Exhibit 10.19

 

CALLON PETROLEUM COMPANY

PHANTOM SHARE AWARD AGREEMENT

Grantee:  __________

 

 

1.Grant of Phantom Shares.  As of the Grant Date (identified in Section 12
below), Callon Petroleum Company (the “Company”), hereby grants ______ Phantom
Shares (“Phantom Shares”) to the Grantee identified above, a key employee of the
Company, subject to the terms and conditions of this agreement (the “Agreement”)
and the Callon Petroleum Company 2011 Omnibus Incentive Plan, as amended (the
“Plan”).  The Plan is hereby incorporated in its entirety into this Agreement by
this reference.  This Agreement is an Incentive Agreement as described in the
Plan. 

2.Definitions.  All capitalized terms used herein shall have the meanings set
forth in the Plan unless otherwise specifically defined herein.

3.Agreement Term.  This Agreement shall commence on the Grant Date (identified
in Section 12) and terminate without further action on the date that all the
Phantom Shares under this Agreement are either fully paid upon vesting, or they
expire and are forfeited without vesting, pursuant to the terms and conditions
of the Plan and this Agreement. 

4.Normal Vesting.  All the Phantom Shares subject to this Agreement shall vest
in accordance with the Vesting Schedule set forth in Section 12 and Exhibit A.

5.Phantom Shares Adjustment.  The Phantom Shares shall be subject to an
adjustment in accordance with the procedures and calculations as described in
Exhibit A, as attached hereto and incorporated into this Agreement (the
“Adjusted Phantom Shares”). 

6.Accelerated Vesting and Events of Forfeiture.

6.1.Separation from Service for Cause.  In the event of the Grantee’s Separation
from Service for Cause, all the vested (to the extent not already paid by the
Company) and non-vested Phantom Shares then outstanding as of the Separation
from Service date shall immediately expire, terminate and become forfeited, and
shall not be paid or become exercisable to any extent.  No further action is
needed to effectuate the forfeiture of all the Grantee’s Phantom Shares due to a
termination for Cause.

6.2.Change in Control.  In the event of the Grantee’s involuntary Separation
from Service without Cause within the two-year period immediately following the
effective date of a Change in Control (“Change in Control Date”), all non-vested
Phantom Shares then outstanding shall become 100% vested as of the date of the
Grantee’s Separation from Service, which shall be the Vesting Date; provided,
that the number of such vested Phantom Shares shall be

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determined pursuant to Section 6.7.  Any amount due shall be payable in
accordance with Section 7.

6.3.Separation from Service upon Retirement.  In the event of Grantee’s
Separation from Service due to Retirement, all unvested Phantom Shares shall
vest on a prorated basis based on the percentage of the time between the Grant
Date and the Vesting Date that the Grantee was employed in Employment; provided
however, in the event of Grantee’s Separation from Service due to Retirement,
the Committee, in its discretion, may elect to accelerate vesting of a greater
number of Phantom Shares than the prorated number set forth above in this
sentence. The number of prorated Phantom Shares earned will be determined
pursuant to Section 6.7. For purposes of this Agreement, and notwithstanding any
different definition in the Plan, the term “Retirement” shall mean the
Separation from Service of the Grantee, other than for Cause, after Grantee
attains the age of fifty five (55) with ten (10) years of Employment service or
after Grantee attains the age of seventy (70) regardless of length of Employment
service.

6.4.Separation from Service upon Disability.  In the event of Grantee’s
Separation from Service due to the Disability of Grantee, all unvested Phantom
Shares as of the Separation from Service date shall vest immediately and be
adjusted in accordance with the peer company comparison in Exhibit A pursuant to
Section 6.7. 

