**EXHIBIT 10.4**

 

**EMPLOYMENT AGREEMENT**

 

**EMPLOYMENT AGREEMENT** (this “Agreement”),dated effective as of January 1, 2004, by and between Warren Resources,Inc., a New York corporation (the “Company”), and David E. Fleming (the“Employee”).  This agreementshall supercede and replace the prior agreement dated June 25, 2001between the Company and the Employee.

 

**W I T N E S S E T H:**

 

**WHEREAS,**the Company desires to employ theEmployee upon the terms and conditions set forth in this Agreement; and

 

**WHEREAS,**the Employee desires to accept anoffer of employment with the Company upon the terms and conditions set forthherein;

 

**NOW, THEREFORE**, in consideration of thepremises and the respective covenants and agreements of the parties hereincontained, and intending to be legally bound hereby, the parties hereto agreeas follows:

 

# 1.                                       **Employment. **The Company hereby agrees to employ theEmployee, and the Employee hereby agrees to serve the Company, on the terms andconditions hereinafter set forth in this Agreement.

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# 2.                                       **Term. **This Agreement, and the employment ofthe Employee by the Company hereunder, will commence on the date hereof (the “EffectiveDate”) and terminate on December 31, 2004 (the “Initial Term”),subject to termination as set forth herein (the “Employment Period”).  As used herein, the term “Employment Year”shall mean each consecutive twelve (12) month period during the EmploymentPeriod commencing on the Effective Date, or the yearly anniversary thereof, asthe case may be. Effective on the first anniversary of the Effective Date, thisAgreement shall be automatically extended indefinitely until the Company or theEmployee shall give ninety (90) days prior written notice to the other partythat it or he, as the case may be, in its or his sole discretion, wishes toterminate this Agreement.

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# 3.                                       **Positionand Duties. **Subject tothe provisions of this Section 3, during the Employment Period, theEmployee shall serve as the Senior Vice President and General Counsel of theCompany and shall faithfully perform the duties and responsibilities normallyassociated with such positions, subject to the oversight and direction of theChief Executive Officer of the Company and the Board of Directors of theCompany.

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# 4.                                       **Place ofEmployment.**  Generally,the Employee will fulfill all duties and responsibilities to the Company as setforth herein from the current principal place of business of Warren Resources,Inc., located at 489 Fifth Avenue, 32nd Floor, New York, NY 10017 orto any other location in the midtown Manhattan area in New York City where theprincipal place of business of Warren E&P or the Company may be relocated.

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# 5.                                       **BestEfforts. **The Employee’semployment with the Company shall be sixty (60%) percent time and the Employeeshall devote his best efforts and sixty (60%) percent of his business timeexclusively to the performance of his duties and responsibilities as set forthin this Agreement, which duties and responsibilities shall be performedcompetently, carefully and faithfully. Except as provided below, the Employee shall not, while an employee ofthe Company and without the prior written consent of the Company, engage in anyother gainful occupation or activity which conflicts with or impinges upon thefull and faithful performance of the Employee’s duties, or otherwise violatesany other term or provision of this Agreement. It is expressly understood and agreed, however, that the provisions ofthis Section 5 shall not be construed to prevent the Employee frompursuing any other activity or profession in the 40% of the time not devoted tothe Company, including investing for his own account or pursuing charitable orcivic activities; provided, that such activities do not impair theperformance by the Employee of his duties and responsibilities hereunder, orotherwise violate any provision of this Agreement, and that Employee shall notbecome employed by or affiliated with another company in the oil and gasindustry.

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# 6.                                       **TheEmployee’s Compensation.**

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###### (a)                                  **Salary. **During the Employment Period, for theservices described herein the Company shall pay to the Employee an annual basesalary of $223,438.00 (as adjusted pursuant to the terms hereof, the “BaseCompensation”). The Base Compensation shall be increased on eachanniversary date of this Agreement by any increases in the cost of living basedon the changes in the “Consumer Price Index” as published from time to time bythe U.S. Department of Commerce for the New York City metropolitan area. TheBase Compensation will be paid to the Employee in accordance with the normalpayroll practices of the Company in effect from time to time, less all requiredwithholdings for benefits, federal, state and local taxes, if any.  The amount of the Base Compensation may, inthe Company’s discretion, be increased by the Company on an annual basis duringthe Employment Period.  All increases tothe Base Compensation, if any, shall be based on the condition of the Company’sbusiness and results of operations and the Company’s evaluation of theEmployee’s individual performance for the relevant period.  Any increases made to the Base Compensationshall be in the discretion of the Company.

