EX-10.1


 Exhibit 10.1 
 Appendix A – VAALCO Energy, Inc. 2012 Long Term Incentive Plan 
  

VAALCO ENERGY, INC. 
 2012 LONG TERM INCENTIVE PLAN 
 (As Effective April 11, 2012 as
amended on May 29, 2012) 






 TABLE OF CONTENTS 

 

									
	 	  	 	  	 	  	Page	 
	 SECTION 1. GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE AND BENEFITS

	  	 	1	  
	 1.1
	  	Background and Purpose	  	 	1	  
	 1.2
	  	Definitions	  	 	1	  
		  	(a)	  	 Affiliate
	  	 	1	  
		  	(b)	  	 Authorized Officer
	  	 	1	  
		  	(c)	  	 Board
	  	 	1	  
		  	(d)	  	 Cause
	  	 	1	  
		  	(e)	  	 CEO
	  	 	2	  
		  	(f)	  	 Change in Control
	  	 	2	  
		  	(g)	  	 Code
	  	 	2	  
		  	(h)	  	 Committee
	  	 	2	  
		  	(i)	  	 Common Stock
	  	 	2	  
		  	(j)	  	 Company
	  	 	2	  
		  	(k)	  	 Consultant
	  	 	2	  
		  	(l)	  	 Covered Employee
	  	 	3	  
		  	(m)	  	 Disability
	  	 	3	  
		  	(n)	  	 Employee
	  	 	3	  
		  	(o)	  	 Employment
	  	 	3	  
		  	(p)	  	 Exchange Act
	  	 	3	  
		  	(q)	  	 Fair Market Value
	  	 	3	  
		  	(r)	  	 Grantee
	  	 	4	  
		  	(s)	  	 Immediate Family
	  	 	4	  
		  	(t)	  	 Incentive Agreement
	  	 	4	  
		  	(u)	  	 Incentive Award
	  	 	4	  
		  	(v)	  	 Incentive Stock Option or ISO
	  	 	4	  
		  	(w)	  	 Independent Director
	  	 	4	  
		  	(x)	  	 Insider
	  	 	4	  
		  	(y)	  	 Nonstatutory Stock Option
	  	 	4	  
		  	(z)	  	 Option Price
	  	 	4	  
		  	(aa)	  	 Other Stock-Based Award
	  	 	4	  
		  	(bb)	  	 Outside Director
	  	 	5	  
		  	(cc)	  	 Parent
	  	 	5	  
		  	(dd)	  	 Performance-Based Award
	  	 	5	  
		  	(ee)	  	 Performance-Based Exception
	  	 	5	  
		  	(ff)	  	 Performance Criteria
	  	 	5	  
		  	(gg)	  	 Performance Period
	  	 	5	  
		  	(hh)	  	 Person
	  	 	5	  
		  	(ii)	  	 Plan
	  	 	5	  
		  	(jj)	  	 Plan Year
	  	 	5	  
		  	(kk)	  	 Publicly Held Corporation
	  	 	5	  
		  	(ll)	  	 Restricted Stock
	  	 	5	  
		  	(mm)	  	 Restricted Stock Award
	  	 	5	  
		  	(nn)	  	 Restricted Stock Unit
	  	 	5	  
		  	(oo)	  	 Restriction Period
	  	 	5	  
		  	(pp)	  	 Retirement
	  	 	5	  
		  	(qq)	  	 Share
	  	 	6	  


  
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	 	  	 	  	 	  	Page	 
		  	(rr)	  	 Share Pool
	  	 	6	  
		  	(ss)	  	 Spread
	  	 	6	  
		  	(tt)	  	 Stock Appreciation Right or SAR
	  	 	6	  
		  	(uu)	  	 Stock Option or Option
	  	 	6	  
		  	(vv)	  	 Subsidiary
	  	 	6	  
		  	(ww)	  	 Supplemental Payment
	  	 	6	  
	 1.3
	  	Plan Administration 	  	 	6	  
		  	(a)	  	 Authority of the Committee
	  	 	6	  
		  	(b)	  	 Meetings
	  	 	6	  
		  	(c)	  	 Decisions Binding
	  	 	6	  
		  	(d)	  	 Modification of Outstanding Incentive Awards
	  	 	7	  
		  	(e)	  	 Delegation of Authority
	  	 	7	  
		  	(f)	  	 Limitation of Liability
	  	 	7	  
		  	(g)	  	 Expenses of Committee
	  	 	7	  
		  	(h)	  	 Surrender of Previous Incentive Awards
	  	 	8	  
		  	(i)	  	 Indemnification
	  	 	8	  
	 1.4
	  	Shares of Common Stock Available for Incentive Awards	  	 	8	  
	 1.5
	  	Share Pool Adjustments for Awards and Payouts	  	 	9	  
	 1.6
	  	Common Stock Available	  	 	10	  
	 1.7
	  	Participation	  	 	10	  
		  	(a)	  	 Eligibility
	  	 	10	  
		  	(b)	  	 Incentive Stock Option Eligibility
	  	 	10	  
	 1.8
	  	Types of Incentive Awards 	  	 	11	  
	 SECTION 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS 
	  	 	11	  
	 2.1
	  	Grant of Stock Options	  	 	11	  
	 2.2
	  	Stock Option Terms	  	 	11	  
		  	(a)	  	 Written Agreement
	  	 	11	  
		  	(b)	  	 Number of Shares
	  	 	11	  
		  	(c)	  	 Exercise Price
	  	 	11	  
		  	(d)	  	 Term
	  	 	11	  
		  	(e)	  	 Exercise
	  	 	11	  
		  	(f)	  	 $100,000 Annual Limit on Incentive Stock Options
	  	 	12	  
		  	(g)	  	 No Reloads
	  	 	12	  
	 2.3
	  	Stock Option Exercises 	  	 	12	  
		  	(a)	  	 Method of Exercise and Payment
	  	 	12	  
		  	(b)	  	 Restrictions on Share Transferability
	  	 	13	  
		  	(c)	  	 Notification of Disqualifying Disposition of Shares from Incentive Stock Options
	  	 	13	  
		  	(d)	  	 Proceeds of Option Exercise
	  	 	13	  
	 2.4
	  	Supplemental Payment on Exercise of Nonstatutory Stock Options	  	 	13	  
	 2.5
	  	Stock Appreciation Rights	  	 	14	  
		  	(a)	  	 Grant
	  	 	14	  
		  	(b)	  	 General Provisions
	  	 	14	  
		  	(c)	  	 Exercise
	  	 	14	  
		  	(d)	  	 Settlement
	  	 	14	  
	 SECTION 3. RESTRICTED STOCK AWARDS 
	  	 	14	  
	 3.1
	  	Award of Restricted Stock 	  	 	14	  
		  	(a)	  	 Grant
	  	 	14	  
		  	(b)	  	 Immediate Transfer Without Immediate Delivery of Restricted Stock
	  	 	15	  
	 3.2
	  	Restrictions 	  	 	15	  
		  	(a)	  	 Forfeiture of Restricted Stock 
	  	 	15	  


  
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	 	  	 	  	 	  	Page	 
		  	(b)	  	 Issuance of Certificates
	  	 	15	  
		  	(c)	  	 Removal of Restrictions
	  	 	16	  
	 3.3
	  	Delivery of Shares of Common Stock	  	 	16	  
	 3.4
	  	Supplemental Payment on Vesting of Restricted Stock Award or RSU	  	 	16	  
	 SECTION 4. RESTRICTED STOCK UNITS 
	  	 	16	  
	 4.1
	  	Grant of RSUs	  	 	16	  
	 4.2
	  	Restrictions and Lapse of Restrictions on RSUs.	  	 	16	  
	 4.3
	  	Settlement of RSUs.	  	 	17	  
	 4.4
	  	No Rights as a Stockholder.	  	 	17	  
	 SECTION 5. OTHER STOCK-BASED AWARDS 
	  	 	17	  
	 5.1
	  	Grant of Other Stock-Based Awards	  	 	17	  
	 5.2
	  	Other Stock-Based Award Terms 	  	 	17	  
		  	(a)	  	 Written Agreement
	  	 	17	  
		  	(b)	  	 Purchase Price
	  	 	17	  
		  	(c)	  	 Performance Criteria and Other Terms
	  	 	17	  
	 5.3
	  	Supplemental Payment on Other Stock-Based Awards 	  	 	18	  
	 SECTION 6. PERFORMANCE-BASED AWARDS AND PERFORMANCE CRITERIA 
	  	 	18	  
	 6.1
	  	Performance Criteria	  	 	18	  
	 6.2
	  	Compliance with Section 162(m)	  	 	19	  
	 6.3
	  	Adjustments of Performance-Based Awards	  	 	19	  
	 6.4
	  	Discretionary Adjustments	  	 	20	  
	 6.5
	  	Certification	  	 	20	  
	 6.6
	  	Other Considerations	  	 	20	  
	 SECTION 7. PROVISIONS RELATING TO PLAN PARTICIPATION 
	  	 	20	  
	 7.1
	  	Incentive Agreement	  	 	20	  
	 7.2
	  	No Employment Rights Conferred	  	 	21	  
	 7.3
	  	Securities Requirements	  	 	21	  
	 7.4
	  	Transferability	  	 	21	  
	 7.5
	  	Rights as a Shareholder	  	 	22	  
		  	(a)	  	 No Shareholder Rights
	  	 	22	  
		  	(b)	  	 Representation of Ownership
	  	 	22	  
	 7.6
	  	Change in Stock and Adjustments 	  	 	22	  
		  	(a)	  	 Changes in Law or Circumstances
	  	 	22	  
		  	(b)	  	 Exercise of Corporate Powers
	  	 	23	  
		  	(c)	  	 Recapitalization of the Company
	  	 	23	  
		  	(d)	  	 Issue of Common Stock by the Company
	  	 	23	  
		  	(e)	  	 Assumption under the Plan of Outstanding Stock Options
	  	 	23	  
		  	(f)	  	 Assumption of Incentive Awards by a Successor
	  	 	24	  
	 7.7
	  	Termination of Employment, Death, Disability and Retirement 	  	 	25	  
		  	(a)	  	 Termination of Employment
	  	 	25	  
		  	(b)	  	 Termination of Employment for Cause
	  	 	25	  
		  	(c)	  	 Retirement
	  	 	25	  
		  	(d)	  	 Disability or Death
	  	 	25	  
		  	(e)	  	 Continuation
	  	 	26	  
	 7.8
	  	Change in Control	  	 	26	  
	 7.9
	  	Exchange of Incentive Awards	  	 	28	  
	 7.10
	  	Repricing Prohibited	  	 	28	  
	 SECTION 8. GENERAL 
	  	 	28	  
	 8.1
	  	Effective Date and Grant Period	  	 	28	  
	 8.2
	  	Funding and Liability of Company	  	 	28	  


  
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	 	  	 	  	 	  	Page	 
	 8.3
	  	Withholding Taxes 	  	 	29	  
		  	(a)	  	 Tax Withholding
	  	 	29	  
		  	(b)	  	 Share Withholding
	  	 	29	  
		  	(c)	  	 Incentive Stock Options
	  	 	29	  
	 8.4
	  	No Guarantee of Tax Consequences	  	 	29	  
	 8.5
	  	Designation of Beneficiary by Participant	  	 	30	  
	 8.6
	  	Deferrals	  	 	30	  
	 8.7
	  	Amendment and Termination of Plan	  	 	30	  
	 8.8
	  	Requirements of Law and Securities Exchanges.	  	 	31	  
	 8.9
	  	Treatment for Other Compensation Purposes	  	 	32	  
	 8.10
	  	No Obligation to Exercise Awards; No Right to Notice of Expiration Date	  	 	32	  
	 8.11
	  	Rule 16b-3 Securities Law Compliance for Insiders	  	 	32	  
	 8.12
	  	Compliance with Code Section 162(m) for Publicly Held Corporation	  	 	32	  
	 8.13
	  	Compliance with Code Section 409A	  	 	32	  
	 8.14
	  	Notices	  	 	33	  
		  	(a)	  	 Notice From Insiders to Secretary of Change in Beneficial Ownership
	  	 	33	  
		  	(b)	  	 Notice to Insiders and Securities and Exchange Commission
	  	 	33	  
	 8.15
	  	Pre-Clearance Agreement with Brokers	  	 	33	  
	 8.16
	  	Successors to Company	  	 	33	  
	 8.17
	  	Miscellaneous Provisions	  	 	34	  
	 8.18
	  	Severability	  	 	34	  
	 8.19
	  	Rules of Construction	  	 	34	  
	 8.20
	  	Governing Law	  	 	34	  


  
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 VAALCO ENERGY, INC. 

2012 LONG TERM INCENTIVE PLAN 
 SECTION 1. 
 GENERAL PROVISIONS
RELATING TO 
 PLAN GOVERNANCE, COVERAGE AND BENEFITS 

 

	1.1	Background and Purpose 


VAALCO Energy, Inc., a Delaware corporation (the “Company”), has adopted this plan document, entitled “VAALCO
Energy, Inc. 2012 Long Term Incentive Plan” (the “Plan”), effective as of April 11, 2012 (the “Effective Date”). 
 The purpose of the Plan is to foster and promote the long-term financial success of the Company and to increase stockholder value by: (a) encouraging the commitment of selected key Employees,
Consultants and Outside Directors, (b) motivating superior performance of key Employees, Consultants and Outside Directors by means of long-term performance related incentives, (c) encouraging and providing key Employees, Consultants and
Outside Directors with a program for obtaining ownership interests in the Company which link and align their personal interests to those of the Company’s stockholders, (d) attracting and retaining key Employees, Consultants and Outside
Directors by providing competitive compensation opportunities, and (e) enabling key Employees, Consultants and Outside Directors to share in the long-term growth and success of the Company. 

