Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (“Agreement”) is entered into on August 19,
2013, by and between David E. Fleming (“Executive”) and Warren Resources, Inc.,
a Maryland corporation (the “Company”), to be effective as of July 15, 2013 (as
defined in Appendix A).  This Agreement shall supersede and replace in its
entirety any and all prior agreements, whether oral or written, previously
entered into by the parties.

 

Certain capitalized terms in this Agreement have the meanings set forth in
Appendix A attached to this Agreement, which is incorporated into this Agreement
in its entirety.

 

1.                                      EMPLOYMENT

 

The Company agrees to continue to employ Executive, and Executive agrees to
continue to accept employment by the Company as its Senior Vice President,
General Counsel and Corporate Secretary and report to the Company’s Chief
Executive Officer.  Executive will perform the duties as are commensurate and
consistent with Executive’s position and will devote Executive’s full working
time, attention and efforts to the Company and to discharging the
responsibilities of Executive’s position, and such other duties as may be
assigned from time to time by the Company, which relate to the business of the
Company and are reasonably consistent with Executive’s position.  Executive
agrees to comply with the Company’s standard policies and procedures, including
the Employee Handbook previously delivered and accepted by Executive, and with
all applicable laws and regulations.

 

The Executive acknowledges that the Company’s principal executive offices are
currently located at 1114 Avenue of the Americas, New York, New York, and the
Executive’s principal place of employment shall be the Company’s principal
executive offices, which shall be in New York County in the State of New York.

 

2.                                      TERM OF EMPLOYMENT

 

This Agreement, and the employment of the Executive by the Company hereunder,
shall be effective as of July 15, 2013 (the “Effective Date”) and terminate on
the first anniversary of the Effective Date (the “Term”), subject to earlier
termination as set forth herein (the “Employment Period”).

 

3.                                      COMPENSATION AND BENEFITS

 

The Company agrees to pay or cause to be paid to Executive and Executive agrees
to accept in exchange for the services rendered hereunder the following
compensation and benefits:

 

3.1                               Annual Salary

 

Executive’s compensation shall consist of an annual base salary (the “Salary”)
of not less than $329,221.00, payable in semi-monthly installments in accordance
with the payroll practices of the Company, less all required withholdings for
benefits, federal, state and local taxes, if any.  The Salary shall be reviewed,
and may be increased but not decreased (unless there is an across the board
reduction in the salary of all senior executives of the Company), by the Board
of

 

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Directors (or the Compensation Committee thereof) at least annually while
Executive is employed hereunder.

 

3.2                               Bonus and Equity Awards

 

Executive shall be eligible to participate in the Company’s incentive bonus
plans as may be adopted from time to time by the Board of Directors (or the
Compensation Committee thereof), subject to and in accordance with the terms and
conditions of such plans, which shall not be paid later than March 15 of the
calendar year immediately following the calendar year to which the bonus
relates. The Executive’s target annual bonus opportunity shall be up to
sixty-two and one-half (62.5%) percent of the Salary, based on the achievement
of performance goals set forth in the Company’s incentive bonus plan.

 

Executive also may be eligible to receive equity awards under the Company’s
equity plans, with the amount, terms and conditions of such equity awards to be
determined by the Board of Directors (or the Compensation Committee thereof).

 

3.3                               Benefits

 

Executive shall be eligible to participate, subject to and in accordance with
applicable eligibility requirements, in such employee benefit plans, policies,
programs and arrangements as are generally provided to the Company’s most senior
executives, which benefits shall include, at a minimum, basic health, dental and
vision insurance.

 

3.4                               Vacation and Other Paid Time-Off Benefits

 

Executive shall be entitled to four (4) weeks of paid vacation per year, which
may be increased to equal to those provided to similarly situated executives of
the Company, in accordance with the plans, policies, programs and arrangements
of the Company applicable to similarly situated executives of the Company
generally.  Executive also shall be provided such holidays and sick leave as the
Company makes available to all of its other employees.

 

3.5                               Business Expenses

 

The Company shall reimburse Executive for all reasonable expenses incurred by
him in accordance with the Company’s expense policy in the course of performing
his duties and responsibilities under this Agreement.  Any reimbursement
provided for under this Agreement that would constitute nonqualified deferred
compensation subject to Section 409A of the Internal Revenue Code of 1986, as
amended (“Section 409A”), shall be subject to the following additional rules: 
(i) no reimbursement of any such expense shall affect the Executive’s right to
reimbursement of any such expense in any other taxable year; (ii) reimbursement
of the expense shall be made, if at all, promptly, but not later than the end of
the calendar year following the calendar year in which the expense was incurred;
and (iii) the right to reimbursement shall not be subject to liquidation or
exchange for any other benefit.

 

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4.                                      TERMINATION

 

4.1                               Employment at Will

 

Executive acknowledges and understands that employment with the Company is at
will and can be terminated by either party for no reason or for any reason not
otherwise specifically prohibited by law, subject to the terms herein.  Except
as expressly provided for in this Agreement, upon any termination of employment,
Executive shall not be entitled to receive any payments or benefits under this
Agreement other than unpaid Salary earned through the date of termination and
unused vacation that has accrued as of the date of Executive’s termination of
employment that would be payable under the Company’s standard policy.

