Exhibit 10.6

 

CENTENNIAL RESOURCE DEVELOPMENT, INC.
2016 LONG TERM INCENTIVE PLAN

 

ARTICLE I.
PURPOSE

 

The Plan’s purpose is to enhance the Company’s ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing these individuals with equity ownership opportunities. 
Capitalized terms used in the Plan are defined in Article XI.

 

ARTICLE II.
ELIGIBILITY

 

Service Providers are eligible to be granted Awards under the Plan, subject to
the limitations described herein.

 

ARTICLE III.
ADMINISTRATION AND DELEGATION

 

3.1          Administration.  The Plan is administered by the Administrator. 
The Administrator has authority to determine which Service Providers receive
Awards, grant Awards and set Award terms and conditions, subject to the
conditions and limitations in the Plan.  The Administrator also has the
authority to take all actions and make all determinations under the Plan, to
interpret the Plan and Award Agreements and to adopt, amend and repeal Plan
administrative rules, guidelines and practices as it deems advisable.  The
Administrator may correct defects and ambiguities, supply omissions and
reconcile inconsistencies in the Plan or any Award as it deems necessary or
appropriate to administer the Plan and any Awards.  The Administrator’s
determinations under the Plan are in its sole discretion and will be final and
binding on all persons having or claiming any interest in the Plan or any Award.

 

3.2          Appointment of Committees.  To the extent Applicable Laws permit,
the Board may delegate any or all of its powers under the Plan to one or more
Committees or officers of the Company or any of its Subsidiaries.  The Board may
abolish any Committee or re-vest in itself any previously delegated authority at
any time.

 

ARTICLE IV.
STOCK AVAILABLE FOR AWARDS

 

4.1          Number of Shares.  Subject to adjustment under Article VIII and the
terms of this Article IV, Awards may be made under the Plan covering up to the
Overall Share Limit.

 

4.2          Share Recycling.  If all or any part of an Award expires, lapses or
is terminated, exchanged for cash, surrendered, repurchased, canceled without
having been fully exercised or forfeited, in any case, in a manner that results
in the Company acquiring Shares covered by the Award at a price not greater than
the price (as adjusted to reflect any Equity Restructuring) paid by the
Participant for such Shares or not issuing any Shares covered by the Award, the
unused Shares covered by the Award will again be available for Award grants
under the Plan.  Further, Shares delivered (either by actual delivery or
attestation) to the Company by a Participant to satisfy the applicable purchase
price and/or to satisfy any applicable tax withholding obligation with respect
to an Award other than an Option or Stock Appreciation Right (including Shares
retained by the Company from the Award being purchased and/or

 

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creating the tax obligation) will again be available for Award grants under the
Plan.  The payment of Dividend Equivalents in cash in conjunction with any
outstanding Awards shall not count against the Overall Share Limit. 
Notwithstanding anything to the contrary contained herein, the following Shares
shall not be added to the Shares authorized for grant under Section 4.1 and
shall not be available for future grants of Awards:  (i) Shares tendered by the
Participant or withheld by the Company in payment of the exercise price of an
Option; (ii) Shares tendered by the Participant or withheld by the Company to
satisfy any tax withholding obligation with respect to an Award that is an
Option or Stock Appreciation Right; (iii) Shares subject to a Stock Appreciation
Right that are not issued in connection with the stock settlement of the Stock
Appreciation Right on exercise thereof; and (iv) Shares purchased on the open
market with the cash proceeds from the exercise of Options.

 

4.3          Incentive Stock Option Limitations.  Notwithstanding anything to
the contrary herein, no more than 16,500,000 Shares may be issued pursuant to
the exercise of Incentive Stock Options.

 

4.4          Substitute Awards.  In connection with an entity’s merger or
consolidation with the Company or any Subsidiary or the Company’s or any
Subsidiary’s acquisition of an entity’s property or stock, the Administrator may
grant Awards in substitution for any options or other stock or stock-based
awards granted before such merger or consolidation by such entity or its
affiliate.  Substitute Awards may be granted on such terms as the Administrator
deems appropriate, notwithstanding limitations on Awards in the Plan. 
Substitute Awards will not count against the Overall Share Limit (nor shall
Shares subject to a Substitute Award be added to the Shares available for Awards
under the Plan as provided above), except that Shares acquired by exercise of
substitute Incentive Stock Options will count against the maximum number of
Shares that may be issued pursuant to the exercise of Incentive Stock Options
under the Plan. Additionally, in the event that a company acquired by the
Company or any Subsidiary or with which the Company or any Subsidiary combines
has shares available under a pre-existing plan approved by stockholders and not
adopted in contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used for Awards under
the Plan and shall not reduce the Shares authorized for grant under the Plan
(and Shares subject to such Awards shall not be added to the Shares available
for Awards under the Plan as provided above); provided that Awards using such
available shares shall not be made after the date awards or grants could have
been made under the terms of the pre-existing plan, absent the acquisition or
combination, and shall only be made to individuals who were not Employees or
Directors prior to such acquisition or combination.

 

4.5          Non-Employee Director Compensation.  Notwithstanding any provision
to the contrary in the Plan, the Administrator may establish compensation for
non-employee Directors from time to time, subject to the limitations in the
Plan.  The Administrator will from time to time determine the terms, conditions
and amounts of all such non-employee Director compensation in its discretion and
pursuant to the exercise of its business judgment, taking into account such
factors, circumstances and considerations as it shall deem relevant from time to
time, provided that the sum of any cash compensation, or other compensation, and
the value (determined as of the grant date in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718, or any
successor thereto) of Awards granted to a non-employee Director as compensation
for services as a non-employee Director during any fiscal year of the Company
may not exceed $500,000.  The Administrator may make exceptions to this limit
for individual non-employee Directors in extraordinary circumstances, as the
Administrator may determine in its discretion, provided that the non-employee
Director receiving such additional compensation may not participate in the
decision to award such compensation or in other contemporaneous compensation
decisions involving non-employee Directors.

 

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ARTICLE V.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

 

5.1          General.  The Administrator may grant Options or Stock Appreciation
Rights to Service Providers subject to the limitations in the Plan, including
any limitations in the Plan that apply to Incentive Stock Options.  The
Administrator will determine the number of Shares covered by each Option and
Stock Appreciation Right, the exercise price of each Option and Stock
Appreciation Right and the conditions and limitations applicable to the exercise
of each Option and Stock Appreciation Right.  A Stock Appreciation Right will
entitle the Participant (or other person entitled to exercise the Stock
Appreciation Right) to receive from the Company upon exercise of the exercisable
portion of the Stock Appreciation Right an amount determined by multiplying the
excess, if any, of the Fair Market Value of one Share on the date of exercise
over the exercise price per Share of the Stock Appreciation Right by the number
of Shares with respect to which the Stock Appreciation Right is exercised,
subject to any limitations of the Plan or that the Administrator may impose and
payable in cash, Shares valued at Fair Market Value or a combination of the two
as the Administrator may determine or provide in the Award Agreement.

