Document:

Exhibit 10.1

 

SECOND AMENDMENT
TO EMPLOYMENT AGREEMENT

 

This
Second Amendment (“Amendment”) dated June 17, 2005 is made and entered
into effective as of January 1, 2005 (the “Effective Date”) to the
Employment Agreement referenced below by and between Warren Resources, Inc.
(“Company” or “Employer”), and Norman F. Swanton, an individual (“Employee”)
(together the “Parties”).

 

RECITALS

 

WHEREAS,
the Parties had entered into an Employment Agreement effective on January 1,
2001 (the “Original Agreement”); and

 

WHEREAS,
the Parties amended the Original Agreement by an amendment effective January 1,
2004 (the “First Amended Agreement”).

 

WHEREAS,
the Parties now want to amend the Original Agreement to make such changes as
are specifically covered herein and as specifically identified in italics.

 

AGREEMENT

 

NOW,
THEREFORE, for good and valuable consideration, and in consideration of the
mutual covenants and conditions herein set forth, the receipt and sufficiency
of which is hereby acknowledged, the Parties agree as follows:

 

Section 
6 (a) of the First Amended Agreement is hereby deleted and revised to read
in its entirety as follows:

 

(a)                                  Salary. 
During the Employment Period, the Company shall pay to the Employee an
annual base salary of $500,000.00 (as adjusted pursuant to the terms hereof,
the “Base Compensation”).  The Base
Compensation shall be increased on each anniversary date of this Agreement by
any increases in the cost of living based on the changes in the “Consumer Price
Index” as published from time to time by the U.S. Department of Commerce for
the New York City metropolitan area.  The
Base Compensation will be paid to the Employee in accordance with the normal
payroll practices of the Company in effect from time to time, less all required
withholdings for benefits, federal, state and local taxes, if any.  The amount of the Base Compensation may, in
the Company’s discretion, be increased by the Company on an annual basis during
the Employment Period.  All increases to
the Base Compensation, if any, shall be based on the condition of the Company’s
business and results of operations and the Company’s evaluation of the Employee’s
individual performance for the relevant period. 
Any increases made to the Base Compensation shall be in the discretion
of the Company.

 

**************

 

 

Except
as set forth in this Amendment, the Original Agreement as amended by the First
Amended Agreement shall remain in full force and effect and references in the
Original Agreement to “this Agreement”, “hereunder”, “herein”, “hereof”, and
words of like effect shall mean the Original Agreement as so amended by this
Amendment.

 

This
Amendment may be executed in one or more counterparts and/or by facsimile, each
of which shall be deemed an original and all of which signed counterparts,
taken together, shall constitute one instrument.

 

IN WITNESS WHEREOF, the Company and Employee have
duly executed this Agreement in multiple originals on June 17, 2005 to be
effective on the Effective Date.

 

	
   

  	
  EMPLOYER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WARREN
  RESOURCES, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy A.
  Larkin

  	
   

  
	
   

  	
   

  	
   Timothy A.
  Larkin

  	
   

  
	
   

  	
   

  	
  Executive Vice President and

  	
   

  
	
   

  	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Norman F. Swanton

  	
   

  
	
   

  	
     Norman F. SwantonExhibit 10.2

 

SECOND AMENDMENT
TO EMPLOYMENT AGREEMENT

 

This
Second Amendment (“Amendment”) dated June 17, 2005 is made and entered
into effective as of January 1, 2005 (the “Effective Date”) to the
Employment Agreement referenced below by and between Warren Resources, Inc.
(“Company” or “Employer”), and Timothy A. Larkin, an individual (“Employee”)
(together the “Parties”).

 

RECITALS

 

WHEREAS,
the Parties had entered into an Employment Agreement effective on January 1,
2001 (the “Original Agreement”); and

 

WHEREAS,
the Parties amended the Original Agreement by an amendment effective January 1,
2004 (the “First Amended Agreement”).