 

4.2                               Automatic Termination on Death or Total
Disability

 

This Agreement and Executive’s employment hereunder shall terminate
automatically upon the death or Total Disability of Executive.  “Total
Disability” shall mean Executive’s inability to perform the duties of
Executive’s position for a period or periods aggregating ninety (90) days in any
period of one hundred eighty (180) consecutive days as a result of physical or
mental illness, loss of legal capacity or any other cause beyond Executive’s
control.  Executive and the Company hereby acknowledge that Executive’s ability
to perform Executive’s duties is the essence of this Agreement.  Termination
hereunder shall be deemed to be effective (a) at the end of the calendar month
in which Executive’s death occurs or (b) immediately upon a determination by the
Board of Directors (or the Compensation Committee thereof) of Executive’s Total
Disability provided, however, that the decision by the Board of whether
Executive has a Total Disability shall be based upon the findings of a qualified
Medical Doctor reasonably agreed to by the Company and the Executive.

 

In the case of termination of employment under this Section 4.2, Executive, or
his estate in the event of his death, shall be entitled to receive:  (a) any
accrued and unpaid salary, earned and unpaid incentive bonus, deferred or other
compensation for any period preceding the employment termination date;
(b) payment for any accrued and unpaid benefits pursuant to the terms of any
compensation or benefit plans to the extent permitted by such plans and any
accrued but unused vacation days; and (c) any unpaid expense reimbursement
(unless covered under a separate company policy) (the “Accrued Obligations”).

 

Additionally, should Executive’s employment be terminated as a result of his
death or Total Disability, he will be entitled to Executive’s then vested
outstanding equity-based awards, and the unvested portion will be forfeited. 
The Executive will have an extension of the time period during which Executive
may exercise Executive’s then outstanding stock options, to the extent vested on
the date of termination, until the earlier of (A) one (1) year from the date of
termination and (B) the latest date upon which such stock options would have
expired by their original terms under any circumstances.

 

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4.3                               Termination of Employment Without Cause or for
Good Reason, Other Than in Connection with a Change of Control

 

(a)                                 If (1) the Company terminates Executive’s
employment without Cause (as defined in Appendix A), or (2) Executive resigns
for Good Reason (as defined in Appendix A), then Executive shall be entitled to
receive the following termination payments and benefits; provided, however, that
this Section 4.3 shall not apply to, and shall have no effect in connection
with, any termination to which Section 4.2 or Section 4.4 of this Agreement
applies:

 

(i)                                     an amount equal to nine (9) months of
the Executive’s Annual Salary, at the rate in effect immediately prior to
termination (the “Severance Payment”);

 

(ii)                                  the Accrued Obligations, payable in a lump
sum on the next regularly scheduled payroll date following the date on which
Executive’s employment terminated;

 

(iii)                               COBRA continuation coverage paid in full by
the Company, so long as Executive has not become actually covered by the medical
plan of a subsequent employer during any such month and is otherwise entitled to
COBRA continuation coverage, with such payments for a maximum of 9 months
following the date of termination.  After such period, Executive is responsible
for paying the full cost for any additional COBRA continuation coverage to which
Executive is then entitled.  If the Company’s payment of the COBRA premiums on
the Executive’s behalf would violate the nondiscrimination rules or cause the
reimbursement of claims to be taxable under the Patient Protection and
Affordable Care Act of 2010, together with the Health Care and Education
Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the
Code, the Company paid premiums shall be treated as taxable payments and be
subject to imputed income tax treatment to the extent necessary to eliminate any
discriminatory treatment or taxation under the Act or Section 105(h) of the
Code;

 

(iv)                              accelerated prorated vesting of Executive’s
then unvested equity-based awards that vest based solely on continued employment
or service with the Company (the “Time-Based Equity Awards”).  The unvested
portion of Time-Based Equity Awards to be accelerated as of the date of an event
described in this Section 4.3 shall be determined as follows upon the occurrence
of such event:  If the vested portion of Time-Based Equity Awards otherwise
would be determined in increments of one year or greater, then the portion of
the Time-Based Equity Awards that would vest on the next vesting date following
the termination date had the Executive remained employed with the Company will
vest.  For example, if the Executive’s Time-Based Equity Awards ordinarily vest
in four equal annual installments and that Executive is subject to an event
described in Section 4.3 after completing one and one-half years of service from
the vesting commencement date, Executive would be vested in fifty (50%) of the
Time-Based Equity Awards;

 

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(v)                                 Any Time-Based Equity Awards that are
eligible to vest pursuant to this Section shall vest based upon the date the
general release and waiver of all claims against the Company substantially the
form attached hereto as Appendix B becomes effective.  Any Time-Based Equity
Awards that vest pursuant to this Section 4.3 shall be promptly settled within
(30) days following the date of vesting but in no event later than March 15 of
the calendar year following the calendar year in which the later of the vesting
event or your termination of Employment occurs; and

 

(vi)                              an extension of the time period during which
Executive may exercise Executive’s then outstanding stock options, to the extent
vested on the date of termination (taking into account the accelerated vesting
provided in this Section 4.3(a)), until the earlier of (A) ninety (90) days from
the date of termination, but excluding any stock trading blackout days, and
(B) the latest date upon which such stock options would have expired by their
original terms under any circumstances.

 

(b)                                 As a condition to receiving the payments and
benefits under this Section 4.3 other than the Accrued Obligations, Executive
shall execute (and not revoke within the applicable revocation period) a general
release and waiver of all claims against the Company, which release and waiver
shall be in a form acceptable to the Company, and in substantially the form
attached hereto as Appendix B.  Such release and waiver shall be delivered to
the Company no later than the date specified by the Company (which date shall in
no event be later than twenty-one (21) days or forty-five (45) days, as
applicable, after the date on which Executive is presented with the terms of the
release and waiver).  In addition, payment of the amounts and benefits under
this Section 4.3 are contingent on Executive’s full and continued compliance
with the Company’s Confidential Information, Nonsolicitation and Noncompetition
Agreement, as the same may be amended from time to time.