The Plan provides for payment of various forms of compensation. It is not intended to be a plan that is subject to the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan will be interpreted, construed and administered consistent with its status as a plan that is not subject to ERISA. 

The Plan will remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to
Section 8.7, until all Shares subject to the Plan have been purchased or acquired according to its provisions. However, in no event may an Incentive Stock Option be granted under the Plan after the expiration of ten (10) years from
the Effective Date to the extent required by Code Section 422(b)(2). 
  

	1.2	Definitions 

 The
following terms shall have the meanings set forth below: 
 (a)
Affiliate.    Any Subsidiary and any other entity that, directly or through one or more intermediaries, is controlled by the Company, as determined by the Committee. 

(b) Authorized Officer.    The Chairman of the Board, the CEO
or any other senior officer of the Company to whom either of them delegate the authority to execute any Incentive Agreement for and on behalf of the Company. No officer or director shall be an Authorized Officer with respect to any Incentive
Agreement for himself. 
 (c) Board.    The
then-current Board of Directors of the Company. 
 (d)
Cause.    When used in connection with the termination of a Grantee’s Employment, shall mean the termination of the Grantee’s Employment by the Company or any Subsidiary by reason of (i) the conviction of
the Grantee by a court of competent jurisdiction as to which no further appeal can be taken of a crime involving moral turpitude or a felony; (ii) the commission by the Grantee of a material act of fraud upon the Company or any Subsidiary, or
any customer or supplier thereof; (iii) the misappropriation of any funds or property of the 

  
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Company or any Subsidiary, or any customer or supplier thereof; (iv) the willful and continued failure by the Grantee to perform the material duties assigned to him that is not cured to the
reasonable satisfaction of the Company within 30 days after written notice of such failure is provided to Grantee by the Board or CEO (or by another officer of the Company or a Subsidiary who has been designated by the Board or CEO for such
purpose); (v) the engagement by the Grantee in any direct and material conflict of interest with the Company or any Subsidiary without compliance with the Company’s or Subsidiary’s conflict of interest policy, if any, then in effect;
or (vi) the engagement by the Grantee, without the written approval of the Board or CEO, in any material activity which competes with the business of the Company or any Subsidiary or which would result in a material injury to the business,
reputation or goodwill of the Company or any Subsidiary. 
 (e)
CEO.    
The then-current Chief Executive Officer of the Company. 
 (f) Change in
Control.    Any of the events described in and subject to Section 7.8. 

(g) Code.    The Internal Revenue Code of 1986, as amended,
and the regulations and other authority promulgated thereunder by the appropriate governmental authority. References herein to any provision of the Code shall refer to any successor provision thereto. 

(h) Committee.    The committee appointed by the Board to
administer the Plan. The Committee shall be comprised of not less than two members of the Compensation Committee of the Board who are Independent Directors, or any successor committee or subcommittee of the Board designated by the Board, which
committee or subcommittee shall be comprised of two or more members of the Board, each of whom is an Independent Director. The Committee may be the Compensation Committee of the Board, or any subcommittee of the Compensation Committee, provided that
the members of the Committee satisfy the requirements of the previous provisions of this paragraph. 
 The Board
shall have the power to fill vacancies on the Committee arising by resignation, death, removal or otherwise. The Board, in its sole discretion, may bifurcate the powers and duties of the Committee among one or more separate committees, or retain all
powers and duties of the Committee in a single Committee. The members of the Committee shall serve at the discretion of the Board. 
 Notwithstanding any other provision of the Plan, any Incentive Awards that are to be granted under the Plan to Outside Directors shall be approved by the Board, or made in accordance with a policy or
program that is approved by the Board; provided, however, the Committee may recommend such Incentive Awards, policy or program to the Board for its approval. With respect to the grant of Incentive Awards to Outside Directors, all rights, powers and
authorities vested in the Committee under the Plan with respect thereto shall instead be exercised by the Board, and thus any reference in the Plan to the Committee shall be deemed to include a reference to the Board when acting in such capacity.
When the Board exercises its authority to act in its capacity as the Committee hereunder with respect to an Incentive Award for an Outside Director, it shall so designate with respect to any action that it undertakes in such capacity. 

(i) Common Stock.    The common stock of the Company, $0.10
par value per share, and any class of common stock into which such common shares may hereafter be converted, reclassified or recapitalized. 
 (j) Company.    VAALCO Energy, Inc., a corporation organized under the laws of the State of Delaware, and any successor in interest thereto.

 (k) Consultant.    An independent agent,
consultant, attorney, an individual who has agreed to become an Employee within the next six months, or any other individual who is not 

  
 2 







 
an Outside Director or an Employee and who, in the opinion of the Committee, is (i) in a position to contribute to the growth or financial success of the Company (or any Parent or
Subsidiary), (ii) is a natural person and (iii) provides bona fide services to the Company (or any Parent or Subsidiary), which services are not in connection with the offer or sale of securities in a capital raising transaction,
and do not directly or indirectly promote or maintain a market for the Company’s securities. 
 
(l) Covered Employee.    A named executive officer who is one of the group of covered employees, as defined in Code Section 162(m) and Treasury Regulation Section 1.162-27(c) (or its successor), during
any period that the Company is a Publicly Held Corporation. 
 (m)
Disability.    As determined by the Committee in its discretion exercised in good faith, a physical or mental condition of the Grantee that would entitle him to payment of disability income payments under the
Company’s long term disability insurance policy or plan for employees, as then effective, if any; or in the event that the Grantee is not covered, for whatever reason, under the Company’s long-term disability insurance policy or plan,
“Disability” means a permanent and total disability as defined in Code Section 22(e)(3). A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, the Grantee shall submit to
any reasonable examination(s) required in the opinion of such physician. 
 (n)
Employee.    Any employee of the Company (or any Parent or Subsidiary) within the meaning of Code Section 3401(c) including, without limitation, officers who are members of the Board. 

(o) Employment.    Employment means that the individual is
employed as an Employee, or engaged as a Consultant or Outside Director, by the Company (or any Parent or Subsidiary), or by any corporation issuing or assuming an Incentive Award in any transaction described in Code Section 424(a), or by a
parent corporation or a subsidiary corporation of such corporation issuing or assuming such Incentive Award, as the parent-subsidiary relationship shall be determined at the time of the corporate action described in Code Section 424(a). In this
regard, neither the transfer of a Grantee from Employment by the Company to Employment by any Parent or Subsidiary, nor the transfer of a Grantee from Employment by any Parent or Subsidiary to Employment by the Company, shall be deemed to be a
termination of Employment of the Grantee. Moreover, the Employment of a Grantee shall not be deemed to have been terminated because of an approved leave of absence from active Employment on account of temporary illness, authorized vacation or
granted for reasons of professional advancement, education, or health, or during any period required to be treated as a leave of absence by virtue of any applicable statute, Company personnel policy or written agreement. 

The term “Employment” for purposes of the Plan shall include (i) active performance of agreed services by a
Consultant for the Company (or any Parent or Subsidiary) or (ii) current membership on the Board by an Outside Director. 
 All determinations hereunder regarding Employment, and termination of Employment, shall be made by the Committee in its discretion. 

(p) Exchange Act.    The Securities Exchange Act of 1934, as
amended. 
 (q) Fair Market Value.    While the
Company is a Publicly Held Corporation, the Fair Market Value of one Share on the date in question shall be (i) the closing sales price on such day for a Share as quoted on the New York Stock Exchange (“NYSE”), 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


  
 3 







 
not quoted on NYSE or other national securities exchange, the average of 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 Common Stock on the date in question, Fair Market 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 Fair
Market Value of the Common Stock is required to be made hereunder, the determination of Fair Market Value for purposes of the Plan shall be made by the Committee in its discretion. 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 Stock Options, SARs, and other Incentive Awards subject to Code Section 409A, such Fair
Market Value shall be determined by the Committee consistent with the requirements of Section 409A in order to satisfy the exception under Code Section 409A for stock rights. 

(r) Grantee.    Any Employee, Consultant or Outside Director
who is granted an Incentive Award under the Plan. 
 (s) Immediate
Family.    With respect to a Grantee, the Grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships. 
 (t)
Incentive Agreement.    The written agreement entered into between the Company and the Grantee setting forth the terms and conditions pursuant to which an Incentive Award is granted under the Plan, as such agreement is
further defined in Section 6.1. 
 (u) Incentive
Award.    A grant of an award under the Plan to a Grantee, including any Nonstatutory Stock Option, Incentive Stock Option (ISO), Stock Appreciation Right (SAR), Restricted Stock Award, Restricted Stock Unit, or on Other
Stock-Based Award, as well as any Supplemental Payment with respect thereto. 

(v) Incentive Stock Option or ISO.    A Stock Option granted
by the Committee to an Employee under Section 2 which is designated by the Committee as an Incentive Stock Option and intended to qualify as an Incentive Stock Option under Code Section 422. 

(w) Independent Director.    A member of the Board who
qualifies as (i) an “independent director” under Section 303A of the New York Stock Exchange Listed Company Manual, (ii) an “outside director” within the meaning of Code Section 162(m), and (c) a
“non-employee director” as defined in Rule 16b-3 under the Exchange Act. 

(x) Insider.    While the Company is a Publicly Held
Corporation, an individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as
defined under Section 16 of the Exchange Act. 
 (y) Nonstatutory Stock
Option.    A Stock Option granted by the Committee to a Grantee under Section 2 that is not designated by the Committee as an Incentive Stock Option. 

(z) Option Price.    The exercise price at which a Share may
be purchased by the Grantee of a Stock Option. 
 (aa) Other Stock-Based
Award.    An Incentive Award granted by the Committee to a Grantee under Section 5.1 that is valued in whole or in part by reference to, or is otherwise based upon, Common Stock. 

  
 4 







 (bb) Outside
Director.    A member of the Board who is not, at the time of grant of an Incentive Award, an employee of the Company or any Affiliate. 

(cc) Parent.    Any corporation (whether now or hereafter
existing) which constitutes a “parent” of the Company, as defined in Code Section 
424(e). 
 (dd) Performance-Based Award.    A grant
of an Incentive Award under the Plan pursuant to Section 6 that is intended to satisfy the Performance-Based Exception. 
 (ee) Performance-Based Exception.    The performance-based exception from the tax deductibility limitations of Code Section 162(m), as
prescribed in Code Section 162(m) and Treasury Regulation Section 1.162-27(e) (or its successor), which is applicable during such period that the Company is a Publicly Held Corporation. 

(ff) Performance Criteria.    The business criteria that are
specified by the Committee pursuant to Section 6 for an Incentive Award that is intended to qualify for the Performance-Based Exception; the satisfaction of such business criteria during the Performance Period being required for the
grant and/or vesting of the Incentive Award to occur, as specified in the applicable Incentive Agreement. 
 
(gg) Performance Period.    A period of time determined by the Committee over which performance is measured for the purpose of determining a Grantee’s right to, and the payment value of, any Incentive Award
that is intended to qualify for the Performance-Based Exception. 
 (hh)
Person.    Any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity. 

(ii) Plan.    VAALCO Energy, Inc. 2012 Long
Term Incentive Plan, as effective on the Effective Date, which is set forth herein and as it may be amended from time to time. 
 (jj) Plan Year.    The calendar year; provided, however, the first Plan Year shall be a short year commencing on the Effective Date and ending
on December 31, 2012. 
 (kk) Publicly Held
Corporation.    A corporation issuing any class of common equity securities required to be registered under Section 12 of the Exchange Act. 

(ll) Restricted Stock.    One or more Shares of Common Stock
that are issued or transferred to a Grantee pursuant to Section 3 and subject to certain restrictions as set forth in the Plan and in the Grantee’s Incentive Agreement. 

(mm) Restricted Stock Award.    An authorization by the
Committee to issue or transfer Restricted Stock to a Grantee pursuant to Section 
3. 
 (nn) Restricted Stock Unit .    A right
granted to a Grantee pursuant to Section 4 which entitles the Grantee to receive one Share or the cash equivalent on the vesting date, which right is subject to certain restrictions as set forth in the Plan and in the Grantee’s
Incentive Agreement. 
 (oo) Restriction
Period.    The period of time determined by the Committee and set forth in the Incentive Agreement during which the transfer of Restricted Stock by the Grantee is restricted. 

(pp) Retirement.    The voluntary termination of Employment
from the Company or any Parent or Subsidiary constituting retirement for age on any date after the Employee attains the normal retirement age of 65 years, or such other age as may be designated by the Committee in the Grantee’s Incentive
Agreement. 

  
 5 







 (qq)
Share.    A share of the Common Stock of the Company. 

(rr) Share Pool.    The number of shares authorized for
issuance under Section 1.4, as adjusted for (i) awards and payouts under Section 1.5 and (ii) changes and adjustments as described in Section 7.6. 

(ss) Spread.    The difference between the exercise price
per Share specified in a SAR grant and the Fair Market Value of a Share on the date of exercise of the SAR. 
 
(tt) Stock Appreciation Right or SAR.    A Stock Appreciation Right as described in Section 2.5. 
 (uu) Stock Option or Option.    Pursuant to Section 2, (i) an Incentive Stock Option granted to an Employee, or (ii) a
Nonstatutory Stock Option granted to an Employee, Consultant or Outside Director, whereunder such option the Grantee has the right to purchase Shares of Common Stock. In accordance with Code Section 422, only an Employee may be granted an
Incentive Stock Option. 
 (vv) Subsidiary.    Any
company (whether a corporation, partnership, joint venture or other form of entity) in which the Company or a corporation in which the Company owns a majority of the shares of capital stock, directly or indirectly, owns a greater than 50% equity
interest; except that, with respect to the issuance of Incentive Stock Options, the term “Subsidiary” shall have the same meaning as the term “subsidiary corporation” as defined in Code Section 424(f) as required by Code
Section 422. 
 (ww) Supplemental
Payment.    Any amount, as described in Sections 2.4, 3.4 and/or 5.3, that is dedicated to payment of income taxes which are payable by the Grantee resulting from an Incentive Award. 

