Document:

EX-10.1: EMPLOYMENT LETTER AGREEMENT

 

EXHIBIT 10.1

	 	 	 
	
	 	 
	Memory Pharmaceuticals Corp.

	 	Tony Scullion
	100 Philips Parkway

	 	Chief Executive Officer
	Montvale, New Jersey 07645
	 	 
	Phone: (201) 802-7102
	 	 
	Fax: (201) 802-7190
	 	 
	www.memorypharma.com
	 	 

May 18, 2004

Jzaneen Lalani, Esq.

Dear Ms. Lalani:

     We are pleased to extend an offer to you to join our Company as Vice
President Legal Affairs. We look forward to you joining our team, and are
confident that you will contribute significantly to the value of our
organization. The terms of your anticipated employment by the Company are as
follows.

     1. Position. Your position will be Vice President of Legal Affairs, based
out of the Company’s
offices currently located in Montvale, New Jersey, and you will report
directly to the Company’s Chief Executive
Officer unless otherwise directed by the CEO. As Vice President of Legal
Affairs, you will be part of the
Company’s senior management team. Your responsibilities shall include, but
not be limited to, managing the
Company’s corporate and SEC compliance and assisting management in
evaluating and addressing legal and other
issues raised in the Company’s operations and activities. In addition to
performing duties and responsibilities
associated with the position of Vice President of Legal Affairs, from time
to time the Company may assign you
other duties and responsibilities and/or may assign you to a different
location.

     As a full-time employee of the Company, you will be expected to devote
your full business time and energies to the business and affairs of the
Company. Your performance will be reviewed formally after six months of
employment and annually thereafter at the end of each calendar year.

     2. Starting Date/Nature of Relationship. It is expected that your
employment will start on June 10,
2004 (the “Start Date”). No provision of this letter shall be construed to
create an express or implied employment
contract for a specific period of time. Either you or the Company may
terminate the employment relationship at any
time and for any reason, by giving at least thirty (30) days’ prior
written notice to the other party.

     3. Compensation.

     (a) Your initial salary will be at the bi-weekly rate of $7,307.69
(annualized at $190,000).

     (b) Effective as of the Start Date, you will receive stock options to
purchase 50,000 shares of the
Company’s Common Stock, which will be in the form on incentive stock
options, to the extent permissible under
applicable law, and the balance will be in the form of non-qualified stock
options. Such stock options (i) will entitle
you to purchase the Company’s Common Stock at the then current fair market
value per share, as determined by the
Company’s Board of Directors in accordance with the Company’s 2004 Stock
Incentive Plan, and (ii) shall vest in
quarterly increments over a period of four (4) years as described in the
standard forms of Stock Option Agreement,
which you agree to execute and deliver to the Company on or before the
Start Date.

 

 

MEMORY PHARMACEUTICALS CORP.

     (c) You will be eligible to receive annual bonus payments dependent on the
performance of the
Company and your individual performance, subject to the discretion of the
Board of Directors. Your target bonus
will be equal to twenty-five percent (25%) of your base salary, assuming
the achievement of such Company and
individual performance objectives.

     (d) Upon termination for any reason, the Company will pay you within two
weeks of such
termination, your current base salary earned through the termination date,
plus accrued vacation, if any, and other
benefits or payments, if any, to which you are entitled. In the event that
you are terminated by the Company without
“Cause” (as hereinafter defined), then the Company will continue to pay
you your bi-weekly rate in effect at the
time of termination and provide and pay the Company’s portion of your
medical insurance for a period of six (6)
months. Further, for the period commencing seven months following such
termination and ending twelve months
after such termination, the Company will continue to pay you your
bi-weekly rate in effect at the time of termination
and provide and pay the Company’s portion of your medical insurance,
except that such severance payments made
to you during this period will be reduced by all 1099 and W-2 income
earned or received by you during such period,
including income earned or received from consulting services or temporary
employment, and the Company’s
payments for your medical insurance will terminate when you have such
coverage through any new employer before
the end of the twelve month period following your termination. The Company
will reconcile such payments with
you quarterly, and any additional payments owed to you by the Company, and
any payments owed to the Company
by you, will be paid respectively within two weeks following such
reconciliation period. The Company will not be
obligated to continue any such payments to you under this paragraph 3(d)
in the event you materially breach the
terms of the Confidentiality Agreement (as defined below). Notwithstanding
any termination of your employment
(with or without Cause), you shall continue to be bound by the provisions
of the Confidentiality Agreement.