 

(c)                                  Notwithstanding the foregoing, termination
of employment by Executive will not be for Good Reason unless (1) Executive
notifies the Company in writing of the existence of the condition which
Executive believes 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) Executive actually terminates employment within one year following the
initial existence of the Good Reason condition.  If Executive terminates
employment before the expiration of the Remedial Period, then Executive’s
termination will not be considered to be for Good Reason.

 

(d)                                 Subject to Section 4.3(b), Severance
Payments under Section 4.3(a)(i) shall be paid to Executive through the
Company’s normally scheduled payroll in a lump sum within sixty (60) days
following the date on which Executive’s employment was terminated without Cause
or Executive resigned for Good Reason; provided, however, that in the event such
sixty (60) day period begins in one taxable year of Executive and ends in a
second taxable year of Executive, the Company shall not make any Severance
Payments to Executive until the second taxable year and any missed installment
payment(s) shall be made together with the first permitted installment payment
of severance pay hereunder (without interest). Each such payment

 

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shall be treated as a separate payment for purposes of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), including the rules and
regulations thereunder (“Code Section 409A”).  Notwithstanding the foregoing, if
any payments and benefits payable pursuant to Section 4.3(a) constitute a
“deferral of compensation” subject to Code Section 409A (after taking into
account, to the maximum extent possible, any applicable exemptions), then the
applicable provisions of Section 14 hereof shall apply.

 

4.4                               Termination of Employment in Connection with a
Change of Control

 

4.4.1                     Benefits for Qualified Terminations in Connection with
a Change of Control

 

(a)                                 If (1) during the period commencing on the
date the Company enters into a definitive agreement with respect to a
transaction that would constitute a Change of Control (as defined in Appendix A)
and ending on the date the Change of Control is consummated pursuant to such
definitive agreement, the Company terminates Executive’s employment without
Cause (as defined in Appendix A), (2) during the period commencing upon the
consummation of the Change of Control and ending twenty-four (24) months
thereafter, the Company or, if applicable, the surviving or successor employer
(“Successor Employer”) terminates Executive’s employment without Cause (as
defined in Appendix A), or (3) during the period commencing upon the
consummation of the Change of Control and ending twenty-four (24) months
thereafter, Executive resigns for Good Reason (as defined in Appendix A), then
Executive shall be entitled to receive the following termination payments and
benefits and shall not also be eligible to receive the payments and benefits
under Section 4.3:

 

(i)                                     an amount equal to (A) one (1) times the
Executive’s Annual Salary at the rate in effect immediately prior to
termination, plus (B) the average amount of the annual bonus paid to the
Executive over the course of the immediately preceding fiscal years, up to a
maximum of three (3) years, plus (C) prorated bonus for the year of termination,
all payable to Executive in accordance with the terms below (“CIC Severance
Payment”);

 

(ii)                                  Accrued Obligations, payable in a lump sum
on the next regularly scheduled payroll date following the date on which
Executive’s employment terminated;

 

(iii)                               COBRA continuation coverage paid in full by
the Company, so long as Executive has not become actually covered by the medical
plan of a subsequent employer during any such month and is otherwise entitled to
COBRA continuation coverage, with such payments for a maximum of 9 months
following the date of termination.  After such period, Executive is responsible
for paying the full cost for any additional COBRA continuation coverage to which
Executive is then entitled.  If the Company’s payment of the COBRA premiums on
the Executive’s behalf would violate the nondiscrimination rules or cause the
reimbursement of claims to be taxable under the Act or Section 105(h) of the
Code, the Company paid premiums shall be treated as taxable payments and be

 

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subject to imputed income tax treatment to the extent necessary to eliminate any
discriminatory treatment or taxation under the Act or Section 105(h) of the Code

 

(iv)                              accelerated vesting of Executive’s then
unvested Time-Based Equity Awards;

 

(v)                                 Any Time-Based Equity Awards that are
eligible to vest pursuant to this Section shall vest based upon the date the
general release and waiver of all claims against the Company substantially the
form attached hereto as Appendix B becomes effective.  Any Time-Based Equity
Awards that vest pursuant to this Section 4.4.1 shall be promptly settled within
(30) days following the date of vesting but in no event later than March 15 of
the calendar year following the calendar year in which the later of the vesting
event or your termination of Employment occurs; and

 

(vi)                              an extension of the time period during which
Executive may exercise Executive’s then outstanding stock options, to the extent
vested on the date of termination (taking into account the accelerated vesting
provided in this Section 4.4.1), until the earlier of (A) one (1) year from the
date of termination and (B) the latest date upon which such stock options would
have expired by their original terms under any circumstances.