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###### (b)                                 **IncentiveBonus Compensation**.  Inaddition to the Base Compensation to which the Employee is entitled underSection 6(a), the Employee shall be eligible to be awarded incentive bonuscompensation (the “Bonus Compensation”) with respect to each calendar year orportion thereof during which the Employee was employed by the Company hereunderequal to up to and including 100% of the Employee’s Base Compensation.  The criteria for determining the amount ofthe Bonus Compensation shall

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###### be determined by mutualagreement between the Employee and the Chief Executive Officer of the Companyand shall by approved by the Compensation Committee of the Board of Directors.Incentive Bonus Compensation shall be paid within 90 days following theend of the calendar year.

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###### (c)                                  **Options.**  Employee shall be entitled to participate inthe Company’s Equity Incentive Plan (the “Equity Incentive Plan”), andwill be awarded 24,000 options thereunder, exercisable at the price of $7.00per share of common stock for a period ending five years after the date ofgrant of the option (the “Options”). The grant of such Options shall be documented with a formal award letterfrom the Company to the Employee setting forth the terms and conditions ofEmployee’s Options.

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# 7.                                       **TheEmployee’s Benefits. **Asan employee of the Company, the Employee shall be entitled to receive and enjoythe following benefits during the Employment Period:

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###### (a)                                  **Participationin Company Benefit Plans. **TheEmployee shall be entitled to participate in and to receive benefits generallyavailable to senior executives under those certain employee benefit plans andarrangements which may be offered by the Company from time to time during theEmployment Period, subject to and on a basis consistent with the terms,conditions and overall administration of such plans and arrangements by theCompany.  The Company shall provide fullmedical, hospitalization and dental insurance coverage for the Employee.

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###### (b)                                 **Vacations.**  The Employee shall be entitled to 60% offour (4) weeks of paid vacation per Employment Year, provided that anyvacations are to be taken at times mutually agreeable to the Company and theEmployee.  In addition to the foregoing,the Employee shall be entitled to receive all paid holidays given by theCompany to its employees generally. If Employee has not used his accrued butunused vacation days during an Employment Year, such days may not be carriedover to another and shall be deemed waived by the Employee. Any accrued butunused vacation days in an Employment Year shall be reimbursed in cash toEmployee upon a termination of his employment Without Cause hereunder.

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###### (c)                                  **BusinessExpense Reimbursement.** The Company shall promptly reimburse or pay the Employee for allreasonable and necessary business expenses paid or incurred by the Employee inperforming his duties and responsibilities hereunder; provided, that,the Employee shall have (i) submitted such reasonable documentation as may berequested by the Company in accordance with the reimbursement policies of theCompany in effect from time to time and (ii) obtained the prior approval of theCompany for all charges in excess of $5,000.

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###### (d)                                 **LifeInsurance.**The Company shall provide term life insurance in theamount of $1,000,000 on the life of Employee, with Employee’s spouse, or otherEmployee designee, as the named beneficiary for $500,000 of such life insurancepolicy.

 

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# 8.                                       **Terminationof Employment. **TheEmployee’s employment with the Company may be terminated as follows:

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###### (a)                                  **WithCause. **The Employee’semployment with the Company may be terminated by the Company at any time for“Cause.”  As used herein, the term “Cause”shall refer to the following: (i) theft, fraud, dishonesty, gross negligence orwillful malfeasance by the Employee in connection with the performance of hisduties hereunder (collectively, “Theft Events”); (ii) a material breach orfailure to fulfill and perform the Employee’s duties hereunder, which breach orfailure is not cured to the reasonable satisfaction of the Company withinforty-five (45) days after written demand from the Company (if such breach isat all curable during such time in the reasonable determination of the Company;failing such determination, “Cause” shall have occurred upon the occurrence ofsuch breach or failure); (iii) conviction of a felony or a crime involvingmoral turpitude; (iv) habitual neglect of duties or misconduct in theperformance of the Employee’s duties and responsibilities hereunder followingan initial notice of warning from the Company with respect thereto; or (v) arepeated or ongoing failure to comply with the reasonable directions andinstructions of management of the Company in connection with the performance ofthe Employee’s duties and responsibilities hereunder following an initialnotice of warning from the Company with respect thereto.  Upon termination for Cause, all rights ofthe Employee under this Agreement shall immediately terminate and the Companyshall have no further obligations.  Atermination of the Employee’s employment with the Company by the Employee uponhis voluntary resignation or voluntary retirement shall be treated as atermination for Cause hereunder.  Inconnection therewith, the Employee covenants and agrees not to voluntarilyresign or voluntarily retire without providing the Company with ninety (90)days’ prior written notice. Upon a termination for Cause, Employee shallreceive in full satisfaction of all amounts due to him an amount equal to theremainder of Base Compensation through date of termination. Notwithstanding anyof the foregoing, in the event that the Company has terminated Employee’semployment on account of a Theft Event, the Company shall be entitled towithhold from any amounts otherwise due to Employee under thisSubsection 8(a) the amount of monetary damages incurred by the Companyfrom such Theft Event which shall be quantified and determined in writing bythe Company within 90 days after the date of termination. The Employee agreesthat his eligibility to receive any and all amounts described in thisSection 8(a) shall be subject to and contingent upon the Employee’sexecution of a full and complete general release in favor of the Company andits affiliated persons and entities, satisfactory to the Company in its solediscretion.

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###### (b)                                 **WithoutCause. **The Employee’semployment with the Company may be terminated by the Company at any timewithout Cause, but in the event of any such termination pursuant to thisSection 8(b), the Company will pay, in addition to any other amounts duehereunder, the Employee severance pay in an amount equal to the greater of (i)the balance of all of Employee’s remaining and unpaid Base Compensation due forthe balance of the then existing term hereunder, or (ii) 90 days of BaseCompensation, payable upon execution and delivery of the release describedbelow, less all required withholdings and in accordance with then currentpayroll practices of the Company and applicable law or regulation. In addition,Employee shall receive any accrued but unpaid vacation time for the currentEmployment Year. The Employee agrees

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###### that his eligibility toreceive any and all amounts described in this Section 8(b) shall besubject to and contingent upon the Employee’s execution of a full and completegeneral release in favor of the Company and its affiliated persons andentities, satisfactory to the Company in its sole discretion.

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###### (c)                                  **Terminationfor Death or Disability. **TheEmployee’s employment hereunder shall terminate immediately upon the Employee’sdeath or Disability.  For purposes ofthe preceding sentence, the term “Disability” shall mean the Employee’sinability, by reason of physical or mental incapacity (determined by a licensedphysician reasonably acceptable to the Employee and the Company), to performthe essential functions of his job, with or without a reasonable accommodationby the Company, for an aggregate of ninety (90) days during any twelve (12)month period, *provided further* that during any such continuous period, theEmployee’s Base Compensation payable under Section 6(a) shall be reducedby the amount, if any, of payments to the Employee under any short-term orlong-term disability insurance policy, plan or program maintained by theCompany.  During any period when theEmployee implicitly or explicitly purports to be unable to perform his dutieshereunder by reason of physical or mental illness, incapacity or disability,the Employee, at the request and expense of Company, shall submit to one ormore examinations by a physician of the Company’s choice. A termination of theEmployee’s employment with the Company due to any of the foregoing provisionsof this Section 8(c) shall be treated as a termination without Causehereunder.

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###### (d)                                 **Terminationby Employee for Good Reason.** Employee shall have the right to terminate this Agreement for“Good Reason”. The following events affecting Employee shall constitute “GoodReason” within the meaning of this Agreement: (i) if Employee, at any timeduring the Employment Period (except during a period of Disability), has suffereda material change or diminution in duties and responsibilities from thosecontemplated herein, or (ii) if there is a Change of Control Event, as definedbelow.