 

WHEREAS,
the Parties now want to amend the Original Agreement to make such changes as
are specifically covered herein and as specifically identified in italics.

 

AGREEMENT

 

NOW,
THEREFORE, for good and valuable consideration, and in consideration of the
mutual covenants and conditions herein set forth, the receipt and sufficiency
of which is hereby acknowledged, the Parties agree as follows:

 

Section 
6 (a) of the First Amended Agreement is hereby deleted and revised to read
in its entirety as follows:

 

(a)                                  Salary. 
During the Employment Period, the Company shall pay to the Employee an
annual base salary of $275,000.00 (as adjusted pursuant to the terms hereof,
the “Base Compensation”).  The Base
Compensation shall be increased on each anniversary date of this Agreement by
any increases in the cost of living based on the changes in the “Consumer Price
Index” as published from time to time by the U.S. Department of Commerce for
the New York City metropolitan area.  The
Base Compensation will be paid to the Employee in accordance with the normal
payroll practices of the Company in effect from time to time, less all required
withholdings for benefits, federal, state and local taxes, if any.  The amount of the Base Compensation may, in
the Company’s discretion, be increased by the Company on an annual basis during
the Employment Period.  All increases to
the Base Compensation, if any, shall be based on the condition of the Company’s
business and results of operations and the Company’s evaluation of the Employee’s
individual performance for the relevant period. 
Any increases made to the Base Compensation shall be in the discretion
of the Company.

 

**************

 

 

Except
as set forth in this Amendment, the Original Agreement as amended by the First
Amended Agreement shall remain in full force and effect and references in the
Original Agreement to “this Agreement”, “hereunder”, “herein”, “hereof”, and
words of like effect shall mean the Original Agreement as so amended by this
Amendment.

 

This
Amendment may be executed in one or more counterparts and/or by facsimile, each
of which shall be deemed an original and all of which signed counterparts,
taken together, shall constitute one instrument.

 

IN WITNESS WHEREOF, the Company and Employee have
duly executed this Agreement in multiple originals on June 17, 2005 to be
effective on the Effective Date.

 

	
   

  	
  EMPLOYER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WARREN
  RESOURCES, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Norman F.
  Swanton

  	
   

  
	
   

  	
   

  	
   Norman F.
  Swanton

  	
   

  
	
   

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Timothy A. Larkin

  	
   

  
	
   

  	
    Timothy A.
  LarkinExhibit 10.3

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT
(this “Agreement”), dated effective as of July 1, 2005, by and
between Warren Resources, Inc., a New York corporation (the “Company”),
and Lloyd G. Davies (the “Employee”).

 

W I T N E S S E T H:

 

WHEREAS, Employee
is currently employed by the Company under an agreement effective as of March 1,
2004 (“Prior Agreement”); and

 

WHEREAS, the
Company is desirous of continuing the employment of Employee pursuant to the
terms and conditions set forth in this Agreement, and Employee is desirous of
continuing in the employ of Employer pursuant to such terms and conditions; and

 

WHEREAS, this
Agreement shall supercede and replace the Prior Agreement between the Company
and Employee; and

 

NOW, THEREFORE,
in consideration of the premises and the respective covenants and agreements of
the parties herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

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

 

2.                                       Term. 
This Agreement, and the employment of the Employee by the Company
hereunder, will commence on the date hereof (the “Effective Date”) and
terminate on December 31, 2005 (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 Employment
Period commencing on the Effective Date, or the yearly anniversary thereof, as
the case may be. Effective on the first anniversary of the Effective Date, this
Agreement shall be automatically extended indefinitely until the Company or the
Employee shall give ninety (90) days prior written notice to the other party
that it or he, as the case may be, in its or his sole discretion, wishes to
terminate this Agreement.