 

(b)                                 As a condition to receiving the payments and
benefits under this Section 4.4.1 other than the Accrued Obligations, Executive
shall execute (and not revoke within the applicable revocation period) a general
release and waiver of all claims against the Company, which release and waiver
shall be in a form acceptable to the Company (including any Successor Employer
thereto), and in substantially the form attached hereto as Appendix B.  Such
release and waiver shall be delivered to the Company (or any Successor Employer
thereto) no later than the date specified by the Company (or any Successor
Employer thereto) (which date shall in no event be later than twenty-one (21)
days or forty-five (45) days, as applicable, after the date on which Executive
is presented with the terms of the release and waiver).  In addition, payment of
the amounts and benefits under this Section 4.4.1 are contingent on Executive’s
full and continued compliance with the Company’s Confidential Information,
Nonsolicitation and Noncompetition Agreement, as the same may be amended from
time to time

 

(c)                                  Subject to Section 4.4.1(b), the CIC
Severance Payments under Section 4.4.1(a) shall be paid to Executive through the
Company’s (or the Successor Employer’s) normally scheduled payroll in a lump sum
within sixty (60) days following the date on which Executive’s employment was
terminated without Cause or Executive resigned for Good Reason; provided,
however, that in the event such sixty (60) day period begins in one taxable year
of Executive and ends in a second taxable year of Executive, the Company will
not make any CIC Severance Payments to Executive until the second taxable year. 
Each such payment shall be treated as a separate payment for purposes of Code
Section 409A.  Notwithstanding the foregoing, if any payments and benefits
payable pursuant to Section 4.4.1(a) constitute a “deferral of compensation”
subject to Code Section 409A (after taking into account, to the maximum extent
possible, any applicable exemptions), then the applicable provisions of
Section 14 hereof shall apply.

 

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4.4.2                     Code Section 280G

 

(a)                                 Notwithstanding anything in this Agreement
to the contrary, in the event that Executive becomes entitled to receive or
receives any payment or benefit under this Agreement or under any other plan,
agreement or arrangement with the Company, any person whose actions result in a
Change of Control or any other person affiliated with the Company or such person
(all such payments and benefits being referred to herein as the “Total
Payments”) and it is determined that any of the Total Payments will be subject
to any excise tax pursuant to Code Section 4999, or any similar or successor
provision (the “Excise Tax”), the Company shall pay to Executive either (1) the
full amount of the Total Payments or (2) an amount equal to the Total Payments,
reduced by the minimum amount necessary to prevent any portion of the Total
Payments from being an “excess parachute payment” (within the meaning of Code
Section 280G) (the “Capped Payments”), whichever of the foregoing amounts
results in the receipt by Executive, on an after-tax basis, of the greatest
amount of Total Payments notwithstanding that all or some portion of the Total
Payments may be subject to the Excise Tax.  For purposes of determining whether
Executive would receive a greater after-tax benefit from the Capped Payments
than from receipt of the full amount of the Total Payments, (i) there shall be
taken into account any Excise Tax and all applicable federal, state and local
taxes required to be paid by Executive in respect of the receipt of such
payments and (ii) such payments shall be deemed to be subject to federal income
taxes at the highest rate of federal income taxation applicable to individuals
that is in effect for the calendar year in which the effective date of the
Change of Control occurs, and state and local income taxes at the highest rate
of taxation applicable to individuals in the state and locality of Executive’s
residence on the effective date of the Change of Control, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes (as determined by assuming that such deduction is subject
to the maximum limitation applicable to itemized deductions under Code
Section 68 and any other limitations applicable to the deduction of state and
local income taxes under the Code).

 

(b)                                 All computations and determinations called
for by this Section 4.4.2 shall be made by a reputable independent public
accounting firm or independent tax counsel appointed by the Company (the
“Firm”).  All determinations made by the Firm under this Section 4.4.2 shall be
conclusive and binding on both the Company and Executive, and the Firm shall
provide its determinations and any supporting calculations to the Company and
Executive within ten (10) business days after Executive’s employment terminates
under any of the circumstances described in Section 4.4.1, or such earlier time
as is requested by the Company.  For purposes of making its determinations under
this Section 4.4.2, the Firm may rely on reasonable, good faith interpretations
concerning the application of Code Sections 280G and 4999.  The Company and
Executive shall furnish to the Firm such information and documents as the Firm
may reasonably request in making its determinations.  The Company shall bear all
fees and expenses charged by the Firm in connection with its services.

 

(c)                                  In the event that Section 4.4.2(a) applies
and a reduction is required to be applied to the Total Payments thereunder, the
Total Payments shall be reduced by the Company in its reasonable discretion in
the following order:  (1) reduction of any Total Payments that are subject to
Code Section 409A on a pro-rata basis or such other manner that complies with
Code Section 409A, as determined by the Company, and (2) reduction of any Total
Payments that are exempt from Code Section 409A.

 

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4.5                               Voluntary Termination by Executive Other Than
for Good Reason

 

Upon the voluntary resignation or retirement of Executive, the Executive shall
receive the Accrued Obligations.

 

4.6                               No Mitigation; No Offset.

 

The Company and Executive acknowledge and agree that there is no duty of
Executive to mitigate damages under this Agreement, and there shall be no offset
against any amounts due to Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that Executive may
obtain.  All amounts paid to the Executive pursuant to Section 4 shall be paid
without regard to whether Executive has taken or takes actions to mitigate
damages and, subject to all applicable laws and regulations, shall not be
subject to setoff, counterclaim, recoupment, defense or other right which the
Company may have against Executive or others.

 

5.                                      COVENANTS OF THE EXECUTIVE.

 

The Executive acknowledges that in the course of his employment with the Company
he has and will become familiar with the Company’s trade secrets and with other
confidential information concerning the Company, and that his services are of
special, unique and extraordinary value to the Company.  Therefore, the Company
and the Executive mutually agree that it is in the interest of both parties for
the Executive to enter into the restrictive covenants set forth in this
Section 5 and that such restrictions and covenants are reasonable given the
nature of the Executive’s duties and the nature of the Company’s business.