6.5.Separation from Service upon Death.  In the event of Grantee’s Separation
from Service due to the death of Grantee, all unvested Phantom Shares on the
date of death shall be adjusted in accordance with the peer company comparison
in Exhibit A pursuant to Section 6.7, and paid to the Grantee’s surviving
spouse, if any, who shall be his sole primary beneficiary.  In the event that
there is no surviving spouse, then such benefits shall be paid to the Grantee's
estate upon receipt of proper instructions by the Committee. 

6.6.Separation from Service for Other Reason.  Except as provided above in
Sections 6.1, 6.2, 6.3, 6.4 and 6.5, in the event of the Grantee’s voluntary or
involuntary Separation from Service for any other reason at any time before all
the Phantom Shares are 100% vested, all of the non-vested Phantom Shares as of
the Separation from Service date shall automatically expire and become
forfeited, and no additional vesting shall occur after such date. 

6.7.Adjustment of Phantom Shares due to Separation from Service.  In the event
of a Separation from Service pursuant to Sections 6.2, 6.3, 6.4, or 6.5, the
value of the vested Phantom Shares shall be calculated on the Vesting Date under
Section 12.4 or on last trading day of the Common Stock immediately preceding
the Change in Control Date under Section 6.2, as applicable (not on Grantee’s
Separation from Service date). The Phantom Shares shall vest and be adjusted in
accordance with the peer company comparison in Exhibit A pursuant to Section
6.7, and thus the calculation of Adjusted Phantom Shares under Exhibit A shall
be performed effective as of the Vesting Date

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described in the first sentence of this paragraph, and any amount due shall be
payable in accordance with Section 7.

7.Payment for Phantom Shares upon Vesting Date.  Subject to Section 8, upon
determination of the Adjusted Phantom Shares in accordance with Exhibit A, the
Grantee shall be entitled to receive a cash lump sum payment in an amount, net
of applicable withholdings, if any, that is equal to the closing price of the
company’s common stock multiplied by the Adjusted Phantom Shares on the Vesting
Date.  This amount shall be paid by the Company within forty-five (45) calendar
days from the Vesting Date.

For purposes herein, while the Company is a Publicly Held Corporation, and
notwithstanding any different definition that may be in the Plan, the value of
one Share on the date in question shall be (i) the closing price on such day for
a Share as quoted on the New York Stock Exchange, the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”) or the national
securities exchange on which Shares are then principally listed or admitted to
trading, or (ii) if not quoted on a national securities exchange, the average
between the reported high and low or the closing bid and asked prices for a
Share as quoted by the National Quotation Bureau's “Pink Sheets” or the National
Association of Securities Dealers' OTC Bulletin Board System.  If there was no
public trade of Company Stock on the date in question, the value shall be
determined by reference to the last preceding date on which such a trade was so
reported.

If the Company is not a Publicly Held Corporation at the time a determination of
the value of the Company Stock is required to be made hereunder, the
determination of value for purposes of the Plan shall be made by the Committee
in its discretion as it deems appropriate.  In this respect, the Committee may
rely on such financial data, appraisals, valuations, experts, and other sources
as, in its sole and absolute discretion, it deems advisable under the
circumstances.  With respect to Phantom Share Awards subject to Code Section
409A, the value shall be determined by the Committee in a manner that is
consistent with the requirements of Code Section 409A.

8.Six Month Delay.  To the extent (a) any delivery of cash to which Grantee
becomes entitled under this Agreement in connection with Grantee’s Separation
from Service constitutes deferred compensation subject to Code Section 409A, and
(b) Grantee is deemed at the time of such Separation from Service to be a
“specified employee” under Code Section 409A, then such delivery shall not be
made or commence until the earliest of (1) the expiration of the six (6) month
period measured from the date of Grantee’s Separation from Service or (2) the
date of Grantee’s death following such Separation from Service. 

9.Independent Legal and Tax Advice.  The Company and its employees do not
provide any tax or legal advice to Grantee or any other person.  Grantee is
encouraged to consult with a personal tax advisor and legal counsel.

