Exhibit 10.2

 

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[    ]

[    ]

Re: Participation Agreement – Talos Energy Operating Company LLC Executive
Severance Plan

Dear [        ]:

We are pleased to inform you that you have been designated as eligible to
participate in the Talos Energy Operating Company LLC Executive Severance Plan
(as it may be amended from time to time, the “Plan”), as a Tier [1][2]
Executive. Your participation in the Plan is subject to the terms and conditions
of the Plan and your execution and delivery of this agreement, which constitutes
a Participation Agreement (as defined in the Plan). A copy of the Plan is
attached hereto as Annex A and is incorporated herein and deemed to be part of
this Participation Agreement for all purposes.

In signing below, you expressly agree to be bound by, and promise to abide by,
the terms of Sections 7, 8, 9, 10 and 11 of the Plan, which create certain
restrictions with respect to confidentiality, non-solicitation, ownership of
intellectual property, non-disparagement and post-termination cooperation. You
agree that the covenants within Sections 7, 8, 9, 10 and 11 of the Plan are
reasonable in all respects.

You acknowledge and agree that the Plan and this Participation Agreement
supersede all prior severance benefit policies, plans and arrangements of the
Company or any other member of the Company Group (and supersedes all prior oral
or written communications by the Company or any of other member of the Company
Group with respect to severance benefits), and all such prior policies, plans,
arrangements and communications are hereby null and void and of no further force
and effect with respect to your participation therein.

You acknowledge and agree that all obligations of the Company and its affiliates
pursuant to that certain Employment Agreement entered into as of [        ], by
and between you and the Company (the “Employment Agreement”) have been fully and
finally satisfied and, therefore, except as provided in the last sentence of
this paragraph, the Employment Agreement is hereby terminated effective as of
the date of this letter and that neither the Company nor any other person or
entity has any other future obligations to you thereunder. Notwithstanding the
termination of the Employment Agreement, you acknowledge and agree that the
provisions of Sections 9 and 10 of the Employment Agreement, and those
provisions necessary to interpret and enforce them, will survive the termination
of the Employment Agreement according to their respective terms.

You further acknowledge and agree that (i) you have fully read, understand and
voluntarily enter into this Participation Agreement and (ii) you have had a
sufficient opportunity to consult with your personal tax, financial planning
advisor and attorney about the tax, financial and legal consequences of your
participation in the Plan before signing this Participation Agreement.

 

 

TALOS ENERGY INC.    333 Clay Street, Suite 3300, Houston, Texas 77002

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Unless otherwise defined herein, capitalized terms used in this Participation
Agreement shall have the meanings set forth in the Plan. This Participation
Agreement may be executed in separate counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.

Please execute this Participation Agreement in the space provided below and send
a fully executed copy to [        ] no later than [        ].

[Signature Page Follows]

 

 

TALOS ENERGY INC.    333 Clay Street, Suite 3300, Houston, Texas 77002

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Sincerely, TALOS ENERGY OPERATING COMPANY LLC By:  

 

  Name:   Title:

AGREED AND ACCEPTED

this          day of                     , 20         by:

 

 

[        ]

 

 

TALOS ENERGY INC.    333 Clay Street, Suite 3300, Houston, Texas 77002

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ANNEX A

TALOS ENERGY OPERATING COMPANY LLC

EXECUTIVE SEVERANCE PLAN

[See attached.]

 

 

TALOS ENERGY INC.    333 Clay Street, Suite 3300, Houston, Texas 77002

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TALOS ENERGY OPERATING COMPANY LLC

EXECUTIVE SEVERANCE PLAN

1. Purpose. Talos Energy Operating Company LLC (the “Company”), has adopted the
Talos Energy Operating Company LLC Executive Severance Plan (the “Plan”) to
provide severance pay and benefits to eligible officers and management employees
who are Eligible Executives (as defined below) and whose employment is
terminated on or after August 29, 2018 (the “Effective Date”). The Plan is
intended to be maintained primarily for the purpose of providing benefits for a
select group of management or highly compensated employees.

2. Definitions. For purposes of the Plan, the following terms shall have the
respective meanings set forth below:

(a) “Accrued Amounts” means (i) all accrued and unpaid Base Salary through the
Date of Termination, which shall be paid within 10 business days following the
Date of Termination (or earlier if required by applicable law); (ii)
reimbursement for all incurred but unreimbursed expenses for which an Eligible
Executive is entitled to reimbursement in accordance with the expense
reimbursement policies of the Company in effect as of the Date of Termination;
and (iii) benefits to which an Eligible Executive may be entitled pursuant to
the terms of any plan or policy sponsored by the Company or any of its
Affiliates as in effect from time to time.

(b) “Affiliate” means with respect to any person, any other person that directly
or indirectly through one or more intermediaries controls, is controlled by or
is under common control with, the person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a person, whether through
ownership of voting securities, by contract or otherwise.

(c) “Applicable March 15” means March 15 of the calendar year following the
calendar year in which the Date of Termination occurs.

(d) “Applicable Period” means (i) with respect to each Tier 1 Executive, a
period of 24 months beginning on the Eligible Executive’s Date of Termination;
and (ii) with respect to each Tier 2 Executive, a period of 18 months beginning
on the Eligible Executive’s Date of Termination.

(e) “Applicable Severance Multiple” means (i) with respect to each Tier 1
Executive, 2.0; and (ii) with respect to each Tier 2 Executive, 1.5.

(f) “Base Salary” means the amount an Eligible Executive is entitled to receive
as base salary on an annualized basis, calculated as of the Date of Termination,
including any amounts that an Eligible Executive could have received in cash had
he not elected to contribute to an employee benefit plan maintained by the
Company, but excluding all annual cash incentive awards, bonuses, equity awards,
and incentive compensation payable by the Company as consideration for an
Eligible Executive’s services. Notwithstanding the foregoing, in the event of a
reduction in an Eligible Executive’s Base Salary resulting in such Eligible
Executive’s resignation for Good Reason, for purposes of determining such
Eligible Executive’s Severance Amount, such Eligible Executive’s Base Salary
shall be deemed to be that in effect immediately prior to such reduction.

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(g) “Board” means the Board of Directors of Talos Energy Inc.