 

3.                                       Position and Duties.  Subject to the provisions of this Section 3,
during the Employment Period, the Employee shall serve as the Executive Vice
President of the Company and Chairman and Chief Executive Officer of Warren
E&P, Inc. and shall

 

 

faithfully perform the
duties and responsibilities normally associated with such positions, subject to
the oversight and direction of the Chief Executive Officer of the Company and
the Board of Directors of the Company.

 

4.                                       Place of Employment.  Generally, the Employee will fulfill duties
and responsibilities to the Company as set forth herein from the current principal
place of business of Warren E&P, Inc., located at 123 West 1st Street,
Casper, Wyoming, or from his personal residence, as needed.

 

5.                                       Best Efforts.  The Employee’s employment with the
Company shall be his full business time and the Employee shall devote his best
efforts exclusively to the performance of his duties and responsibilities as
set forth in this Agreement, which duties and responsibilities shall be
performed competently, carefully and faithfully.  Except as provided below, the Employee shall
not, while an employee of the Company and without the prior written consent of
the Company, engage in any other gainful occupation or activity which conflicts
with or impinges upon the full and faithful performance of the Employee’s
duties, or otherwise violates any other term or provision of this
Agreement.  It is expressly understood
and agreed, however, that the provisions of this Section 5 shall not be
construed to prevent the Employee from pursuing any other activity or
profession in his own personal time not devoted to the Company, including
investing for his own account or pursuing charitable or civic activities; provided,
that such activities do not impair the performance by the Employee of his
duties and responsibilities hereunder, or otherwise violate any provision of
this Agreement, and that Employee shall not become employed by or affiliated
with another company in the oil and gas industry.

 

6.                                       The Employee’s Compensation.

 

(a)                                  Salary. 
During the Employment Period, for the services described herein the
Company shall pay to the Employee an annual base salary of $250,000.00 (as
adjusted pursuant to the terms hereof, the “Base Compensation”). The
Base Compensation shall be increased on each anniversary date of this Agreement
by any increases in the cost of living based on the changes in the “Consumer
Price Index” as published from time to time by the U.S. Department of Commerce
for the Miami metropolitan area. The Base Compensation will be paid to the
Employee in accordance with the normal payroll practices of the Company in
effect from time to time, less all required withholdings for benefits, federal,
state and local taxes, if any.  The
amount of the Base Compensation may, in the Company’s discretion, be increased
by the Company on an annual basis during the Employment Period.  All increases to the Base Compensation, if
any, shall be based on the condition of the Company’s business and results of
operations and the Company’s evaluation of the Employee’s individual
performance for the relevant period.  Any
increases made to the Base Compensation shall be in the discretion of the
Company.

 

(b)                                 Incentive Bonus Compensation.  In addition to the Base Compensation to which
the Employee is entitled under Section 6(a), the Employee shall be
eligible to be awarded incentive bonus compensation (the “Bonus Compensation”)
with respect to each calendar year or portion thereof during which the Employee
was employed

 

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by the Company hereunder
equal to up to and including 100% of the Employee’s Base Compensation.  The criteria for determining the amount of
the Bonus Compensation shall be determined by mutual agreement between the
Employee and the Chief Executive Officer of the Company and shall by approved
by the Compensation Committee of the Board of Directors. Incentive Bonus
Compensation shall be paid within 90 days following the end of the
calendar year.

 

(c)                                  Incentive Plans.  Employee shall be eligible to receive awards
(“Awards”) under the Company’s equity incentive plans (the “Equity Incentive
Plans”).  The grant of such Awards shall
be documented with a formal award letter from the Company to the Employee
setting forth the terms and conditions of Employee’s Award.

 

7.                                       The Employee’s Benefits.  As an employee of the Company, the
Employee shall be entitled to receive and enjoy the following benefits during
the Employment Period:

 

(a)                                  Participation in Company Benefit Plans.  The Employee shall be entitled to
participate in and to receive benefits generally available to senior executives
under those certain employee benefit plans and arrangements which may be
offered by the Company from time to time during the Employment Period, subject
to and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements by the Company. 
The Company shall provide full medical, hospitalization and dental
insurance coverage for the Employee.