     (e) For the purposes of this Section 3, “Cause” shall include (i) your
conviction of a felony, either in
connection with the performance of your obligations to the Company or
otherwise, which adversely affects your
ability to perform such obligations or materially adversely affects the
business activities, reputation, goodwill or
image of the Company, (ii) your willful disloyalty, deliberate dishonesty,
breach of fiduciary duty, (iii) your breach
of the terms of this Agreement, or your failure or refusal to carry out
any material tasks assigned to you by the
Company in accordance with the terms hereof, which breach or failure
continues for a period of more than thirty
(30) days after your receipt of written notice thereof from the Company,
(iv) the commission by you of any act of
fraud, embezzlement or deliberate disregard of a rule or policy of the
Company known to you or contained in a
policy and procedure manual provided to you which results in material
loss, damage or injury to the Company, or
(v) the material breach by you of any of the provisions of the
Confidentiality Agreement.

     4. Benefits. You will be entitled as an employee of the Company to receive
such benefits as are
generally provided its employees and executives and for which you are
eligible in accordance with Company policy
as in effect from time to time. The Company retains the right to change,
add or cease any particular benefit relating
to its employees and executives generally. At this time, the Company is
offering a benefit program, consisting of
medical, dental, life and short/long term disability insurance, as well as
a 401(k) retirement plan and flexible
spending plan. You will be eligible for eleven paid holidays, four
floating holidays and four (4) weeks paid vacation
per year, which will be pro rated for the 2000 calendar year based on the
Start Date. You will accrue additional
vacation days in accordance with Company policy. If you decide to become a
“resident alien” for U.S. immigration
purposes, the Company will arrange for its immigration counsel to handle
the matter on your behalf and will pay the
related legal fees and expenses.

     5. Confidentiality. The Company considers the protection of its
confidential information and
proprietary materials to be very important. Therefore, as a condition of
your employment, you and the Company
will become parties to a Confidentiality and Noncompetition Agreement
substantially in the form of Exhibit A to
this letter (the “Confidentiality Agreement”).

     6. General.

     (a) This letter, together with the Employment Agreement, the
Confidentiality Agreement and the Stock Option Agreement, when executed,
will constitute our entire agreement as to your employment by the Company
and will supersede any prior agreements or understandings, whether in
writing or oral.

2

 

MEMORY PHARMACEUTICALS CORP.

     (b) This letter shall be subject to and
contingent upon the following:

          (i) satisfactory results of a medical
examination;

          (ii) maintenance by you of non-immigrant or resident alien status
for immigration purposes while in the United States allowing you to work for
the Company;

          (iii) verification of employment history; and

          (iv) your agreement (as evidenced by your signature below) to use
reasonable efforts after the Start Date to become familiar with New Jersey law
as generally applicable to the Company. Your employment with the Company shall
not require you to become licensed and admitted as a member of the New Jersey
Bar.

     (c) This letter and the Company’s obligations hereunder shall be subject
to review and approval by
the Company’s Board of Directors and the Compensation Committee thereof.

     (d) This letter shall be governed by the law of the State of New Jersey.

     You may accept this offer of employment and the terms thereof by signing
the enclosed additional copy of this letter and the Confidentiality Agreement,
which execution will evidence your agreement with the terms set forth herein
and therein, and returning them to the Company.

     This offer of employment will expire on May 21, 2004, unless accepted by
you prior to such date. We look forward to you joining our team, and we believe
that your skills will compliment those of our existing management team, and
that you will make a significant contribution to the Company’s growth. We look
forward to your prompt response to this offer letter.

	 	 	 
	MEMORY PHARMACEUTICALS CORP.
	 