 

(a)                                 Noncompetition.  During the Employment Term
and for the period (“Restricted Period”), that is the greater of (A) one
(1) year following termination of the Employment Term, and (2) the equivalent
years of Salary payable to Executive as severance under this Agreement, the
Executive shall not, within ten (10) miles of any location in which, as of the
last day of the Employment Term, the Company owns Assets, directly or
indirectly, own, manage, operate, control, or participate in the ownership,
management, operation or control of any Business, provided that the Executive’s
ownership of securities of two percent (2%) or less of any class of securities
of a public company shall not, by itself, be considered to be competition with
the Company or any Affiliate.  For purposes of this Agreement, “Business” shall
mean the ownership of oil and/or gas assets, and “Assets” means the Company’s
oil and/or gas assets.

 

(b)                                 Nonsolicitation.  During the Employment Term
and for the Restricted Period following termination of the Employment Term, the
Executive shall not, directly or indirectly, and any entity to which Executive
is providing services shall not, directly or indirectly, (i) employ, solicit for
employment or otherwise contract for the services of any individual who is or
was an employee of the Company; (ii) otherwise induce or attempt to induce any
employee of the Company to leave the employ of the Company, or in any way
interfere with the relationship between the Company any employee respectively
thereof; or (iii) induce or attempt to induce any customer, supplier, licensee
or other business relation of the Company or any Affiliate to cease doing
business with the Company, or interfere in any way with the

 

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relationship between any such customer, supplier, licensee or business relation
and the Company.

 

(c)                                  Nondisclosure.  For the Employment Term and
thereafter, (i) the Executive shall not divulge, transmit or otherwise disclose
(except as legally compelled by court order, and then only to the extent
required, after prompt notice to the Board of any such order), directly or
indirectly, other than in the regular and proper course of business of the
Company, any trade secrets or other confidential knowledge or information with
respect to the operations or finances of the Company or any Affiliates or with
respect to confidential or secret processes, services, techniques, customers or
plans with respect to the Company (all of the foregoing collectively hereinafter
referred to as, “Confidential Information”), and (ii) the Executive will not
use, directly or indirectly, any Confidential Information for the benefit of
anyone other than the Company; provided, however, that the Executive has no
obligation, express or implied, to refrain from using or disclosing to others
any such knowledge or information which is or hereafter shall become available
to the general public other than through disclosure by the Executive.  All
Confidential Information, new processes, techniques, know-how, methods,
inventions, plans, products, patents and devices developed, made or invented by
the Executive, alone or with others, while an employee of the Company which are
related to the business of the Company and the Affiliates shall be and become
the sole property of the Company, unless released in writing by the Board, and
the Executive hereby assigns any and all rights therein or thereto to the
Company.

 

(d)                                 Nondisparagement.  The Executive shall not
take any action to disparage or criticize the Company or its respective
employees, directors, owners or customers or to engage in any other action that
injures or hinders the business relationships of the Company.  The Company shall
not take any action to disparage or criticize the Executive or to engage in any
other action that injures the Executive’s business reputation.  Nothing
contained in this Section 5(d) shall preclude the Executive or the Company from
enforcing his or its rights under this Agreement.

 

(e)                                  Return of Company Property.  All
Confidential Information, files, records, correspondence, memoranda, notes or
other documents (including, without limitation, those in computer-readable form)
or property relating or belonging to the Company, whether prepared by the
Executive or otherwise coming into his possession in the course of the
performance of his services under this Agreement, shall be the exclusive
property of the Company and shall be delivered to the Company, and not retained
by the Executive (including, without limitations, any copies thereof), promptly
upon request by the Company and, in any event, promptly upon termination of the
Employment Term.

 

(f)                                   Enforcement.  The Executive acknowledges
that a breach of his covenants contained in this Section 5 may cause irreparable
damage to the Company, the exact amount of which would be difficult to
ascertain, and that the remedies at law for any such breach or threatened breach
would be inadequate.  Accordingly, the Executive agrees that if he breaches or
threatens to breach any of the covenants contained in this Section 5, in
addition to any other remedy which may be available at law or in equity, the
Company shall be entitled to specific performance and injunctive relief to
prevent the breach or any threatened breach thereof without bond or other
security or a showing that monetary damages will not provide an adequate remedy.

 

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(g)                                  Scope of Covenants.  The Company and the
Executive further acknowledge that the time, scope, geographic area and other
provisions of this Section 5 have been specifically negotiated by sophisticated
commercial parties and agree that all such provisions are reasonable under the
circumstances of the activities contemplated by this Agreement.  In the event
that the agreements in this Section 5 shall be determined by any court of
competent jurisdiction to be unenforceable by reason of their extending for too
great a period of time or over too great a geographical area or by reason of
their being too extensive in any other respect, they shall be interpreted to
extend only over the maximum period of time for which they may be enforceable
and/or over the maximum geographical area as to which they may be enforceable
and/or to the maximum extent in all other respects as to which they may be
enforceable, all as determined by such court in such action.

 

6.                                      ASSIGNMENT

 

This Agreement is personal to Executive and shall not be assignable by
Executive.  The Company may assign its rights hereunder to (a) any Successor
Employer; (b) any other corporation resulting from any merger, consolidation or
other reorganization to which the Company is a party; (c) any other corporation,
partnership, association or other person to which the Company may transfer all
or substantially all of the assets and business of the Company existing at such
time; or (d) any subsidiary, parent or other affiliate of the Company.  All of
the terms and provisions of this Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns.