(h) “Cause” means (i) an Eligible Executive’s material breach of the Plan or any
other written agreement between such Eligible Executive and one or more members
of the Company Group, including such Eligible Executive’s breach of any
representation, warranty or covenant made under any such agreement; (ii) an
Eligible Executive’s material breach of any law applicable to the workplace or
employment relationship, or an Eligible Executive’s material breach of any
material policy or code of conduct established by a member of the Company Group
and applicable to such Eligible Executive, including the Company’s policies on
discrimination, harassment and sexual harassment; (iii) an Eligible Executive’s
gross negligence, willful misconduct, breach of fiduciary duty, fraud, theft or
embezzlement on the part of such Eligible Executive; (iv) the commission by an
Eligible Executive of, or conviction or indictment of an Eligible Executive for,
or plea of nolo contendere by an Eligible Executive to, any felony (or state law
equivalent) or any crime involving moral turpitude; or (v) an Eligible
Executive’s willful failure or refusal, other than due to Disability, to perform
such Eligible Executive’s obligations pursuant to the Plan or to follow any
lawful directive from the Company, as determined by the Company; provided,
however, that if such Eligible Executive’s actions or omissions as set forth in
the preceding clause (v) are of such a nature that the Company determines that
they are curable by such Eligible Executive, such actions or omissions must
remain uncured 30 days after the Company first provided Employee written notice
of the obligation to cure such actions or omissions.

(i) “Change in Control” has the meaning assigned to such term in the LTIP, as in
effect from time to time.

(j) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.

(k) “COBRA Continuation Period” means the period beginning on the first day of
the first calendar month following such Eligible Executive’s Date of Termination
and continuing for a number of months thereafter equal to such Eligible
Executive’s Applicable Period; provided, however, that the COBRA Continuation
Period shall immediately terminate upon the earlier of (i) the time such
Eligible Executive becomes eligible to be covered under a group health plan
sponsored by another employer (and such Eligible Executive shall promptly notify
the Company in the event that such Eligible Executive becomes so eligible) or
(ii) the date such Eligible Executive is no longer eligible to receive COBRA
continuation coverage.

(l) “Code” means the Internal Revenue Code of 1986, as amended.

(m) “Committee” means the Compensation Committee of the Board or such other
committee designated by the Board to administer the Plan.

(n) “Company Group” means Talos Energy Inc. and each of its direct and indirect
subsidiaries, including the Company.

 

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(o) “Confidential Information” means all trade secrets, non-public information,
proprietary information, knowledge, data, designs, ideas, concepts,
improvements, product developments, discoveries and inventions, whether
patentable or not, that are conceived, made, developed or acquired by or
disclosed to an Eligible Executive, individually or in conjunction with others,
during the period that the Eligible Executive is employed by the Company or any
other member of the Company Group (whether during business hours or otherwise
and whether on the Company’s premises or otherwise) that relate to any member of
the Company Group’s businesses or properties, products or services (including
all such information relating to corporate opportunities, operations, future
plans, proposals, products, marketing, selling, budgets, licenses, prices,
transactions, costs, recipes, production techniques, methods of doing business,
business plans, strategies for developing business and market share, research,
financial and sales data, pricing terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or acquisition targets or their
requirements, the identity of key contacts within customers’ organizations or
within the organization of acquisition prospects, or marketing and merchandising
techniques, prospective names and marks). Moreover, all documents, videotapes,
written presentations, brochures, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, e-mail,
voice mail, electronic databases, maps, drawings, architectural renditions,
models and all other writings or materials of any type including or embodying
any of such information, ideas, concepts, improvements, discoveries, inventions
and other similar forms of expression are and shall be the sole and exclusive
property of the Company Group, and be subject to the same restrictions on
disclosure applicable to all Confidential Information pursuant to the Plan. For
purposes of the Plan, Confidential Information shall not include any information
that (i) is or becomes generally available to the public other than as a result
of a disclosure or wrongful act of the Eligible Executive or any of the Eligible
Executive’s agents; (ii) was available to the Eligible Executive on a
non-confidential basis before its disclosure by a member of the Company Group;
or (iii) becomes available to the Eligible Executive on a non-confidential basis
from a source other than a member of the Company Group; provided, however, that
such source is not bound by a confidentiality agreement with, or other
obligation with respect to confidentiality to, a member of the Company Group.

(p) “Date of Termination” means the effective date of the termination of an
Eligible Executive’s employment with the Company and its Affiliates, as
applicable, such that the Eligible Executive is no longer employed by the
Company or any of its Affiliates.

(q) “Disability” means an Eligible Executive is unable to perform the essential
functions of such Eligible Executive’s position (after accounting for reasonable
accommodation, if applicable and required by applicable law), due to physical or
mental impairment or other incapacity that continues, or can reasonably be
expected to continue, for a period in excess of 120 consecutive days or 180
days, whether or not consecutive (or for any longer period as may be required by
applicable law), in any 12-month period. The determination of whether an
Eligible Executive has incurred a Disability shall be made in good faith by the
Company.

(r) “Eligible Executive” means any employee of the Company or an Affiliate of
the Company who (i) is designated by the Committee as an “Eligible Executive”
who is eligible to participate in the Plan; (ii) has executed and returned a
Participation Agreement to the Company; (iii) is not covered under any other
severance plan, policy, program or arrangement sponsored or maintained by the
Company or any of its Affiliates; and (iv) is not a party to an employment or

 

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severance agreement with the Company or any of its Affiliates pursuant to which
such employee is eligible for severance payments or benefits. The Committee
shall have the sole discretion to determine whether an employee is an Eligible
Executive. Eligible Executives shall be limited to a select group of management
or highly compensated employees within the meaning of Sections 201, 301 and 401
of ERISA.

(s) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.