	 	 
	By:

	 	/s/ Tony Scullion
	

	 	
 
	

	 	Name: Tony Scullion
	

	 	Title: Chief Executive Officer
	 
	 	 
	ACCEPTED AND AGREED
	 
	 	 
	/s/ Jzaneen Lalani
	
 
	Jzaneen Lalani, Esq.
	 
	 	 
	Date: 05/18/04

3FORM OF SUBSCRIPTION & REGISTRATION RIGHTS AGREE

 

EXHIBIT 4.1

FORM OF

SUBSCRIPTION AND REGISTRATION RIGHTS AGREEMENT

Warren Resources, Inc.

489 Fifth Avenue, 32nd Floor

New York, New York 10017

Gentlemen and Ladies:

     The undersigned desires to invest in Warren Resources, Inc. (the
“Company”) on the terms and conditions described in this Subscription And
Registration Rights Agreement (this “Subscription Agreement”) and the Company’s
Supplemental Confidential Private Placement Memorandum dated July 9, 2004 (the
“Supplemental Memorandum”). Pursuant to the terms described in the Supplemental
Memorandum and in this Subscription Agreement, the Company is offering to
subscribers who are accredited investors up to 975,000 (the “Units”), with each
Unit consisting of one share of the Company’s common stock, par value $0.0001
per share (the “Common Shares”), 0.25 Class A Warrants, with an entire Class A
Warrant entitling its holder to purchase one Common Share at an exercise price
of $10.00 per share, and 0.25 Class B Warrants, with an entire Class B Warrant
entitling its holder to purchase one Common Share at an exercise price of $12.50
per share. Notwithstanding anything to the contrary in the foregoing, the
undersigned acknowledges that 0.25 Class A Warrants equal one-fourth of a Class
A Warrant and that 0.25 Class B Warrants equal one-fourth of a Class B Warrant.
The Units are offered at the price of $7.00 per Unit (the “Offering Price”) for
an aggregate of up to $6,825,000 (the “Supplemental Offering”).

     The Class A Warrants and Class B Warrants (collectively, the “Warrants”)
are exercisable beginning one year after the date of their issuance and ending
five years after the date of their issuance. The Warrants will terminate, if not
exercised, five years from the date of their issuance. The Purchaser shall be
entitled to registration rights for the Common Shares, including the Common
Shares issuable upon exercise of the Warrants, as further described in this
Subscription Agreement. In the event that the Company’s shares of common stock
have not commenced public trading by February 3, 2005, the Company shall issue
an additional 0.05 Class A Warrants and 0.05 Class B Warrants to the undersigned
for each Unit purchased pursuant to this Subscription Agreement by the
undersigned.

1. SUBSCRIPTION

     (a) Subject to and in accordance with the terms and conditions of this
Subscription Agreement, the undersigned hereby offers to purchase    
Units. In accordance with the Irrevocable Instruction Letter, incorporated
herein as Exhibit A, the undersigned shall cause to be delivered to the Company
the full purchase price of $   (the “Purchase Price”) for the
subscription for the Units in the form of a check or wire transfer to the
Company. It is understood by the undersigned that the Company reserves the right
in its sole discretion to reject all or any part of any subscription. After
completion of the Supplemental Offering, the undersigned will be notified
promptly by the Company whether the undersigned’s subscription has been
accepted.

     (b) As more fully described in the undersigned’s warrant agreements in
connection with the Warrants, the exercise price of each Warrant and the number
of Common Shares issuable upon the exercise of a Warrant are subject to
adjustment in the event of: (i) any subdivision or combination of the

 

 

Company’s outstanding Common Shares; or (ii) any distribution by the Company to
holders of Common Shares of a stock dividend, or assets (other than cash
dividends payable out of retained earnings).

2. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED

     The undersigned hereby represents and warrants to, and agrees with, the
Company as follows:

	 	(i)	 	the undersigned can bear the economic risk of losing the
undersigned’s entire investment;
	 
	 	(ii)	 	the undersigned is acquiring the Units for its own account and
not with a view to, or for resale in connection with, a
distribution of the Units, or of the Common Shares or Warrants
included in the Units, in violation of the Securities Act of
1933, as amended (the “1933 Act”);
	 
	 	(iii)	 	the undersigned’s overall commitments to investments that are
not readily marketable is not disproportionate to the
undersigned’s net worth and the undersigned’s investment in
the Units will not cause such overall commitments to become
excessive;
	 
	 	(iv)	 	the undersigned’s financial condition is such that the
undersigned is under no present or contemplated future need to
dispose of any portion of the Units to satisfy any existing or
contemplated undertaking, need or indebtedness;
	 
	 	(v)	 	the undersigned has adequate means of providing for the
undersigned’s current needs and personal contingencies and has
no need for liquidity in the undersigned’s investment in the
Units; and
	 
	 	(vi)	 	the undersigned has sufficient knowledge and experience in
business and financial matters to evaluate, and has evaluated,
the merits and risks of this investment.

     (b) The address set forth below on the signature page of this Subscription
Agreement is the undersigned’s true and correct principal office, and the
undersigned has no present intention of relocating its principal office to any
other state or jurisdiction.

     (c) The undersigned is an “accredited investor” as that term is defined in
Rule 501 of Regulation D, as promulgated under the 1933 Act because the
undersigned meets one of the following criteria (if the undersigned is not an
“accredited investor”, place an “X” in the following blank:    ):

	 	(i)	 	An individual with a net worth, individually or jointly with
the undersigned’s spouse, of $1,000,000; or
	 
	 	(ii)	 	An individual with income in excess of $200,000 in each of the
two most recent years, or joint income with the undersigned’s
spouse in excess of $300,000 in each of those years, and the
undersigned has a reasonable expectation of reaching the same
income level in the current year; or
	 
	 	(iii)	 	An individual who is an officer or director of the Company; or

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	 	(iv)	 	A corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of
$5,000,000; or
	 
	 	(v)	 	A trust with total assets in excess of $5,000,000 not formed
for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person as
described in Rule 506(b)(2)(ii) of Regulation D, as
promulgated under the 1933 Act; or
	 
	 	(vi)	 	An entity in which all of the equity owners are accredited
investors.

     (d) The undersigned confirms that all documents, records and books
pertaining to an investment in the Units that have been requested by the
undersigned have been made available or delivered to the undersigned. Without
limiting the foregoing, the undersigned has received and reviewed the
Supplemental Memorandum together with the following documents: (a) Summary of
Evaluation of Proved Oil and Gas Reserves effective December 31, 2003 utilizing
December 31, 2003 pricing, as prepared by Williamson Petroleum Consultants, Inc;
(b) the Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2003; (c) the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004; (d) the Company’s Proxy Statement on Schedule 14A relating to
the Company’s Annual Meeting of Stockholders on June 16, 2004; (e) the Company’s
letter to shareholders and bondholders dated June 7, 2004; and (e) any other
documents included with the Supplemental Memorandum, and the undersigned has had
the opportunity to discuss the acquisition of the Units with the Company. The
undersigned has obtained or been given access to all information concerning the
Company that the undersigned has requested. As a result of its review of the
Company, including the review of the materials provided to the undersigned, the
undersigned understands, among other things, the following: the Company has
limited financial resources, has had periods when it has incurred negative cash
flow, and has had periods when it has not operated at a profit; and the Company
has not concurrently, and may not in the future, receive additional investment
funds. The undersigned further represents that the undersigned is cognizant of
the operations, financial condition and capitalization of the Company; is
cognizant of the intended use of proceeds from this financing, and has available
full information concerning the Company’s affairs to evaluate the merits and
risks of an investment in the Units.

     (e) The undersigned has had the opportunity to ask questions of, and
receive answers from, the Company concerning the terms of an investment in the
Units and to receive additional information necessary to verify the accuracy of
the information delivered to the undersigned.

     (f) The undersigned understands that the issuance of the Units has not
been registered under the 1933 Act or any state securities laws in reliance on
an exemption for private offerings and no U.S. federal or state agency has made
any finding or determination as to the fairness of this investment or any
recommendation or endorsement of the offering of the Units.

