other compensation for your
services, the right and option to purchase (the “Option”), in accordance with
the terms and conditions set forth in the Plan, an aggregate of
                    (            ) shares of Common Stock of the Corporation
(the “Option Shares”) at a price of $         per share (the “Exercise Price”),
subject to the limitations set forth herein and in the Plan.  The Option is not
intended to be an incentive stock option within the meaning of section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”).

 

2.                                      Exercise

 

Subject to the provisions and limitations contained herein and of the relevant
provisions of the Plan and until the termination of the Option as provided for
herein, you may exercise the Option, on a cumulative basis, as follows:

 

(a)                      One-third (1/3rd) of the total number of Option Shares
may be purchased by you on             , 2013;

 

(b)                      One-third (1/3rd) of the total number of Option Shares
may be purchased by you on           , 2014; and

 

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(c)                       One-third (1/3rd) of the total number of Option Shares
may be purchased by you on           , 2015.

 

If the Option is not exercised for the total number of Option Shares available
for purchase during such period, the Option shall not thereby terminate as to
such unexercised portion, but shall be cumulative.  In no event shall your
exercise the Option for a fraction of a share. The unexercised portion of the
Option, if any, will automatically and without notice terminate and become null
and void on               , 2017at 5:00 pm (Eastern Time).

 

Subject to applicable exercise restrictions set forth in Section 6(d) of the
Plan, this Option may be exercised, in whole or in part, by giving written
notice of exercise to the Corporation substantially in the form set forth on
Schedule A, specifying the number of shares to be purchased. The notice shall be
accompanied by payment in full of the Exercise Price. The Exercise Price may be
paid by any of the following methods, subject to the restrictions set forth in
the Plan:

 

(i) in cash, by certified or cashier’s check, by money order or by personal
check (if approved by the Corporation) of an amount equal to the aggregate
Exercise Price of the shares of Common Stock to which such exercise relates; or

 

(ii) by delivery of shares of Common Stock already owned by the Holder and held
by the Holder for a minimum of six months, which shares, including any cash
tendered therewith, have an aggregate Fair Market Value equal to the aggregate
Exercise Price of the shares of Common Stock to which such exercise relates; or

 

(iii) by delivery by the Holder of a properly executed notice, together with a
copy of the Holder’s irrevocable instruction to a broker-dealer acceptable to
the Corporation to deliver promptly to the Corporation the amount of sale or
loan proceeds sufficient to pay such exercise price. In connection therewith,
the Corporation may enter into agreements for coordinated procedures with one or
more securities brokerage firms.

 

Under no circumstance shall the allocation of Option Fair Market Value described
above be deemed a loan to the Holder by the Corporation.

 

3.                                      Transferability

 

The Option is not transferable, either in whole or in part, by you otherwise
than by will or the laws of descent and distribution and is exercisable, during
your lifetime, only by you. Except as set forth in the preceding sentence, the
Option may not be assigned, transferred, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar proceeding.  Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Option contrary to
the provisions hereof or of the Plan, and the levy of any attachment or similar
proceeding upon the Option, shall be null and void and without effect.

 

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4.                                      Registration

 

Unless there is in effect a registration statement under the Securities Act of
1933, as amended (the “Securities Act”), with respect to the issuance of the
Option Shares (and, if required, there is available for delivery a prospectus
meeting the requirements of section (10)(a)(3) of the Securities Act), you will,
upon the exercise of the Option (a) represent and warrant to the Corporation and
agree, in each case, in writing that (i) the Option Shares then being purchased
by you pursuant to the Option are being acquired for your own account, for
investment only and not with a view to the resale or distribution thereof, and
(ii) that any subsequent offer for sale or sale of any such Option Shares shall
be made either pursuant to (x) a registration statement on an appropriate form
under the Securities Act, which registration statement shall have become
effective and shall be current with respect to the Option Shares being offered
and sold, or (y) a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption, you shall, prior to any offer
for sale or sale of such Option Shares, obtain a favorable written opinion from
counsel for or approved by the Corporation as to the availability of such
exemption and (b) agree that the certificates evidencing such Option Shares
shall bear a legend to the effect of the foregoing.