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For purposes of thisEmployment Agreement, a “Change of Control” shall mean the happening of any ofthe following:

 

(i)                                     theacquisition by any person or group deemed a person under Sections 3(a)(9) and13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”) (otherthan the Company and its subsidiaries as determined immediately prior to thatdate) of beneficial ownership, directly or indirectly (with beneficialownership determined as provided in Rule 13d-3, or any successor rule, underthe Exchange Act), of a majority of the total combined voting power of allclasses of stock of the Company having the right under ordinary circumstancesto vote at an election of the Board of Directors of the Company, if such personor group deemed a person was not a beneficial owner of at least five percent (5%) of such total combinedvoting power of the Company on  the dateof this Agreement;

 

(ii)                                  theelection to the Board of Directors of the Company of members as a result ofwhich a majority of the Board of Directors shall consist of persons who are notmembers of the Board of Directors as of the Effective Date (including Employeeas a

 

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member of the Board ofDirectors as of the Effective Date), except in the event that such slate ofDirectors is proposed by the management of the Company;

 

(iii)                               thedate of approval by the stockholders of the Company of an agreement providingfor the merger or consolidation of the Company with another corporation orother entity where (x) stockholders of the Company immediately prior to suchmerger or consolidation would not beneficially own following such merger orconsolidation shares entitling such stockholders to 50% or more of all votes(without consolidation of the rights of any class of stock to elect directorsby a separate class vote) to which all stockholders of the survivingcorporation would be entitled in the election of directors, or (y) where themembers of the Board of Directors, immediately prior to such merger orconsolidation, would not, immediately after such merger or consolidation,constitute a majority of the board of directors of the surviving corporation;or

 

(iv)                              thesale of all or substantially all of the assets of the Company.

 

###### (e)                                  **Statusupon Termination**.  Thetermination of this Agreement, and the Employee’s employment hereunder, for anyreason whatsoever shall constitute the Employee’s effective termination andresignation from any other positions or duties with the Company and all of itsaffiliates.

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###### (f)                                    **Effect ofTermination**.

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(i)                                     Inthe event of a termination of the Employee’s employment with the Companyhereunder for any reason, in addition and subject to the provisions of Sections8(a), 8(b), 8(c) and 8(d), the Employee shall be entitled to receive all BaseCompensation and accrued benefits owing through the date of termination in accordancewith the Company’s normal practices then in effect.

 

## (ii)                                  Inthe event of a termination of the Employee’s employment without Cause pursuantto Sections 8(b), 8(c) or 8(d) above, the Company shall also pay the Employeeseverance compensation in accordance with Section 8(b) above.  Furthermore, if the Employee is terminatedwithout Cause, or the employment ceases under Section 8(c) or 8(d), allunvested options granted to the Employee pursuant to the Equity Incentive Planshall become fully vested and be kept in effect for 90 days following theEmployee’s termination of employment.

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## (iii)                               Inthe event of a termination of the Employee’s employment with the Companyhereunder for Cause pursuant to Section 8(a) above, all rights of theEmployee under this Agreement shall immediately terminate and the Company shallhave no further obligations hereunder, subject to Section 8(f)(i) aboveand this provision. Furthermore, if the Employee is terminated for Cause, allunvested options granted to the Employee pursuant to the Equity Inventive Planshall terminate.

 

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# 9.                                       **Noncompetitionand Confidentiality.**

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###### (a)                                  **Noncompetition. **During the Employment Period and, in thecase of a termination of the Employee’s employment for Cause, for a period ofsix (6) months following the date of termination of employment, or, in the caseof a termination of the Employee’s employment without Cause, for a period ofone day following the date of termination of employment (the “Covered Period”),the Employee agrees not to engage in any Competitive Activity within the Statesof New York, California, New Mexico, Texas and Wyoming.  As used herein, the term “CompetitiveActivity” shall mean the following: (i) providing competitive services, other than on behalf of the Company,to any Customer (as defined below); (ii) serving as an officer, director,employee, consultant, advisor, agent or representative of, or otherwiseassociating in any other capacity with, any person, corporation, partnership,limited liability company, sole proprietorship, association or other businessenterprise, other than the Company, engaged in the business of oil and gasexploration, drilling and production or any other business in which the Companyis engaged (each, a “Competitive Enterprise”), or engaging individuallyin any Competitive Enterprise; (iii) owning or acquiring, directly orindirectly, any interest in any Competitive Enterprise (provided, however,the Employee shall be allowed to passively own for investment purposes,directly or indirectly, no more than ten percent (10%) of the issued andoutstanding publicly traded securities of any issuer engaged in a CompetitiveEnterprise); (iv) soliciting or inducing any partner, stockholder, member,principal, director, officer, employee, consultant, agent or otherrepresentative of the Company or one or more affiliates to leave the employ orretention of the Company or such affiliate or hiring away any of the foregoingpersons; and/or (v) encouraging, requesting or advising, explicitly orimplicitly, any Customer or supplier of the Company or one or more of itsaffiliates to withdraw, curtail or cancel its business relationships with theCompany or any affiliate thereof (unless expressly requested to do so by the Companyas part of the Employee’s employment services provided hereunder).