(t) “Good Reason” means (i) a material diminution in an Eligible Executive’s
Base Salary or authority, duties or responsibilities with the Company or its
Affiliates; (ii) a material breach by the Company of any of its obligations
under the Plan; or (iii) a relocation of the geographic location of an Eligible
Executive’s principal place of employment by more than 50 miles from the
location of such Eligible Executive’s principal place of employment as of the
Effective Date. Notwithstanding the foregoing provisions of this definition or
any other provision of the Plan to the contrary, any assertion by an Eligible
Executive of a termination for Good Reason shall not be effective unless all of
the following conditions are satisfied: (A) the condition described in this
definition giving rise to such Eligible Executive’s termination of employment
must have arisen without such Eligible Executive’s consent; (B) such Eligible
Executive must provide written notice to the Company of the existence of such
condition(s) within 30 days after the initial occurrence of such condition(s);
(C) the condition(s) specified in such notice must remain uncorrected for 30
days following the Company’s receipt of such written notice; and (D) the date of
such Eligible Executive’s termination of employment must occur within 90 days
after the initial occurrence of the condition(s) specified in such notice.

(u) “LTIP” means the Talos Energy Inc. Long Term Incentive Plan, as the same may
be amended, restated or otherwise modified from time to time.

(v) “Participation Agreement” means the participation agreement delivered to
each Eligible Executive by the Committee prior to his or her entry into the Plan
evidencing the Eligible Executive’s agreement to participate in the Plan and to
comply with all terms, conditions and restrictions within the Plan.

(w) “Prior Year Annual Bonus” means any earned but unpaid annual cash bonus that
an Eligible Executive earned for the fiscal year of the Company ending prior to
the Date of Termination.

(x) “Prohibited Period” means the period during which an Eligible Executive is
employed by the Company or any of its Affiliates and continuing through the last
day of the Eligible Executive’s Applicable Period following the Eligible
Executive’s Date of Termination.

(y) “Pro-Rata Annual Bonus” means an amount equal to the annual cash bonus that
an Eligible Executive would have been entitled to receive for the fiscal year of
the Company in which the Date of Termination occurs based on actual performance
(as determined by the Committee following the end of such fiscal year in
accordance with the LTIP or any successor plan thereto), multiplied by a
fraction, the numerator of which is the number of days in such fiscal year
during which such Eligible Executive was employed by the Company and its
Affiliates, and the denominator of which is 365.

 

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(z) “Qualifying Termination” means the termination of an Eligible Executive’s
employment (i) by the Company without Cause (which, for the avoidance of doubt,
does not include a termination due to death or Disability); or (ii) due to an
Eligible Executive’s resignation for Good Reason.

(aa) “Release Requirement” means the requirement that an Eligible Executive
execute and deliver to the Company a general release of claims, in a form
acceptable to the Company, on or prior to the date that is 21 days following the
date upon which the Company delivers the release to an Eligible Executive (which
shall occur no later than seven days following the Date of Termination) or, in
the event that such termination of employment is “in connection with an exit
incentive or other employment termination program” (as such phrase is defined in
the Age Discrimination in Employment Act of 1967, as amended), the date that is
45 days following such delivery date. Notwithstanding the foregoing or any other
provision in the Plan to the contrary, the Release Requirement shall not be
considered satisfied if the release described in the preceding sentence is
revoked by the Eligible Executive within any time provided by the Company for
such revocation.

(bb) “Section 409A” means Section 409A of the Code and the Department of
Treasury regulations and other interpretive guidance issued thereunder,
including any such regulations or guidance that may be amended or issued after
the Effective Date.

(cc) “Severance Amount” means, with respect to an Eligible Executive, an amount
equal to the product of (i) the Applicable Severance Multiple and (ii) such
Eligible Executive’s Base Salary.

(dd) “Tier” means an “Executive Tier” used for purposes of determining the level
of severance benefits an Eligible Executive is eligible to receive. Each
Eligible Executive shall be designated by the Committee as a Tier 1 Executive or
a Tier 2 Executive.

3. Administration of the Plan.

(a) Administration by the Committee. The Committee shall be responsible for the
management and control of the operation and the administration of the Plan,
including interpretation of the Plan, decisions pertaining to eligibility to
participate in the Plan, computation of severance benefits, granting or denial
of severance benefit claims and review of claims denials. The Committee has
absolute discretion in the exercise of its powers and responsibilities. For this
purpose, the Committee’s powers shall include the following authority, in
addition to all other powers provided by the Plan:

(i) to make and enforce such rules and regulations as it deems necessary or
proper for the efficient administration of the Plan;

(ii) to interpret the Plan, the Committee’s interpretation thereof to be final
and conclusive on all persons claiming benefits under the Plan;

 

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(iii) to decide all questions concerning the Plan and the eligibility of any
person to participate in the Plan, and to designate each Eligible Executive as
either a Tier 1 Executive or a Tier 2 Executive;

(iv) to make a determination as to the right of any person to a benefit under
the Plan (including to determine whether and when there has been a termination
of an Eligible Executive’s employment and the cause of such termination);

(v) to appoint such agents, counsel, accountants, consultants, claims
administrator and other persons as may be required to assist in administering
the Plan;

(vi) to allocate and delegate its responsibilities under the Plan and to
designate other persons to carry out any of its responsibilities under the Plan,
any such allocation, delegation or designation to be in writing;

(vii) to sue or cause suit to be brought in the name of the Plan; and

(viii) to obtain from the Company, its Affiliates and from Eligible Executives
such information as is necessary for the proper administration of the Plan.

(b) Indemnification of the Committee. The Company shall, without limiting any
rights that the Committee may have under the Company’s charter or bylaws,
applicable law or otherwise, indemnify and hold harmless the Committee and each
member thereof (and any other individual acting on behalf of the Committee or
any member thereof) against any and all expenses and liabilities arising out of
such person’s administrative functions or fiduciary responsibilities, excepting
only expenses and liabilities arising out of the person’s own gross negligence
or willful misconduct. Expenses against which such person shall be indemnified
hereunder include the amounts of any settlement, judgment, attorneys’ fees,
costs of court, and any other related charges reasonably incurred in connection
with a claim, proceeding, settlement, or other action under the Plan.

(c) Compensation and Expenses. The Committee shall not receive additional
compensation with respect to services for the Plan. To the extent required by
applicable law, but not otherwise, the Committee shall furnish bond or security
for the performance of their duties hereunder. Any expenses properly incurred by
the Committee incident to the administration, termination or protection of the
Plan, including the cost of furnishing bond, shall be paid by the Company.

(d) Plan Year. The plan year for the Plan shall be the 12-month period beginning
each January 1; provided, however, that the first plan year for the Plan shall
begin on the Effective Date and shall end on December 31, 2018.