 

	1.3	Plan Administration 

 (a) Authority of the Committee.    Except as may be limited by law and subject to the provisions herein, the Committee shall have the complete
power and authority to (i) select Grantees who shall participate in the Plan; (ii) determine the sizes, duration and types of Incentive Awards; (iii) determine the terms and conditions of Incentive Awards and Incentive Agreements;
(iv) determine whether any Shares subject to Incentive Awards will be subject to any restrictions on transfer; (v) construe and interpret the Plan and any Incentive Agreement or other agreement entered into under the Plan; and
(vi) establish, amend, or waive rules for the Plan’s administration. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. 

(b) Meetings.    The Committee shall designate a chairman
from among its members who shall preside at its meetings, and shall designate a secretary, without regard to whether that individual is a member of the Committee, who shall keep the minutes of the proceedings and all records, documents, and data
pertaining to its administration of the Plan. Meetings shall be held at such times and places as shall be determined by the Committee and the Committee may hold telephonic meetings. The Committee may take any action otherwise proper under the Plan
by the affirmative vote, taken with or without a meeting, of a majority of its members. The Committee may authorize any one or more of its members or any officer of the Company to execute and deliver documents on behalf of the Committee. 

(c) Decisions Binding.    All determinations and decisions
of the Committee shall be made in its discretion pursuant to the provisions of the Plan, and shall be final, conclusive and binding on all Persons including the Company, its shareholders, Employees, Grantees, and their estates and beneficiaries. The
Committee’s decisions and determinations with respect to the Plan or any Incentive Award need not be uniform and may be made selectively among Incentive Awards, Grantees and Persons, whether or not such Incentive Awards are similar or such
Persons are similarly situated. 

  
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 (d) Modification of Outstanding Incentive
Awards.    Subject to the shareholder approval requirements under Section 8.7 or as otherwise required, the Committee may, in its discretion, provide for the extension of the exercisability of an Incentive
Award, accelerate the vesting or exercisability of an Incentive Award, eliminate or make less restrictive any restrictions contained in an Incentive Award, waive any restriction or other provisions of an Incentive Award, or otherwise amend or modify
an Incentive Award in any manner that (i) is not adverse to the Grantee to whom such Incentive Award was granted, (ii) is consented to by such Grantee, (iii) does not cause the Incentive Award to provide for the deferral of
compensation in a manner that does not comply with Code Section 409A or is not exempt from Code Section 409A (unless otherwise determined by the Committee), or (iv) does not contravene the requirements of the Performance-Based
Exception under Code Section 162(m), if applicable. With respect to an Incentive Award that is an ISO, no adjustment thereto shall be made to the extent constituting a “modification” within the meaning of Code Section 424(h)(3)
unless otherwise agreed to by the Grantee in writing. Notwithstanding the above provisions of this subsection, no amendment or modification of an Incentive Award shall be made to the extent such modification results in any Stock Option with an
exercise price less than 100% of the Fair Market Value per Share on the date of grant (110% for Grantees of ISOs who are 10% or greater shareholders pursuant to Section 1.7(b)). 

With respect to restrictions in the Plan that are based on the requirements of Rule 16b-3 under the Exchange Act,
Code Section 422, Code Section 162(m), the rules of the New York Stock Exchange or any exchange or inter-dealer quotation system upon which the Common Stock is listed or quoted, or any other applicable law, rule or restriction
(collectively, “applicable law”), to the extent that any such restrictions are no longer required by applicable law, the Committee shall have the sole discretion and authority to grant Incentive Awards that are not subject to such mandated
restrictions and/or to waive any such mandated restrictions with respect to outstanding Incentive Awards. 
 
(e) Delegation of Authority.     The Committee may delegate to designated officers or other employees of the Company any of its duties and authority under the Plan pursuant to such conditions or limitations as the
Committee may establish from time to time, including, without limitation, the authority to recommend Grantees and the forms and terms of their Incentive Awards; provided, however, the Committee may not delegate to any Person the authority
(i) to grant Incentive Awards or (ii) while the Company is a Publicly Held Corporation, to take any action which would contravene the requirements of Rule 16b-3 under the Exchange Act, the Performance-Based Exception under Code
Section 162(m), or the Sarbanes-Oxley Act of 2002. 
 (f) Limitation of
Liability.    The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished by any officer or employee of the Company or an Affiliate, the Company’s
independent certified public accountants, counsel or other advisors to the Company, or any consultant, attorney, accountant or other advisor retained by the Committee to assist in the administration of the Plan. Neither the Board nor the Committee,
nor any member of either, shall be liable for any act, omission, interpretation, decision, construction or determination made in good faith in connection with the Plan or any Incentive Award. 

(g) Expenses of Committee.     The Committee may employ legal
counsel, including, without limitation, independent legal counsel and counsel regularly employed by the Company, and other agents as the Committee may deem appropriate for the administration of the Plan. The Committee may rely upon any opinion or
computation received from any such counsel or agent. All expenses incurred by the Committee in interpreting and administering the Plan, including, without limitation, meeting expenses and professional fees, shall be paid by the Company. 

  
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 (h) Surrender of Previous Incentive
Awards.    The Committee may, in its discretion, grant Incentive Awards to Grantees on the condition that such Grantees surrender to the Committee for cancellation such other Incentive Awards (including, without limitation,
Incentive Awards with higher exercise prices) as the Committee directs. Incentive Awards granted on the condition precedent of surrender of outstanding Incentive Awards shall not count against the limits set forth in Section 1.4 until
such time as such previous Incentive Awards are surrendered and cancelled. No surrender of Incentive Awards shall be made under this Section 1.3(h) if such surrender causes any Incentive Award to provide for the deferral of compensation
in a manner that is subject to taxation under Code Section 409A, unless otherwise determined by the Committee. 
 (i) Indemnification.     Each individual who is or was a member of the Committee shall be indemnified by the Company against and from any damage,
loss, liability, cost and expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he may be involved by reason of any action
taken or failure to act under the Plan, except for any such act or omission constituting willful misconduct or gross negligence. Each such individual shall be indemnified by the Company for all amounts paid by him in settlement thereof, with the
Company’s approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to
handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which each such individual may be entitled (i) under the Company’s Articles or Certificate of
Incorporation or Bylaws, (ii) pursuant to any separate indemnification or hold harmless agreement with the Company or an Affiliate, (iii) as a matter of law, contract or otherwise, or (iv) any power that the Company or an Affiliate
may have to indemnify them or hold them harmless. 
  

	1.4	Shares of Common Stock Available for Incentive Awards 

 Subject to adjustment under Section 7.6, there shall be available for Incentive Awards that are granted wholly or partly in Common Stock (including rights or Stock Options that may be
exercised for or settled in Common Stock) three million (3,000,000) Shares of Common Stock. Pursuant to Section 1.5, the number of such reserved Shares for Incentive Awards under the Plan that are forfeited or terminated, expire
unexercised, are settled in cash in lieu of Common Stock or in a manner such that all or some of the Shares covered by an Incentive Award are not issued to a Grantee or are exchanged for Incentive Awards that do not involve Common Stock, shall again
immediately become available for Incentive Awards hereunder. 
 Subject to adjustment under Section 7.6, the
aggregate number of Shares that may be issued upon exercise of ISOs shall be three million (3,000,000) of the Shares reserved pursuant to the previous paragraph. Subject to adjustment under Section 7.6, the number of Shares which
may be granted as Restricted Stock Awards or Restricted Stock Units, in the aggregate, shall be two hundred fifty thousand (250,000) of the Shares reserved pursuant to the previous paragraph. The Committee may from time to time adopt and
observe such procedures concerning the counting of Shares against the Plan reserve as it deems appropriate. 
 During any period
that the Company is a Publicly Held Corporation, then unless the Committee determines that a particular Incentive Award granted to a Covered Employee is not intended to comply with the Performance-Based Exception, the following rules shall apply to
grants of Incentive Awards that are made to Covered Employees: 
 (a) Subject to adjustment under
Section 7.6, the maximum aggregate number of Shares attributable to Incentive Awards paid out in Shares that may be granted (in the case of 

  
 8 







 
Stock Options and SARs) or that may vest (in the case of Restricted Stock, Restricted Stock Units or Other Stock-Based Awards), as applicable, in any calendar year pursuant to any Incentive
Awards for any individual Grantee shall be one million (1,000,000) Shares. 
 (b) The maximum aggregate cash
payout (with respect to any Incentive Awards paid out in cash) in any calendar year which may be made for any Grantee shall be twenty-five million dollars ($25,000,000). 

(c) With respect to any Stock Option or SAR granted to a Covered Employee that is canceled or repriced, the number of
Shares subject to such Stock Option or SAR shall continue to count against the maximum number of Shares that may be the subject of Stock Options or SARs granted to such Covered Employee and, in this regard, such maximum number shall be determined in
accordance with Code Section 162(m). 
 (d) The limitations of subsections (a), (b) and
(c) above shall be construed and administered so as to comply with the Performance-Based Exception. 
  

	1.5	Share Pool Adjustments for Awards and Payouts 

 The following Incentive Awards shall reduce, on a one Share for one Share basis, the number of Shares authorized for issuance under the Share Pool: 

 

	 	(a)	Stock Option; 

  

	 	(b)	SAR in Shares; 

  

	 	(c)	Restricted Stock Award; 

  

	 	(d)	Restricted Stock Unit in Shares; and 

  

	 	(e)	Other Stock-Based Award in Shares. 

 Shares subject to an Incentive Award shall not be issued or transferred to a Grantee, and shall cease to be issuable or transferable to a Grantee, due to forfeiture, termination, expiration or
cancellation, in whole or in part, of such Incentive Award for any other reason, or if any such Shares shall, after issuance or transfer, be reacquired by the Company due to the Grantee’s failure to comply with the terms and conditions of an
Incentive Award or for any other reason. The Shares not so issued or transferred, or the Shares so reacquired by the Company, as the case may be, shall no longer be charged against the Share reserve in Section 1.4, and may be used
thereafter for additional Incentive Awards under the Plan. The following additional parameters shall apply: 

(a) To the extent an Incentive Award is settled or paid in cash, Shares subject to such Incentive Award will not be
considered to have been issued and will not be applied against the maximum number of Shares provided in Section 1.4. 
 (b) If an Incentive Award may be settled in Shares or cash, such Shares shall be deemed issued only when and to the extent that settlement or payment is actually made in Shares. To the extent an Incentive
Award is settled or paid in cash, and not Shares, any Shares previously reserved for issuance or transfer pursuant to such Incentive Award will again be deemed available for issuance or transfer under Section 1.4, and the maximum number
of Shares that may be issued or transferred under Section 1.4, shall be reduced only by the number of Shares actually issued and transferred to the Grantee. 

(c) Notwithstanding the foregoing: (i) Shares withheld or tendered to pay withholding taxes or the exercise price of
an Incentive Award shall not again be available for the grant of Incentive Awards under the Plan, and (ii) the full number of Shares subject to a granted Stock Option or SAR that are settled by the issuance of Shares shall be counted against
the Shares authorized for issuance under Section 1.4, regardless of the number of Shares actually issued upon the settlement of such Stock Option or SAR. 

  
 9 







 (d) Any Shares repurchased by the Company on the open market using the
proceeds from the exercise of an Incentive Award shall not increase the number of Shares available under Section 1.4 for the future grant of Incentive Awards. 

(e) Shares withheld or deducted from an Incentive Award to satisfy tax withholding requirements relating to Stock Options
or Stock Appreciation Rights shall not be added back to the Share reserve in Section 1.4, and shall not again be available for issuance pursuant to Incentive Awards granted under the Plan. Shares withheld or deducted by the Company to
satisfy tax withholding requirements relating to Incentive Awards other than Stock Options or SARs shall be added back to the Share reserve in Section 1.4 and thus be available again for issuance of Incentive Awards under the Plan.
Shares delivered by a Grantee to the Company to satisfy tax withholding requirements shall be treated in the same way as Shares withheld or deducted from an Incentive Award as specified above for purposes of Share reserve counting under
Section 1.4. 
 (f) To the extent that the full number of Shares subject to a Stock Option or a
Share-settled Stock Appreciation Right is not issued upon exercise of such Stock Option or SAR for any reason, including by reason of a net settlement or net exercise, then all Shares that are covered by the exercised Stock Option or SAR shall not
be added back to the Share reserve in Section 1.4 and thus such Shares shall not again be available for issuance of Incentive Awards under the Plan. 
 (g) If the Option Price of a Stock Option is satisfied by delivering Shares to the Company (by either actual delivery or attestation), such Shares shall not be added to the Share reserve in
Section 1.4, and thus shall not be available for issuance of Incentive Awards under the Plan. 
  

	1.6	Common Stock Available 


The Common Stock available for issuance or transfer under the Plan shall be made available from Shares now or hereafter (a) held in
the treasury of the Company, (b) authorized but unissued shares, or (c) Shares to be purchased or acquired by the Company. No fractional shares shall be issued under the Plan; payment for fractional shares shall be made in cash.