 

5.2          Exercise Price.  The Administrator will establish each Option’s and
Stock Appreciation Right’s exercise price and specify the exercise price in the
Award Agreement.  The exercise price will not be less than 100% of the Fair
Market Value on the grant date of the Option or Stock Appreciation Right.
Notwithstanding the foregoing, if on the last day of the term of an Option or
Stock Appreciation Right the Fair Market Value of one Share exceeds the
applicable exercise or base price per Share, the Participant has not exercised
the Option or Stock Appreciation Right and remains employed by the Company or
one of its Subsidiaries and the Option or Stock Appreciation Right has not
expired, the Option or Stock Appreciation Right shall be deemed to have been
exercised by the Participant on such day with payment made by withholding Shares
otherwise issuable in connection with its exercise.  In such event, the Company
shall deliver to the Participant the number of Shares for which the Option or
Stock Appreciation Right was deemed exercised, less the number of Shares
required to be withheld for the payment of the total purchase price and required
withholding taxes; provided, however, any fractional Share shall be settled in
cash.

 

5.3          Duration.  Each Option or Stock Appreciation Right will be
exercisable at such times and as specified in the Award Agreement, provided that
the term of an Option or Stock Appreciation Right will not exceed ten years. 
Notwithstanding the foregoing and unless determined otherwise by the Company, in
the event that on the last business day of the term of an Option or Stock
Appreciation Right (other than an Incentive Stock Option) (i) the exercise of
the Option or Stock Appreciation Right is prohibited by Applicable Law, as
determined by the Company, or (ii) Shares may not be purchased or sold by the
applicable Participant due to any Company insider trading policy (including
blackout periods) or a “lock-up” agreement undertaken in connection with an
issuance of securities by the Company, the term of the Option or Stock
Appreciation Right shall be extended until the date that is thirty (30) days
after the end of the legal prohibition, black-out period or lock-up agreement,
as determined by the Company; provided, however, in no event shall the extension
last beyond the ten year term of the applicable Option or Stock Appreciation
Right.  Notwithstanding the foregoing, if the Participant, prior to the end of
the term of an Option or Stock Appreciation Right, violates the non-competition,
non-solicitation, confidentiality or other similar restrictive covenant
provisions of any employment contract, confidentiality and nondisclosure
agreement or other agreement between the Participant and the Company or any of
its Subsidiaries, the right of the Participant and the Participant’s transferees
to exercise any Option or Stock Appreciation Right issued to the Participant
shall terminate immediately upon such violation, unless the Company otherwise
determines.  In addition, if, prior to the end of the term of an Option or Stock
Appreciation Right, the Participant is given notice by the Company or any of its
Subsidiaries of the Participant’s Termination of Service by the Company or any
of its Subsidiaries for

 

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Cause, and the effective date of such Termination of Service is subsequent to
the date of the delivery of such notice, the right of the Participant and the
Participant’s transferees to exercise any Option or Stock Appreciation Right
issued to the Participant shall be suspended from the time of the delivery of
such notice until the earlier of (i) such time as it is determined or otherwise
agreed that the Participant’s service as a Service Provider will not be
terminated for Cause as provided in such notice or (ii) the effective date of
the Participant’s Termination of Service by the Company or any of its
Subsidiaries for Cause (in which case the right of the Participant and the
Participant’s transferees to exercise any Option or Stock Appreciation Right
issued to the Participant will terminate immediately upon the effective date of
such Termination of Service).

 

5.4          Exercise.  Options and Stock Appreciation Rights may be exercised
by delivering to the Company a written notice of exercise, in a form the
Administrator approves (which may be electronic), signed by the person
authorized to exercise the Option or Stock Appreciation Right, together with, as
applicable, payment in full (i) as specified in Section 5.5 for the number of
Shares for which the Award is exercised and (ii) as specified in Section 9.5 for
any applicable taxes.  Unless the Administrator otherwise determines, an Option
or Stock Appreciation Right may not be exercised for a fraction of a Share.

 

5.5          Payment Upon Exercise.  Subject to Section 10.8, any Company
insider trading policy (including blackout periods) and Applicable Laws, the
exercise price of an Option must be paid by:

 

(a)           cash, wire transfer of immediately available funds or by check
payable to the order of the Company, provided that the Company may limit the use
of one of the foregoing payment forms if one or more of the payment forms below
is permitted;

 

(b)           if there is a public market for Shares at the time of exercise,
unless the Company otherwise determines, (A) delivery (including telephonically
to the extent permitted by the Company) of an irrevocable and unconditional
undertaking by a broker acceptable to the Company to deliver promptly to the
Company sufficient funds to pay the exercise price, or (B) the Participant’s
delivery to the Company of a copy of irrevocable and unconditional instructions
to a broker acceptable to the Company to deliver promptly to the Company cash or
a check sufficient to pay the exercise price; provided that such amount is paid
to the Company at such time as may be required by the Administrator;

 

(c)           to the extent permitted by the Administrator, delivery (either by
actual delivery or attestation) of Shares owned by the Participant valued at
their Fair Market Value;

 

(d)           to the extent permitted by the Administrator, surrendering Shares
then issuable upon the Option’s exercise valued at their Fair Market Value on
the exercise date;

 

(e)           to the extent permitted by the Administrator, delivery of a
promissory note or any other property that the Administrator determines is good
and valuable consideration; or

 

(f)            to the extent permitted by the Company, any combination of the
above payment forms approved by the Administrator.

 

ARTICLE VI.
RESTRICTED STOCK; RESTRICTED STOCK UNITS

 

6.1          General.  The Administrator may grant Restricted Stock, or the
right to purchase Restricted Stock, to any Service Provider, subject to the
Company’s right to repurchase all or part of such shares at their issue price or
other stated or formula price from the Participant (or to require forfeiture of
such shares) if conditions the Administrator specifies in the Award Agreement
are not satisfied before the

 

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end of the applicable restriction period or periods that the Administrator
establishes for such Award.  In addition, the Administrator may grant to Service
Providers Restricted Stock Units, which may be subject to vesting and forfeiture
conditions during the applicable restriction period or periods, as set forth in
an Award Agreement.  The Administrator will determine and set forth in the Award
Agreement the terms and conditions for each Restricted Stock and Restricted
Stock Unit Award, subject to the conditions and limitations contained in the
Plan.

 

6.2          Restricted Stock.

 

(a)           Dividends.  Participants holding shares of Restricted Stock will
be entitled to all ordinary cash dividends paid with respect to such Shares,
unless the Administrator provides otherwise in the Award Agreement.  In
addition, unless the Administrator provides otherwise, if any dividends or
distributions are paid in Shares, or consist of a dividend or distribution to
holders of Common Stock of property other than an ordinary cash dividend, the
Shares or other property will be subject to the same restrictions on
transferability and forfeitability as the shares of Restricted Stock with
respect to which they were paid.  In addition, with respect to a share of
Restricted Stock with performance-based vesting, dividends which are paid prior
to vesting shall only be paid out to the Participant to the extent that the
performance-based vesting conditions are subsequently satisfied and the share of
Restricted Stock vests.

 

(b)           Stock Certificates.  The Company may require that the Participant
deposit in escrow with the Company (or its designee) any stock certificates
issued in respect of shares of Restricted Stock, together with a stock power
endorsed in blank.

 

6.3          Restricted Stock Units.

 

(a)           Settlement.  The Administrator may provide that settlement of
Restricted Stock Units will occur upon or as soon as reasonably practicable
after the Restricted Stock Units vest or will instead be deferred, on a
mandatory basis or at the Participant’s election, in a manner intended to comply
with Section 409A.

 

(b)           Stockholder Rights. A Participant will have no rights of a
stockholder with respect to Shares subject to any Restricted Stock Unit unless
and until the Shares are delivered in settlement of the Restricted Stock Unit.