10.Withholding of Taxes.  The Company shall have the right to (a) make
deductions from the cash otherwise deliverable upon payment for the vested
Adjusted Phantom Shares in an amount sufficient to satisfy all required
withholding of any federal,

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state, local or foreign taxes, or (b) take such other action as deemed necessary
or appropriate to satisfy any withholding obligations.

11.General.

11.1.Nontransferability of Phantom Shares.  The Phantom Shares are not
transferable or assignable by Grantee in any respect, other than by will or the
laws of descent and distribution.  No right to any payment that may be provided
hereunder to Grantee shall be liable for, or subject to, any debts, contracts,
liabilities, damages, losses, or torts of the Grantee unless and until actually
paid to or on behalf of Grantee by the Company.

11.2.Grantee’s Acknowledgments.  Grantee hereby accepts this Agreement subject
to all of its terms and provisions.  Grantee hereby agrees to accept as binding,
conclusive, and final all decisions or interpretations of the Committee or the
Board, as appropriate under the Plan, with respect to any questions or
determinations arising under this Agreement.

11.3.No Guarantee of Employment.  No Phantom Share shall confer upon Grantee any
right to continued Employment with the Company or any Affiliate.

11.4.Notices.  All notices under this Agreement shall be mailed or delivered by
hand to the parties at their respective addresses set forth beneath their
signatures below, or at such other address as may be designated in writing by
either party to the other party, or to their permitted transferees if
applicable.  Notices shall be effective upon receipt.

11.5.Amendment and Termination.  No amendment, modification or termination of
this Agreement shall be made at any time without the written consent of Grantee
and the Company.

11.6.Severability.  In the event that any provision of this Agreement shall be
held illegal, invalid, or unenforceable for any reason, such provision shall be
fully severable, but shall not affect the remaining provisions of the Agreement,
and the Agreement shall be construed and enforced as if the illegal, invalid, or
unenforceable provision had not been included herein.  The headings that are
used in this Agreement are used for reference and convenience purposes only and
do not constitute substantive matters to be considered in construing the terms
and provisions of this Agreement.  Words of either gender used in this Agreement
shall be construed to include the other gender, and words in the singular number
shall be construed to include the plural, and vice versa, unless the context
requires otherwise.

11.7.Covenants and Agreements as Independent Agreements. Each of the covenants
and agreements that are set forth in this Agreement shall be construed as a
covenant and agreement independent of any other provision of this
Agreement.  The existence of any claim or cause of action of Grantee against the
Company or an Affiliate, whether predicated on this Agreement or otherwise,

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shall not constitute a defense to the enforcement by the Company of the
covenants and agreements that are set forth in this Agreement.

11.8.Parties Bound.  The terms, provisions, and agreements that are contained in
this Agreement shall apply to, be binding upon, and inure to the benefit of the
parties and their respective heirs, executors, administrators, legal
representatives, successors and assigns as permitted under the Plan.

11.9.Supersedes Prior Agreements.  This Agreement shall supersede any prior
agreements, promises, understandings, and representations, oral or written,
between the Company (including its employees, agents and Affiliates) and the
Grantee regarding the terms and conditions of the Phantom Shares hereunder.

11.10.Governing Law.  The Agreement shall be construed in accordance with the
laws of the State of Delaware without regard to its conflicts of law provisions,
to the extent federal law does not supersede and preempt Delaware law.

12.Definitions and Other Terms.  The following capitalized terms shall have
those meanings set forth opposite them:

12.1.Grantee:  ___________

12.2.Grant Date:  __________,_____

12.3.Number of Phantom Shares Granted:  ___________

12.4.Vesting Schedule:  None of the Phantom Shares covered by this Agreement
shall vest on the Grant Date.  Subject to earlier vesting pursuant to Section 6
above, if the Grantee remains in continuous Employment from the Grant Date, all
of the Phantom Shares shall vest on __________,_____ (the “Vesting Date”) and
shall be adjusted based on the performance goals as set out in Exhibit A.