4. Eligibility. Only individuals who are Eligible Executives may participate in
the Plan. The Committee has full and absolute discretion to determine and select
which employees of the Company and its Affiliates are Eligible Executives. Once
an employee has been designated as an Eligible Executive, he or she shall
automatically continue to be an Eligible Executive until he or she ceases to be
an employee or is removed as an Eligible Executive by the Committee; provided,
however, that if an employee is an Eligible Executive as of the date of a Change
in

 

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Control, then he or she may not be removed as an Eligible Executive by the
Committee during the 12-month period following the date of such Change in
Control. The Plan shall supersede all prior practices, policies, procedures and
plans relating to severance benefits from the Company and its Affiliates with
respect to the Eligible Executives.

5. Plan Benefits.

(a) Qualifying Termination. In the event an Eligible Executive’s employment with
the Company and, as applicable, each of its Affiliates, ends due to a Qualifying
Termination, such Eligible Executive shall be entitled to receive the Accrued
Amounts, and so long as such Eligible Executive satisfies the Release
Requirement and abides by the terms of Sections 7, 8, 9, 10 and 11 below, such
Eligible Executive shall also be entitled to receive:

(i) A lump sum severance payment to such Eligible Executive in an amount equal
to the Severance Amount, payable on or prior to the Company’s first regularly
scheduled pay date that on or after the date that is 60 days after such Eligible
Executive’s Date of Termination;

(ii) The Prior Year Annual Bonus, if applicable, payable in a lump sum at the
time annual bonuses for such prior fiscal year are paid to executives of the
Company, but in no event later than the Applicable March 15;

(iii) A Pro-Rata Annual Bonus for the fiscal year of the Company in which the
Date of Termination occurs, payable in a lump sum at the time annual bonuses for
such fiscal year are paid to executives of the Company, but in no event later
than the Applicable March 15; and

(iv) If such Eligible Executive timely and properly elects to continue coverage
for such Eligible Executive and such Eligible Executive’s spouse and eligible
dependents, if any, under the Company’s group health plans pursuant to COBRA,
similar in the amounts and types of coverage provided under the Company’s group
health plans to such Eligible Executive prior to such Eligible Executive’s Date
of Termination, then during the COBRA Continuation Period (as defined below),
the Company shall provide a subsidy, which subsidy shall be paid directly to the
applicable COBRA administrator, on a monthly basis for the difference between
the amount such Eligible Executive pays to effect and continue such coverage and
the employee contribution amount that active executive employees of the Company
pay for the same or similar coverage under such group health plans (the “COBRA
Benefit”). Notwithstanding anything in the preceding provisions of this
Section 5(a)(iv) to the contrary, (A) the election of COBRA continuation
coverage and the payment of any premiums due with respect to such COBRA
continuation coverage will remain such Eligible Executive’s sole responsibility,
and the Company will assume no obligation for payment of any such premiums
relating to such COBRA continuation coverage and (B) if the provision of the
benefit described in this Section 5(a)(iv) cannot be provided in the manner
described above without penalty, tax, or other adverse impact on the Company,
then the Company and such Eligible Executive shall negotiate in good faith to
determine an alternative manner in which the Company may provide a substantially
equivalent benefit to such Eligible Executive without such adverse impact on the
Company. If such Eligible Executive has not become eligible to be covered under
a group health plan sponsored by another

 

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employer by the earlier of end of the COBRA Continuation Period or December 1 of
the calendar year following the calendar year in which such Eligible Executive’s
Date of Termination occurs (such earlier date being the “COBRA Payment Trigger
Date”), then, on the Company’s first regularly scheduled pay date following the
COBRA Payment Trigger Date (but in no event later than December 31 of the
calendar year following the calendar year in which the such Eligible Executive’s
Date of Termination occurs), the Company shall pay to Executive a lump sum cash
payment equal to (A) the difference between the amount such Eligible Executive
paid to effect and continue coverage for such Eligible Executive and his or her
spouse and eligible dependents and the employee contribution amount that active
executive employees of the Company pay for the same or similar coverage under
such group health plans, if any, under the Company’s group health plan for the
complete calendar month next preceding the COBRA Payment Trigger Date,
multiplied by (B) the number of complete calendar months remaining in such
Eligible Executive’s Applicable Period.

(b) Termination as a Result of Death or Disability. In the event an Eligible
Executive’s employment with the Company and, as applicable, each of its
Affiliates, ends due to such Eligible Executive’s death or Disability, such
Eligible Executive shall be entitled to receive the Accrued Amounts, and so long
as such Eligible Executive (or the executor of such Eligible Executive’s estate
or such Eligible Executive’s legal guardian, as applicable) satisfies the
Release Requirement and abides by the terms of Sections 7, 8, 9, 10 and 11
below, such Eligible Executive shall also be entitled to receive:

(i) The Prior Year Annual Bonus, if applicable, payable in a lump sum at the
time annual bonuses for such prior fiscal year are paid to executives of the
Company, but in no event later than the Applicable March 15; and

(ii) A Pro-Rata Annual Bonus for the fiscal year of the Company in which the
Date of Termination occurs, payable in a lump sum at the time annual bonuses for
such fiscal year are paid to executives of the Company, but in no event later
than the Applicable March 15.

(c) Other Non-Qualifying Terminations of Employment. In the event that an
Eligible Executive’s employment with the Company and, as applicable, each of its
Affiliates terminates other than pursuant to a Qualifying Termination or as a
result of death or Disability, then all compensation and benefits to such
Eligible Executive shall terminate contemporaneously with such termination of
employment, except that such Eligible Executive shall be entitled to the Accrued
Amounts.

(d) After-Acquired Evidence. Notwithstanding any provision of the Plan to the
contrary, in the event that the Company determines that an Eligible Executive is
eligible to receive the Severance Amount and other severance benefits pursuant
to Section 5(a) or Section 5(b) but, after such determination, the Company
subsequently acquires evidence or determines that: (i) such Eligible Executive
has failed to abide by the terms of Sections 7, 8, 9, 10 of 11; or (ii) a Cause
condition existed prior to the Date of Termination that, had the Company been
fully aware of such condition, would have given the Company the right to
terminate such Eligible Executive’s employment for Cause, then the Company shall
have the right to cease the payment of the Severance Amount and to cease
providing any other severance benefits under Section 5(a) or Section 5(b), and
such Eligible Executive shall promptly return to the Company any payment of the
Severance Amount and any other severance benefits received by such Eligible
Executive prior to the date that the Company determines that the conditions of
this Section 5(d) have been satisfied.