 

7.                                      AMENDMENTS IN WRITING

 

No amendment, modification, waiver, termination or discharge of any provision of
this Agreement, or consent to any departure therefrom by either party hereto,
shall in any event be effective unless the same shall be in writing,
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by the Company
and Executive, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given.  No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Company and Executive.

 

8.                                      NOTICES

 

Every notice relating to this Agreement shall be in writing and shall be given
by personal delivery, by a reputable same-day or overnight courier service
(charges prepaid), by registered or certified mail (postage prepaid, return
receipt requested) or by facsimile to the recipient with a confirmation copy to
follow the next day to be delivered by personal delivery or by a reputable
same-day or overnight courier service to the appropriate party’s address or fax
number below (or such other address and fax number as a party may designate by
notice to the other parties):

 

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If to the Company:

Warren Resources, Inc.

 

1114 Avenue of the Americas

 

34th Floor

 

New York, NY 10013

 

Fax Number: (212) 697-9466

 

Attn: Chief Executive Officer

 

 

If to the Executive:

Last known address on record at the Company

 

9.                                      APPLICABLE LAW

 

This Agreement shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without regard to any
rules governing conflicts of laws.

 

10.                               INDEMNIFICATION AND INSURANCE.

 

The Company shall provide Executive with indemnification and advancement of
expenses to the fullest extent permitted by applicable law and the Company’s
By-laws and other organization documents as they may be amended from time to
time.  Without limiting the foregoing, the Company shall also provide Executive
with directors and officers liability insurance coverage and other liability
insurance coverage at levels and on terms reasonable and customary for companies
of comparable size and profile and on terms and at rates no less favorable than
those provided to other officers or directors of the Company.

 

11.                               ENTIRE AGREEMENT

 

This Agreement, on and as of the Effective Date, constitutes the entire
agreement between the Company and Executive with respect to the subject matter
hereof, and all prior or contemporaneous oral or written communications,
understandings or agreements between the Company and Executive with respect to
such subject matter are hereby superseded in their entirety, except as otherwise
provided herein.

 

12.                               SEVERABILITY

 

If any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any action in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.

 

13.                               WAIVERS

 

No delay or failure by any party hereto in exercising, protecting, or enforcing
any of its rights, titles, interests, or remedies hereunder, and no course of
dealing or performance with respect thereto, shall constitute a waiver thereof. 
The express waiver by a party hereto of any

 

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right, title, interest, or remedy in a particular instance or circumstance shall
not constitute a waiver thereof in any other instance or circumstance.  All
rights and remedies shall be cumulative and not exclusive of any other rights or
remedies.

 

14.                               HEADINGS

 

All headings used herein are for convenience only and shall not in any way
affect the construction of, or be taken into consideration in interpreting, this
Agreement.

 

15.                               COUNTERPARTS

 

This Agreement, and any amendment or modification entered into pursuant to
Section 5 hereof, may be executed in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute one and the same
instrument.

 

16.                               CODE SECTION 409A

 

The Company makes no representations or warranties to Executive with respect to
any tax, economic or legal consequences of this Agreement or any payments or
other benefits provided hereunder, including without limitation under Code
Section 409A, and no provision of this Agreement shall be interpreted or
construed to transfer any liability for failure to comply with Code Section 409A
from Executive or any other individual to the Company or any of its affiliates. 
Executive, by executing this Agreement, shall be deemed to have waived any claim
against the Company and its affiliates with respect to any such tax, economic or
legal consequences.  However, the parties intend that this Agreement and the
payments and benefits provided hereunder be exempt from the requirements of Code
Section 409A, and the rules and regulations issued thereunder, to the maximum
extent possible, whether pursuant to the short-term deferral exception described
in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay
plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or
otherwise.  To the extent Code Section 409A is applicable to this Agreement, the
parties intend that this Agreement and any payments and benefits hereunder
comply with the deferral, payout and other limitations and restrictions imposed
under Code Section 409A so as to avoid the imputation of any tax, penalty or
interest under Code Section 409A.  Notwithstanding anything herein to the
contrary, this Agreement shall be construed, interpreted, operated and
administered in a manner consistent with such intentions.  Without limiting the
generality of the foregoing, and notwithstanding any other provision of this
Agreement to the contrary:

 

(a)                                 To the extent Code Section 409A is
applicable to this Agreement, a termination of employment shall not be deemed to
have occurred for purposes of any provision of this Agreement providing for the
payment of amounts or benefits upon or following a termination of employment
unless such termination constitutes a “separation from service” within the
meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the
optional alternative definitions available thereunder (a “Separation from
Service”), and, for purposes of any such provision of this Agreement, references
to “terminate,” “termination,” “termination of employment,” “resigns” and like
terms shall mean Separation from Service.

 

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(b)                                 If Executive is a “specified employee”
within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of
Executive’s Separation from Service, Executive shall not be entitled to any
payment or benefit on account of Executive’s Separation from Service, until the
earlier of (1) the date which is six (6) months after Executive’s Separation
from Service for any reason other than death or (2) the date of Executive’s
death.  The provisions of this paragraph shall only apply if, and to the extent,
required to avoid the imputation of any tax, penalty or interest pursuant to
Code Section 409A on Executive.  Any amounts otherwise payable to Executive upon
or in the six (6) month period following Executive’s Separation from Service
that are not so paid by reason of this Section 15(b) shall be paid (without
interest) as soon as practicable (and in all events within thirty (30) days)
after the date that is six (6) months after Executive’s Separation from Service
(or, if earlier, as soon as practicable, and in all events within thirty (30)
days, after the date of Executive’s death).