     (g) The undersigned acknowledges that, in making the decision to purchase
the Units, it has relied solely upon independent investigations made by it.

     (h) The undersigned has the full right, power and authority to enter into
this Subscription Agreement and to carry out and consummate the transactions
herein. This Subscription Agreement constitutes the legal, valid and binding
obligation of the undersigned.

     (i) The undersigned represents that an investment in the Units is a
suitable investment for the undersigned.

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     (j) The undersigned acknowledges and is aware that the following legend
will be imprinted on the certificate(s) representing the Common Shares and the
Warrants subscribed to by the undersigned (including those Common Shares
exercisable upon exercise of the Warrants):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”),
AND ARE `RESTRICTED SECURITIES’ AS THAT TERM IS DEFINED IN RULE 144
UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.”

     (k) The undersigned acknowledges and is aware of the following, in
addition to other information included in the information provided to the
undersigned:

	 	(i)	 	The Units and the securities included in the Units constitute
a speculative investment and involve a high degree of risk of
loss by the undersigned of the undersigned’s total investment.
	 
	 	(ii)	 	There are substantial restrictions on the transferability of
the Units. The Units, the Common Shares, the Warrants and the
Common Shares issuable upon exercise of the Warrants cannot be
transferred, pledged, hypothecated, sold or otherwise disposed
of unless they are registered under the 1933 Act, or an
exemption from such registration is available and established
to the satisfaction of the Company; except as provided in
Section 3 below, investors in the Supplemental Offering have
no rights to require that any transfer of the Units be
registered under the 1933 Act; there is a limited public
market for the Company’s Common Shares; and accordingly, the
undersigned may have to hold the Units indefinitely; and it
may not be possible for the undersigned to liquidate the
undersigned’s investment in the Company.

     (l) The undersigned understands and agrees that the Company is relying
upon the accuracy, completeness, and truth of the undersigned’s representations,
warranties, agreements and certifications contained in this Subscription
Agreement, in determining the undersigned’s suitability as an investor in the
Company and in establishing compliance with federal and state securities laws.
The undersigned understands that any incomplete, inaccurate or untruthful
response, or the breach of the undersigned’s representations, warranties,
agreements or certifications may result in the undersigned or the Company, or
both, being in violation of federal or state securities laws, and any person,
including the Company, who suffers damage as a result may have a claim against
the undersigned for damages. The undersigned also acknowledges that the
undersigned is indemnifying the Company and others for any such losses in
accordance with Section 5 of this Subscription Agreement.

     The foregoing representations and warranties are true and accurate in all
material respects as of the date hereof and shall survive the delivery of the
subscription amount and the completed Subscription Agreement.

3. REGISTRATION RIGHTS

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     The Common Shares purchased in connection with the Supplemental Offering
and the Common Shares issuable upon exercise of the Warrants issued in
connection with the Supplemental Offering constitute “Registrable Shares”, which
are entitled to the registration rights described below.

     (a) At any time after the earlier to occur of (i) 170 days after the
closing of the initial public offering of the Company’s shares of common stock
and (ii) February 3, 2005, the Company shall, as soon as practicable thereafter,
file with the Securities and Exchange Commission (the “SEC”) a registration
statement covering the sale by the undersigned of the Registrable Shares
purchased in this Offering by the undersigned. The Company will undertake
reasonable best efforts to cause the registration statement to become effective
with the SEC as soon as possible after its filing. Notwithstanding the
foregoing, the Company shall not be obligated to effect more than one
registration covering the sale by the undersigned of the Registrable Shares
under this Section 3.

     (b) The Company’s obligations contained in this Section 3 shall be
conditioned upon timely receipt by the Company in writing of such information as
the Company reasonably may require from the undersigned to be included in the
registration statement. Such information shall be provided to the Company in
writing within 10 days after the request for that information by the Company.