 

(c)           Dividend Equivalents.  If the Administrator provides, a grant of
Restricted Stock Units may provide a Participant with the right to receive
Dividend Equivalents.  Dividend Equivalents may be paid currently or credited to
an account for the Participant, settled in cash or Shares and subject to the
same restrictions on transferability and forfeitability as the Restricted Stock
Units with respect to which the Dividend Equivalents are granted and subject to
other terms and conditions as set forth in the Award Agreement.  In addition,
Dividend Equivalents with respect to an Award with performance-based vesting
that are based on dividends paid prior to the vesting of such Award shall only
be paid out to the Participant to the extent that the performance-based
conditions are subsequently satisfied and the Award vests.

 

ARTICLE VII.
OTHER STOCK OR CASH BASED AWARDS

 

Other Stock or Cash Based Awards may be granted to Participants, including
Awards entitling Participants to receive Shares to be delivered in the future
and including annual or other periodic or long-term cash bonus awards (whether
based on specified Performance Criteria or otherwise), in each case subject to
any conditions and limitations in the Plan. Such Other Stock or Cash Based
Awards will also be

 

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available as a payment form in the settlement of other Awards, as standalone
payments and as payment in lieu of compensation to which a Participant is
otherwise entitled.  Other Stock or Cash Based Awards may be paid in Shares,
cash or other property, as the Administrator determines.  Subject to the
provisions of the Plan, the Administrator will determine the terms and
conditions of each Other Stock or Cash Based Award, including any purchase
price, performance goal (which may be based on the Performance Criteria),
transfer restrictions, and vesting conditions, which will be set forth in the
applicable Award Agreement.

 

ARTICLE VIII.
ADJUSTMENTS FOR CHANGES IN COMMON STOCK
AND CERTAIN OTHER EVENTS

 

8.1          Equity Restructuring.  In connection with any Equity Restructuring,
notwithstanding anything to the contrary in this Article VIII, the Administrator
will equitably adjust each outstanding Award as it deems appropriate to reflect
the Equity Restructuring, which may include adjusting the number and type of
securities subject to each outstanding Award and/or the Award’s exercise price
or grant price (if applicable), granting new Awards to Participants, and making
a cash payment to Participants.  The adjustments provided under this Section 8.1
will be final and binding on the affected Participant and the Company; provided
that the Administrator will determine whether an adjustment is equitable.

 

8.2          Corporate Transactions.  In the event of any dividend or other
distribution (whether in the form of cash, Common Stock, other securities, or
other property), reorganization, merger, consolidation, combination,
amalgamation, repurchase, recapitalization, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the
assets of the Company, or sale or exchange of Common Stock or other securities
of the Company, Change in Control, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, other similar
corporate transaction or event, other unusual or nonrecurring transaction or
event affecting the Company or its financial statements or any change in any
Applicable Laws or accounting principles, the Administrator, on such terms and
conditions as it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such transaction or event (except that
action to give effect to a change in Applicable Law or accounting principles may
be made within a reasonable period of time after such change) and either
automatically or upon the Participant’s request, is hereby authorized to take
any one or more of the following actions whenever the Administrator determines
that such action is appropriate in order to (x) prevent dilution or enlargement
of the benefits or potential benefits intended by the Company to be made
available under the Plan or with respect to any Award granted or issued under
the Plan, (y) to facilitate such transaction or event or (z) give effect to such
changes in Applicable Laws or accounting principles:

 

(a)           To provide for the cancellation of any such Award in exchange for
either an amount of cash or other property with a value equal to the amount that
could have been obtained upon the exercise or settlement of the vested portion
of such Award or realization of the Participant’s rights under the vested
portion of such Award, as applicable; provided that, if the amount that could
have been obtained upon the exercise or settlement of the vested portion of such
Award or realization of the Participant’s rights, in any case, is equal to or
less than zero, then the Award may be terminated without payment;

 

(b)           To provide that such Award shall vest and, to the extent
applicable, be exercisable as to all shares covered thereby, notwithstanding
anything to the contrary in the Plan or the provisions of such Award;

 

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(c)           To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
awards covering the stock of the successor or survivor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and/or applicable exercise or purchase price, in all cases, as determined
by the Administrator;

 

(d)           To make adjustments in the number and type of shares of Common
Stock (or other securities or property) subject to outstanding Awards and/or
with respect to which Awards may be granted under the Plan (including, but not
limited to, adjustments of the limitations in Article IV hereof on the maximum
number and kind of shares which may be issued) and/or in the terms and
conditions of (including the grant or exercise price), and the criteria included
in, outstanding Awards;

 

(e)           To replace such Award with other rights or property selected by
the Administrator; and/or

 

(f)            To provide that the Award will terminate and cannot vest, be
exercised or become payable after the applicable event.

 

8.3          Administrative Stand Still.  In the event of any pending stock
dividend, stock split, combination or exchange of shares, merger, consolidation
or other distribution (other than normal cash dividends) of Company assets to
stockholders, or any other extraordinary transaction or change affecting the
Shares or the share price of Common Stock, including any Equity Restructuring or
any securities offering or other similar transaction, for administrative
convenience, the Administrator may refuse to permit the exercise of any Award
for up to sixty days before or after such transaction.

 

8.4          General.  Except as expressly provided in the Plan or the
Administrator’s action under the Plan, no Participant will have any rights due
to any subdivision or consolidation of Shares of any class, dividend payment,
increase or decrease in the number of Shares of any class or dissolution,
liquidation, merger, or consolidation of the Company or other corporation. 
Except as expressly provided with respect to an Equity Restructuring under
Section 8.1 above or the Administrator’s action under the Plan, no issuance by
the Company of Shares of any class, or securities convertible into Shares of any
class, will affect, and no adjustment will be made regarding, the number of
Shares subject to an Award or the Award’s grant or exercise price.  The
existence of the Plan, any Award Agreements and the Awards granted hereunder
will not affect or restrict in any way the Company’s right or power to make or
authorize (i) any adjustment, recapitalization, reorganization or other change
in the Company’s capital structure or its business, (ii) any merger,
consolidation dissolution or liquidation of the Company or sale of Company
assets or (iii) any sale or issuance of securities, including securities with
rights superior to those of the Shares or securities convertible into or
exchangeable for Shares.  The Administrator may treat Participants and Awards
(or portions thereof) differently under this Article VIII.

 

ARTICLE IX.
GENERAL PROVISIONS APPLICABLE TO AWARDS

 

9.1          Transferability.  Except as the Administrator may determine or
provide in an Award Agreement or otherwise for Awards other than Incentive Stock
Options, Awards may not be sold, assigned, transferred, pledged or otherwise
encumbered, either voluntarily or by operation of law, except by will or the
laws of descent and distribution, or, subject to the Administrator’s consent,
pursuant to a domestic relations order, and, during the life of the Participant,
will be exercisable only by the Participant.  References to a Participant, to
the extent relevant in the context, will include references to a Participant’s
authorized transferee that the Administrator specifically approves.

 

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9.2          Documentation.  Each Award will be evidenced in an Award Agreement,
which may be written or electronic, as the Administrator determines. Each Award
may contain terms and conditions in addition to those set forth in the Plan.

 

9.3          Discretion.  Except as the Plan otherwise provides, each Award may
be made alone or in addition or in relation to any other Award.  The terms of
each Award to a Participant need not be identical, and the Administrator need
not treat Participants or Awards (or portions thereof) uniformly.