  

	1.7	Participation 

 (a) Eligibility.    Incentive Awards may be granted only to individuals who, at the time of grant, are Employees, Consultants, and/or Outside
Directors. The Committee shall from time to time designate those Employees, Consultants and/or Outside Directors, if any, to be granted Incentive Awards under the Plan, the type of Incentive Awards granted, the number of Shares, Stock Options,
rights or units, as the case may be, which shall be granted to each such individual, and any other terms or conditions relating to the Incentive Awards as it may deem appropriate to the extent consistent with the provisions of the Plan. A Grantee
who has been granted an Incentive Award may, if otherwise eligible, be granted additional Incentive Awards at any time. 
 (b) Incentive Stock Option Eligibility.    Incentive Stock Options may only be granted to Employees and not to Consultants or
Outside Directors. In addition, no Employee shall be eligible for the grant of any Incentive Stock Option who owns or would own immediately before the grant of such Incentive Stock Option, directly or indirectly, stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the Company, or any Parent or Subsidiary. This restriction does not apply if, at the time such Incentive Stock Option is granted, the Incentive Stock Option exercise
price is at least one hundred and ten percent (110%) of the Fair Market Value on the date of grant and the Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the date of grant. For the


  
 10 








 
purpose of the immediately preceding sentence, the attribution rules of Code Section 424(d) shall apply for the purpose of determining an Employee’s percentage ownership in the Company
or any Parent or Subsidiary. This paragraph shall be construed consistent with the requirements of Code Section 422. 
  

	1.8	Types of Incentive Awards 


The types of Incentive Awards under the Plan are Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock
Units, Other Stock-Based Awards, and related Supplemental Payments, or any combination of the foregoing. 
 
SECTION 2. 
 STOCK OPTIONS AND STOCK APPRECIATION RIGHTS 

 

	2.1	Grant of Stock Options 


The Committee is authorized to grant (a) Nonstatutory Stock Options to Employees, Consultants and/or Outside Directors and
(b) Incentive Stock Options to Employees only, in accordance with the terms and conditions of the Plan, and with such additional terms and conditions, not inconsistent with the Plan, as the Committee shall determine in its discretion.
Successive grants may be made to the same Grantee regardless whether any Stock Option previously granted to such person remains unexercised. 
  

	2.2	Stock Option Terms 

 (a) Written Agreement.    Each grant of a Stock Option shall be evidenced by a written Incentive Agreement. Among its other
provisions, each Incentive Agreement shall set forth the extent to which the Grantee shall have the right to exercise the Stock Option following termination of the Grantee’s Employment. Such provisions shall be determined in the discretion of
the Committee and included in the Grantee’s Incentive Agreement, and they need not be uniform among all Stock Options issued pursuant to the Plan. 
 (b) Number of Shares.    Each Stock Option shall specify the number of Shares of Common Stock to which it pertains. 

(c) Exercise Price.    The exercise price per Share of
Common Stock under each Stock Option shall be (i) not less than 100% of the Fair Market Value per Share on the date the Stock Option is granted and (ii) specified in the Incentive Agreement; provided, however, if the Grantee of an ISO is a
10% or greater shareholder pursuant to Section 1.7(b)), the exercise price for the ISO shall not be less than 110% of the Fair Market Value on the date of grant. Each Stock Option shall specify the method of exercise which shall be
consistent with Section 2.3(a). 
 (d)
Term.    In the Incentive Agreement, the Committee shall fix the term of each Stock Option which shall not be more than five (5) years from the date of grant. 

(e) Exercise.    The Committee shall determine the time or
times at which a Stock Option may be exercised, in whole or in part. Each Stock Option may specify the required period of continuous Employment and/or the Performance Criteria to be achieved before the Stock Option or portion thereof will become
exercisable. Each Stock Option, the exercise of which, or the timing of the exercise of which, is dependent, in whole or in part, on the achievement of designated Performance Criteria, may specify a minimum level of achievement in respect of the
specified Performance Criteria below which no Stock Options will be exercisable and a method for determining the number of Stock Options that will be exercisable 

  
 11 








 
if performance is at or above such minimum but short of full achievement of the Performance Criteria. All such particular terms and conditions of the Stock Option shall be set forth in the
Grantee’s Incentive Agreement. 
 (f) $100,000 Annual Limit on Incentive
Stock Options.    Notwithstanding any contrary provision in the Plan, a Stock Option designated as an ISO shall be an ISO only to the extent that the aggregate Fair Market Value (determined as of the time the ISO is
granted) of the Shares of Common Stock with respect to which ISOs are exercisable for the first time by the Grantee during any single calendar year (under the Plan and any other stock option plans of the Company and its Subsidiaries or Parent) does
not exceed $100,000. This limitation shall be applied by taking ISOs into account in the order in which they were granted and shall be construed in accordance with Code Section 422(d). To the extent that a Stock Option intended to constitute an
ISO exceeds the $100,000 limitation (or any other limitation under Code Section 422), the portion of the Stock Option that exceeds the $100,000 limitation (or violates any other limitation under Code Section 422) shall be deemed a
Nonstatutory Stock Option. In such event, all other terms and provisions of such Stock Option grant shall remain unchanged. 
 (g) No Reloads.    Incentive Agreements for Stock Options shall not contain any provision entitling a Grantee to the automatic grant of
additional Stock Options in connection with the exercise of the original Stock Option. 
  

	2.3	Stock Option Exercises 

 (a) Method of Exercise and Payment.    Stock Options shall be exercised by the delivery of a signed written notice of exercise to the Company,
which must be received as of a date set by the Company in advance of the effective date of the proposed exercise. The notice shall set forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for
the Shares. 
 The Option Price upon exercise of any Stock Option shall be payable to the Company in full either:
(i) in cash or its equivalent; or (ii) subject to prior approval by the Committee in its discretion, by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price,
(iii) subject to prior approval by the Committee in its discretion, by withholding Shares which otherwise would be acquired on exercise having an aggregate Fair Market Value at the time of exercise equal to the total Option Price; or
(iv) subject to prior approval by the Committee in its discretion, by a combination of (i), (ii), and (iii) above. 
 Any payment in Shares shall be effected by the surrender of such Shares to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Stock Option is
exercised. Unless otherwise permitted by the Committee in its discretion, the Grantee shall not surrender, or attest to the ownership of, Shares in payment of the Option Price if such action would cause the Company to recognize compensation expense
(or additional compensation expense) with respect to the Stock Option for financial accounting reporting purposes. 
 The Committee, in its discretion, also may allow the Option Price to be paid with such other consideration as shall constitute lawful consideration for the issuance of Shares (including, without
limitation, effecting a “cashless exercise” with a broker of the Option), subject to applicable securities law restrictions and tax withholdings, or by any other means which the Committee determines to be consistent with the Plan’s
purpose and applicable law. At the direction of the Grantee, the broker will either (i) sell all of the Shares received when the Option is exercised and pay the Grantee the proceeds of the sale (minus the Option Price, withholding taxes and any
fees due to the broker); or (ii) sell enough of the Shares received upon exercise of the Option to cover the Option Price, withholding taxes and any fees due the 

  
 12 








 
broker and deliver to the Grantee (either directly or through the Company) a stock certificate for the remaining Shares. Dispositions to a broker effecting a cashless exercise are not exempt
under Section 16 of the Exchange Act while the Company is a Publicly Held Corporation. Moreover, in no event will the Committee allow the Option Price to be paid with a form of consideration, including a loan or a “cashless exercise,”
if such form of consideration would violate the Sarbanes-Oxley Act of 2002, as determined by the Committee. 
 As
soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver, or cause to be delivered, to or on behalf of the Grantee, in the name of the Grantee or other appropriate recipient, evidence of
ownership for the number of Shares purchased under the Stock Option. 
 Subject to Section 7.4,
during the lifetime of a Grantee, each Option granted to the Grantee shall be exercisable only by the Grantee (or his legal guardian in the event of his Disability) or by a broker-dealer acting on his behalf pursuant to a cashless exercise under the
foregoing provisions of this Section 2.3(a). 
 (b) Restrictions on
Share Transferability.    The Committee may impose such restrictions on any grant of Stock Options or on any Shares acquired pursuant to the exercise of a Stock Option as it may deem advisable, including, without
limitation, restrictions under (i) any shareholders’ agreement, buy/sell agreement, right of first refusal, non-competition, and any other agreement between the Company and any of its securities holders or employees; (ii) any
applicable federal securities laws; (iii) the requirements of any stock exchange or market upon which such Shares are then listed and/or traded; or (iv) any blue sky or state securities law applicable to such Shares. Any certificate issued
to evidence Shares issued upon the exercise of an Incentive Award may bear such legends and statements as the Committee shall deem advisable to assure compliance with applicable federal and state laws and regulations. 

Any Grantee or other Person exercising an Incentive Award shall be required, if requested by the Committee, to give a
written representation that the Incentive Award and the Shares subject to the Incentive Award will be acquired for investment and not with a view to public distribution; provided, however, that the Committee, in its discretion, may release any
Person receiving an Incentive Award from any such representations either prior to or subsequent to the exercise of the Incentive Award. 
 (c) Notification of Disqualifying Disposition of Shares from Incentive Stock Options.    Notwithstanding any other provision of the Plan, a
Grantee who disposes of Shares of Common Stock acquired upon the exercise of an Incentive Stock Option by a sale or exchange either (i) within two (2) years after the date of the grant of the Incentive Stock Option under which the Shares
were acquired or (ii) within one (1) year after the transfer of such Shares to him pursuant to exercise, shall promptly notify the Company of such disposition, the amount realized and his adjusted basis in such Shares. 

(d) Proceeds of Option Exercise.    The proceeds received by
the Company from the sale of Shares pursuant to Stock Options exercised under the Plan shall be used for general corporate purposes. 
  

	2.4	Supplemental Payment on Exercise of Nonstatutory Stock Options 

 The Committee, either at the time of grant or exercise of any Nonstatutory Stock Option, may provide in the Incentive Agreement for a Supplemental Payment by the Company to the Grantee with respect to the
exercise of any Nonstatutory Stock Option. The Supplemental Payment shall be in the amount specified by the Committee, which amount shall not exceed the amount necessary to pay the federal and state income tax payable with respect to both the
exercise of the Nonstatutory Stock Option and the receipt of the Supplemental Payment, assuming the holder is taxed at either the 

  
 13 








 
maximum effective income tax rate applicable thereto or at a lower tax rate as deemed appropriate by the Committee in its discretion. No Supplemental Payments will be made with respect to any
SARs or ISOs. 
  

	2.5	Stock Appreciation Rights 

 (a) Grant.    The Committee may grant Stock Appreciation Rights to any Employee, Consultant or Outside Director. A SAR is the right to receive
an amount equal to the Spread with respect to a Share upon the exercise of the SAR. SARs may be granted in tandem with the grant of a Stock Option, in which case the Incentive Agreement will provide that the SAR shall be cancelled when and to the
extent the related Stock Option is exercised and that exercise will result in the surrender of the right to purchase the Share under the Stock Option as to which the SAR was exercised. Alternatively, SARs may be granted independently of Stock
Options, in which case the grant of SARs shall be evidenced by an Incentive Agreement. Any SARs granted under the Plan are intended to satisfy the requirements under Code Section 409A to the effect that such SARs do not provide for the deferral
of compensation that is subject to taxation under Code Section 409A. 

(b) General Provisions.    The terms and conditions of each
SAR shall be evidenced by an Incentive Agreement. The exercise price per Share shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the grant date of the SAR. The term of the SAR shall be determined by the
Committee but shall not be greater than ten (10) years from the date of grant. The Committee cannot include any feature for the deferral of compensation other than deferral of the recognition of income until exercise of the SAR. 

(c) Exercise.    SARs shall be exercisable subject to such
terms and conditions as the Committee shall specify in the Incentive Agreement for the SAR grant. No SAR granted to an Insider may be exercised prior to six (6) months from the date of grant, except in the event of his death or Disability which
occurs prior to the expiration of such six-month period if so permitted under the Incentive Agreement. 
 
(d) Settlement.    Upon exercise of the SAR, the Grantee shall receive an amount equal to the Spread. The Spread, less applicable withholdings, shall be payable only in cash or in Shares, or a combination of
both, as specified in the Incentive Agreement, within 30 calendar days of the exercise date. In addition, the Incentive Agreement under which such SARs are awarded, or any other agreements or arrangements, shall not provide that the Company will
purchase any Shares delivered to the Grantee as a result of the exercise or vesting of the SAR. 

SECTION 3. 
 RESTRICTED STOCK AWARDS 
  

	3.1	Award of Restricted Stock 

 (a) Grant.    With respect to a Grantee who is an Employee, Consultant or Outside Director, Shares of Restricted Stock may be awarded by the
Committee with such restrictions during the Restriction Period as the Committee shall designate in its discretion. Any such restrictions may differ with respect to a particular Grantee. Restricted Stock shall be awarded for no additional
consideration or such additional consideration as the Committee may determine, which consideration may be less than, equal to or more than the Fair Market Value of the shares of Restricted Stock on the grant date. The terms and conditions of each
grant of Restricted Stock shall be evidenced by an Incentive Agreement and, during the Restriction Period, such Shares of Restricted Stock must remain subject to a “substantial risk of forfeiture”


  
 14 








 
within the meaning given to such term under Code Section 83. Any Restricted Stock Award may, at the time of grant, be designated by the Committee as a Performance-Based Award that is
intended to qualify for the Performance-Based Exception. 
 (b)
Immediate Transfer Without Immediate Delivery of Restricted Stock.    Unless otherwise specified in the Grantee’s Incentive Agreement, each Restricted Stock Award shall constitute an immediate transfer of the record
and beneficial ownership of the Shares of Restricted Stock to the Grantee in consideration of the performance of services as an Employee, Consultant or Outside Director, as applicable, thus entitling such Grantee to all voting, dividend, and other
ownership rights in such Shares. 
 As specified in the Incentive Agreement, a Restricted Stock Award may or may
not limit the Grantee’s dividend rights during the Restriction Period in which the shares of Restricted Stock are subject to a “substantial risk of forfeiture” (within the meaning given to such term under Code Section 83) and
restrictions on transfer. In the Incentive Agreement, the Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Shares of a
Restricted Stock Award is designed to comply with the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Shares of Restricted Stock, such that the
dividends and/or the Shares of Restricted Stock maintain eligibility for the Performance-Based Exception. In the event that any dividend constitutes a derivative security or an equity security pursuant to the rules under Section 16 of the
Exchange Act, if applicable, such dividend shall be subject to a vesting period equal to the remaining vesting period of the Shares of Restricted Stock with respect to which the dividend is paid. 