     (c) All registration expenses incurred by the Company in connection with
any registration, qualification or compliance pursuant to this Section 3,
including printing expenses, fees and disbursements of the Company’s counsel,
and registration and filing fees relating to the sale of the Registrable Shares
to be registered on behalf of the undersigned pursuant to this Section 3, shall
be borne by the Company. All selling expenses, including commissions, allocable
to the sale of the Registrable Shares registered on behalf of the undersigned
and all costs of the undersigned’s legal counsel and other advisors shall be
borne by the undersigned.

     (d) In the case of a registration effected by the Company on behalf of the
undersigned pursuant to this Section 3, the Company shall keep the undersigned
advised in writing as to the initiation of such registration and as to the
completion thereof. At its expense, the Company will keep such registration
continuously effective for a period ending on the earlier to occur of the date:
(i) that is two years after the date on which the registration statement becomes
effective with the SEC; (ii) on which the undersigned is eligible to sell the
Registrable Shares pursuant to Rule 144(k) under the Securities Act, or the
successor to such provision; or (iii) on which the undersigned has completed the
distribution described in the registration statement relating thereto.

     (e) The Company has previously existing registration rights obligations to
holders (the “Preferred Holders”) of its 8% Cumulative Convertible Preferred
Stock (the “Preferred Stock”) which require the following limitations on the
registration rights granted hereunder to the undersigned:

	 	(i)	 	Commencing six months after the completion of an initial
public offering by the Company, the Preferred Holders may
request a registration statement covering all or any portion
of the Common Stock received or receivable upon exercise of
the Preferred Stock (the “Converted Shares”). No securities
other than the Converted Shares may be included in this
registration statement without the prior written consent of a
majority of the Preferred Holders that requested the
registration statement. In addition, from the date of filing
of such registration statement and until the withdrawal or
abandonment, or until 90 days after the effective date, of
that registration statement, the Company cannot file or cause
to be effected any other registration of any of its equity
securities.

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	 	(ii)	 	Commencing six months after the completion of an initial
public offering by the Company, the Preferred Holders of at
least 50 percent of the Preferred Stock may request and obtain
piggyback rights for Converted Shares on a registration
statement filed by the Company. If this registration statement
is an underwritten secondary registration, and the managing
underwriters advise the Company in writing of their opinion
that the number of securities requested to be included in that
registration exceeds the number that can be sold in an orderly
manner in that offering within a price range acceptable to the
Company and the holders of a majority of the Converted Shares
requested to be included in such registration, the Company
shall include in such registration the Preferred Stock
requested to be included and the Registrable Shares acquired
in this Offering, pro rata among the holders of all such
securities on the basis of the number of securities owned by
each such holder.

     (f) In the case of a registration effected by the Company on behalf of the
undersigned pursuant to this Section 3, the Company shall use its best efforts
to register and qualify the securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions within the
United States as the undersigned may reasonably request that allow registration
by coordination and to do any and all other acts and things which may be
necessary or advisable to enable the undersigned to complete such proposed sale
or other distribution by the undersigned of Registrable Shares in any such
jurisdiction; provided however, that in no event shall the Company be obligated
to register or qualify under the blue sky laws of any state in which the Common
Stock of the Company currently is not qualified for resale, or be obligated to
register or qualify the securities in any jurisdiction which would require the
Company to qualify to do business or to file a general consent to service of
process in any jurisdiction where it shall not then be qualified.

     (g) The Company shall prepare and file with the SEC such amendments and
supplements to the registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable Shares; shall furnish to the
undersigned such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the 1933 Act, and such other
documents (including, without limitation, prospectus amendments and supplements
as are prepared by the Company) as the undersigned may reasonably request in
order to facilitate the disposition of the Registrable Shares; shall notify the
undersigned at any time when a prospectus relating to such registration
statement is required to be delivered under the 1933 Act; shall immediately
notify the undersigned of the happening of any event as a result of which the
prospectus included in or relating to such registration statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading; and, thereafter, the Company will promptly
prepare (and, when completed, give notice to the undersigned) a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Shares, such prospectus will not contain an untrue statement
of a material fact or omit to state any fact necessary to make the statements
therein not misleading; provided that upon such notification by the Company, the
undersigned will not offer or sell Registrable Shares under the registration
statement until the Company has notified the undersigned that it has prepared a
supplement or amendment to such prospectus and delivered copies of such
supplement or amendment to the undersigned (it being understood and agreed by
the Company that the foregoing proviso shall in no way diminish or otherwise
impair the Company’s obligation to promptly prepare a prospectus amendment or
supplement as above provided and deliver copies of same as above provided).