 

9.4          Termination of Status.  The Administrator will determine how the
disability, death, retirement, authorized leave of absence or any other change
or purported change in a Participant’s Service Provider status affects an Award
and the extent to which, and the period during which, the Participant, the
Participant’s legal representative, conservator, guardian or Designated
Beneficiary may exercise rights under the Award, if applicable.

 

9.5          Withholding.  Each Participant must pay the Company, or make
provision satisfactory to the Administrator for payment of, any taxes required
by law to be withheld in connection with such Participant’s Awards by the date
of the event creating the tax liability.  The Company may deduct an amount
sufficient to satisfy such tax obligations based on the minimum statutory
withholding rates (or such other rate as may be determined by the Company after
considering any accounting consequences or costs) from any payment of any kind
otherwise due to a Participant.  Subject to Section 10.8 and any Company insider
trading policy (including blackout periods), Participants may satisfy such tax
obligations (i) in cash, by wire transfer of immediately available funds, by
check made payable to the order of the Company, provided that the Company may
limit the use of the foregoing payment forms if one or more of the payment forms
below is permitted, (ii) to the extent permitted by the Administrator, in whole
or in part by delivery of Shares, including Shares retained from the Award
creating the tax obligation, valued at their Fair Market Value, (iii) if there
is a public market for Shares at the time the tax obligations are satisfied,
unless the Company otherwise determines, (A) delivery (including telephonically
to the extent permitted by the Company) of an irrevocable and unconditional
undertaking by a broker acceptable to the Company to deliver promptly to the
Company sufficient funds to satisfy the tax obligations, or (B) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a broker acceptable to the Company to deliver promptly to the
Company cash or a check sufficient to satisfy the tax withholding; provided that
such amount is paid to the Company at such time as may be required by the
Administrator, or (iv) to the extent permitted by the Company, any combination
of the foregoing payment forms approved by the Administrator.  If any tax
withholding obligation will be satisfied under clause (ii) of the immediately
preceding sentence by the Company’s retention of Shares from the Award creating
the tax obligation and there is a public market for Shares at the time the tax
obligation is satisfied, the Company may elect to instruct any brokerage firm
determined acceptable to the Company for such purpose to sell on the applicable
Participant’s behalf some or all of the Shares retained and to remit the
proceeds of the sale to the Company or its designee, and each Participant’s
acceptance of an Award under the Plan will constitute the Participant’s
authorization to the Company and instruction and authorization to such brokerage
firm to complete the transactions described in this sentence.

 

9.6          Amendment of Award; Prohibition on Repricing.  The Administrator
may amend, modify or terminate any outstanding Award, including by substituting
another Award of the same or a different type, changing the exercise or
settlement date, and converting an Incentive Stock Option to a Non-Qualified
Stock Option.  The Participant’s consent to such action will be required unless
(i) the action, taking into account any related action, does not materially and
adversely affect the Participant’s rights under the Award, or (ii) the change is
permitted under Article VIII or pursuant to Section 10.6.  Notwithstanding the
foregoing or anything in the Plan to the contrary, the Administrator may not
except pursuant to Article VIII, without the approval of the stockholders of the
Company, reduce the exercise

 

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price per share of outstanding Options or Stock Appreciation Rights or cancel
outstanding Options or Stock Appreciation Rights in exchange for cash, other
Awards or Options or Stock Appreciation Rights with an exercise price per share
that is less than the exercise price per share of the original Options or Stock
Appreciation Rights.

 

9.7          Conditions on Delivery of Stock.  The Company will not be obligated
to deliver any Shares under the Plan or remove restrictions from Shares
previously delivered under the Plan until (i) all Award conditions have been met
or removed to the Company’s satisfaction, (ii) as determined by the Company, all
other legal matters regarding the issuance and delivery of such Shares have been
satisfied, including any applicable securities laws and stock exchange or stock
market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Administrator
deems necessary or appropriate to satisfy any Applicable Laws.  The Company’s
inability to obtain authority from any regulatory body having jurisdiction,
which the Administrator determines is necessary to the lawful issuance and sale
of any securities, will relieve the Company of any liability for failing to
issue or sell such Shares as to which such requisite authority has not been
obtained.

 

9.8          Acceleration.  The Administrator may at any time provide that any
Award will become immediately vested and fully or partially exercisable, free of
some or all restrictions or conditions, or otherwise fully or partially
realizable.

 

9.9          Additional Terms of Incentive Stock Options.  The Administrator may
grant Incentive Stock Options only to employees of the Company, any of its
present or future parent or subsidiary corporations, as defined in
Sections 424(e) or (f) of the Code, respectively, and any other entities the
employees of which are eligible to receive Incentive Stock Options under the
Code.  If an Incentive Stock Option is granted to a Greater Than 10%
Stockholder, the exercise price will not be less than 110% of the Fair Market
Value on the Option’s grant date, and the term of the Option will not exceed
five years.  All Incentive Stock Options will be subject to and construed
consistently with Section 422 of the Code.  By accepting an Incentive Stock
Option, the Participant agrees to give prompt notice to the Company of
dispositions or other transfers (other than in connection with a Change in
Control) of Shares acquired under the Option made within (i) two years from the
grant date of the Option or (ii) one year after the transfer of such Shares to
the Participant, specifying the date of the disposition or other transfer and
the amount the Participant realized, in cash, other property, assumption of
indebtedness or other consideration, in such disposition or other transfer. 
Neither the Company nor the Administrator will be liable to a Participant, or
any other party, if an Incentive Stock Option fails or ceases to qualify as an
“incentive stock option” under Section 422 of the Code.  Any Incentive Stock
Option or portion thereof that fails to qualify as an “incentive stock option”
under Section 422 of the Code for any reason, including becoming exercisable
with respect to Shares having a fair market value exceeding the $100,000
limitation under Treasury Regulation Section 1.422-4, will be a Non-Qualified
Stock Option.

 

ARTICLE X.
MISCELLANEOUS

 

10.1        No Right to Employment or Other Status.  No person will have any
claim or right to be granted an Award, and the grant of an Award will not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company or any Subsidiary.  The Company and its
Subsidiaries expressly reserve the right at any time to dismiss or otherwise
terminate its relationship with a Participant free from any liability or claim
under the Plan or any Award, except as expressly provided in an Award Agreement.

 

10.2        No Rights as Stockholder; Certificates.  Subject to the Award
Agreement, no Participant or Designated Beneficiary will have any rights as a
stockholder with respect to any Shares to be

 

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distributed under an Award until becoming the record holder of such Shares. 
Notwithstanding any other provision of the Plan, unless the Administrator
otherwise determines or Applicable Laws require, the Company will not be
required to deliver to any Participant certificates evidencing Shares issued in
connection with any Award and instead such Shares may be recorded in the books
of the Company (or, as applicable, its transfer agent or stock plan
administrator).  The Company may place legends on stock certificates issued
under the Plan that the Administrator deems necessary or appropriate to comply
with Applicable Laws.

 

10.3        Effective Date and Term of Plan.  Unless earlier terminated by the
Board, the Plan will become effective upon the consummation of the Company’s
initial business combination, subject to the approval of the Company’s
stockholders, and will remain in effect until the tenth anniversary of the
earlier of (i) the date the Board adopted the Plan or (ii) the date the
Company’s stockholders approved the Plan, but Awards previously granted may
extend beyond that date in accordance with the Plan.  If the Plan is not
approved by the Company’s stockholders, the Plan will not become effective and
no Awards will be granted under the Plan.