 

(b)                                 Vacations.  The Employee shall be entitled to four (4) weeks
of paid vacation per Employment Year, provided that any vacations are to be
taken at times mutually agreeable to the Company and the Employee.  In addition to the foregoing, the Employee
shall be entitled to receive all paid holidays given by the Company to its
employees generally. If Employee has not used his accrued but unused vacation
days during an Employment Year, such days may not be carried over to another
and shall be deemed waived by the Employee. Any accrued but unused vacation
days in an Employment Year shall be reimbursed in cash to Employee upon a
termination of his employment Without Cause hereunder.

 

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

 

(d)                                 Disability Insurance.  The Company may provide disability insurance
paying benefits to Employee (subject to reasonableness and/or availability).

 

3

 

8.                                       Termination of Employment.  The Employee’s employment with the
Company may be terminated as follows:

 

(a)                                  With Cause.  The Employee’s employment 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 or
willful malfeasance by the Employee in connection with the performance of his
duties hereunder (collectively, “Theft Events”); (ii) a material breach or
failure to fulfill and perform the Employee’s duties hereunder, which breach or
failure is not cured to the reasonable satisfaction of the Company within
forty-five (45) days after written demand from the Company (if such breach is
at all curable during such time in the reasonable determination of the Company;
failing such determination, “Cause” shall have occurred upon the occurrence of
such breach or failure); (iii) conviction of a felony or a crime involving
moral turpitude; (iv) habitual neglect of duties or misconduct in the
performance of the Employee’s duties and responsibilities hereunder following
an initial notice of warning from the Company with respect thereto; or (v) a
repeated or ongoing failure to comply with the reasonable directions and
instructions of management of the Company in connection with the performance of
the Employee’s duties and responsibilities hereunder following an initial
notice of warning from the Company with respect thereto.  Upon termination for Cause, all rights of the
Employee under this Agreement shall immediately terminate and the Company shall
have no further obligations.  A
termination of the Employee’s employment with the Company by the Employee upon
his voluntary resignation or voluntary retirement shall be treated as a
termination for Cause hereunder.  In
connection therewith, the Employee covenants and agrees not to voluntarily
resign or voluntarily retire without providing the Company with ninety (90) days’
prior written notice. Upon a termination for Cause, Employee shall receive in
full satisfaction of all amounts due to him an amount equal to the remainder of
Base Compensation through date of termination. Notwithstanding any of the
foregoing, in the event that the Company has terminated Employee’s employment
on account of a Theft Event, the Company shall be entitled to withhold from any
amounts otherwise due to Employee under this Subsection 8(a) the
amount of monetary damages incurred by the Company from such Theft Event which
shall be quantified and determined in writing by the Company within 90 days
after the date of termination. The Employee agrees that his eligibility to
receive any and all amounts described in this Section 8(a) shall be
subject to and contingent upon the Employee’s execution of a full and complete
general release in favor of the Company and its affiliated persons and
entities, satisfactory to the Company in its sole discretion.

 

(b)                                 Without Cause.  The Employee’s employment with the
Company may be terminated by the Company at any time without Cause, but in the
event of any such termination pursuant to this Section 8(b), the Company
will pay, in addition to any other amounts due hereunder, 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 for the balance of the
then existing term hereunder, or (ii) 90 days of Base Compensation,
payable upon execution and delivery of the release described below, less all
required withholdings and in accordance with then current payroll practices of
the Company and applicable law or regulation. Notwithstanding the foregoing, in
the event of a termination by the Company without Cause in connection with a “Change
of Control

 

4

 

Event”, as defined under Section 8(e) below,
then the compensation to Employee provided under Section (e) shall
govern.  In addition, Employee shall
receive any accrued but unpaid vacation time for the current Employment Year.
The Employee agrees that his eligibility to receive any and all amounts
described in this Section 8(b) shall be subject to and contingent
upon the Employee’s execution of a full and complete general release in favor
of the Company and its affiliated persons and entities, satisfactory to the
Company in its sole discretion.