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As used in thisSection 9, the term “Customer” shall include any person who is orwas a customer of the Company or an affiliate thereof at any time during theperiod commencing with the Employment Period through the end of the CoveredPeriod.

 

###### (b)                                 **Confidentiality. **During the Employment Period and for aperiod of three (3) years thereafter, the Employee shall not, except as mayotherwise be required by law, directly or indirectly disclose to any person orentity, or use or cause to be used in any manner adverse to the interests ofthe Company or any affiliate thereof, any Confidential Information (as definedbelow in this Section 9(b)).  TheEmployee agrees that, upon the termination of his employment with the Companyfor any reason, all Confidential Information (other than a copy of thisAgreement and any other agreements that have been personally executed by theEmployee other than in his capacity as an officer of the Company) and duplicatesthereof in the possession or control of the Employee, in any form or format,including, without limitation, written, visual, audio, electronic or magneticformats, shall forthwith be returned to the Company and shall not be retainedby the Employee or furnished or communicated to any third party in any formwhatsoever.

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As used in thisSection 9(b), the term “Confidential Information” shall mean thefollowing:  (i) information disclosed tothe Employee or known by the Employee as a consequence of the Employee’srelationship with the Company or any Affiliate thereof, as defined below, notgenerally known in the Company’s business, about the Company’s or anAffiliate’s employees, customers, directors, officers, partners, shareholders,advertising methods, public relations methods, business plans, operations,methods, processes and forecasts, vendors, finances, trade marks, tradesecrets, source code, patent applications, manuals, designs, technical specificationsand other intellectual property; (ii) information disclosed to the Employee orknown by the Employee as a consequence of the Employee’s relationship with theCompany or any Affiliate thereof, not generally known in the businesses inwhich the customers of the Company or its affiliates are or may be engaged,about the products, processes, operations, trade information and services ofany such customer; or (iii) information disclosed to the Employee by theCompany or any of its affiliate which is marked as “confidential” or, ifcommunicated verbally, is followed up by written correspondence designatingsuch information as “confidential.” Affiliate shall mean any person or entitythat directly, or indirectly, through one or more intermediaries, controls, oris controlled by, or is under common control with, the Company.

 

###### (c)                                  **Severability. **The invalidity or nonenforceability ofany provision of this Section 9 in any respect shall not affect thevalidity or enforceability of the other provisions of this Section 9 inany other respect, or of any other provision of this Agreement.  In the event that any provision of thisSection 9 shall be held invalid or unenforceable by a court of competentjurisdiction by reason of the geographic or business scope or the durationthereof or for any other reason, such invalidity or unenforceability shallattach only to the particular aspects of such provision found invalid orunenforceable as applied and shall not affect or render invalid orunenforceable any other provision of this Section 9 or the enforcement ofsuch provision in other circumstances, and this Section 9 shall beconstrued as if the geographic or business scope or the duration of suchprovision or other basis on which such provision has been challenged had beenmore narrowly drafted so as not to be invalid or unenforceable.

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# 10.                                 **BusinessOpportunities. **Duringthe Employment Period, the Employee agrees to bring all business opportunitiesto the Company relating to or otherwise associated with the business orbusinesses then conducted by the Company or each affiliate thereof, or businessor businesses proposed to be conducted by the Company.