 

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6. Certain Excise Taxes. Notwithstanding anything to the contrary in the Plan,
if an Eligible Executive is a “disqualified individual” (as defined in
Section 280G(c) of the Code), and the payments and benefits provided for in the
Plan, together with any other payments and benefits which such Eligible
Executive has the right to receive from the Company or any of its Affiliates,
would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the
Code), then the payments and benefits provided for in the Plan shall be either
(a) reduced (but not below zero) so that the present value of such total amounts
and benefits received by such Eligible Executive from the Company and its
Affiliates will be one dollar ($1.00) less than three times such Eligible
Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code) and so
that no portion of such amounts and benefits received by such Eligible Executive
shall be subject to the excise tax imposed by Section 4999 of the Code or
(b) paid in full, whichever produces the better net after-tax position to such
Eligible Executive (taking into account any applicable excise tax under
Section 4999 of the Code and any other applicable taxes). The reduction of
payments and benefits hereunder, if applicable, shall be made by reducing,
first, payments or benefits to be paid in cash hereunder in the order in which
such payment or benefit would be paid or provided (beginning with such payment
or benefit that would be made last in time and continuing, to the extent
necessary, through to such payment or benefit that would be made first in time)
and, then, reducing any benefit to be provided in-kind hereunder in a similar
order. The determination as to whether any such reduction in the amount of the
payments and benefits provided hereunder is necessary shall be made by the
Company in good faith. If a reduced payment or benefit is made or provided and
through error or otherwise that payment or benefit, when aggregated with other
payments and benefits from the Company (or its Affiliates) used in determining
if a “parachute payment” exists, exceeds one dollar ($1.00) less than three
times such Eligible Executive’s base amount, then such Eligible Executive shall
immediately repay such excess to the Company upon notification that an
overpayment has been made. Nothing in this Section 6 shall require the Company
to be responsible for, or have any liability or obligation with respect to, such
Eligible Executives’ excise tax liabilities under Section 4999 of the Code.

7. Confidentiality. During the period in which an Eligible Executive
participates in the Plan, the Eligible Executive shall be provided with, and
will have access to, Confidential Information. In consideration of such Eligible
Executive’s receipt of Confidential Information and access to such Confidential
Information and in exchange for other valuable consideration provided hereunder,
and as a condition to participation in the Plan, each Eligible Executive shall
be subject to the covenants and restrictions in this Section 7 and in Sections
8, 9, 10, 11 and 12.

(a) In General. Both during the period in which an Eligible Executive is
employed by or affiliated with the Company and thereafter, except as expressly
permitted by the Plan or by directive of the Board, the Eligible Executive shall
not disclose any Confidential Information to any person or entity and shall not
use any Confidential Information except for the benefit of the Company Group.
Each Eligible Executive acknowledges and agrees that such Eligible Executive
would inevitably use and disclose Confidential Information in violation of this
Section 7 if such Eligible Executive were to violate any of the covenants set
forth in Section 8. Each Eligible Executive shall follow all Company policies
and protocols regarding the physical

 

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security of all documents and other materials containing Confidential
Information (regardless of the medium on which Confidential Information is
stored). The covenants of this Section 7(a) shall apply to all Confidential
Information, whether now known or later to become known to an Eligible Executive
during the period that such Eligible Executive is employed by or affiliated with
the Company or any other member of the Company Group.

(b) Permitted Disclosures. Notwithstanding any provision of Section 7(a) to the
contrary, an Eligible Executive may make the following disclosures and uses of
Confidential Information: (i) disclosures to other employees of the Company
Group who have a need to know the information in connection with the businesses
of the Company Group; (ii) disclosures to customers and suppliers when, in the
reasonable and good faith belief of the Eligible Executive, such disclosure is
in connection with the Eligible Executive’s performance of his or her duties for
the Company and is in the best interests of the Company; (iii) disclosures and
uses that are approved in writing by the Company; or (iv) disclosures to a
person or entity that has (A) been retained by a member of the Company Group to
provide services to one or more members of the Company Group and (B) agreed in
writing to abide by the terms of a confidentiality agreement.

(c) Return of Confidential Information. Upon the termination of the Eligible
Executive’s employment with the Company and at any other time upon request of
the Company, an Eligible Executive shall promptly surrender and deliver to the
Company all documents (including electronically stored information) and all
copies thereof and all other materials of any nature containing or pertaining to
all Confidential Information and any other Company Group property (including any
Company Group-issued computer, mobile device or other equipment) in the Eligible
Executive’s possession, custody or control and the Eligible Executive shall not
retain any such documents or other materials or property of the Company Group.
Within 10 days of any such request, the Eligible Executive shall certify to the
Company in writing that all such documents, materials and property have been
returned to the Company.

(d) Additional Permitted Disclosures. Nothing in the Plan (whether in this
Section 7 or otherwise) shall prohibit or restrict an Eligible Executive from
lawfully (i) initiating communications directly with, cooperating with,
providing information to, causing information to be provided to, or otherwise
assisting in an investigation by any governmental or regulatory agency, entity,
or official(s) (collectively, “Governmental Authorities”) regarding a possible
violation of any law; (ii) responding to any inquiry or legal process directed
to such Eligible Executive individually from any such Governmental Authorities;
(iii) testifying, participating or otherwise assisting in an action or
proceeding by any such Governmental Authorities relating to a possible violation
of law; (iv) making any other disclosures that are protected under the
whistleblower provisions of any applicable law; or (v) making disclosures to
such Eligible Executive’s retained attorneys for the purposes of seeking legal
advice as to such Eligible Executive’s rights and obligations under the Plan
and/or relating to legal recourse for possible violations of the Plan or any law
by the Company. Additionally, pursuant to the federal Defend Trade Secrets Act
of 2016, an Eligible Executive shall not be held criminally or civilly liable
under any federal or state trade secret law for the disclosure of a trade secret
that: (A) is made (x) in confidence to a federal, state, or local government
official, either directly or indirectly, or to an attorney; and (y) solely for
the purpose of reporting or investigating a suspected violation of law; (B) is
made to such Eligible Executive’s attorney in relation to a lawsuit for
retaliation against such Eligible Executive for reporting a suspected violation
of law; or (C) is made in a complaint

 

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or other document filed in a lawsuit or other proceeding, if such filing is made
under seal. Nor does the Plan require an Eligible Executive to obtain prior
authorization from any member of the Company Group before engaging in any
conduct described in this Section 7(d), or to notify any member of the Company
Group that such Eligible Executive has engaged in any such conduct.

