Exercise; Depends. As for how much is too much exercise generally, just watch & listen to the signs. Always warm up & cool down, and don't go so far that he's sweating or blowing massively. Build up gradually from whatever seems to be reasonably comfortable for him.
Domestic horses rarely get enough exercise for optimum health and even if you're exercising him a number of times daily, most of his life will likely still be rather sedentary. An option that may be appropriate for you, to change this pattern & get him exercising more on his own is implementing the 'paddock paradise' setup. You can google it for info & examples, and you can make a compromised setup if a full track doesn't suit you.
Be wary about round pen/lunging, as this is hard on their joints. Make sure they're big circles & change direction often. Doing it on a hill, or leading/driving/riding up & down hills would be helpful if possible. The other thing with lunging for exercise is that it tends to 'turn them off' as it's boring & repetitive. I'd try to make sure things are relatively positive & interesting for him - add obstacles, go places - do it on the move, add rewards, etc.
As for feed, even if the horse is fat, he still needs free access to low-grade roughage, to keep his digestive system functioning healthily. I think 1.5% of their bodyweight daily is about the amount they need. I'd be putting it in a double or a small holed hay net or such, to make him work for it & not able to waste or gorge on it. He will need a good quality complete supplement to ensure he's getting correct nutrition, and I'd avoid the grain-based options.