Shares awarded pursuant to a grant of Restricted Stock, whether or not under a Performance-Based Award, may be issued in
the name of the Grantee and held, together with a stock power endorsed in blank, by the Committee or Company (or their delegates) or in trust or in escrow pursuant to an agreement satisfactory to the Committee, as determined by the Committee, until
such time as the restrictions on transfer have expired. All such terms and conditions shall be set forth in the Grantee’s Incentive Agreement. The Company or Committee (or their delegates) shall issue to the Grantee a receipt evidencing the
certificates held by it which are registered in the name of the Grantee. 
  

	3.2	Restrictions 

 (a) Forfeiture of Restricted Stock.    Restricted Stock awarded to a Grantee may be subject to the following restrictions until
the expiration of the Restriction Period: (i) a restriction that constitutes a “substantial risk of forfeiture” (as defined in Code Section 83), and a restriction on transferability; (ii) unless otherwise specified by the
Committee in the Incentive Agreement, the Restricted Stock that is subject to restrictions which are not satisfied shall be forfeited and all rights of the Grantee to such Shares shall terminate; and (iii) any other restrictions that the
Committee determines in advance are appropriate, including, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any
transferee. Any such restrictions shall be set forth in the Grantee’s Incentive Agreement. The Grantee cannot sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Shares of Restricted Stock until the Restriction Period has
expired. 
 (b) Issuance of
Certificates.    Reasonably promptly after the date of grant with respect to Shares of Restricted Stock, the Company shall cause to be issued a stock certificate, which is registered in the name of the Grantee to whom
such Shares of Restricted Stock were granted, evidencing such Shares; provided, however, that the Company shall not 

  
 15 








 
cause to be issued such a stock certificate unless it has received a stock power duly endorsed in blank with respect to such Shares. Each such stock certificate shall bear the following legend or
any other legend approved by the Company: 
 The transferability of this certificate and the shares of stock represented hereby
are subject to the restrictions, terms and conditions (including forfeiture and restrictions against transfer) contained in the VAALCO Energy, Inc. 2012 Long Term Incentive Plan and an Incentive Agreement entered into between the registered owner of
such shares and VAALCO Energy, Inc. A copy of the Plan and Incentive Agreement are on file in the main corporate office of VAALCO Energy, Inc. 
 Such legend shall not be removed from the certificate evidencing such Shares of Restricted Stock unless and until such Shares vest pursuant to the terms of the Incentive Agreement. 

(c) Removal of Restrictions.    The Committee, in its
discretion, shall have the authority to remove any or all of the restrictions on the Restricted Stock if it determines that, by reason of a change in applicable law or another change in circumstance arising after the grant date of the Restricted
Stock, such action is necessary or appropriate. 
  

	3.3	Delivery of Shares of Common Stock 

 Subject to withholding taxes under Section 8.3 and to the terms of the Incentive Agreement, a stock certificate evidencing the Shares of Restricted Stock with respect to which the restrictions
in the Incentive Agreement have been satisfied shall be delivered to the Grantee or other appropriate recipient free of restrictions. 
  

	3.4	Supplemental Payment on Vesting of Restricted Stock Award or RSU 

 The Committee, either at the time of grant or vesting of Incentive Award that is a Restricted Stock Award or an RSU, may provide for a Supplemental Payment by the Company to the holder in an amount
specified by the Committee, which amount shall not exceed the amount necessary to pay the federal and state income tax payable with respect to both the vesting of the Incentive Award and receipt of the Supplemental Payment, assuming the Grantee is
taxed at either the maximum effective income tax rate applicable thereto or at a lower tax rate as deemed appropriate by the Committee in its discretion. 
 SECTION 4. 
 RESTRICTED STOCK
UNITS 
  

	4.1	Grant of RSUs 

 The
Committee may grant Restricted Stock Units to a Grantee who is an Employee, Consultant or Outside Director, as selected in the discretion of the Committee, in such amounts as shall be determined by the Committee in its discretion. Each grant of RSUs
will be evidenced by an Incentive Agreement that sets forth the number of RSUs covered by the Incentive Award and the terms, conditions, restrictions and other provisions applicable to the RSUs as may be specified by the Committee consistent with
the terms of the Plan, including, without limitation, provisions relating to compliance with, or exemption under, Code Section 409A. The Committee may award Restricted Stock Units to a Grantee that are payable in Shares or cash, or in a
combination thereof. 
  

	4.2	Restrictions and Lapse of Restrictions on RSUs. 

 RSUs shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions as the Committee may impose in the Incentive Agreement including, without limitation,


  
 16 








 
provisions relating to compliance with, or exemption under, Code Section 409A. These restrictions may lapse separately or in combination at such times, under such circumstances, in such
installments, upon the satisfaction of performance goals or continued service requirements, or otherwise, as determined by the Committee and set forth in the Grantee’s Incentive Agreement. 

 

	4.3	Settlement of RSUs. 

 RSUs
shall become payable to a Grantee at the time or times set forth in the Incentive Agreement, which may be upon or following vesting of the Incentive Award. RSUs may be paid in cash, Shares or a combination thereof, as determined by the Committee and
set forth in the Grantee’s Incentive Agreement, subject to any applicable withholding taxes. 
  

	4.4	No Rights as a Stockholder. 

 The Grantee shall have no rights as a stockholder with respect to any Incentive Award of RSUs until such time as Shares are paid and delivered to the Grantee in settlement of the RSUs pursuant to the
terms of Grantee’s Incentive Agreement. 
 SECTION 5. 

OTHER STOCK-BASED AWARDS 
  

	5.1	Grant of Other Stock-Based Awards 

 Other Stock-Based Awards may be awarded by the Committee to Grantees that are payable in Shares or in cash, as determined in the discretion of the Committee to be consistent with the goals of the Company.
Other types of Stock-Based Awards that are payable in Shares include, without limitation, purchase rights, Shares awarded that are not subject to any restrictions or conditions, Shares awarded subject to the satisfaction of specified Performance
Criteria, convertible or exchangeable debentures, other rights convertible into Shares, Incentive Awards valued by reference to the performance of a specified Affiliate, or a division, business unit, or department of the Company or an Affiliate, and
settlement in cancellation of rights of any Person with a vested interest in any other plan, fund, program or arrangement that is or was sponsored, maintained or participated in by the Company or any Affiliate. As is the case with other types of
Incentive Awards, Other Stock-Based Awards may be awarded either alone or in addition to, or in tandem with, any other Incentive Awards. Other Stock-Based Awards that are payable in Shares are not intended to be deferred compensation subject to
taxation under Code Section 409A, unless otherwise determined by the Committee at the time of grant. 
  

	5.2	Other Stock-Based Award Terms 

 (a) Written Agreement.    All terms and conditions of Other Stock-Based Awards shall be determined by the Committee and set forth in the
Incentive Agreement. 
 (b) Purchase
Price.    Except to the extent that an Other Stock-Based Award is granted in substitution for an outstanding Incentive Award or is delivered upon exercise of a Stock Option, the amount of consideration required to be
received by the Company shall be either (i) no consideration other than services rendered (in the case of authorized and unissued shares), or to be rendered, by the Grantee, or (ii) as otherwise specified in the Incentive Agreement.

 (c) Performance Criteria and Other
Terms.    The Committee may specify Performance Criteria for (i) vesting in Other Stock-Based Awards and (ii) payment thereof to the Grantee, as it may determine in its discretion. The extent to which any such
Performance Criteria have been met shall be determined and certified by the Committee in accordance with the requirements to qualify for the Performance-Based Exception pursuant to Section 6. 

  
 17 









	5.3	Supplemental Payment on Other Stock-Based Awards 

 The Committee, either at the time of grant or vesting of an Other Stock-Based Award, may provide for a Supplemental Payment by the Company to the holder in an amount specified by the Committee, which
amount shall not exceed the amount necessary to pay the federal and state income tax payable with respect to both the vesting of the Other Stock-Based Award and receipt of the Supplemental Payment, assuming the Grantee is taxed at either the maximum
effective income tax rate applicable thereto or at a lower tax rate as deemed appropriate by the Committee in its discretion. 

SECTION 6. 
 PERFORMANCE-BASED AWARDS AND PERFORMANCE CRITERIA 
  

	6.1	Performance Criteria 

 As
determined by the Committee at the time of grant, a Performance-Based Award may be granted subject to performance objectives relating to one or more of the following Performance Criteria within the meaning of Code Section 162(m) in order to
qualify for the Performance-Based Exception: 
 (a) profits (including, but not limited to, profit growth, net
operating profit or economic profit); 
 (b) profit-related return ratios; 

(c) return measures (including, but not limited to, return on assets, capital, equity, investment or sales); 

(d) cash flow (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital or
investments); 
 (e) earnings (including but not limited to, total shareholder return, earnings per share or
earnings before or after taxes); 
 (f) net sales growth (measured either in dollars or in volumes of hydrocarbon
production); 
 (g) net earnings or income (before or after taxes, interest, depreciation and/or amortization);

 (h) gross, operating or net profit margins; 

(i) productivity ratios; 
 (j) share price (including, but not limited to, growth measures and total shareholder return); 
 (k) turnover of assets, capital, or inventory (including, without limitation, reserve additions or revisions, and economic value added from reserves); 

(l) expense targets (including, without limitation, reserve replacement costs and finding and development costs);

 (m) margins; 
 (n) measures of health, safety or environment; 
 (o) operating
efficiency (including, without limitation, project completion time, budget goals, operational downtime, rig utilization, and similar matters); 
 (p) customer service or satisfaction; 
 (q) market share;

 (r) credit quality; 

  
 18 








 (s) debt ratios (e.g., debt to equity and debt to total capital); and

 (t) working capital targets. 
 Performance Criteria may be stated in absolute terms or relative to comparison companies or indices to be achieved during a Performance Period. In the Incentive Agreement, the Committee shall designate
one or more Performance Criteria for each granted Incentive Award that is intended to qualify for the Performance-Based Exception. 
 The Performance Criteria specified in any Incentive Agreement need not be applicable to all Incentive Awards, and may be particular to an individual Grantee’s function, Affiliate or business unit.
The Committee may establish the Performance Criteria of the Company, any Affiliate or business unit, as determined and designated by the Committee, in its discretion, in the Grantee’s Incentive Agreement for the Performance-Based Award.

 Performance-Based Awards will be granted in the discretion of the Committee and will be (a) sufficiently objective so
that an independent Person having knowledge of the relevant facts could determine the amount payable to Grantee, if applicable, and whether the pre-determined goals have been achieved with respect to the Incentive Award, (b) established at a
time when the performance outcome is substantially uncertain, (c) established in writing no later than ninety (90) days after the commencement of the Performance Period to which they apply (or no later than the date that 25% of the
Performance Period has elapsed in the case of a Performance Period of less than a year), and (d) based on any Performance Criteria, or any combination thereof, as set forth above in this Section 6 and referenced in the
Grantee’s Incentive Agreement. 
  

	6.2	Compliance with Section 162(m) 

 The Performance Criteria must be objective and must satisfy third party “objectivity” standards under Code Section 162(m) and the regulations promulgated thereunder. In interpreting
provisions relating to Performance-Based Awards under the Plan or an Incentive Agreement, it is the intent of the Plan and Committee to conform with the standards of Code Section 162(m) and the regulations thereunder to qualify for the
Performance-Based Exception. 
  

	6.3	Adjustments of Performance-Based Awards 

 The Committee may provide in any Performance-Based Award, at the time the Performance Criteria are established, that any evaluation of performance shall exclude or otherwise objectively adjust for any
specified event that occurs during a Performance Period, including the following: (a) asset write-downs or impairment charges; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting
principles or other laws or provisions affecting reported results; (d) accruals and charges for reorganization and restructuring programs; (e) acquisitions or divestitures; (f) foreign exchange gains and losses; (g) extraordinary
nonrecurring items as described in Financial Accounting Standards Board Accounting Standards Codification Topic 225.20, “Income Statement — Extraordinary and Unusual Items” (or any successor thereto); and (h) extraordinary
nonrecurring items as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year. To the extent such inclusions or
exclusions affect Performance-Based Awards, they shall be prescribed in a form that meets the requirements of the Performance-Based Exception. Notwithstanding the foregoing, the Committee may, at its sole discretion, reduce the Performance Criteria
(or results thereof) upon which Performance-Based Awards are provided in order to offset any unintended result(s) arising from events not anticipated when the Performance Criteria were established, or for any other purpose, provided that such
adjustment is permitted by Code Section 162(m). 

  
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	6.4	Discretionary Adjustments 


The Performance Criteria shall not allow for any discretion by the Committee as to an increase in any Performance-Based Award made to
Grantee, but discretion to lower or reduce the Performance-Based Award is permissible. The Committee cannot exercise any discretionary authority it may otherwise have under the Plan with respect to a Performance-Based Award in any manner to
(a) waive the achievement of the applicable Performance Criteria or (b) increase the amount payable pursuant thereto or the value thereof, or (c) otherwise in a manner that would cause the Performance-Based Award to cease to qualify
for the Performance-Based Exception. The Committee may exercise negative discretion to determine that the portion of a Performance-Based Award actually earned, vested or payable (as applicable) shall be less than the portion that would be earned,
vested or payable based solely upon application of the applicable Performance Criteria as set forth in the Grantee’s Incentive Agreement. 
  