 

10.4        Amendment of Plan.  The Administrator may amend, suspend or
terminate the Plan at any time; provided that no amendment, other than an
increase to the Overall Share Limit, may materially and adversely affect any
Award outstanding at the time of such amendment without the affected
Participant’s consent.  No Awards may be granted under the Plan during any
suspension period or after Plan termination.  Awards outstanding at the time of
any Plan suspension or termination will continue to be governed by the Plan and
the Award Agreement, as in effect before such suspension or termination.  The
Board will obtain stockholder approval of any Plan amendment to the extent
necessary to comply with Applicable Laws.

 

10.5        Provisions for Foreign Participants.  The Administrator may modify
Awards granted to Participants who are foreign nationals or employed outside the
United States or establish subplans or procedures under the Plan to address
differences in laws, rules, regulations or customs of such foreign jurisdictions
with respect to tax, securities, currency, employee benefit or other matters.

 

10.6        Section 409A.

 

(a)           General.  The Company intends that all Awards be structured to
comply with, or be exempt from, Section 409A, such that no adverse tax
consequences, interest, or penalties under Section 409A apply.  Notwithstanding
anything in the Plan or any Award Agreement to the contrary, the Administrator
may, without a Participant’s consent, amend this Plan or Awards, adopt policies
and procedures, or take any other actions (including amendments, policies,
procedures and retroactive actions) as are necessary or appropriate to preserve
the intended tax treatment of Awards, including any such actions intended to
(A) exempt this Plan or any Award from Section 409A, or (B) comply with
Section 409A, including regulations, guidance, compliance programs and other
interpretative authority that may be issued after an Award’s grant date.  The
Company makes no representations or warranties as to an Award’s tax treatment
under Section 409A or otherwise.  The Company and its Subsidiaries will have no
obligation under this Section 10.6 or otherwise to avoid the taxes, penalties or
interest under Section 409A with respect to any Award and will have no liability
to any Participant or any other person if any Award, compensation or other
benefits under the Plan are determined to constitute noncompliant “nonqualified
deferred compensation” subject to taxes, penalties or interest under
Section 409A.

 

(b)           Separation from Service.  If an Award constitutes “nonqualified
deferred compensation” under Section 409A, any payment or settlement of such
Award upon a termination of a Participant’s Service Provider relationship will,
to the extent necessary to avoid taxes under Section 409A, be made only upon the
Participant’s “separation from service” (within the meaning of

 

10

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Section 409A), whether such “separation from service” occurs upon or after the
termination of the Participant’s Service Provider relationship.  For purposes of
this Plan or any Award Agreement relating to any such payments or benefits,
references to a “termination,” “termination of employment” or like terms means a
“separation from service.”

 

(c)                                  Payments to Specified Employees. 
Notwithstanding any contrary provision in the Plan or any Award Agreement, any
payment(s) of “nonqualified deferred compensation” required to be made under an
Award to a “specified employee” (as defined under Section 409A and as the
Administrator determines) due to his or her “separation from service” will, to
the extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code,
be delayed for the six-month period immediately following such “separation from
service” (or, if earlier, until the specified employee’s death) and will instead
be paid (as set forth in the Award Agreement) on the day immediately following
such six-month period or as soon as administratively practicable thereafter
(without interest).  Any payments of “nonqualified deferred compensation” under
such Award payable more than six months following the Participant’s “separation
from service” will be paid at the time or times the payments are otherwise
scheduled to be made.

 

10.7                        Limitations on Liability.  Notwithstanding any other
provisions of the Plan, no individual acting as a director, officer, other
employee or agent of the Company or any Subsidiary will be liable to any
Participant, former Participant, spouse, beneficiary, or any other person for
any claim, loss, liability, or expense incurred in connection with the Plan or
any Award, and such individual will not be personally liable with respect to the
Plan because of any contract or other instrument executed in his or her capacity
as an Administrator, director, officer, other employee or agent of the Company
or any Subsidiary.  The Company will indemnify and hold harmless each director,
officer, other employee and agent of the Company or any Subsidiary that has been
or will be granted or delegated any duty or power relating to the Plan’s
administration or interpretation, against any cost or expense (including
attorneys’ fees) or liability (including any sum paid in settlement of a claim
with the Administrator’s approval) arising from any act or omission concerning
this Plan unless arising from such person’s own fraud or bad faith.

 

10.8                        Lock-Up Period.  The Company may, at the request of
any underwriter representative or otherwise, in connection with registering the
offering of any Company securities under the Securities Act, prohibit
Participants from, directly or indirectly, selling or otherwise transferring any
Shares or other Company securities during a period of up to one hundred eighty
days following the effective date of a Company registration statement filed
under the Securities Act, or such longer period as determined by the
underwriter.

 

10.9                        Data Privacy.  As a condition for receiving any
Award, each Participant explicitly and unambiguously consents to the collection,
use and transfer, in electronic or other form, of personal data as described in
this section by and among the Company and its Subsidiaries and affiliates
exclusively for implementing, administering and managing the Participant’s
participation in the Plan.  The Company and its Subsidiaries and affiliates may
hold certain personal information about a Participant, including the
Participant’s name, address and telephone number; birthdate; social security,
insurance number or other identification number; salary; nationality; job
title(s); any Shares held in the Company or its Subsidiaries and affiliates; and
Award details, to implement, manage and administer the Plan and Awards (the
“Data”).  The Company and its Subsidiaries and affiliates may transfer the Data
amongst themselves as necessary to implement, administer and manage a
Participant’s participation in the Plan, and the Company and its Subsidiaries
and affiliates may transfer the Data to third parties assisting the Company with
Plan implementation, administration and management.  These recipients may be
located in the Participant’s country, or elsewhere, and the Participant’s
country may have different data privacy laws and protections than the
recipients’ country.  By accepting an Award, each Participant authorizes such
recipients to receive, possess, use, retain and transfer the Data, in electronic
or other form, to implement,

 

11

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administer and manage the Participant’s participation in the Plan, including any
required Data transfer to a broker or other third party with whom the Company or
the Participant may elect to deposit any Shares.  The Data related to a
Participant will be held only as long as necessary to implement, administer, and
manage the Participant’s participation in the Plan.  A Participant may, at any
time, view the Data that the Company holds regarding such Participant, request
additional information about the storage and processing of the Data regarding
such Participant, recommend any necessary corrections to the Data regarding the
Participant or refuse or withdraw the consents in this Section 10.9 in writing,
without cost, by contacting the local human resources representative.  The
Company may cancel Participant’s ability to participate in the Plan and, in the
Administrator’s discretion, the Participant may forfeit any outstanding Awards
if the Participant refuses or withdraws the consents in this Section 10.9.  For
more information on the consequences of refusing or withdrawing consent,
Participants may contact their local human resources representative.

 

10.10                 Severability.  If any portion of the Plan or any action
taken under it is held illegal or invalid for any reason, the illegality or
invalidity will not affect the remaining parts of the Plan, and the Plan will be
construed and enforced as if the illegal or invalid provisions had been
excluded, and the illegal or invalid action will be null and void.