     (h) To the fullest extent permitted by law, the Company will indemnify and
hold harmless the undersigned, each officer, director, fiduciary, employee,
member, general partner and limited partner (and affiliates thereof) of the
undersigned, each broker or other person acting on behalf of the undersigned and

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each person, if any, who controls the undersigned within the meaning of the 1933
Act, against any loss, claim, damage or liability (or action in respect thereof)
to which the undersigned may become subject, under the 1933 Act, or otherwise,
insofar as any such loss, claim, damage or liability (or action in respect
thereof) is caused by any untrue statement or alleged untrue statement of any
material facts contained in the registration statement, any prospectus contained
in the registration statement, or any amendment or supplement thereto, or arises
out of or is based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading, or arises out of the failure of any representations
or warranties of the Company contained herein to be true and correct and the
Company will reimburse on demand the undersigned, such broker or other person
acting on behalf of the undersigned or such officer, director, fiduciary,
employee, member, general partner, limited partner, affiliate or controlling
person for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action. Notwithstanding the foregoing provisions of this paragraph,
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, expense or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by the undersigned or any agent or
other representative of the undersigned. If the indemnification provided for in
this Section 3 from the indemnifying party is applicable by its terms but
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative faults of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or related to
information supplied by, such indemnifying party or indemnified party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action.

     (i) The undersigned will indemnify and hold harmless the Company and any
underwriter (as defined in the 1933 Act) for the Company and each person, if
any, who controls the Company or such underwriter against any loss, claim,
damage or liability (or action in respect thereof) to which the Company or such
underwriter or controlling person may become subject, under the 1933 Act or
otherwise, insofar as any such loss, claim, damage or liability (or action in
respect thereof) is caused by any untrue statement or alleged untrue statement
or omission or alleged omission made in conformity with information furnished by
the undersigned or any agent or other representative of the undersigned or other
representative of the undersigned for use in the registration statement.

4. PUBLIC TRADING OF COMMON STOCK

     If the Company’s shares of common stock have not commenced public trading
by February 3, 2005, then the Company shall issue an additional 0.05 Class A
Warrants and an additional 0.05 Class B Warrants to the undersigned for each
Unit purchased in this Offering by the undersigned.

5. INDEMNIFICATION

     Both the Company and the undersigned acknowledge and understand the
meaning and legal consequences of the representations, warranties, agreements
and certifications contained above, and the Company and the undersigned hereby
agree to indemnify and hold harmless the other party (including, without
limitation, its respective managers, officers, directors, representatives and
agents) from and against any and all loss, damage or liability due to or arising
out of a breach of any representation,

-7-

 

warranty, agreement or certification, or the inaccuracy of any statement, of the
Company or the undersigned, as the case may be, contained in this Subscription
Agreement or any other document submitted by the Company or the undersigned in
connection with the undersigned’s subscription for the Units. The foregoing
notwithstanding, nothing in this Subscription Agreement, including the
representations, warranties, agreements and certifications contained above,
shall be deemed to constitute a waiver of any rights that the undersigned may
have under the 1933 Act and other federal and state securities laws.

6. MISCELLANEOUS

     (a) This Subscription Agreement may be executed in one or more
counterparts all of which taken together shall constitute a single instrument.

     (b) This Subscription Agreement shall be governed and construed as binding
upon the parties hereto, and their respective successors, and no other person
shall have any right or obligation hereunder. This subscription shall be
irrevocable, and may not be assigned by the undersigned. Subject to the
foregoing, this Subscription Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the undersigned.