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# 11.                                 **Rights toWork Product.**The Employee agrees that all work performed by theEmployee pursuant hereto shall be the sole and exclusive property of theCompany, in whatever stage of development or completion.  With respect to any copyrightable worksprepared in whole or in part by the Employee pursuant to this Agreement,including compilations of lists or data, the Employee agrees that all suchworks will be prepared as “work-for-hire” within the meaning of the CopyrightAct of 1976, as amended (the “Act”), of which the Company shall beconsidered the “author” within the meaning of the Act.  In the event (and to the extent) that suchworks or any part or element thereof is found as a matter of law not to be a“work-for-hire” within the meaning of the Act, the Employee hereby assigns tothe Company the sole and exclusive right, title and interest in and to all suchworks, and all copies of any of them, without

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# further consideration,and agrees, to the extent reasonable under the circumstances, to cooperate withthe Company to register, and from time to time to enforce, all patents,copyrights and other rights and protections relating to such works in any andall countries.  To that end, theEmployee agrees to execute and deliver all documents requested by the Companyin connection therewith, and the Employee hereby irrevocably designates andappoints the Company as the Employee’s agent and attorney-in-fact to act forand on behalf of the Employee and in the Employee’s stead to execute, registerand file any such applications, and to do all other lawfully permitted acts tofurther the registration, protection and issuance of patents, copyrights orsimilar protections with the same legal force and effect as if executed by theEmployee.  The Company shall reimbursethe Employee for all reasonable costs and expenses incurred by the Employeepursuant to this Section 11.

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# 12.                                 **NoDisparaging Statements.** During the Term of employment and for one (1) year after termination ofthis Agreement for any reason whatsoever, the Employee and the Company agree torefrain from making any disparaging statements, either orally or in writing,about the other party (and, on the part of the Employee, about any affiliate ofthe Company, or any directors, officers, shareholders, employees, agents orother representatives of the Company or any affiliate thereof).

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# 13.                                 **Survival. **The provisions of Sections 8(b), 8(c),8(d), 8(f), 9, 11, 12, 14, 15, 16 and 17 hereof shall survive the terminationof this Agreement for the applicable time period necessary to fully effectuatethe provisions of such sections.

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# 14.                                 **ComplianceWith Other Agreements. **TheEmployee and the Company each hereby represent and warrant to the other thatthe execution and delivery of this Agreement and the performance of suchparty’s obligations hereunder will not, with or without the giving of noticeand/or the passage of time, (i) violate any judgment, writ, injunction or orderof any court, arbitrator or governmental agency applicable to such party, or(ii) conflict with, result in the breach of any provision of or the terminationof, or constitute a default under, any agreement to which such party is a partyor by which such party is or may be bound. The parties agree to indemnify and hold harmless each other from anyliability, judgment or claim incurred, entered or made against such party basedon its reliance on the representations and warranties made in thisSection 14, including all costs and expenses and attorney’s fees incurredor paid by such party in connection with the foregoing.

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# 15.                                 **InjunctiveRelief. **The Employeeacknowledges and agrees that the Company and its affiliates are engaged in ahighly competitive business and that the protections of the Company and eachsuch affiliate set forth in Sections 9, 10 and 11 of this Agreement are fairand reasonable and are of vital concern to the Company and its affiliates.  Further, the Employee acknowledges andagrees that monetary damages for any violation of such Sections will notadequately compensate the Company and its affiliates with respect to any suchviolation.  Therefore, in the event of abreach by the Employee of any of the terms and provisions contained in Sections9, 10 or 11 hereof, the Company shall be entitled to institute legalproceedings to enforce the specific performance of this Agreement by theEmployee and to enjoin the Employee from any further violations.  The

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# remedies available to theCompany pursuant to this Section 15 may be exercised cumulatively by theCompany in conjunction with all other rights and remedies provided by law.

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# 16.                                 **ArbitrationOf Disputes. **If anydispute shall arise between the Employee and the Company in connection withthis Agreement, and such dispute cannot be resolved amicably by the parties,the same shall be conclusively and finally resolved by bindingarbitration.  Any party hereto maycommence an arbitration proceeding by providing written notice to the otherparty requesting the arbitration of an unresolved dispute.  Each such dispute, if any, shall besubmitted to an arbitrator acceptable to both parties.  If either the Employee or the Companyrefuses or neglects to agree to appoint an arbitrator within thirty (30) daysafter receipt of written notice from the other party requesting the other partyto do so, the American Arbitration Association may appoint sucharbitrator.  The arbitrator shall beexperienced in the subject matter of the dispute. Except as otherwisespecifically set forth herein, the arbitrators shall conduct the arbitration inaccordance with the Commercial Arbitration Rules of the American ArbitrationAssociation.  The decision in writing ofthe arbitrator, when filed with the parties hereto, shall be final and bindingon both parties.  Judgment may beentered upon the final decision of the arbitrator in any court havingjurisdiction.  Such arbitration shalltake place in New York, New York.