 

10.11                 Governing Documents.  If any contradiction occurs between
the Plan and any Award Agreement or other written agreement between a
Participant and the Company (or any Subsidiary) that the Administrator has
approved, the Plan will govern, unless it is expressly specified in such Award
Agreement or other written document that a specific provision of the Plan will
not apply.

 

10.12                 Governing Law.  The Plan and all Awards will be governed
by and interpreted in accordance with the laws of the State of Delaware,
disregarding any state’s choice-of-law principles requiring the application of a
jurisdiction’s laws other than the State of Delaware.

 

10.13                 Claw-back Provisions.  All Awards (including any proceeds,
gains or other economic benefit the Participant actually or constructively
receives upon receipt or exercise of any Award or the receipt or resale of any
Shares underlying the Award) will be subject to any Company claw-back policy,
including any claw-back policy adopted to comply with Applicable Laws (including
the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or
regulations promulgated thereunder) as set forth in such claw-back policy or the
Award Agreement.

 

10.14                 Titles and Headings.  The titles and headings in the Plan
are for convenience of reference only and, if any conflict, the Plan’s text,
rather than such titles or headings, will control.

 

10.15                 Conformity to Securities Laws.  Participant acknowledges
that the Plan is intended to conform to the extent necessary with Applicable
Laws.  Notwithstanding anything herein to the contrary, the Plan and all Awards
will be administered only in conformance with Applicable Laws.  To the extent
Applicable Laws permit, the Plan and all Award Agreements will be deemed amended
as necessary to conform to Applicable Laws.

 

10.16                 Relationship to Other Benefits.  No payment under the Plan
will be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except as expressly provided in writing in
such other plan or an agreement thereunder.

 

10.17                 Broker-Assisted Sales. In the event of a broker-assisted
sale of Shares in connection with the payment of amounts owed by a Participant
under or with respect to the Plan or Awards, including amounts to be paid under
the final sentence of Section 9.5: (a) any Shares to be sold through the broker-

 

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assisted sale will be sold on the day the payment first becomes due, or as soon
thereafter as practicable; (b) such Shares may be sold as part of a block trade
with other Participants in the Plan in which all participants receive an average
price; (c) the applicable Participant will be responsible for all broker’s fees
and other costs of sale, and by accepting an Award, each Participant agrees to
indemnify and hold the Company harmless from any losses, costs, damages, or
expenses relating to any such sale; (d) to the extent the Company or its
designee receives proceeds of such sale that exceed the amount owed, the Company
will pay such excess in cash to the applicable Participant as soon as reasonably
practicable; (e) the Company and its designees are under no obligation to
arrange for such sale at any particular price; and (f) in the event the proceeds
of such sale are insufficient to satisfy the Participant’s applicable
obligation, the Participant may be required to pay immediately upon demand to
the Company or its designee an amount in cash sufficient to satisfy any
remaining portion of the Participant’s obligation.

 

10.18                 Section 162(m) Limitations.

 

(a)                                 Individual Award Limitations. 
Notwithstanding any provision in the Plan to the contrary, and subject to
adjustment as provided in Article VIII, (i) the maximum aggregate number of
Shares with respect to which one or more Awards of Options or Stock Appreciation
Rights may be granted to any one person during any fiscal year of the Company
shall be 1,000,000; (ii) the maximum aggregate number of Shares with respect to
which one or more Awards of Restricted Stock, Restricted Stock Units, or Other
Stock or Cash Based Awards that are denominated in Shares intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code (“Performance-Based Compensation”) may be granted to any one person during
any fiscal year of the Company shall be 1,000,000; and (iii) the maximum amount
of cash that may be paid to any one person during any fiscal year of the Company
with respect to one or more Awards payable in cash and not denominated in Shares
shall be $5,000,000.

 

(b)                                 Committee Composition.  To the extent an
Award is intended to qualify as Performance-Based Compensation, the
Administrator shall be a Committee and it is intended that each member of such
Committee will be an “outside director” within the meaning of Section 162(m) of
the Code.

 

(c)                                  Performance-Based Compensation.  The
Administrator, in its sole discretion, may determine whether an Award is
intended to qualify as Performance-Based Compensation.  For the avoidance of
doubt, nothing herein shall require the Administrator to structure any Awards in
a manner intended to constitute Performance-Based Compensation and the
Administrator shall be free, in its sole discretion, to grant Awards that are
not intended to be Performance-Based Compensation.  Notwithstanding any other
provision of the Plan and except as otherwise determined by the Administrator,
any Award which is intended to qualify as Performance-Based Compensation shall
be subject to any additional limitations set forth in Section 162(m) of the Code
or any regulations or rulings issued thereunder that are requirements for
qualification as Performance-Based Compensation, and the Plan and the applicable
Award Agreement shall be deemed amended to the extent necessary to conform to
such requirements.  In addition, Awards of Restricted Stock, Restricted Stock
Units and Other Stock or Cash Based Awards that are intended to qualify as
Performance-Based Compensation shall be subject to the following provisions,
which shall control over any conflicting provision in the Plan or any Award
Agreement:

 

(i)                                     To the extent necessary to comply with
the requirements of Section 162(m)(4)(C) of the Code, no later than 90 days
following the commencement of any performance period or any designated fiscal
period or period of service (or such earlier time as may be required under
Section 162(m) of the Code), the Administrator shall, in writing, (a) designate
the Participant to receive such Award, (b) select the Performance Criteria
applicable to the performance period, which Performance

 

13

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Criteria shall be limited to the specific performance criteria set forth in the
definition of Performance Criteria, (c) establish the performance goals (and any
exclusions), and amounts of such Awards, as applicable, which may be earned for
such performance period based on the Performance Criteria, and (d) specify the
relationship between Performance Criteria and the performance goals and the
amounts of such Awards, as applicable, to be earned by each Participant for such
performance period.

 

(ii)                                  Following the completion of each
performance period, the Administrator shall certify in writing whether and the
extent to which the applicable performance goals have been achieved for such
performance period.  In determining the amount earned under such Awards, the
Administrator shall have the right to reduce or eliminate (but not to increase)
the amount payable at a given level of performance to take into account
additional factors that the Administrator may deem relevant, including the
assessment of individual or corporate performance for the performance period.

 

(iii)                               Unless otherwise specified by the
Administrator at the time of grant, the Performance Criteria with respect to an
Award intended to be Performance-Based Compensation payable to a Participant
shall be determined on the basis of Applicable Accounting Standards.  For this
purpose, “Applicable Accounting Standards” means the U.S. Generally Accepted
Accounting Principles, International Financial Reporting Standards or other
accounting principles or standards applicable to the Company’s financial
statements under U.S. federal securities laws.

 

(iv)                              No adjustment or action described in
Article VIII or in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause such Award to fail to so
qualify as Performance-Based Compensation, unless the Administrator determines
that the Award should not so qualify.

 

10.19                 No Fractional Shares. Notwithstanding any provision in the
Plan to the contrary, no fractional Shares shall be issued or delivered pursuant
to the Plan or any Award, and the Administrator shall determine whether cash,
other securities or other property shall be paid or transferred in lieu of any
fractional Shares, or whether such fractional Shares or any rights thereto shall
be canceled, terminated or otherwise eliminated.

 

10.20                 Section 83(b) Elections Prohibited. No Participant may
make an election under Section 83(b) of the Code, or any successor section
thereto, with respect to any Award without the consent of the Administrator,
which the Administrator may grant or withhold in its discretion.