 

(c)                                  Termination for Death, Disability or Retirement.  The Employee’s employment hereunder shall
terminate immediately upon the Employee’s death, Disability or written election
to retire after age 65.  For purposes of
the preceding sentence, the term “Disability” shall mean the Employee’s
inability, by reason of physical or mental incapacity (determined by a licensed
physician reasonably acceptable to the Employee and the Company), to perform
the essential functions of his job, with or without a reasonable accommodation
by the Company, for an aggregate of ninety (90) days during any twelve (12)
month period, provided further that during any
such continuous period, the Employee’s Base Compensation payable under Section 6(a) shall
be reduced by the amount, if any, of payments to the Employee under any
short-term or long-term disability insurance policy, plan or program maintained
by the Company.  During any period when
the Employee implicitly or explicitly purports to be unable to perform his
duties hereunder by reason of physical or mental illness, incapacity or
disability, the Employee, at the request and expense of Company, shall submit
to one or more examinations by a physician of the Company’s choice. A
termination of the Employee’s employment with the Company due death or
Disability as provided under this Section 8(c) shall be treated as a
termination without Cause hereunder. Additionally, after reaching age 65, if
Employee has served continuously for a minimum of three years of full-time
service, upon his written election to retire, Employee shall be entitled to a
final retirement payment equal to three months Base Compensation.

 

(d)                                 Termination by Employee for Good Reason.
 Employee shall have the right to
terminate this Agreement for “Good Reason”. The following events affecting
Employee shall constitute “Good Reason” within the meaning of this Agreement: (i) if
Employee, at any time during the Employment Period (except during a period of
Disability), has suffered a material change or diminution in duties and
responsibilities from those contemplated herein.

 

(e)                                  Termination by Employee for Change of Control.  Employee shall have the right to terminate
this Agreement for a Change of Control Event, as defined below.  For purposes of this Employment Agreement, a “Change
of Control” shall mean the happening of any of the following:

 

(i)                                     the
acquisition by any person or group deemed a person under Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”)
(other than the Company and its subsidiaries as determined immediately prior to
that date) of beneficial ownership, directly or indirectly (with beneficial
ownership determined as provided in Rule 13d-3, or any successor rule,
under the Exchange Act), of a majority of

 

5

 

the
total combined voting power of all classes of stock of the Company having the
right under ordinary circumstances to vote at an election of the Board of Directors
of the Company, if such person or group deemed a person was not a beneficial
owner of at least five percent (5%) of such total combined voting power of the
Company on the date of this Agreement;

 

(ii)                                  the
election to the Board of Directors of the Company of members as a result of
which a majority of the Board of Directors shall consist of persons who are not
members of the Board of Directors as of the Effective Date (including Employee
as a member of the Board of Directors as of the Effective Date), except in the
event that such slate of Directors is proposed by the management of the
Company;

 

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

 

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

 

Upon the occurrence of any of the foregoing Change of
Control events, immediately prior to the effective date of the Change of
Control, Employee may terminate this Agreement and the Company shall pay
Employee a cash severance payment in a lump sum in an amount equal to twelve
(12) months of Employee’s then current Base Compensation (less applicable
withholding), paid immediately prior to the effective date of the Change of
Control.

 

(f)                                    Status upon Termination.  The termination of this Agreement, and the
Employee’s employment hereunder, for any reason whatsoever shall constitute the
Employee’s effective termination and resignation from any other positions or
duties with the Company and all of its affiliates.

 

(g)                                 Effect of Termination.

 

(i)                                     In
the event of a termination of the Employee’s employment with the Company
hereunder for any reason, in addition and subject to the provisions of Sections
8(a), 8(b), 8(c). 8(d) and 8(e), the Employee shall be entitled to receive
all Base Compensation and accrued benefits owing through the date of
termination in accordance with the Company’s normal practices then in effect.

