Exhibit 10.1

 

Dear Mr. Skelly,

 

In recognition of your continuing contributions and loyalty to Warren
Resources, Inc. (the “Company”) in the critical months ahead, this letter
agreement sets forth the retention bonus payments that the Company will provide
to you and the terms and conditions of those payments.

 

1.              Retention Payments.  Provided that you remain actively employed
in good standing by the Company as of March 31, 2016 (the “Retention Date”), the
Company agrees that you will be entitled to receive the following payments and
benefits (collectively, the “Retention Benefits”):

 

a.              Cash Retention. A lump sum cash payment equal to $412,500, less
all applicable authorized and required deductions and withholdings (the “Cash
Retention”); and

 

b.              COBRA Retention. Provided you elect to continue your medical
care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”) upon a subsequent separation of your employment that occurs within one
year following the Retention Date, and such separation is not due to a
termination for Cause, the Company will either pay or reimburse you, at its
election, for the premiums associated with such continued coverage on the first
of each month commencing on the first of the month following such separation and
continuing until the earlier of (i) the date that you become covered by the
medical plan of a subsequent employer, (ii) the date you are no longer eligible
for continued medical coverage pursuant to COBRA, and (iii) the ninth month of
COBRA coverage (inclusive) (the “COBRA Retention”).

 

2.              Payment of Your Retention Payments in the Event of a Termination
of Employment. Notwithstanding the general requirement that you must remain in
the employment of the Company until the Retention Date in order to be eligible
to receive payment of your Retention Benefits, if, prior to the Retention Date,
your employment is terminated by the Company without Cause or by you for Good
Reason (as such terms are defined in Exhibit A hereto), you will remain entitled
to receive the Retention Benefits.  To exercise your right to terminate for Good
Reason, you must provide written notice to the Company of your belief that Good
Reason exists within 90 days of the initial existence of the condition(s) giving
rise to Good Reason, and that notice shall describe the condition(s) believed to
constitute Good Reason.  The Company shall have 30 days to remedy the Good
Reason condition(s).  If not remedied within that 30-day period, you may
terminate your employment for Good Reason; provided, however, that such
termination must occur prior to the Retention Date.

 

By this letter, the Company is notifying you of its intent to close its New York
City office where you are employed and move its headquarters to Denver,
Colorado.  If you terminate your employment as a result of such intended
relocation prior to the Retention Date, you will be entitled to receive a lump
sum cash payment equal to $275,000, plus the COBRA Retention (collectively, the
“Office Closure Severance Benefits”).  To exercise such right to terminate, you
must provide written notice to the Company of your intent to terminate your
employment, and actually terminate your employment, prior to the Retention Date.

 

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3.              Payment and Release. The right to payment of any Retention
Benefits or Office Closure Severance Benefits (each, a “Benefit”) will be
contingent on the timely execution and delivery of a waiver and release in a
form acceptable to and provided by the Company (the “Release”) and your
non-revocation of the Release.  The lump sum cash portion of any Benefit will be
payable to you within 14 days following the Release becoming irrevocable,
subject to your execution and delivery of the Release by the 50th day following
the date of your termination of employment or the Retention Date, as
applicable.  If you fail to timely execute the required Release as prescribed
above or you revoke the Release during any applicable revocation period, you
will not be eligible to receive payment of any portion of your Benefit and it
will be forfeited in full.

 

COBRA Retention payments will be payable as set forth under Section 1(b) above;
provided that no COBRA Retention payments will be made prior to delivery of the
Release and expiration of the revocation period in relation thereto.  In the
event that payments are due under 1(b) prior to delivery of the Release and
expiration of the revocation period, they will be provided as reimbursements to
you on the first payroll date that occurs after your delivery of the Release and
expiration of the revocation period in relation thereto.