 

ARTICLE XI.
DEFINITIONS

 

As used in the Plan, the following words and phrases will have the following
meanings:

 

11.1                        “Administrator” means the Board or a Committee to
the extent that the Board’s powers or authority under the Plan have been
delegated to such Committee.

 

11.2                        “Applicable Laws” means the requirements relating to
the administration of equity incentive plans under U.S. federal and state
securities, tax and other applicable laws, rules and regulations, the applicable
rules of any stock exchange or quotation system on which the Common Stock is
listed or quoted and the applicable laws and rules of any foreign country or
other jurisdiction where Awards are granted.

 

11.3                        “Award” means, individually or collectively, a grant
under the Plan of Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units or Other Stock or Cash Based Awards.

 

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11.4                        “Award Agreement” means a written agreement
evidencing an Award, which may be electronic, that contains such terms and
conditions as the Administrator determines, consistent with and subject to the
terms and conditions of the Plan.

 

11.5                        “Board” means the Board of Directors of the Company.

 

11.6                        “Cause” means (i) if a Participant is a party to a
written employment or consulting agreement with the Company or any of its
Subsidiaries or an Award Agreement in which the term “cause” is defined (a
“Relevant Agreement”), “Cause” as defined in the Relevant Agreement, and (ii) if
no Relevant Agreement exists, (A) the Administrator’s determination that the
Participant failed to substantially perform the Participant’s duties (other than
a failure resulting from the Participant’s Disability); (B) the Administrator’s
determination that the Participant failed to carry out, or comply with any
lawful and reasonable directive of the Board or the Participant’s immediate
supervisor; (C) the occurrence of any act or omission by the Participant that
could reasonably be expected to result in (or has resulted in) the Participant’s
conviction, plea of no contest, plea of nolo contendere, or imposition of
unadjudicated probation for any felony or indictable offense or crime involving
moral turpitude; (D) the Participant’s unlawful use (including being under the
influence) or possession of illegal drugs on the premises of the Company or any
of its Subsidiaries or while performing the Participant’s duties and
responsibilities for the Company or any of its Subsidiaries; or (E) the
Participant’s commission of an act of fraud, embezzlement, misappropriation,
misconduct, or breach of fiduciary duty against the Company or any of its
Subsidiaries.

 

11.7                        “Change in Control” means and includes each of the
following:

 

(a)                                 A transaction or series of transactions
(other than an offering of Common Stock to the general public through a
registration statement filed with the Securities and Exchange Commission or a
transaction or series of transactions that meets the requirements of clauses
(i) and (ii) of subsection (c) below) whereby any “person” or related “group” of
“persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange
Act) (other than the Company, any of its Subsidiaries, an employee benefit plan
maintained by the Company or any of its Subsidiaries or a “person” that, prior
to such transaction, directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities of the Company possessing more than 50% of the total combined
voting power of the Company’s securities outstanding immediately after such
acquisition; or

 

(b)                                 During any period of two consecutive years,
individuals who, at the beginning of such period, constitute the Board together
with any new Director(s) (other than a Director designated by a person who shall
have entered into an agreement with the Company to effect a transaction
described in subsections (a) or (c)) whose election by the Board or nomination
for election by the Company’s stockholders was approved by a vote of at least
two-thirds of the Directors then still in office who either were Directors at
the beginning of the two-year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or

 

(c)                                  The consummation by the Company (whether
directly involving the Company or indirectly involving the Company through one
or more intermediaries) of (x) a merger, consolidation, reorganization, or
business combination or (y) a sale or other disposition of all or substantially
all of the Company’s assets in any single transaction or series of related
transactions or (z) the acquisition of assets or stock of another entity, in
each case other than a transaction:

 

(i)                                     which results in the Company’s voting
securities outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being

 

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converted into voting securities of the Company or the person that, as a result
of the transaction, controls, directly or indirectly, the Company or owns,
directly or indirectly, all or substantially all of the Company’s assets or
otherwise succeeds to the business of the Company (the Company or such person,
the “Successor Entity”)) directly or indirectly, at least a majority of the
combined voting power of the Successor Entity’s outstanding voting securities
immediately after the transaction, and

 

(ii)                                  after which no person or group
beneficially owns voting securities representing 50% or more of the combined
voting power of the Successor Entity; provided, however, that no person or group
shall be treated for purposes of this clause (ii) as beneficially owning 50% or
more of the combined voting power of the Successor Entity solely as a result of
the voting power held in the Company prior to the consummation of the
transaction.

 

Notwithstanding the foregoing, in no event shall the Company’s initial business
combination or the transactions occurring in connection therewith constitute a
Change in Control and, if a Change in Control constitutes a payment event with
respect to any Award (or portion of any Award) that provides for the deferral of
compensation that is subject to Section 409A, to the extent required to avoid
the imposition of additional taxes under Section 409A, the transaction or event
described in subsection (a), (b) or (c) with respect to such Award (or portion
thereof) shall only constitute a Change in Control for purposes of the payment
timing of such Award if such transaction also constitutes a “change in control
event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).

 

The Administrator shall have full and final authority, which shall be exercised
in its discretion, to determine conclusively whether a Change in Control has
occurred pursuant to the above definition, the date of the occurrence of such
Change in Control and any incidental matters relating thereto; provided that any
exercise of authority in conjunction with a determination of whether a Change in
Control is a “change in control event” as defined in Treasury Regulation
Section 1.409A-3(i)(5) shall be consistent with such regulation.

 

11.8                        “Code” means the Internal Revenue Code of 1986, as
amended, and the regulations issued thereunder.

 

11.9                        “Committee” means one or more committees or
subcommittees of the Board, which may include one or more Company directors or
executive officers, to the extent Applicable Laws permit.  To the extent
required to comply with the provisions of Rule 16b-3, it is intended that each
member of the Committee will be, at the time the Committee takes any action with
respect to an Award that is subject to Rule 16b-3, a “non-employee director”
within the meaning of Rule 16b-3; however, a Committee member’s failure to
qualify as a “non-employee director” within the meaning of Rule 16b-3 will not
invalidate any Award granted by the Committee that is otherwise validly granted
under the Plan.

 

11.10                 “Common Stock” means the Class A common stock of the
Company.

 

11.11                 “Company” means Centennial Resource Development, Inc.
(known prior to the consummation of the Company’s initial business combination
as Silver Run Acquisition Corporation), a Delaware corporation, or any
successor.

 

11.12                 “Consultant” means any person, including any adviser,
engaged by the Company or its parent or Subsidiary to render services to such
entity if the consultant or adviser: (i) renders bona fide services to the
Company; (ii) renders services not in connection with the offer or sale of
securities in a capital-raising transaction and does not directly or indirectly
promote or maintain a market for the Company’s securities; and (iii) is a
natural person.

 

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11.13                 “Designated Beneficiary” means the beneficiary or
beneficiaries the Participant designates, in a manner the Administrator
determines, to receive amounts due or exercise the Participant’s rights if the
Participant dies or becomes incapacitated.  Without a Participant’s effective
designation, “Designated Beneficiary” will mean the Participant’s estate.

 

11.14                 “Director” means a Board member.

 

11.15                 “Disability” means a permanent and total disability under
Section 22(e)(3) of the Code, as amended.

 

11.16                 “Dividend Equivalents” means a right granted to a
Participant under the Plan to receive the equivalent value (in cash or Shares)
of dividends paid on Shares.