	6.5	Certification 

 The
Performance-Based Award, and payment for any Performance-Based Award under the Plan with respect to a relevant Performance Period, will be contingent upon the attainment of the Performance Criteria as set forth in the Grantee’s Incentive
Agreement. The Committee shall certify in writing prior to payment of any of the Performance-Based Award that such Performance Criteria have been satisfied. Approved minutes of the Committee may be used for this purpose. 

 

	6.6	Other Considerations 

 All
Performance-Based Awards under the Plan shall be further subject to such other conditions, restrictions, and requirements as the Committee may determine to be necessary or appropriate to effectuate the purpose of this Section 6 and to
otherwise meet the requirements of the Performance-Based Exception. 
 SECTION 7.

 PROVISIONS RELATING TO PLAN PARTICIPATION 

 

	7.1	Incentive Agreement 

 Each Grantee to whom an Incentive Award is granted shall be required to enter into an Incentive Agreement with the Company, in such a form as is provided by the Committee. The Incentive Agreement shall
contain specific terms as determined by the Committee, in its discretion, with respect to the Grantee’s particular Incentive Award. Such terms need not be uniform among all Grantees or any similarly situated Grantees. The Incentive Agreement
may include, without limitation, vesting, forfeiture and other provisions particular to the particular Grantee’s Incentive Award, as well as, for example, provisions to the effect that the Grantee (a) shall not disclose any confidential
information acquired during Employment with the Company, (b) shall abide by all the terms and conditions of the Plan and such other terms and conditions as may be imposed by the Committee, (c) shall not interfere with the employment or
other service of any employee, (d) shall not compete with the Company or become involved in a conflict of interest with the interests of the Company, (e) shall forfeit an Incentive Award if terminated for Cause, (f) shall not be
permitted to make an election under Code Section 83(b) when applicable, and (g) shall be subject to any other agreement between the Grantee and the Company regarding Shares that may be acquired under an Incentive Award including, without
limitation, a shareholders’ agreement, buy-sell agreement, or other agreement restricting the transferability of Shares by Grantee. An Incentive Agreement shall include such terms and conditions as are determined by the Committee, in its
discretion, to be appropriate with respect to any individual Grantee. The Incentive Agreement shall be signed by the Grantee to whom the Incentive Award is made and by an Authorized Officer. 

  
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 Unless otherwise determined by the Committee and set forth in the applicable Incentive Award
Agreement, Incentive Awards shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law. 
  

	7.2	No Employment Rights Conferred 

 Nothing in the Plan or any instrument executed pursuant to the Plan shall create any Employment rights (including without limitation, rights to continued Employment) in any Grantee or affect the right of
the Company to terminate the Employment of any Grantee at any time without regard to the existence of the Plan. 
  

	7.3	Securities Requirements 

 The Company shall be under no obligation to effect the registration of any Shares to be issued hereunder pursuant to the Securities Act of 1933 or to effect similar compliance under any state securities
laws. Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates evidencing Shares pursuant to the Plan unless and until the Company is advised by its counsel that the
issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities, and the requirements of any securities exchange on which Shares are traded. The Committee may require, as a condition of
the issuance and delivery of certificates evidencing Shares pursuant to the terms hereof, that the recipient of such Shares make such covenants, agreements and representations, and that such certificates bear such legends, as the Committee, in its
discretion, deems necessary or desirable. 
 The Committee may, in its discretion, defer the effectiveness of any exercise of an
Incentive Award in order to allow the issuance of Shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Committee shall inform the Grantee
in writing of its decision to defer the effectiveness of the exercise of an Incentive Award. During the period that the effectiveness of the exercise of an Incentive Award has been deferred, the Grantee may, by written notice to the Committee,
withdraw such exercise and obtain the refund of any amount paid with respect thereto. 
 If the Shares issuable on exercise of
an Incentive Award are not registered under the Securities Act of 1933, the Company may imprint on the certificate for such Shares the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with
the Securities Act of 1933: 
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (“ACT”), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO ANY
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS OR PURSUANT TO A WRITTEN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. 

 

	7.4	Transferability 

 Incentive Awards granted under the Plan shall not be transferable or assignable other than: (a) by will or the laws of descent and distribution or (b) pursuant to a qualified domestic relations
order (as defined under Code Section 414(p)); provided, however, only with respect to Incentive Awards consisting of Nonstatutory Stock Options, the Committee may, in its discretion, authorize all or a portion of the Nonstatutory Stock Options
to be granted on terms which permit transfer by the Grantee to (i) the members of the Grantee’s Immediate Family, (ii) a trust or trusts for the exclusive benefit of Immediate Family members, (iii) a partnership in which such
Immediate Family members are the only 

  
 21 








 
partners, or (iv) any other entity owned solely by Immediate Family members; provided that (A) there may be no consideration for any such transfer, (B) the Incentive Agreement
pursuant to which such Nonstatutory Stock Options are granted must be approved by the Committee, and must expressly provide for transferability in a manner consistent with this Section 7.4, (C) subsequent transfers of transferred
Nonstatutory Stock Options shall be prohibited except in accordance with clauses (a) and (b) (above) of this sentence, and (D) there may be no transfer of any Incentive Award in a listed transaction as described in IRS Notice 2003-47
(or its successor). Following any permitted transfer, the Nonstatutory Stock Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer; provided, however, the term “Grantee” shall
be deemed to refer to the transferee. The events of termination of employment, as set out in Section 7.7 and in the Incentive Agreement, shall continue to be applied with respect to the original Grantee, and the Incentive Award shall be
exercisable by the transferee only to the extent, and for the periods, specified in the Incentive Agreement. 
 Except as may
otherwise be permitted under the Code, in the event of a permitted transfer of a Nonstatutory Stock Option hereunder, the original Grantee shall remain subject to withholding taxes upon exercise. In addition, the Company and the Committee shall have
no obligation to provide any notices to any Grantee or transferee thereof, including, for example, notice of the expiration of an Incentive Award following the original Grantee’s termination of employment. 

The designation by a Grantee of a beneficiary of an Incentive Award shall not constitute transfer of the Incentive Award. No transfer by
will or by the laws of descent and distribution shall be effective to bind the Company unless the Committee has been furnished with a copy of the deceased Grantee’s enforceable will or such other evidence as the Committee deems necessary to
establish the validity of the transfer. Any attempted transfer in violation of this Section 7.4 shall be void and ineffective. All determinations under this Section 7.4 shall be made by the Committee in its discretion.

 Except as provided in this Section 7.4, Incentive Awards may be exercised during the lifetime of the Grantee only
by the Grantee or by the Grantee’s legally authorized representative as determined by the Committee. 
  

	7.5	Rights as a Shareholder 

 (a) No Shareholder Rights.    Except as otherwise provided in Section 3.1(b) for grants of Restricted Stock, a
Grantee of an Incentive Award (or a permitted transferee of such Grantee) shall have no rights as a shareholder with respect to any Shares until the issuance of a stock certificate or other record of ownership for such Shares. 

(b) Representation of Ownership.    In the case of the
exercise of an Incentive Award by a Person acquiring the right to exercise such Incentive Award by reason of the death or Disability of a Grantee, the Committee may require reasonable evidence as to the ownership of such Incentive Award or the
authority of such Person. The Committee may also require such consents and releases of taxing authorities as it deems advisable. 
  

	7.6	Change in Stock and Adjustments 


(a) Changes in Law or Circumstances.    Subject to
Section 7.8 (which only applies in the event of a Change in Control), in the event of any change in applicable law or any change in circumstances which results in or would result in any dilution of the rights granted under the Plan, or
which otherwise warrants an equitable adjustment because it interferes with the intended operation of the Plan, then, if the Committee should so determine, in its discretion, that such change equitably requires an adjustment in the number or kind of
shares of stock or other securities or property theretofore subject, or which may become subject, to 

  
 22 








 
issuance or transfer under the Plan or in the terms and conditions of outstanding Incentive Awards, such adjustment shall be made in accordance with such determination. Such adjustments may
include changes with respect to (i) the aggregate number of Shares that may be issued under the Plan, (ii) the number of Shares subject to Incentive Awards, and (iii) the Option Price or other price per Share for outstanding Incentive
Awards, but shall not result in the grant of any Stock Option with an exercise price less than 100% of the Fair Market Value per Share on the date of grant. The Committee shall give notice to each applicable Grantee of such adjustment which shall be
effective and binding. 
 (b) Exercise of Corporate
Powers.    The existence of the Plan or outstanding Incentive Awards hereunder shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments,
recapitalization, reorganization or other changes in the Company’s capital structure or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or liquidation of the Company or an Affiliate, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding whether of a similar character
or otherwise. 
 (c) Recapitalization of the
Company.    Subject to Section 7.8 (which only applies in the event of a Change in Control), if while there are Incentive Awards outstanding, the Company shall effect any subdivision or consolidation of Shares
of Common Stock or other capital readjustment, the payment of a stock dividend, stock split, combination of Shares, recapitalization or other increase or reduction in the number of Shares outstanding, without receiving compensation therefor in
money, services or property, then the number of Shares available under the Plan and the number of Incentive Awards which may thereafter be exercised shall (i) in the event of an increase in the number of Shares outstanding, be proportionately
increased and the Option Price or Fair Market Value of the Incentive Awards awarded shall be proportionately reduced; and (ii) in the event of a reduction in the number of Shares outstanding, be proportionately reduced, and the Option Price or
Fair Market Value of the Incentive Awards awarded shall be proportionately increased. The Committee shall take such action and whatever other action it deems appropriate, in its discretion, so that the value of each outstanding Incentive Award to
the Grantee shall not be adversely affected by a corporate event described in this Section 7.6(c). 

(d) Issue of Common Stock by the Company.    Except as
hereinabove expressly provided in this Section 7.6 and subject to Section 7.8 in the event of a Change in Control, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon any conversion of shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of, or Option Price or Fair Market Value of, any Incentive Awards then outstanding under previously granted Incentive Awards; provided,
however, in such event, outstanding Shares of Restricted Stock shall be treated the same as outstanding unrestricted Shares of Common Stock. 
 (e) Assumption under the Plan of Outstanding Stock Options.    Notwithstanding any other provision of the Plan, the Committee, in its
discretion, may authorize the assumption and continuation under the Plan of outstanding and unexercised stock options or other types of stock-based incentive awards that were granted under a stock option plan (or other type of stock incentive plan
or agreement) that is or was maintained by a corporation or other entity that was merged into, consolidated with, or whose stock or assets were acquired by, the Company as the surviving corporation. Any such action shall be upon such terms and
conditions as the Committee, in its discretion, may deem appropriate, including provisions to 

  
 23 








 
preserve the holder’s rights under the previously granted and unexercised stock option or other stock-based incentive award; such as, for example, retaining an existing exercise price under
an outstanding stock option. Any such assumption and continuation of any such previously granted and unexercised incentive award shall be treated as an outstanding Incentive Award under the Plan and shall thus count against the number of Shares
reserved for issuance pursuant to Section 1.4. In addition, any Shares issued by the Company through the assumption or substitution of outstanding grants from an acquired company shall reduce the Shares available for grants under
Section 1.4. 
 (f) Assumption of Incentive Awards by a
Successor.    Subject to the accelerated vesting and other provisions of Section 7.8 that apply in the event of a Change in Control, in the event of a Corporate Event (defined below), each Grantee shall be
entitled to receive, in lieu of the number of Shares subject to Incentive Awards, such shares of capital stock or other securities or property as may be issuable or payable with respect to or in exchange for the number of Shares which Grantee would
have received had he exercised the Incentive Award immediately prior to such Corporate Event, together with any adjustments (including, without limitation, adjustments to the Option Price and the number of Shares issuable on exercise of outstanding
Stock Options). For this purpose, Shares of Restricted Stock shall be treated the same as unrestricted outstanding Shares of Common Stock. A “Corporate Event” means any of the following: (i) a dissolution or liquidation of the
Company, (ii) a sale of all or substantially all of the Company’s assets, or (iii) a merger, consolidation or combination involving the Company (other than a merger, consolidation or combination (A) in which the Company is the
continuing or surviving corporation and (B) which does not result in the outstanding Shares being converted into or exchanged for different securities, cash or other property, or any combination thereof). The Committee shall take whatever other
action it deems appropriate to preserve the rights of Grantees holding outstanding Incentive Awards. 