     (c) This Subscription Agreement, including Exhibit A hereto, constitutes
the entire agreement between the undersigned and the Company with respect to the
subject matter of this Subscription Agreement and supersedes all prior and
contemporaneous agreements between the undersigned and the Company with respect
to the subject matter of this Subscription Agreement.

     (d) This Subscription Agreement will be construed and enforced in
accordance with and governed by the laws of the State of Maryland, except for
matters arising under the 1933 Act, without reference to principles of conflicts
of law.

     With such full understandings and acknowledgements, the undersigned does
hereby affirm the undersigned’s subscription to the purchase of the Units being
offered by the Company as described herein and in the Supplemental Memorandum.
The undersigned does further acknowledge the undersigned’s understandings of all
the terms and provisions of this Subscription Agreement and, upon acceptance of
this Subscription Agreement by the Company, agrees to be bound by all the terms
and conditions of this Subscription Agreement.

[continued on signature page]

-8-

 

SIGNATURE PAGE FOR INDIVIDUALS

	 	 	 	 	 
	Please complete the following:	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	

	 	
 	 	 
	 
	 	 	 	 
	
 	 	 
	Exact Name in Which Title is to be Held	 	 
	 
	 	 	 	 
	
 	 	
 
	Signature	 	Signature of Co-Owner
	 
	 	 	 	 
	
 	 	
 
	Print Name	 	Print Name of Co-Owner
	 
	 	 	 	 
	
 	 	
 
	Social Security Number or Tax	 	Social Security Number or Tax
	 
	 	 	 	 
	
 
	Address	 	 
	 
	 	 	 	 
	
 
	City, State, Postal or Zip Code, Country	 	 

	 	 	 	 	 	 	 
	STATE OF   

	 	 	)	 	 	 
	

	 	 	)	 	 	ss.
	COUNTY OF   

	 	 	)	 	 	 

     On this                     day of                    , 2004, before me personally
appeared                                       , who being duly sworn by me, acknowledged that (s)he
executed the foregoing instrument for the uses and purposes therein stated.

     My commission expires:                                                          

	 	 	 
	 
	 	 
	
 

	 	
 
	Notary Public

	 	Address

     * If the Securities are to be held in joint tenancy or as tenants in
common, both persons must sign above and please indicate the manner in which the
Securities are to be held:

	 	 	 
	                    Tenants in Common

	 	                    Joint Tenants

     This subscription is accepted by Warren Resources, Inc. on this                     day
of                    , 2004.

	 	 	 	 	 
	 	 	WARREN RESOURCES, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Name:	 	 
	

	 	 	 	
 
	

	 	Title:	 	 
	

	 	 	 	
 

-9-

 

SIGNATURE PAGE FOR ENTITIES

	 	 	 	 	 
	Date:

	 	 	 	 
	

	 	
 	 	 
	 
	 	 	 	 
	
 	 	 
	Printed Name of Entity	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	

	 	
 	 	 
	

	 	Signature	 	 
	 
	 	 	 	 
	
 	 	 
	Printed Name and Title	 	 
	 
	 	 	 	 
	
 
	Address	 	 
	 
	 	 	 	 
	
 
	City, State, Postal or Zip Code, Country	 	 
	 
	 	 	 	 
	
 	 	 
	Tax Identification Number	 	 

	 	 	 	 	 	 	 
	STATE OF   

	 	 	)	 	 	 
	

	 	 	)	 	 	ss.
	COUNTY OF   

	 	 	)	 	 	 

     On this                     day of                    , 2004, before me personally appeared
                                      , who being duly sworn by me, acknowledged that (s)he
executed the foregoing instrument in the name of said entity, that (s)he had the
authority to execute the same, and that (s)he executed the same as the act and
deed of said entity for the uses and purposes therein stated.

     My commission expires:                                                          

	 	 	 
	 
	 	 
	
 

	 	
 
	Notary Public

	 	Address

     This subscription is accepted by Warren Resources, Inc. on this                     day
of                    , 2004.

	 	 	 	 	 
	 	 	WARREN RESOURCES, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Name:	 	 
	

	 	 	 	
 
	

	 	Title:	 	 
	

	 	 	 	
 

-10-

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