8. Non-Solicitation.

(a) Access to Confidential Information and Development of Goodwill. The Company
shall provide each Eligible Executive access to Confidential Information for use
only during the period during which such Eligible Executive is employed by the
Company, and each Eligible Executive acknowledges and agrees that the Company
will be entrusting the Eligible Executive, in his unique and special capacity,
with developing the goodwill of the Company, and in consideration thereof and in
consideration of the Company providing the Eligible Executive with access to
Confidential Information and as an express incentive for the Company to allow
the Eligible Executive to participate in the Plan, the Eligible Executive has
voluntarily agreed to the covenants set forth in this Section 8. Each Eligible
Executive further agrees and acknowledges that the limitations and restrictions
set forth herein are reasonable in all respects and not oppressive, will not
cause the Eligible Executive undue hardship, and are material and substantial
parts of the Plan intended and necessary to protect the Confidential
Information, goodwill and substantial and legitimate business interests.

(b) Restrictions. During the Prohibited Period, an Eligible Executive shall not,
without the prior written approval of the Company, directly or indirectly, for
the Eligible Executive or on behalf of or in conjunction with any other person
or entity of any nature, solicit, canvass, approach, encourage, entice or induce
any employee or contractor of any member of the Company Group to terminate his,
her or its employment or engagement with any member of the Company Group.

(c) Enforcement. Because of the difficulty of measuring economic losses to the
Company Group as a result of a breach or threatened breach of the covenants set
forth in Section 7 and this Section 8, and because of the immediate and
irreparable damage that would be caused to members of the Company Group for
which they would have no other adequate remedy, the Company and each other
member of the Company Group shall be entitled to enforce the foregoing
covenants, in the event of a breach or threatened breach, by injunctions and
restraining orders from any court of competent jurisdiction, without the
necessity of showing any actual damages or that money damages would not afford
an adequate remedy, and without the necessity of posting any bond or other
security. The aforementioned equitable relief shall not be the Company’s or any
other member of the Company Group’s exclusive remedy for a breach but instead
shall be in addition to all other rights and remedies available to the Company
and each other member of the Company Group at law and equity.

9. Ownership of Intellectual Property. The Company shall own, and, by agreeing
to participate in the Plan, each Eligible Executive assigns, all right, title
and interest (including patent rights, copyrights, trade secret rights, mask
work rights, trademark rights, and all other intellectual and industrial
property rights of any sort throughout the world) relating to any and all
inventions (whether or not patentable), works of authorship, mask works,
designs, know-how, ideas and information authored, created, contributed to, made
or conceived or reduced to practice,

 

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in whole or in part, by the Eligible Executive during the period in which the
Eligible Executive is or has been employed by or affiliated with the Company or
any other member of the Company Group that either (a) relate, at the time of
conception, reduction to practice, creation, derivation or development, to any
member of the Company Group’s businesses or actual or anticipated research or
development, or (b) were developed on any amount of the Company’s or any other
member of the Company Group’s time or with the use of any member of the Company
Group’s equipment, supplies, facilities or trade secret information (all of the
foregoing collectively referred to herein as “Company Intellectual Property”),
and the Eligible Executive shall promptly disclose all Company Intellectual
Property to the Company. All of each Eligible Executive’s works of authorship
and associated copyrights created during the period in which the Eligible
Executive is employed by or affiliated with the Company or any other member of
the Company Group and in the scope of the Eligible Executive’s employment shall
be deemed to be “works made for hire” within the meaning of the Copyright Act.
Each Eligible Executive shall perform, during and after the period in which the
Eligible Executive is or has been employed by or affiliated with the Company or
any other member of the Company Group, all reasonable acts deemed necessary by
the Company to assist each member of the Company Group, at the Company’s
expense, in obtaining and enforcing its rights throughout the world in the
Company Intellectual Property. Such acts may include execution of documents and
assistance or cooperation (i) in the filing, prosecution, registration, and
memorialization of assignment of any applicable patents, copyrights, mask work,
or other applications, (ii) in the enforcement of any applicable patents,
copyrights, mask work, moral rights, trade secrets, or other proprietary rights,
and (iii) in other legal proceedings related to the Company Intellectual
Property.

10. Non-Disparagement. Each Eligible Executive shall refrain, both during the
Eligible Executive’s employment with the Company and thereafter, from publishing
any oral or written statements about the Company, any member of the Company
Group or any of their respective directors, officers, employees, consultants,
agents or representatives that (a) are slanderous, libelous or defamatory,
(b) disclose Confidential Information of or regarding the Company’s or any
member of the Company Group’s business affairs, directors, officers, managers,
members, employees, consultants, agents or representatives, or (c) place the
Company, any member of the Company Group or any of their respective directors,
officers, managers, members, employees, consultants, agents or representatives
in a false light before the public.

11. Defense and Pursuit of Claims. An Eligible Executive shall, following the
termination of his or her employment, cooperate with the Company Group and its
counsel in any litigation or human resources matters in which such Eligible
Executive may be a witness or potential witness or with respect to which such
Eligible Executive may have knowledge of relevant facts or evidence. The Company
shall reimburse such Eligible Executive for reasonable and necessary expenses
incurred in the course of complying with this Section provided that the Eligible
Executive provides reasonable documentation of the same and obtains the
Company’s prior approval for incurring such expenses.