Notwithstanding the previous paragraph of this Section 7.6(f), but subject to the accelerated vesting and
other provisions of Section 7.8 that apply in the event of a Change in Control, in the event of a Corporate Event (described in the previous paragraph), the Committee, in its discretion, shall have the right and power to effectuate one
or more of the following alternatives with respect to outstanding Incentive Awards, which may vary among individual Grantees and which may vary among Incentive Awards held by any individual Grantee: 

 

	 	(i)	cancel, effective immediately prior to the occurrence of the Corporate Event, each outstanding Incentive Award (whether or not then exercisable) and, in full
consideration of such cancellation, pay to the Grantee an amount in cash equal to the excess of (A) the value, as determined by the Committee, of the property (including cash) received by the holders of Common Stock as a result of such
Corporate Event over (B) the exercise price of such Incentive Award, if any; provided, however, this subsection (i) shall be inapplicable to an Incentive Award granted within six (6) months before the occurrence of the Corporate Event
if the Grantee is an Insider and such disposition is not exempt under Rule 16b-3 (or other rules preventing liability of the Insider under Section 16(b) of the Exchange Act) and, in that event, the provisions hereof shall be applicable to such
Incentive Award after the expiration of six (6) months from the date of grant; or 

  

	 	(ii)	provide for the exchange or substitution of each Incentive Award outstanding immediately prior to such Corporate Event (whether or not then exercisable) for another
award with respect to the Common Stock or other property for which such Incentive Award is exchangeable and, incident thereto, make an equitable adjustment as determined by the Committee, in its discretion, in the Option Price or exercise price of
the Incentive Award, if any, or in the number of Shares or amount of property (including cash) subject to the Incentive Award; or 


  
 24 









	 	(iii)	provide that thereafter upon the exercise of an Incentive Award that was previously granted, the Grantee shall be entitled to purchase or receive under such Incentive
Award, in lieu of the number of Shares then covered by such Incentive Award, the number and class of shares of stock or other securities or property (including, without limitation, cash) to which the Grantee would have been entitled pursuant to the
terms of the agreement of the Corporate Event if, immediately prior to such Corporate Event, the Grantee has been the holder of record of the number of Shares then covered by such Incentive Award; provided, however, if such consideration is not
solely common stock of the successor corporation, the Committee may, with the consent of the successor corporation, provide for the consideration to be received to be solely common stock of the successor corporation that is equal to the Fair Market
Value of the per Share consideration received by the holders of Shares as the result of the Corporate Event; or 

  

	 	(iv)	provide for assumption of the Plan and such outstanding Incentive Awards by the surviving entity or its parent. 


The Committee, in its discretion, shall have the authority to take whatever action it deems to be necessary or appropriate to effectuate
the provisions of this Section 7.6(f). 
  

	7.7	Termination of Employment, Death, Disability and Retirement 


(a) Termination of Employment.    Unless otherwise
expressly provided in the Grantee’s Incentive Agreement or the Plan, if the Grantee’s Employment is terminated for any reason other than due to his death, Disability, Retirement or for Cause, any non-vested portion of any Stock Option or
other Incentive Award at the time of such termination shall automatically expire and terminate and no further vesting shall occur after the termination date. In such event, except as otherwise expressly provided in his Incentive Agreement, the
Grantee shall be entitled to exercise his rights only with respect to the portion of the Incentive Award that was vested as of his termination of Employment date for a period that shall end on the earlier of (i) the expiration date set forth in
the Incentive Agreement or (ii) one hundred and twenty (120) days after the date of his termination of Employment. 
 (b) Termination of Employment for Cause.    Unless otherwise expressly provided in the Grantee’s Incentive Agreement, in the event of
the termination of a Grantee’s Employment for Cause, all vested and non-vested Stock Options and other Incentive Awards granted to such Grantee shall immediately expire, and shall not be exercisable to any extent, as of 12:01 a.m. (CST) on the
date of such termination of Employment. 
 (c)
Retirement.    Unless otherwise expressly provided in the Grantee’s Incentive Agreement, upon the termination of Employment due to the Grantee’s Retirement: 

 

	 	(i)	any non-vested portion of any outstanding Option or other Incentive Award shall immediately terminate and no further vesting shall occur; and 


 

	 	(ii)	any vested Option or other Incentive Award shall expire on the earlier of (A) the expiration date set forth in the Incentive Agreement for such Incentive Award; or
(B) the expiration of (1) six (6) months after the date of his termination of Employment due to Retirement in the case of any Incentive Award other than an Incentive Stock Option or (2) three months after his termination date in
the case of an Incentive Stock Option. 

 (d) Disability or
Death.    Unless otherwise expressly provided in the Grantee’s Incentive Agreement, upon termination of Employment as a result of the Grantee’s Disability or death: 

 

	 	(i)	any non-vested portion of any outstanding Option or other Incentive Award shall immediately terminate upon termination of Employment and no further vesting shall occur;
and 


  
 25 









	 	(ii)	any vested Incentive Award shall expire on the earlier of either (A) the expiration date set forth in the Incentive Agreement or (B) the one year anniversary
date of the Grantee’s termination of Employment date. 

 In the case of any vested Incentive Stock Option held
by an Employee following termination of Employment, notwithstanding the definition of “Disability” in Section 1.2, whether the Employee has incurred a “Disability” for purposes of determining the length of the Option
exercise period following termination of Employment under this Section 7.7(d) shall be determined by reference to Code Section 22(e)(3) to the extent required by Code Section 422(c)(6). The Committee shall determine whether a
Disability for purposes of this Section 
7.7(d) has occurred. 
 (e) Continuation.    
Subject to the conditions and limitations of the Plan and applicable law and regulation, in the event that a Grantee ceases to be an Employee, Outside Director or Consultant, as applicable, for whatever reason, the Committee and Grantee may mutually
agree with respect to any outstanding Option or other Incentive Award then held by the Grantee (i) for an acceleration or other adjustment in any vesting schedule applicable to the Incentive Award; (ii) for a continuation of the exercise
period following termination for a longer period than is otherwise provided under such Incentive Award; or (iii) to any other change in the terms and conditions of the Incentive Award. In the event of any such change to an outstanding Incentive
Award, a written amendment to the Grantee’s Incentive Agreement shall be required. No amendment to a Grantee’s Incentive Award shall be made to the extent compensation payable pursuant thereto as a result of such amendment would be
considered deferred compensation that is subject to taxation under Code Section 409A, unless otherwise determined by the Committee. 
  

	7.8	Change in Control 

 Notwithstanding any contrary provision in the Plan, in the event of a Change in Control (as defined below), the following actions shall automatically occur as of the day immediately preceding the Change
in Control date unless expressly provided otherwise in the individual Grantee’s Incentive Agreement (in which case the Incentive Agreement will control): 
 (1) all of the Stock Options and Stock Appreciation Rights then outstanding shall become 100% vested and immediately and fully exercisable; 

(2) all of the restrictions and conditions of any Restricted Stock Awards, Restricted Stock Units and any Other
Stock-Based Awards then outstanding shall be deemed satisfied, and the Restriction Period with respect thereto shall be deemed to have expired, and thus each such Incentive Award shall become free of all restrictions and fully vested; and

 (3) all of the Performance-Based Awards shall become fully vested, deemed earned in full, and promptly paid
within thirty (30) days to the affected Grantees without regard to payment schedules and notwithstanding that the applicable performance cycle, retention cycle or other restrictions and conditions have not been completed or satisfied.

 For all purposes of this Plan, a “Change in Control” of the Company means the occurrence of any one or more
of the following events: 
 (a) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either (i) the then
outstanding shares of common stock of the Company (the “Outstanding Company Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that the following 

  
 26 








 
acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company or any Subsidiary, (ii) any acquisition by the Company or any Subsidiary or by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or (iii) any acquisition by any corporation pursuant to a reorganization, merger, consolidation or similar business combination involving the
Company (a “Merger”), if, following such Merger, the conditions described in Section 7.8(c) (below) are satisfied; 
 (b) Individuals who, as of the Effective Date, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; 

(c) The consummation of a Merger involving the Company, unless immediately following such Merger, (i) substantially
all of the holders of the Outstanding Company Voting Securities immediately prior to Merger beneficially own, directly or indirectly, more than fifty percent (50%) of the common stock of the corporation resulting from such Merger (or its parent
corporation) in substantially the same proportions as their ownership of Outstanding Company Voting Securities immediately prior to such Merger and (ii) at least a majority of the members of the board of directors of the corporation resulting
from such Merger (or its parent corporation) were members of the Incumbent Board at the time of the execution of the initial agreement providing for such Merger; 

(d) The sale or other disposition of all or substantially all of the assets of the Company, unless immediately following
such sale or other disposition, (i) substantially all of the holders of the Outstanding Company Voting Securities immediately prior to the consummation of such sale or other disposition beneficially own, directly or indirectly, more than fifty
percent (50%) of the common stock of the corporation acquiring such assets in substantially the same proportions as their ownership of Outstanding Company Voting Securities immediately prior to the consummation of such sale or disposition, and
(ii) at least a majority of the members of the board of directors of such corporation (or its parent corporation) were members of the Incumbent Board at the time of execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company; or 
 (e) The adoption of any plan or proposal for the
liquidation or dissolution of the Company. 
 Notwithstanding the foregoing provisions of this Section 7.8, to the
extent that any payment (or acceleration of payment) hereunder is considered to be deferred compensation that is subject to, and not exempt under, Code Section 409A, then the term Change in Control hereunder shall be construed to have the
meaning as set forth in Code Section 409A with respect to the payment (or acceleration of payment) of such deferred compensation, but only to the extent inconsistent with the foregoing provisions of the Change in Control definition (above) as
determined by the Incumbent Board. 
 In the event that any acceleration of vesting pursuant to an Incentive Award and any other
payment or benefit received or to be received by a Grantee under the Plan in connection with a Change in Control would subject a Grantee to any excise tax pursuant to Code Section 4999 (which excise tax would be the Grantee’s obligation)
due to the characterization of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Code Section 280G, the Grantee 

  
 27 








 
may elect, in his sole discretion, to reduce the amount of any acceleration of vesting, payment or benefit called for under an Incentive Award in order to avoid such characterization. 

 

	7.9	Exchange of Incentive Awards 

 The Committee may, in its discretion, permit any Grantee to surrender outstanding Incentive Awards in order to exercise or realize his rights under other Incentive Awards or in exchange for the grant of
new Incentive Awards, or require holders of Incentive Awards to surrender outstanding Incentive Awards (or comparable rights under other plans or arrangements) as a condition precedent to the grant of new Incentive Awards. No exchange of Incentive
Awards shall be made under this Section 7.9 if such surrender causes any Incentive Award to provide for the deferral of compensation in a manner that is subject to taxation under Code Section 409A unless otherwise determined by the
Committee. 
  

	7.10	Repricing Prohibited 

 Except as contemplated by the provisions of Section 7.6, outstanding Stock Options and Stock Appreciation Rights will not be “repriced” for any reason without the prior approval of
the Company’s stockholders. For purposes of the Plan, a “repricing” means lowering the Option Price of an outstanding Stock Option or SAR or any other action that has the same effect or is treated as a repricing under generally
accepted accounting principles, and includes a tandem cancellation of a Stock Option or SAR at a time when its Option Price exceeds the fair market value of the underlying Common Stock and exchange for another Stock Option, SAR, other Incentive
Award, other equity security or a cash payment. 
 SECTION 8. 

GENERAL 
  

	8.1	Effective Date and Grant Period 

 The Plan shall be effective upon the Effective Date, provided that it has been approved by the shareholders of the Company within twelve (12) months after the Effective Date. Incentive Awards may be
granted under the Plan at any time prior to receipt of such shareholder approval; provided, however, if the requisite shareholder approval is not obtained within such 12-month period, any Incentive Awards granted hereunder shall automatically become
null and void and of no force or effect. Notwithstanding the foregoing, any Incentive Award that is intended to satisfy the Performance-Based Exception shall not be granted until the terms of the Plan are disclosed to, and approved by, shareholders
of the Company in accordance with the requirements of the Performance-Based Exception. No Incentive Awards may be granted under the Plan on or after the date which is ten (10) years following the Effective Date. The Plan shall remain in effect
until all Incentive Awards granted under the Plan have been satisfied or expired. 
  

	8.2	Funding and Liability of Company 

 No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions
are made, or otherwise to segregate any assets. In addition, the Company shall not be required to maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with respect to Grantees who are entitled to cash, Common Stock or rights thereto under the Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company
shall not be required to segregate any assets that may at any time be 

  
 28 








 
represented by cash, Common Stock or rights thereto. The Plan shall not be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee
of any cash, Common Stock or rights thereto. Any liability or obligation of the Company to any Grantee with respect to an Incentive Award shall be based solely upon any contractual obligations that may be created by this Plan and any Incentive
Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. The Company, Affiliate, Board, and Committee shall not be required to give any security or
bond for the performance of any obligation that may be created by the Plan. 
  

	8.3	Withholding Taxes 

 (a) Tax Withholding.    The Company or any Affiliate is authorized to withhold from any Incentive Award, from any payment due or transfer
made under the Incentive Award or the Plan, or from any compensation or other amount owing to a Grantee, the amount (in cash, Shares, other securities, other Incentive Awards or other property) of any applicable withholding taxes with respect to an
Incentive Award, its exercise, the lapse of restrictions thereon, payment or transfer under an Incentive Award or under the Plan, and to take any other action that is necessary, in the opinion of the Company or Affiliate, to satisfy all obligations
for the payment of the taxes. Notwithstanding the foregoing, in the event of an assignment of a Nonstatutory Stock Option pursuant to Section 7.4, the Grantee who assigns the Nonstatutory Stock Option shall remain subject to withholding
taxes upon exercise of the Nonstatutory Stock Option by the transferee to the extent required by the Code or the rules and regulations promulgated thereunder. Such payments shall be required to be made prior to the delivery of any Shares. Such
payment may be made in cash, by check, or through the delivery of Shares owned by the Grantee or transferee (which may be effected by the actual delivery of Shares or by the Company’s withholding of a number of Shares to be issued upon the
exercise of a Nonstatutory Stock Option, if applicable), which Shares have an aggregate Fair Market Value equal to the required minimum withholding payment, or any combination thereof. 

(b) Share Withholding.    With respect to tax withholding
required upon the exercise of Stock Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of any Incentive Award, the Grantee may elect, subject to the approval of the Committee in
its discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum withholding taxes which could be imposed on
the transaction as determined by the Committee. All such elections shall be made in writing, signed by the Grantee, and remain subject to any restrictions or limitations that the Committee, in its discretion, deems to be appropriate. 

(c) Incentive Stock Options.    With respect to Shares
received by a Grantee pursuant to the exercise of an Incentive Stock Option, if such Grantee disposes of any such Shares within (i) two years from the date of grant of such Option or (ii) one year after the transfer of such shares to the
Grantee, the Company shall have the right to withhold from any salary, wages or other compensation payable by the Company to the Grantee an amount sufficient to satisfy the minimum withholding taxes that could be imposed with respect to such
disqualifying disposition. 
  