 

11.17                 “Employee” means any employee of the Company or its
Subsidiaries.

 

11.18                 “Equity Restructuring” means a nonreciprocal transaction
between the Company and its stockholders, such as a stock dividend, stock split,
spin-off or recapitalization through a large, nonrecurring cash dividend, that
affects the number or kind of Shares (or other Company securities) or the share
price of Common Stock (or other Company securities) and causes a change in the
per share value of the Common Stock underlying outstanding Awards.

 

11.19                 “Exchange Act” means the Securities Exchange Act of 1934,
as amended.

 

11.20                 “Fair Market Value” means, as of any date, the value of
Common Stock determined as follows: (i) if the Common Stock is listed on any
established stock exchange, its Fair Market Value will be the closing sales
price for such Common Stock as quoted on such exchange for such date, or if no
sale occurred on such date, the last day preceding such date during which a sale
occurred, as reported in The Wall Street Journal or another source the
Administrator deems reliable; (ii) if the Common Stock is not traded on a stock
exchange but is quoted on a national market or other quotation system, the
closing sales price on such date, or if no sales occurred on such date, then on
the last date preceding such date during which a sale occurred, as reported in
The Wall Street Journal or another source the Administrator deems reliable; or
(iii) without an established market for the Common Stock, the Administrator will
determine the Fair Market Value in its discretion.

 

11.21                 “Greater Than 10% Stockholder” means an individual then
owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or its parent
or subsidiary corporation, as defined in Section 424(e) and (f) of the Code,
respectively.

 

11.22                 “Incentive Stock Option” means an Option intended to
qualify as an “incentive stock option” as defined in Section 422 of the Code.

 

11.23                 “Non-Qualified Stock Option” means an Option not intended
or not qualifying as an Incentive Stock Option.

 

11.24                 “Option” means an option to purchase Shares.

 

11.25                 “Other Stock or Cash Based Awards” means cash awards,
awards of Shares, and other awards valued wholly or partially by referring to,
or are otherwise based on, Shares or other property.

 

11.26                 “Overall Share Limit” means 16,500,000 Shares.

 

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11.27                 “Participant” means a Service Provider who has been
granted an Award.

 

11.28                 “Performance Criteria” mean the criteria (and adjustments)
that the Administrator may select for an Award to establish performance goals
for a performance period, which may include the following: net earnings or
losses (either before or after one or more of interest, taxes, depreciation,
amortization, and non-cash equity-based compensation expense); gross or net
sales or revenue or sales or revenue growth; net income (either before or after
taxes) or adjusted net income; profits (including but not limited to gross
profits, net profits, profit growth, net operation profit or economic profit),
profit return ratios or operating margin; budget or operating earnings (either
before or after taxes or before or after allocation of corporate overhead and
bonus); cash flow (including operating cash flow and free cash flow or cash flow
return on capital); return on assets; return on capital or invested capital;
cost of capital; return on stockholders’ equity; total stockholder return;
return on sales; costs, reductions in costs and cost control measures; expenses;
working capital; earnings or loss per share; adjusted earnings or loss per
share; price per share or dividends per share (or appreciation in or maintenance
of such price or dividends); regulatory achievements or compliance;
implementation, completion or attainment of objectives relating to research,
development, regulatory, commercial, or strategic milestones or developments;
market share; economic value or economic value added models; division, group or
corporate financial goals; individual business objectives; production or growth
in production; reserves or added reserves; growth in reserves per share;
inventory growth; environmental, health and/or safety performance; effectiveness
of hedging programs; improvements in internal controls and policies and
procedures; customer satisfaction/growth; customer service; employee
satisfaction; recruitment and maintenance of personnel; human resources
management; supervision of litigation and other legal matters; strategic
partnerships and transactions; financial ratios (including those measuring
liquidity, activity, profitability or leverage); debt levels or reductions;
sales-related goals; financing and other capital raising transactions; cash on
hand; acquisition activity; investment sourcing activity; and marketing
initiatives, any of which may be measured in absolute terms or as compared to
any incremental increase or decrease. Such performance goals also may be based
solely by reference to the Company’s performance or the performance of a
Subsidiary, division, business segment or business unit of the Company or a
Subsidiary, or based upon performance relative to performance of other companies
or upon comparisons of any of the indicators of performance relative to
performance of other companies.  Any performance goals that are financial
metrics may be determined in accordance with U.S. Generally Accepted Accounting
Principles, in accordance with accounting principles established by the
International Accounting Standards Board, or may be adjusted when established to
include or exclude any items otherwise includable or excludable under U.S.
Generally Accepted Accounting Principles or under the accounting principles
established by the International Accounting Standards Board.  The Committee may
provide for exclusion of the impact of an event or occurrence which the
Committee determines should appropriately be excluded, including
(a) restructurings, discontinued operations, extraordinary items, and other
unusual, infrequently occurring or non-recurring charges or events, (b) asset
write-downs, (c) litigation or claim judgments or settlements, (d) acquisitions
or divestitures, (e) reorganization or change in the corporate structure or
capital structure of the Company, (f) an event either not directly related to
the operations of the Company, Subsidiary, division, business segment or
business unit or not within the reasonable control of management, (g) foreign
exchange gains and losses, (h) a change in the fiscal year of the Company,
(i) the refinancing or repurchase of bank loans or debt securities,
(j) unbudgeted capital expenditures, (k) the issuance or repurchase of equity
securities and other changes in the number of outstanding shares, (l) conversion
of some or all of convertible securities to Common Stock, (m) any business
interruption event (n) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting principles, or (o) the effect
of changes in other laws or regulatory rules affecting reported results.

 

11.29                 “Plan” means this 2016 Long Term Incentive Plan, as
amended from time to time.

 

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11.30                 “Restricted Stock” means Shares awarded to a Participant
under Article VI subject to certain vesting conditions and other restrictions.

 

11.31                 “Restricted Stock Unit” means an unfunded, unsecured right
to receive, on the applicable settlement date, one Share or an amount in cash or
other consideration determined by the Administrator to be of equal value as of
such settlement date, subject to certain vesting conditions and other
restrictions.

 

11.32                 “Rule 16b-3” means Rule 16b-3 promulgated under the
Exchange Act.

 

11.33                 “Section 409A” means Section 409A of the Code and all
regulations, guidance, compliance programs and other interpretative authority
thereunder.

 

11.34                 “Securities Act” means the Securities Act of 1933, as
amended.

 

11.35                 “Service Provider” means an Employee, Consultant or
Director.

 

11.36                 “Shares” means shares of Common Stock.

 

11.37                 “Stock Appreciation Right” means a stock appreciation
right granted under Article V.

 

11.38                 “Subsidiary” means any entity (other than the Company),
whether domestic or foreign, in an unbroken chain of entities beginning with the
Company if each of the entities other than the last entity in the unbroken chain
beneficially owns, at the time of the determination, securities or interests
representing at least 50% of the total combined voting power of all classes of
securities or interests in one of the other entities in such chain.

 

11.39                 “Substitute Awards” shall mean Awards granted or Shares
issued by the Company in assumption of, or in substitution or exchange for,
awards previously granted, or the right or obligation to make future awards, in
each case by a company acquired by the Company or any Subsidiary or with which
the Company or any Subsidiary combines.

 

11.40                 “Termination of Service” means the date the Participant
ceases to be a Service Provider.

 

* * * * *

 

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