12. Enforcement. Money damages would not be a sufficient remedy for any breach
of Sections 7, 8, 9, 10 or 11 by an Eligible Executive, and any member of the
Company Group shall be entitled to enforce the provisions of such Sections by
terminating payments or additional benefits then owing to the Eligible Executive
and to specific performance, injunctive relief and other equitable relief,
without bond, as remedies for such breach or any threatened breach. In

 

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addition, in the event of a breach by an Eligible Executive, the Eligible
Executive shall repay to the Company any and all payments received or paid or
deemed paid by the Company for the benefit of the Eligible Executive pursuant to
the Plan. Such remedies shall not be deemed the exclusive remedies for a breach
of Sections 7, 8, 9, 10 or 11, but shall be in addition to all remedies
available at law or in equity, including the recovery of damages from the
Eligible Executive and the Eligible Executive’s agents. This Section and
Sections 7, 8, 9, 10 or 11, and each provision and portion hereof, are severable
and separate, and the unenforceability of any specific Section (or portion
thereof) shall not affect the provisions of any other Section (or portion
thereof). Moreover, in the event any arbitrator or court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which such arbitrator or court
deems reasonable, and the Plan shall thereby be reformed.

13. Claims Procedure and Review.

(a) Filing a Claim. Any Eligible Executive that the Committee determines is
entitled to severance benefits under the Plan is not required to file a claim
for benefits. Any Eligible Executive (i) who is not paid severance benefits
hereunder and who believes that he or she is entitled to severance benefits
hereunder or (ii) who has been paid severance benefits hereunder and believes
that he or she is entitled to greater benefits hereunder may file a claim for
severance benefits under the Plan in writing with the Committee.

(b) Initial Determination of a Claim. If a claim for severance benefits
hereunder is wholly or partially denied, the Committee shall, within a
reasonable period of time but no later than 90 days after receipt of the claim
(or 180 days after receipt of the claim if special circumstances require an
extension of time for processing the claim), notify the claimant of the denial.
Such notice shall (i) be in writing, (ii) be written in a manner calculated to
be understood by the claimant, (iii) contain the specific reason or reasons for
denial of the claim, (iv) refer specifically to the pertinent Plan provisions
upon which the denial is based, (v) describe any additional material or
information necessary for the claimant to perfect the claim (and explain why
such material or information is necessary), and (vi) describe the Plan’s claim
review procedures and time limits applicable to such procedures, including a
statement of the claimant’s right to bring a civil action under Section 502(a)
of ERISA following an adverse benefit determination on review.

(c) Appeal of a Denied Claim. Within 60 days of the receipt by the claimant of
this notice, the claimant may file a written appeal with the Committee. In
connection with the appeal, the claimant may review Plan documents and may
submit written issues and comments. The Committee shall deliver to the claimant
a written decision on the appeal promptly, but not later than 60 days after the
receipt of the claimant’s appeal (or 120 days after receipt of the claimant’s
appeal if there are special circumstances which require an extension of time for
processing). Such decision shall (i) be in writing, (ii) be written in a manner
calculated to be understood by the claimant, (iii) include specific reasons for
the decision, (iv) refer specifically to the Plan provisions upon which the
decision is based, (v) state that the claimant is entitled to receive, on
request and free of charge, reasonable access to and copies of all documents,
records, and other information relevant to the claimant’s claim for benefits,
and (vi) a statement of the Participant’s right to bring an action under
Section 502(a) of ERISA. If special circumstances require an extension of up to
180 days for an initial claim or 120 days for an appeal, whichever applies, the
Committee shall send written notice of the extension. This notice shall indicate
the special circumstances requiring the extension and state when the Committee
expects to render the decision.

 

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(d) The benefits claim procedure provided in this Section 13 is intended to
comply with the provisions of 29 C.F.R. §2560.503-1. All provisions of this
Section 13 shall be interpreted, construed, and limited in accordance with such
intent.

14. General Provisions.

(a) Taxes. The Company is authorized to withhold from all payments made
hereunder amounts of withholding and other taxes due or potentially payable in
connection therewith, and to take such other action as the Company may deem
advisable to enable the Company and the Eligible Executive to satisfy
obligations for the payment of withholding taxes and other tax obligations
relating to any payments made under the Plan.

(b) No Mitigation. No Eligible Executive shall have any duty to mitigate the
amounts payable under the Plan by seeking or accepting new employment or
self-employment following a Qualifying Termination.

(c) Offset. The Company may set off against, and each Eligible Executive
authorizes the Company to deduct from, any payments due to the Eligible
Executive, or to his or her estate, heirs, legal representatives, or successors,
any amounts which may be due and owing to the Company or an Affiliate of the
Company by the Eligible Executive, whether arising under the Plan or otherwise;
provided, however, that no such offset may be made with respect to amounts
payable that are subject to the requirements of Section 409A unless the offset
would not result in a violation of the requirements of Section 409A.

(d) Amendment and Termination. Prior to a Change in Control, the Plan may be
amended or modified in any respect, and may be terminated, in any such case, by
the Board; provided, however, that the Plan may not be amended, modified or
terminated in any manner that would in any way adversely affect the benefits or
protections provided hereunder to any individual who is an Eligible Executive
under the Plan at such time, (i) at the request of a third party who has
indicated an intention or taken steps to effect a Change in Control and who
effectuates a Change in Control, or (ii) otherwise in connection with, or in
anticipation of, a Change in Control that actually occurs, and any such
attempted amendment, modification or termination shall be null and void ab
initio. Any action taken to amend, modify or terminate the Plan which is taken
subsequent to the execution of an agreement providing for a transaction or
transactions which, if consummated, would constitute a Change in Control shall
conclusively be presumed to have been taken in connection with a Change in
Control. For the duration of the 12-month period following a Change in Control,
the Plan may not be amended or modified in any manner that would in any way
adversely affect the benefits or protections provided hereunder to any
individual who is an Eligible Executive under the Plan on the date a Change in
Control occurs.

 

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(e) Successors. The Plan will be binding upon any successor to the Company, its
assets, its businesses or its interest (whether as a result of the occurrence of
a Change in Control or otherwise), in the same manner and to the same extent
that the Company would be obligated under the Plan if no succession had taken
place. All payments and benefits that become due to an Eligible Executive under
the Plan will inure to the benefit of his or her heirs, assigns, designees or
legal representatives.