 

IN WITNESS WHEREOF, the parties have executed and entered into this Agreement
effective on the date first set forth above.

 

 

EXECUTIVE

 

 

 

 

/s/ David E. Fleming

 

David E. Fleming

 

 

 

 

 

WARREN RESOURCES, INC.

 

 

 

By:

/s/ Philip A. Epstein

 

Philip A. Epstein

 

Chairman and Chief Executive Officer

 

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APPENDIX A

 

DEFINITIONS

 

Capitalized terms used below that are not defined in this Appendix A have the
meanings set forth in the Executive Employment Agreement (“Agreement”) to which
this Appendix A is attached.  As used in the Agreement,

 

1.                                      “Cause” means the occurrence of one or
more of the following events:

 

(a)                                 willful misconduct, insubordination or
dishonesty in the performance of Executive’s duties or a knowing and material
violation of the Company’s or the Successor Employer’s policies and procedures
in effect from time to time which results in a material adverse effect on the
Company or the Successor Employer;

 

(b)                                 the continued failure of Executive to
satisfactorily perform his duties after receipt of written notice that
identifies the areas in which Executive’s performance is deficient;

 

(c)                                  willful actions in bad faith or intentional
failures to act in good faith by Executive with respect to the Company or the
Successor Employer that materially impair the Company’s or the Successor
Employer’s business, goodwill or reputation;

 

(d)                                 conviction of Executive of a felony or
misdemeanor involving moral turpitude, conduct by Executive that the Company
reasonably believes violates any statute, rule or regulation governing the
Company, or conduct by Executive that the Company reasonably believes
constitutes unethical practices, dishonesty or disloyalty and that results in a
material adverse effect on the Company or the Successor Employer;

 

(e)                                  current use by Executive of illegal
substances; or

 

(f)                                   any material violation by Executive of
this Agreement or the Company’s Confidential Information, Nonsolicitation and
Noncompetition Agreement.

 

2.                                      “Change of Control” means the occurrence
of any of the following events:

 

(a)                                 an acquisition by any Entity of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than 50% of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that
the following acquisitions shall not constitute a Change of Control:  (i) any
acquisition directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege where the security being so converted was
not acquired directly from the Company by the party exercising the conversion
privilege, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Related Company, or (iv) any acquisition by any Entity pursuant to a
transaction that meets the conditions of clauses (i), (ii) and (iii) set forth
in the definition of Company Transaction;

 

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(b)                                 a change in the composition of the Board of
Directors of the Company during any two-year period such that the individuals
who, as of the beginning of such two-year period, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that for purposes of this definition, any individual
who becomes a member of the Board subsequent to the beginning of the two-year
period, whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of those individuals
who are members of the Board and who were also members of the Incumbent Board
(or deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; and provided further,
however, that any such individual whose initial assumption of office occurs as a
result of or in connection with an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of an Entity other than the
Board shall not be considered a member of the Incumbent Board; or

 

(c)                                  the date a majority of members of the
corporation’s board of directors is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
members of the corporation’s board of directors before the date of the
appointment or election,

 

(d)                                 the consummation of a Company Transaction.

 

3.                                      “Company Transaction” means consummation
of:

 

(a)                                 a merger or consolidation of the Company
with or into any other company;

 

(b)                                 a statutory share exchange pursuant to which
all of the Company’s outstanding shares are acquired or a sale in one
transaction or a series of transactions undertaken with a common purpose of all
of the Company’s outstanding voting securities; or

 

(c)                                  a sale, lease, exchange or other transfer
in one transaction or a series of related transactions undertaken with a common
purpose of all or substantially all of the Company’s assets, excluding, however,
in each case, any such transaction pursuant to which (i) the Entities who are
the beneficial owners of the Outstanding Company Voting Securities immediately
prior to such transaction will beneficially own, directly or indirectly, at
least 50% of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the Successor Company
in substantially the same proportions as their ownership, immediately prior to
such transaction, of the Outstanding Company Voting Securities;

 

(ii)                                  no Entity (other than the Company, any
employee benefit plan (or related trust) of the Company, a Related Company or a
Successor Company) will beneficially own, directly or indirectly, more than 50%
of the combined voting power of the outstanding voting securities of the
Successor Company entitled to vote generally in the election of directors unless
such ownership resulted solely from ownership of securities of the Company prior
to such transaction; and

 

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(iii)                               individuals who were members of the
Incumbent Board will immediately after the consummation of such transaction
constitute at least a majority of the members of the board of directors of the
Successor Company.

 

Where a series of transactions undertaken with a common purpose is deemed to be
a Company Transaction, the date of such Company Transaction shall be the date on
which the last of such transactions is consummated.

 

4.                                      “Effective Date” shall be the first date
written above.

 

5.                                      “Entity” means any individual, entity or
group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act).

 

6.                                      “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

7.                                      “Good Reason” means that Executive,
without Executive’s express, written consent, has:

 

(a)                                 incurred a material reduction in authority,
duties or responsibilities at the Company or a Successor Employer (with respect
to a termination in connection with a Change of Control, relative to authority,
duties or responsibilities immediately prior to the Change of Control);

 

(b)                                 incurred a material reduction in Executive’s
annual Salary or bonus opportunity (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 Executive’s
annual Salary);

 

(c)                                  a material diminution in the authority,
duties, or responsibilities of the supervisor to whom the Executive is required
to report

 

(d)                                 a material diminution in the budget over
which the Executive retains authority;

 

(e)                                  suffered a material breach of this
Agreement by the Company or a Successor Employer; or

 

(f)                                   been required to relocate or travel more
than 50 miles from Executive’s then current place of employment in order to
continue to perform the duties and responsibilities of Executive’s position (not
including customary travel as may be required by the nature of Executive’s
position).