 

5.                                      Withholding Taxes

 

By your acceptance hereof, you hereby (i) agree to reimburse the Corporation or
any subsidiary corporation or parent corporation of the Corporation by which you
are employed for any federal, state or local taxes required by any government to
be withheld or otherwise deducted by such corporation in respect of your
exercise of the Option, (ii) authorize the Corporation or any subsidiary
corporation or parent corporation of the Corporation by which you are employed
to withhold from any cash compensation paid to you or in your behalf, an amount
sufficient to discharge any federal, state and local taxes imposed on the
Corporation, or the subsidiary corporation or parent corporation of the
Corporation by which you are employed, and which otherwise has not been
reimbursed by you, in respect of your exercise of the Option and (iii) agree
that the corporation by which you are employed, may, in its discretion, hold the
stock certificate to which you are entitled upon exercise of the Option, as
security for the payment of the aforementioned withholding tax liability, until
cash sufficient to pay that liability has been accumulated, and may, in its
discretion, effect such withholding by retaining Option Shares issuable upon the
exercise of the Option having a fair market value on the date of exercise (as
determined under Section 13 of the Plan) which is equal to the amount to be
withheld.

 

6.                                      Grant Subject to Plan; Conflict

 

This grant is subject to all the terms, conditions, limitations and restrictions
contained in the Plan.  In the event of any conflict or inconsistency between
the terms hereof and the terms of the Plan, the terms of the Plan shall be
controlling.

 

7.                                      Section 409A.

 

Notwithstanding any other provision of the Plan, this Agreement or the Grant
Notice, the Plan, this Agreement and the Grant Notice shall be interpreted in
accordance with the requirements of Section 409A of the Code. The Administrator
may, in its discretion, adopt such amendments to the Plan, this Agreement or the
Grant Notice or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any other actions,

 

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as the Administrator determines are necessary or appropriate to comply with the
requirements of Section 409A of the Code.

 

8.                                      Miscellaneous

 

(a)                                 This grant is not a contract of employment
and the terms of your employment shall not be affected hereby or by any
agreement referred to herein except to the extent specifically so provided
herein or therein.  Nothing herein shall be construed to impose any obligation
on the Corporation, the Subsidiary or on any other subsidiary corporation or
parent corporation thereof to continue your employment, and it shall not impose
any obligation on your part to remain in the employ of the Subsidiary or of any
subsidiary corporation or parent corporation thereof.

 

(b)                                 You agree to notify the Corporation
immediately upon any “disqualifying disposition” (as defined in section 421(b)
of the Code) made by you of Option Shares purchased hereunder.

 

(c)                                  You or your permitted transferees under
Section 4 hereof shall have the right to act as stockholders of the Corporation
only with respect to Option Shares the Exercise Price for which has been paid in
full to the Corporation.

 

(d)                                 You hereby represent that you have received
a copy of the Plan and that you have had ample opportunity to review the Plan
and ask questions with respect thereto.

 

Please indicate your acceptance of all the terms and conditions of the Option
and the Plan by signing and returning a copy of this letter to the Corporate
Secretary of the Corporation.

 

 

 

Very truly yours,

 

 

 

 

 

WARREN RESOURCES, INC.

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

AGREED TO AND ACCEPTED:

 

 

 

 

 

HOLDER:

 

 

 

 

 

 

 

 

Name:

 

 

 

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SCHEDULE A

 

[FORM OF EXERCISE]

 

[Date of Exercise]

 

Warren Resources, Inc.

1114 Avenue of the Americas

34th Floor

New York, NY 10036

 

Attention:

 

Re:                       2010 Equity Incentive Plan

 

Dear Sir:

 

I am the holder of a Nonqualified Stock Option granted to me under the
above-referenced Plan by Warren Resources, Inc. (the “Corporation”) on
          , 2012 to purchase shares of the common stock of the Corporation (the
“Shares”).  I hereby exercise such option with respect to            Shares, the
total purchase price for which is $                , and I enclose check payable
to the order of the Corporation in the amount of $                ] ,
representing the total purchase price for the Shares.  The certificate or
certificates representing the Shares should be registered in my name and should
be [delivered to me] [forwarded to me at the address indicated below].

 

I hereby authorize the Corporation or any subsidiary or parent corporation by
which I am employed to withhold from any cash compensation paid to me, or in my
behalf, an amount sufficient to discharge any federal, state and local wage
withholding taxes imposed on the Corporation, or the subsidiary or parent
corporation by which I am employed, in respect of my exercise of the option or
my disposition of any Shares acquired pursuant thereto.  I agree that the
corporation by which I am employed, may, in its discretion, hold the stock
certificate to which I am entitled upon exercise of such option, as security for
the payment of the aforementioned withholding tax liability, until cash
sufficient to pay that liability has been accumulated.

 

I hereby confirm that such Shares remain fully subject to the terms of the Plan
including, without limitation, those relating to share transfer restrictions.

 

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Please acknowledge receipt of the exercise of my stock option on the attached
copy of this letter.

 

 

 

Very truly yours,

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

 

 

 

Please Print Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Address

 

 

 

 

 

 

RECEIPT ACKNOWLEDGED:

 

 

 

 

 

WARREN RESOURCES, INC.

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Title:

 

 

 

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