(f) Transfer and Assignment. Neither an Eligible Executive nor any other person
shall have any right to sell, assign, transfer, pledge, anticipate or otherwise
encumber, transfer, hypothecate or convey any amounts payable under the Plan
prior to the date that such amounts are paid.

(g) Unfunded Obligation. All benefits due an Eligible Executive under the Plan
are unfunded and unsecured and are payable out of the general assets of the
Company. The Company is not required to segregate any monies or other assets
from its general funds with respect to these obligations. Eligible Executives
shall not have any preference or security interest in any assets of the Company
other than as a general unsecured creditor.

(h) Severability. If any provision of the Plan (or portion thereof) is held to
be illegal or invalid for any reason, the illegality or invalidity of such
provision (or portion thereof) will not affect the remaining provisions (or
portions thereof) of the Plan, but such provision (or portion thereof) will be
fully severable and the Plan will be construed and enforced as if the illegal or
invalid provision (or portion thereof) had never been included herein.

(i) Section 409A. The Plan is intended to comply with Section 409A or an
exemption thereunder and shall be construed and administered in accordance with
Section 409A. Notwithstanding any other provision of the Plan, payments provided
under the Plan may only be made upon an event and in a manner that complies with
Section 409A or an applicable exemption. Any payments under the Plan that may be
excluded from Section 409A either as separation pay due to an involuntary
separation from service or as a short-term deferral shall be excluded from
Section 409A to the maximum extent possible. Any payments to be made under the
Plan upon the termination of an Eligible Executive’s employment shall only be
made if such termination of employment constitutes a “separation from service”
under Section 409A. Each installment payment under the Plan is intended to be a
separate payment for purposes of Section 409A. Notwithstanding any provision in
the Plan to the contrary, if any payment or benefit provided for herein would be
subject to additional taxes and interest under Section 409A if an Eligible
Executive’s receipt of such payment or benefit is not delayed until the earlier
of (i) the date of such Eligible Executive’s death or (ii) the date that is six
months after such Eligible Executive’s Date of Termination (such date, the
“Section 409A Payment Date”), then such payment or benefit shall not be provided
to such Eligible Executive (or such Eligible Executive’s estate, if applicable)
until the Section 409A Payment Date. Notwithstanding the foregoing, the Company
makes no representations that the payments and benefits provided under the Plan
are exempt from, or compliant with, Section 409A and in no event shall the
Company or any of its Affiliates be liable for all or any portion of any taxes,
penalties, interest or other expenses that may be incurred by any Eligible
Executive on account of non-compliance with Section 409A.

 

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(j) Governing Law; Submission to Jurisdiction. All questions arising with
respect to the provisions of the Plan and payments due hereunder will be
determined by application of the laws of the State of Texas, without giving
effect to any conflict of law provisions thereof, except to the extent preempted
by federal law (including ERISA, which is the federal law that governs the Plan,
the administration of the Plan and any claims made under the Plan). Any action
to obtain emergency, temporary or preliminary injunctive relief as permitted by
Sections 8 and 12 will be brought only in the state and federal courts residing
in, or with jurisdiction over, Harris County, Texas. The Eligible Executives
recognize that such forum and venue is convenient.

(k) Status. The Plan is intended to qualify for the exemptions under Title I of
ERISA provided for plans that are unfunded and maintained primarily for the
purpose of providing benefits for a select group of management or highly
compensated employees.

(l) Third-Party Beneficiaries. Each Affiliate of the Company shall be a
third-party beneficiary of the Eligible Executive’s covenants and obligations
under Sections 7, 8, 9, 10, 11 and 12 and shall be entitled to enforce such
obligations as if a party hereto.

(m) No Right to Continued Employment. The adoption and maintenance of the Plan
shall not be deemed to be a contract of employment between the Company or any of
its Affiliates and any person, or to have any impact whatsoever on the at-will
employment relationship between the Company or any of its Affiliates and the
Eligible Executives. Nothing in the Plan shall be deemed to give any person the
right to be retained in the employ of the Company or any of its Affiliates for
any period of time or to restrict the right of the Company or any of its
Affiliates to terminate the employment of any person at any time.

(n) Title and Headings; Construction. Titles and headings to Sections hereof are
for the purpose of reference only and shall in no way limit, define or otherwise
affect the provisions hereof. Unless the context requires otherwise, all
references herein to an agreement, plan, instrument or other document shall be
deemed to refer to such agreement, plan, instrument or other document as
amended, supplemented, modified and restated from time to time to the extent
permitted by the provisions thereof. The word “or” as used herein is not
exclusive and is deemed to have the meaning “and/or.” The words “herein”,
“hereof”, “hereunder” and other compounds of the word “here” shall refer to the
entire Plan, and not to any particular provision hereof. Wherever the context so
requires, the masculine gender includes the feminine or neuter, and the singular
number includes the plural and conversely. The use herein of the word
“including” following any general statement, term or matter shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not non-limiting language (such as “without limitation”,
“but not limited to”, or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that
could reasonably fall within the broadest possible scope of such general
statement, term or matter. Neither the Plan nor any uncertainty or ambiguity
herein shall be construed or resolved against any party hereto, whether under
any rule of construction or otherwise. On the contrary, the Plan has been
reviewed by each of the parties hereto and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of the parties hereto.

(o) Overpayment. If, due to mistake or any other reason, a person receives
severance payments or benefits under the Plan in excess of what the Plan
provides, such person shall repay the overpayment to the Company in a lump sum
within 30 days of notice of the amount of overpayment. If such person fails to
so repay the overpayment, then without limiting any other remedies available to
the Company, the Company may deduct the amount of the overpayment from any other
amounts which become payable to such person under the Plan or otherwise.

 

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(p) Clawback. Any amounts payable under the Plan are subject to any policy
(whether in existence as of the Effective Date or later adopted) established by
the Company providing for clawback or recovery of amounts that were paid to the
Eligible Executive. The Company will make any determination for clawback or
recovery in its sole discretion and in accordance with applicable laws,
regulations, and securities exchange listing standards.

(q) Agent for Service of Legal Process. Legal process may be served on the
Committee, which is the plan administrator, at the following address:
Compensation Committee of the Board of Directors, c/o Talos Energy Inc., 333
Clay St., Suite 3300, Houston, Texas 77002.

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