 

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(ii)                                  In
the event of a termination of the Employee’s employment without Cause pursuant
to Sections 8(b), 8(c), 8(d) or 8(e) above, the Company shall also
pay the Employee severance compensation in accordance with Section 8(b) above.  Furthermore, if the Employee is terminated
without Cause, or the employment ceases under Sections 8(c), 8(d) or 8(e),
all unvested options granted to the Employee pursuant to the Equity Incentive
Plan shall become fully vested and be kept in effect for a period of 180 days
if terminated pursuant to Sections 8(b), 8(c) or 8(d) or one year if
terminated pursuant to Section 8(e).

 

(iii)  In the event of a termination of the Employee’s
employment with the Company hereunder for Cause pursuant to Section 8(a) above,
all rights of the Employee under this Agreement shall immediately terminate and
the Company shall have no further obligations hereunder, subject to Section 8(g)(i) above
and this provision. Furthermore, if the Employee is terminated for Cause, all
unvested options granted to the Employee pursuant to the Equity Inventive Plan
shall terminate.

 

9.                                       Noncompetition and Confidentiality.

 

(a)                                  Noncompetition.  During the Employment Period and, in the
case of a termination of the Employee’s employment for Cause, for a period of
six (6) months following the date of termination of employment, or, in the
case of a termination of the Employee’s employment without Cause, for a period
of one day following the date of termination of employment (the “Covered
Period”), the Employee agrees not to engage in any Competitive Activity
within the States of New York, California and Wyoming.  As used herein, the term “Competitive
Activity” 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 otherwise associating in
any other capacity with, any person, corporation, partnership, limited
liability company, sole proprietorship, association or other business
enterprise, other than the Company, engaged in the business of oil and gas exploration,
drilling and production or any other business in which the Company is engaged
(each, a “Competitive Enterprise”), or engaging individually in any
Competitive Enterprise; (iii) owning or acquiring, directly or indirectly,
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
and outstanding publicly traded securities of any issuer engaged in a Competitive
Enterprise); (iv) soliciting or inducing any partner, stockholder, member,
principal, director, officer, employee, consultant, agent or other
representative of the Company or one or more affiliates to leave the employ or
retention of the Company or such affiliate or hiring away any of the foregoing
persons; and/or (v) encouraging, requesting or advising, explicitly or
implicitly, any Customer or supplier of the Company or one or more of its
affiliates to withdraw, curtail or cancel its business relationships with the
Company or any affiliate thereof (unless expressly requested to do so by the
Company as part of the Employee’s employment services provided hereunder).

 

7

 

As used in this Section 9,
the term “Customer” shall include any person who is or was a customer of
the Company or an affiliate thereof at any time during the period commencing
with the Employment Period through the end of the Covered Period.

 

(b)                                 Confidentiality.  During the Employment Period and for a
period of three (3) years thereafter, the Employee shall not, except as
may otherwise be required by law, directly or indirectly disclose to any person
or entity, or use or cause to be used in any manner adverse to the interests of
the Company or any affiliate thereof, any Confidential Information (as defined
below in this Section 9(b)).  The
Employee agrees that, upon the termination of his employment with the Company
for any reason, all Confidential Information (other than a copy of this Agreement
and any other agreements that have been personally executed by the Employee
other than in his capacity as an officer of the Company) and duplicates thereof
in the possession or control of the Employee, in any form or format, including,
without limitation, written, visual, audio, electronic or magnetic formats,
shall forthwith be returned to the Company and shall not be retained by the
Employee or furnished or communicated to any third party in any form
whatsoever.