 

8.                                      “Parent Company” means a company or
other entity which as a result of a Company Transaction owns the Company or all
or substantially all of the Company’s assets either directly or through one or
more intermediaries.

 

9.                                      “Related Company” means any entity that
is directly or indirectly controlled by, in control of or under common control
with the Company.

 

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10.                               “Successor Company” means the surviving
company, the successor company or Parent Company, as applicable, in connection
with a Company Transaction.

 

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APPENDIX B

 

FORM OF RELEASE

 

In consideration for the payments and benefits to be provided pursuant to
Section 4 of the Executive Employment Agreement (“Agreement”) entered into by
and between David E. Fleming (“Executive”) and Warren Resources, Inc., a
Maryland corporation (the “Company”), with an effective date of July 15, 2013,
Executive agrees to the following:

 

(a)                                 Executive represents that Executive has not
filed any complaints, charges or lawsuits against the Company with any
governmental agency or any court.

 

(b)                                 Executive expressly waives all claims
against the Company and releases the Company, and any of the Company’s past,
present or future parent, affiliated, related, and/or subsidiary entities, and
all of the past and present directors, shareholders, officers, general or
limited partners, employees, agents, and attorneys, and agents and
representatives of such entities, and employee benefit plans in which Executive
is or has been a participant by virtue of his or her employment with the Company
(collectively, the “Releasees”), from any claims that Executive may have against
the Company or the Releasees.  It is understood that this release includes, but
is not limited to, any claims arising directly or indirectly out of, relating
to, or in any other way involving in any manner whatsoever, (1) Executive’s
employment with the Company or its subsidiaries or the termination thereof or
(2) Executive’s status at any time as a holder of any securities of the Company,
including any claims for wages, stock or stock options, employment benefits or
damages of any kind whatsoever arising out of any contracts, express or implied,
any covenant of good faith and fair dealing, express or implied, any legal
restriction on the Company’s right to terminate employment, or any federal,
state or other governmental statute or ordinance, including, without limitation,
the Employee Retirement Income Security Act of 1974, Title VII of the Civil
Rights Act of 1964, the federal Age Discrimination in Employment Act, the
Americans With Disabilities Act, the Family and Medical Leave Act, the Lilly
Ledbetter Fair Pay Act, the Genetic Information Non-Discrimination Act, the New
York Human Rights Law, the New York City Human Rights Law, all as amended, and
any other federal, state or local law (the “Release”).  This Release
specifically includes, but is not limited to, any claims based upon the right to
the payment of wages, incentive and performance compensation, bonuses, vacation,
stock benefits or any other employee benefits, or any other rights arising under
federal, state or local laws prohibiting discrimination and/or harassment on the
basis of race, color, age, religion, sexual orientation, religious creed, sex,
national origin, ancestry, alienage, citizenship, nationality, mental or
physical disability, denial of family and medical care leave, medical condition
(including cancer and genetic characteristics), marital status, military status,
gender identity, harassment or any other basis prohibited by law provided,
however, notwithstanding anything to the contrary set forth herein, that this
Release shall not extend to (i) benefit claims under employee pension benefit
plans in which Executive is a participant by virtue of Executive’s employment
with the Company or its subsidiaries or to benefit claims under employee welfare
benefit plans for occurrences (e.g., medical care, death, or onset of
disability) arising after the execution of this Release by Executive,
(ii) Executive’s rights to severance pay and benefits under the Agreement;
(iii) any claims Executive may have for indemnification pursuant to law,
contract or Company policy, (iv) any claims for coverage under any applicable

 

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directors’ and officers’ insurance policy in accordance with the terms of such
policy, or (v) any claims arising from events that occur after the date
Executive signs this Release.

 

Executive understands that this Release includes a release of claims arising
under the Age Discrimination in Employment Act (ADEA).  Executive understands
and warrants that Executive has been given a period of twenty-one (21) days to
review and consider this Release or forty-five (45) days if Executive’s
termination is part of a group reduction in force.  Executive further warrants
that Executive understands that, with respect to the release of age
discrimination claims only, Executive has a period of seven days (7) after
execution of this Release to revoke the release of age discrimination claims by
notice in writing to the Company.

 

EXECUTIVE ACKNOWLEDGES ALL OF THE FOLLOWING:

 

(A)                               I HAVE CAREFULLY READ AND HAVE VOLUNTARILY
SIGNED THIS RELEASE;

 

(B)                               I FULLY UNDERSTAND THE FINAL AND BINDING
EFFECT OF THIS RELEASE, INCLUDING THE WAIVER OF CLAIMS UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT; AND

 

(C)                               PRIOR TO SIGNING THIS RELEASE, I HAVE BEEN
ADVISED OF MY RIGHT TO CONSULT, AND HAVE BEEN GIVEN ADEQUATE TIME TO REVIEW MY
LEGAL RIGHTS WITH AN ATTORNEY OF MY CHOICE.

 

 

 

Executive Signature

 

 

 

 

 

Executive Name (Print)

 

 

 

 

 

Date

 

 

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