 

[Signature page follows.]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officer, and Grantee has hereunto executed this
Agreement.

 

 

 

ATTEST:

CALLON PETROLEUM COMPANY

 

 

 

 

By:

 

_______________________________

             B. F. Weatherly

             Corporate Secretary

 

By: 

 

_______________________________

             Fred L. Callon, President and

             Chief Executive Officer

 

             Date: __________,_____

 

             Date: __________,_____

 

 

Chief Executive Officer

 

 

Address for Notices:

 

200 North Canal Street

Natchez, MS 39120

Attention: Corporate Secretary

 

Accepted and Agreed:

 

GRANTEE

 

 

 

 

 

 

Signature:

 

 

Date:

 

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit A

Calculation of the
Adjusted Phantom Shares

Subject to the provisions in the Agreement, effective as of the Vesting Date,
the Company’s “Total Shareholder Return” will be calculated and compared to the
same calculated total shareholder return of the selected group of peer companies
that are listed below.  Effective as of the Vesting Date, the number of Phantom
Shares awarded under the Agreement will be retroactively adjusted in accordance
with the payout percentage that is based on the Company’s relative ranking with
the peer companies as shown in the table below (the “Adjusted Phantom Shares”).

For purposes of this calculation, the Company’s total shareholder return and
that of the peer companies will be adjusted if necessary for stock splits, and
the percentage increase or decrease will be calculated as follows:

 

 

(EP + CD) - BP

= % increase or decrease

BP

 

 

Ending price (EP) – equals the closing price of a share of Company Stock during
the twenty (20) day trading period ending __________,_____. 

Beginning price (BP) – equals the closing price of a share of Company Stock
during the twenty (20) day trading period ending immediately prior to the Grant
Date.

Cash Dividends (CD) – equals the cash dividends paid on a share of Company Stock
during the twenty (20) day trading period ending __________,_____.

A similar calculation will also be performed for each peer company.  The
resulting percentage for the Company and the peer companies will then be
ranked.  Based on the relative ranking, the number of Phantom Shares awarded to
Grantee under the Agreement will be adjusted in accordance with the following
table:

 

 

Percentile Ranking

Payout as a % of Award

>90th Percentile

200%

50th Percentile

100%

25th Percentile

25%

<25th Percentile

0%

 

Note: Percentile ranks between these points would be interpolated.

 

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Based on a peer group of 13 companies (including Callon), this results in a
payout schedule as follows:

 

 

 

Rank

 

Payout (as a % of Award)

1-2

 

200%

3

 

183%

4

 

163%

5

 

142%

6

 

121%

7

 

100%

8

 

75%

9

 

50%

10

 

25%

11-13

 

0%

 

 

 

 

Peer Companies:

20-day Avg. Closing Price

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

__________________________

$____

 

 

 

Subject to Section 6 of the Agreement, the Adjusted Phantom Shares shall vest on
the Vesting Date if the Grantee is still in Employment on such date.  The cash
payment due to Grantee is computed by multiplying the number of vested Adjusted
Performance Shares on the Vesting Date by the closing price of a share of
Company Stock on __________,_____ (or as of the next previous trading day if the
Vesting Date is not a trading day and the Company Stock is publicly traded on
the Vesting Date).  Payments due employees under this plan will be made in a
cash lump sum payment, net of applicable withholding taxes within forty-five
(45) days from __________,_____.

Note:  In the event one or more of the listed peer companies is involved in a
merger/acquisition, the named peer company(s) will be adjusted either by
replacing said peer company(s) with a suitable replacement, or in the event no
suitable replacement is determined, said peer company(s) will move to the top or
the bottom of the ranking, based on whether said peer company’s Total
Shareholder Return is greater or less than that for the Company, as of the date
of the merger/acquisition. All such determinations shall be made by the
Committee. 

 

 

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