 

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

 

(c)                                  Severability.  The invalidity or nonenforceability of
any provision of this Section 9 in any respect shall not affect the
validity or enforceability of the other provisions of this Section 9 in
any other respect, or of any other provision of this Agreement.  In the event that any provision of this Section 9
shall be held invalid or unenforceable by a court of competent jurisdiction by
reason of the geographic or business scope or the duration thereof or for any
other reason, such invalidity or unenforceability shall attach only to the
particular aspects of such provision found invalid or unenforceable as applied
and shall not affect or render invalid or unenforceable any other provision of
this Section 9 or the enforcement of such provision in other
circumstances, and this Section 9 shall be construed as if the geographic
or business scope or the duration of such provision or other basis on which
such provision has been challenged had been more narrowly drafted so as not to
be invalid or unenforceable.

 

8

 

10.                                 Business Opportunities.  During the Employment Period, the
Employee agrees to bring all business opportunities to the Company relating to
or otherwise associated with the business or businesses then conducted by the
Company or each affiliate thereof, or business or businesses proposed to be
conducted by the Company.

 

11.                                 Rights to Work Product. The
Employee agrees that all work performed by the Employee pursuant hereto shall
be the sole and exclusive property of the Company, in whatever stage of
development or completion.  With respect
to any copyrightable works prepared in whole or in part by the Employee
pursuant to this Agreement, including compilations of lists or data, the
Employee agrees that all such works will be prepared as “work-for-hire” within
the meaning of the Copyright Act of 1976, as amended (the “Act”), of
which the Company shall be considered the “author” within the meaning of the
Act.  In the event (and to the extent)
that such works 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 to the Company the sole and exclusive right, title and interest in and
to all such works, and all copies of any of them, without further
consideration, and agrees, to the extent reasonable under the circumstances, to
cooperate with the Company to register, and from time to time to enforce, all
patents, copyrights and other rights and protections relating to such works in
any and all countries.  To that end, the
Employee agrees to execute and deliver all documents requested by the Company
in connection therewith, and the Employee hereby irrevocably designates and
appoints the Company as the Employee’s agent and attorney-in-fact to act for
and on behalf of the Employee and in the Employee’s stead to execute, register
and file any such applications, and to do all other lawfully permitted acts to
further the registration, protection and issuance of patents, copyrights or
similar protections with the same legal force and effect as if executed by the
Employee.  The Company shall reimburse
the Employee for all reasonable costs and expenses incurred by the Employee
pursuant to this Section 11.

 

12.                                 No Disparaging Statements.  During the Term of employment and for one (1) year
after termination of this Agreement for any reason whatsoever, the Employee and
the Company agree to refrain from making any disparaging statements, either
orally or in writing, about the other party (and, on the part of the Employee,
about any affiliate of the Company, or any directors, officers, shareholders,
employees, agents or other representatives of the Company or any affiliate
thereof).

 

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

 

14.                                 Compliance With Other Agreements.  The Employee and the Company each hereby
represent and warrant to the other that the execution and delivery of this Agreement
and the performance of such party’s obligations hereunder will not, with or
without the giving of notice and/or the passage of time, (i) violate any
judgment, writ, injunction or order of any court, arbitrator or governmental
agency applicable to such party, or (ii) conflict with, result in the
breach of any provision of or the termination of, or constitute a default
under, any agreement to which such party is a party or by which such

 

9

 

party is or may be
bound.  The parties agree to indemnify
and hold harmless each other from any liability, judgment or claim incurred,
entered or made against such party based on its reliance on the representations
and warranties made in this Section 14, including all costs and expenses
and attorney’s fees incurred or paid by such party in connection with the
foregoing.

 

15.                                 Injunctive Relief.  The Employee acknowledges and agrees that
the Company and its affiliates are engaged in a highly competitive business and
that the protections of the Company and each such affiliate set forth in
Sections 9, 10 and 11 of this Agreement are fair and reasonable and are of
vital concern to the Company and its affiliates.  Further, the Employee acknowledges and agrees
that monetary damages for any violation of such Sections will not adequately
compensate the Company and its affiliates with respect to any such
violation.  Therefore, in the event of a
breach by the Employee of any of the terms and provisions contained in Sections
9, 10 or 11 hereof, the Company shall be entitled to institute legal
proceedings to enforce the specific performance of this Agreement by the
Employee and to enjoin the Employee from any further violations.  The remedies available to the Company
pursuant to this Section 15 may be exercised cumulatively by the Company
in conjunction with all other rights and remedies provided by law.