	8.4	No Guarantee of Tax Consequences 

 The Company, Affiliates, Board and the Committee do not make any commitment or guarantee that any federal, state, local or foreign tax treatment will apply or be available to any Person participating or
eligible to participate hereunder. 

  
 29 








 Neither the Company, any Affiliate, the Board, nor the Committee shall be liable to any
Grantee or any other Person as to any tax consequences expected, but not realized, by any Grantee or other Person due to the grant, exercise, lapse of restriction, vesting, distribution, payment or other taxable event involving any Incentive Award.
Although the Company and its Affiliates may endeavor to (a) qualify an Incentive Award for favorable tax treatment in a jurisdiction or (b) avoid adverse tax treatment for an Incentive Award, the Company makes no representation to that
effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. 
  

	8.5	Designation of Beneficiary by Participant 

 Each Grantee may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his death before he
receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Committee, and will be effective only when filed by the Grantee in writing with the Committee
(or its delegate), and received and accepted during the Grantee’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Grantee’s death shall be paid to the Grantee’s estate. 

 

	8.6	Deferrals 

 Subject to any
requirements that apply to preclude taxation under Code Section 409A, the Committee in its discretion, may permit a Grantee to defer the receipt of the payment of cash or the delivery of Shares under the terms of his Incentive Agreement that
would otherwise be due and payable by virtue of the lapse or waiver of restrictions with respect to Restricted Stock or another form of Incentive Award. 
  

	8.7	Amendment and Termination of Plan 

 The Board shall have the power and authority to terminate or amend the Plan at any time in its discretion; provided, however, the Board shall not, without the approval of the shareholders of the Company
within the time period required by applicable law: 
 (a) except as provided in Section 7.6, increase
the maximum number of Shares that may be issued under the Plan pursuant to Section 1.4; 
 (b) amend
the requirements as to the class of Employees eligible to purchase Common Stock under the Plan; 
 (c) extend the
term of the Plan; 
 (d) while the Company is a Publicly Held Corporation (i) increase the maximum limits on
Incentive Awards to Covered Employees as set for compliance with the Performance-Based Exception; (ii) decrease the authority granted to the Committee under the Plan in contravention of Rule 16b-3 under the Exchange Act (to the extent
Section 16 of the Exchange Act is applicable to the Company); or (iii) delete or limit the provisions of Section 7.10 (repricing prohibition). 
 In addition, to the extent that the Committee determines that (a) the listing for qualification requirements of any national securities exchange or quotation system on which the Common Stock is then
listed or quoted, if applicable, or (b) Code Section 162(m) or any other provision of the Code (or regulations promulgated thereunder), require shareholder approval in order to maintain compliance with such listing requirements or to
maintain any favorable tax advantages or qualifications, then the amendment of the Plan shall not be effective unless approved by the requisite vote of the stockholders of the Company entitled to vote thereon. 

Subject to the provisions of the last paragraph of this Section 8.7, no amendment, modification, suspension, discontinuance
or termination of the Plan shall impair the rights of any Grantee under any 

  
 30 








 
Incentive Award previously granted under the Plan without such Grantee’s consent; provided, however, such consent shall not be required with respect to any Plan amendment, modification or
other such action if the Committee determines, in its sole discretion, that such amendment, modification or other such action is not reasonably likely to significantly reduce or diminish the benefits provided to the Grantee under such Incentive
Award. 
 The Committee may waive any conditions or restrictions under, amend or modify the terms and conditions of, or cancel
or terminate any outstanding Incentive Award at any time and from time to time; provided, however, subject to the provisions of the last paragraph of this Section 8.7 and the provisions of the applicable Incentive Agreement, no such
amendment, modification, cancellation or termination shall impair the rights of a Grantee under an Incentive Award without such Grantee’s consent; provided, however, such consent shall not be required with respect to any amendment, modification
or other such action if the Committee determines, in its sole discretion, that such amendment, modification or other such action is not reasonably likely to significantly reduce or diminish the benefits provided to the Grantee under such Incentive
Award. 
 Notwithstanding any other provision of the Plan or any Incentive Agreement to the contrary, the Committee may, in its
sole discretion and without the consent of any Grantee, amend the Plan or any Incentive Agreement, to take effect retroactively or otherwise, as it deems to be necessary in order for the Company, the Plan, the Incentive Award or the Incentive
Agreement to satisfy or conform to any applicable law, regulation or rule, or to meet the requirements of any applicable accounting standard. 
  

	8.8	Requirements of Law and Securities Exchanges. 

 The granting of Incentive Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required. Certificates evidencing Shares delivered under the Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable
under the rules and regulations of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation, and any applicable federal or
state securities law or regulation. The Committee may cause a legend or legends to be placed upon such certificates to make appropriate reference to such restrictions. 
 The Company shall not be required to sell or issue any Shares under any Incentive Award if the sale or issuance of such Shares would constitute a violation by the Grantee or any other individual
exercising the Incentive Award, or the Company, of any provision of any law or regulation of any governmental authority, including without limitation, any federal or state securities law or regulation. If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any Shares subject to an Incentive Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with,
the issuance or purchase of Shares hereunder, no Shares may be issued or sold to the Grantee or any other individual pursuant to an Incentive Award unless such listing, registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Incentive Award. The Company shall not be obligated to take any affirmative action in order to cause
the exercise of an Incentive Award or the issuance of Shares pursuant to the Plan to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that an Incentive Award shall not be
exercisable until the Shares covered thereby are registered or are exempt from registration, the exercise of such Incentive Award (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption. 

  
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 All Shares issuable under the Plan are subject to any stop-transfer orders and other
restrictions as the Committee deems necessary or advisable to comply with federal, state or foreign securities laws, rules and regulations and the rules of any securities exchange or similar entity. The Committee may place legends on any certificate
evidencing Shares or issue instructions to the transfer agent to reference restrictions applicable to the Shares. 
  

	8.9	Treatment for Other Compensation Purposes 

 The amount of any compensation received or deemed to be received by a Grantee pursuant to an Incentive Award shall not be deemed part of a Grantee’s regular, recurring compensation for purposes of
any termination, indemnity or severance pay laws, and shall not be included in or have any effect on the determination of benefits under any other compensation or benefit plan, program or arrangement of the Company or an Affiliate, including any
retirement or severance benefits plan, unless otherwise expressly provided by the terms of any such other plan, program or arrangement. 
  

	8.10	No Obligation to Exercise Awards; No Right to Notice of Expiration Date 

 An Incentive Award of a Stock Option or a Stock Appreciation Right imposes no obligation upon the Grantee to exercise the Incentive Award. The Company, its Affiliates and the Committee have no obligation
to inform a Grantee of the date on which a Stock Option or SAR is no longer exercisable except as such expiration is set forth in the Incentive Agreement. 
  

	8.11	Rule 16b-3 Securities Law Compliance for Insiders 

 While the Company is a Publicly Held Corporation, transactions under the Plan with respect to Insiders are intended to comply with all applicable conditions of Rule 16b-3 under the Exchange Act to the
extent Section 16 of the Exchange Act is applicable to the Company. Any ambiguities or inconsistencies in the construction of an Incentive Award or the Plan shall be interpreted to give effect to such intention, and to the extent any provision
of the Plan or action by the Committee fails to so comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the Committee in its discretion. 

 

	8.12	Compliance with Code Section 162(m) for Publicly Held Corporation 

 While the Company is a Publicly Held Corporation, unless otherwise determined by the Committee with respect to any particular Incentive Award, it is intended that the Plan shall comply fully with the
applicable requirements so that any Incentive Awards subject to Section 162(m) that are granted to Covered Employees shall qualify for the Performance-Based Exception. If any provision of the Plan or an Incentive Agreement would disqualify the
Plan or would not otherwise permit the Plan or Incentive Award to comply with the Performance-Based Exception as so intended, such provision shall be construed or deemed to be amended to conform to the requirements of the Performance-Based Exception
to the extent permitted by applicable law and deemed advisable by the Committee; provided, however, no such construction or amendment shall have an adverse effect on the prior grant of an Incentive Award or the economic value to a Grantee of any
outstanding Incentive Award. 
  

	8.13	Compliance with Code Section 409A 

 It is intended that Incentive Awards granted under the Plan shall be exempt from, or if not exempt, in compliance with, the applicable requirements to preclude taxation under Code Section 409A,
unless otherwise determined by the Committee at the time of grant. In that respect, the Company, by action of its Board, reserves the right to amend the Plan, and the Board and the Committee each reserve the right to amend any outstanding Incentive
Agreement, to the extent deemed necessary or appropriate, in its discretion, either to exempt such Incentive Award from taxation under Code Section 409A or to comply with the requirements of Code Section 409A to preclude taxation
thereunder. 

  
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 The Plan is intended to comply, and shall be administered consistently in all respects, with
Code Section 409A and the regulations and additional guidance promulgated thereunder to the extent applicable. Accordingly, the Company shall have the authority to take any action, or refrain from taking any action, with respect to the Plan or
any Incentive Award hereunder that is reasonably necessary to ensure compliance with Code Section 409A (provided that the Company shall choose the action that best preserves the value of payments and benefits provided to Grantee that is
consistent with Code Section 409A). The Plan shall be interpreted in a manner that is consistent with Code Section 409A. In furtherance, but not in limitation of the foregoing: 

(a) in no event may Grantee designate, directly or indirectly, the calendar year of any payment to be made hereunder; and

 (b) to the extent the Grantee is a “specified employee” within the meaning of Code
Section 409A, payments, if any, that constitute a “deferral of compensation” under Code Section 409A and that would otherwise become due during the first six months following Grantee’s termination of Employment shall be
delayed and all such delayed payments shall be paid in full in the seventh month after such termination date, provided that the above delay shall not apply to any payment that is excepted from coverage under Code Section 409A, such as a payment
covered by the short-term deferral exception under Code Section 409A. 
  

	8.14	Notices 


(a) Notice From Insiders to Secretary of Change in Beneficial
Ownership.    To the extent Section 16 of the Exchange Act is applicable to the Company, within two business days after the date of a change in beneficial ownership of Shares of Common Stock issued or delivered
pursuant to the Plan, each Insider should report to the Secretary of the Company (or his delegate) any such change to the beneficial ownership of the Shares that is required to be reported by such Insider by Rule 16(a)-3 under the Exchange Act.
Whenever reasonably feasible, the Insider will provide the Company with advance notification of such change in beneficial ownership. 
 (b) Notice to Insiders and Securities and Exchange Commission.    To the extent applicable, the Company shall provide notice to any Insider
of any “blackout period,” as defined in Section 306(a)(4) of the Sarbanes-Oxley Act of 2002, in any case in which Insider is subject to the requirements of Section 304 of said Act in connection with the “blackout
period.” 
  

	8.15	Pre-Clearance Agreement with Brokers 

 Notwithstanding anything in the Plan to the contrary, no Shares issued pursuant to the Plan will be delivered to a broker or dealer that receives such Shares for the account of an Insider unless and until
the broker or dealer enters into a written agreement with the Company whereby such broker or dealer agrees to report immediately to the Secretary of the Company (or other designated Person) a change in the beneficial ownership of such Shares.

  

	8.16	Successors to Company 


All obligations of the Company under the Plan with respect to Incentive Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 

  
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	8.17	Miscellaneous Provisions 

 (a) No Employee, Consultant, Outside Director, or other person shall have any claim or right to be granted an Incentive Award under the Plan. Neither the Plan, nor any action taken hereunder, shall be
construed as giving any Employee, Consultant, or Outside Director any right to be retained in the Employment or other service of the Company or any Parent or Subsidiary. 

(b) The expenses of the Plan shall be borne by the Company. 

(c) By accepting any Incentive Award, each Grantee and each Person claiming by or through Grantee shall be deemed to have
indicated his complete acceptance of all the terms and conditions of the Plan and the Incentive Agreement. 
 (d)
The proceeds received from the sale of Common Stock pursuant to the Plan shall be used for general corporate purposes of the Company. 
  

	8.18	Severability 

 If any
provision of the Plan or any Incentive Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction as to any Person or Incentive Award, or would disqualify the Plan or Incentive Award under any law deemed
applicable by the Committee, such provision shall be (a) construed or deemed amended to conform to applicable law or (b) if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Incentive Award, such provision shall be stricken as to such jurisdiction, Person or Incentive Agreement, and thereafter the remainder of the Plan and any such Incentive Agreement shall remain in full force and effect.

  

	8.19	Rules of Construction 


The section and other headings contained in the Plan are for reference purposes only and shall not affect the meaning or interpretation of
the Plan. Unless the context clearly requires otherwise: (a) words of the masculine gender used herein shall include the feminine and neuter; (b) references to the plural include the singular and to the singular include the plural;
(c) the terms “includes” and “including” are not limiting; (d) the term “or” has the inclusive meaning represented by the phrase “and/or”; and (e) any grammatical form or variant of a term
defined in the Plan shall be construed to have a meaning corresponding to the definition of the term set forth herein. The terms “hereof,” “hereto,” “hereunder” and similar terms in the Plan refer to the Plan as a whole
and not to any particular provision of the Plan. 
  

	8.20	Governing Law 

 The Plan
shall be interpreted, construed and constructed in accordance with the laws of the State of Delaware without regard to its conflicts of law provisions, except as may be superseded by applicable laws of the United States. 

IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed in its name and on its behalf by its duly authorized officer, on
this             day of April 2012, to be effective as of the Effective Date. 
  

			
	 VAALCO ENERGY, INC.

		
	 By:
	 	  

		
	 Name:
	 	  

	 Title:
	 	  




  
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