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Notwithstanding anythingto the contrary contained in this Section 16, nothing shall prohibit theCompany or Employee from pursuing all legal and equitable remedies available tothe Company or Employee in order to enforce the provisions of Sections 9, 10and 11 of this Agreement.  To the extentthat any court action is permitted consistent with or to enforce thisAgreement, the parties hereby consent to the jurisdiction of the federal orstate courts sitting in any state where the Company maintains an office.  Accordingly, with respect to any such courtaction, all of the parties hereto (a) submit to the personal jurisdiction ofsuch courts, (b) consent to service of process and (c) waive any otherrequirement (whether imposed by statute, rule of court, or otherwise) withrespect to personal jurisdiction or service of process.

 

# 17.                                 **Amendment;Waiver; Discharge. **Noprovision of this Agreement may be amended, waived or discharged unless suchamendment, waiver or discharge is agreed to in writing and signed by theEmployee and a duly authorized representative of the Company.  No waiver by either party hereto at any timeof any breach by the other party hereto of, or compliance with, any conditionor provision of this Agreement to be performed by such other party shall bedeemed a waiver of similar or dissimilar provisions or conditions at the sameor at any prior or subsequent time.

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# 18.                                 **Validity. **The invalidity or unenforceability ofany provision or provisions of this Agreement shall not affect the validity orenforceability of any other provision of this Agreement, which shall remain infull force and effect.

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# 19.                                 **Notices. **All notices, demands and othercommunications provided for in this Agreement shall be in writing and shall bedelivered by hand or sent via fax transmission (with written fax confirmation)or mailed postage prepaid or by registered,

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# certified or express mailor reputable overnight courier service, charges prepaid, and shall be deemedgiven when so delivered, if delivered by hand, or upon receipt of reasonablyadequate fax confirmation, if faxed, or, if mailed, five (5) business daysafter mailing (or one (1) business day in the case of express mail or overnightcourier service), addressed as follows:

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# If to the Employee:

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# David E. Fleming

# 105 Norfield Road

# Weston, Connecticut 06883

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# If to the Company:

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# Warren Resources, Inc.

# 489 Fifth Avenue

# 32nd Floor

# New York, NY 10016

# Attention:  Chief Executive Officer

# (Fax):  (212) 697-9466

# (Tel.):  (212) 697-9660

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or to such other addressor person as any party may have furnished to the other in writing in accordanceherewith, except that notices of change of address shall be effective only uponreceipt.

 

# 20.                                 **Headings**.  All headings contained in this Agreement arefor reference purposes only and shall not in any way effect the meaning orinterpretation of any provision or provisions of this Agreement.

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# 21.                                 **EntireAgreement. **ThisAgreement sets forth the entire agreement of the parties hereto in respect ofthe subject matter contained herein and supersedes all prior agreements,promises, covenants, understandings, arrangements, communications,representations or warranties, whether oral or written, by any party orrepresentative of any party hereto.

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# 22.                                 **Assignmentand Transfer. **TheEmployee’s rights and obligations under this Agreement shall not betransferable by assignment or otherwise, and any purported assignment, transferor delegation thereof shall be void. This Agreement shall inure to the benefit of, and be binding upon andenforceable by, any purchaser of substantially all of the Company’s assets, anycorporate successor to the Company or any assignee thereof.

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# 23.                                 **Counterparts. **This Agreement may be executed inseveral counterparts, each of which shall be deemed to be an original but allof which together will constitute one and the same instrument.

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# 24.                                 **GoverningLaw. **The validity,interpretation, construction and performance of this Agreement shall begoverned by the laws of the State of New York without regard to its conflictsof law principles.

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# **IN WITNESS WHEREOF,**the parties haveexecuted this Agreement as of the date and year first above written.

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|   | **WARREN RESOURCES, INC.**                        |
|--------|---------------------------------------------------|
|   |                                              |
|   |                                              |
|   | By:    /s/  Norman F. Swanton |   |
|   | Name:  Norman F. Swanton                     |
|   | Title:  Chief Executive Officer              |
|   |                                              |
|   |                                              |
|   | /s/  David E. Fleming                             |   |
|   | David  E. Fleming                                 |

 

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