 

16.                                 Arbitration Of Disputes.  If any dispute shall arise between the
Employee and the Company in connection with this Agreement, and such dispute
cannot be resolved amicably by the parties, the same shall be conclusively and
finally resolved by binding arbitration. 
Any party hereto may commence an arbitration proceeding by providing
written notice to the other party requesting the arbitration of an unresolved
dispute.  Each such dispute, if any,
shall be submitted to an arbitrator acceptable to both parties.  If either the Employee or the Company refuses
or neglects to agree to appoint an arbitrator within thirty (30) days after
receipt of written notice from the other party requesting the other party to do
so, the American Arbitration Association may appoint such arbitrator.  The arbitrator shall be experienced in the
subject matter of the dispute. Except as otherwise specifically set forth
herein, the arbitrators shall conduct the arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.  The decision in writing of the arbitrator,
when filed with the parties hereto, shall be final and binding on both
parties.  Judgment may be entered upon
the final decision of the arbitrator in any court having jurisdiction.  Such arbitration shall take place in New
York, New York.

 

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

 

10

 

17.                                 Amendment; Waiver; Discharge.  No provision of this Agreement may be
amended, waived or discharged unless such amendment, waiver or discharge is
agreed to in writing and signed by the Employee and a duly authorized
representative of the Company.  No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

 

18.                                 Validity.  The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.

 

19.                                 Notices.  All notices, demands and other
communications provided for in this Agreement shall be in writing and shall be
delivered by hand or sent via fax transmission (with written fax confirmation)
or mailed postage prepaid or by registered, certified or express mail or
reputable overnight courier service, charges prepaid, and shall be deemed given
when so delivered, if delivered by hand, or upon receipt of reasonably adequate
fax confirmation, if faxed, or, if mailed, five (5) business days after
mailing (or one (1) business day in the case of express mail or overnight
courier service), addressed as follows:

 

If to the Employee:

 

To his last known
personal residence

 

 

If to the Company:

 

Warren Resources, Inc.

489 Fifth Avenue

32nd Floor

New York, NY 10016

Attention:  Chief Executive Officer

(Fax):  (212) 697-9466

(Tel.):  (212) 697-9660

 

or to
such other address or person as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 

20.                                 Headings.  All headings contained in this Agreement are
for reference purposes only and shall not in any way effect the meaning or
interpretation of any provision or provisions of this Agreement.

 

21.                                 Entire Agreement.  This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all

 

11

 

prior agreements,
promises, covenants, understandings, arrangements, communications,
representations or warranties, whether oral or written, by any party or
representative of any party hereto.

 

22.                                 Assignment and Transfer.  The Employee’s rights and obligations
under this Agreement shall not be transferable by assignment or otherwise, and
any purported assignment, transfer or delegation thereof shall be void.  This Agreement shall inure to the benefit of,
and be binding upon and enforceable by, any purchaser of substantially all of
the Company’s assets, any corporate successor to the Company or any assignee
thereof.

 

23.                                 Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

 

24.                                 Governing Law.  The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without regard to its conflicts of law principles.

 

 

IN WITNESS WHEREOF, the
Company and Employee have duly executed this Agreement in multiple originals on
June 17, 2005 to be effective on the Effective Date.

 

	
   

  	
  WARREN RESOURCES, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Norman F. Swanton

  
	
   

  	
   

  	
  Name:  Norman F. Swanton

  
	
   

  	
   

  	
  Title:  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Lloyd G. Davies

  
	
   

  	
   Lloyd G. Davies

  	
   

  
				

 

12

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