 

4.              Miscellaneous.  The following additional terms apply:

 

a.              Any ambiguities and interpretive questions regarding the terms
of this letter agreement will be resolved by the Company in its sole discretion
and the Company’s decisions in such matters will be final and binding

 

b.              The payment of the lump sum cash portion of any Benefit is
intended to qualify for the short-term deferral exception to Section 409A
(“Section 409A”) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder and, accordingly, full payment of the lump
sum cash portion of any Benefit shall in all events be made to you not later
than March 15 of the calendar year following the calendar year in which such
amounts are no longer subject to a substantial risk of forfeiture within the
meaning of the rules and regulations under Section 409A.  Further, this
agreement shall be interpreted such that it is in compliance with Section 409A.

 

c.               Your employment is “at will” and, subject to the terms of this
letter agreement, your employment may be terminated by you or the Company at any
time for any reason.  Except as expressly provided under the terms of this
letter agreement or any other binding written plan or agreement applicable to
you, the Company reserves the right to change the terms and conditions of your
employment, including the terms of your compensation and benefits, at any time. 
This letter agreement is not intended to be, and should not be construed as, a
contract of employment for any specific period of time.

 

d.              This letter agreement constitutes the entire agreement between
the Company and you concerning the subject matter hereof and may only be
modified by a written agreement executed by the Company and you.

 

e.               This agreement may be executed in one or more counterparts, all
of which taken together shall be deemed to constitute one and the same original.

 

f.                This agreement shall be governed by the laws of New York,
without regard to any conflicts of laws.

 

g.               Except as specifically provided herein, upon your execution of
this letter agreement, you

 

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hereby waive any and all rights to any severance payments or benefits, including
the accelerated vesting of any equity awards, under any plans, agreements,
programs or other arrangements of the Company to which you are a party and/or a
participant.

 

We look forward to your acceptance of this letter agreement, which you can
indicate by promptly signing, dating and returning a copy of this letter
agreement to me.

 

 

Very truly yours,

 

 

 

 

 

/s/ Lance Peterson

 

 

Lance Peterson

 

 

Warren Resources, Inc.

 

 

 

 

 

 

 

 

Accepted and Agreed:

 

 

 

 

 

/s/ Stewart Skelly

 

October 15, 2015

 

 

 

Stewart Skelly

 

Date

 

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EXHIBIT A

 

Attachment to Letter Agreement: Definitions

 

“Cause” shall mean the following, as determined by the Company in its sole
discretion:

 

(i)            the willful breach or habitual neglect of assigned duties related
to the Company, including compliance with Company policies;

 

(ii)           conviction (including any plea of nolo contendere) of the
employee of any felony or crime involving dishonesty or moral turpitude;

 

(iii)          any act of personal dishonesty knowingly taken by the employee in
connection with his responsibilities as an employee and intended to result in
personal enrichment of the employee or any other person;

 

(iv)          bad faith conduct that is materially detrimental to the Company;

 

(v)           inability of the employee to perform the employee’s duties due to
alcohol or illegal drug use;

 

(vi)          the employee’s failure to comply with any legal written directive
of the Board of Directors of the Company; or

 

(vii)         any act or omission of the employee which is of substantial
detriment to the Company because of the employee’s intentional failure to comply
with any statute, rule or regulation, except any act or omission believed by the
employee in good faith to have been in or not opposed to the best interest of
the Company (without intent of the employee to gain, directly or indirectly, a
profit to which the employee was not legally entitled) and except that Cause
shall not mean bad judgment or negligence other than habitual neglect of duty.

 

“Good Reason” means that employee, without employee’s express, written consent,
has:

 

(i)            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);

 

(ii)           incurred a material reduction in annual salary or bonus
opportunity (except for reductions in connection with a general reduction in
annual salary for all similarly situated employees of the Company by an average
percentage that is not less than the percentage reduction of employee’s annual
salary);

 

(iii)          a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the employee is required to report,
including a requirement that the employee report to a corporate officer or
employee instead of reporting directly to the Company’s Chief Executive Officer;

 

(iv)          a material diminution in the budget over which the employee
retains authority; or

 

(v)           suffered a material breach of this Agreement by the Company or a
successor employer.

 

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“Change of Control” and all other defined terms used in the definitions set
forth in this Exhibit A shall have the meanings set forth in the Executive
Severance Plan dated April 13, 2015.

 

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