Exhibit 10.4


 


EMPLOYMENT
AGREEMENT


 


dated
as of October 23, 2009,


 


between


 


COBALT
INTERNATIONAL ENERGY, INC.,

(the
Company)


 


and


 


James H. Painter,

(Employee)


 

















 


TABLE OF CONTENTS


 


	
   

  	
  PAGE

  
	
   

  	
   

  
	
  ARTICLE 1

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  Section 1.01.  Definitions

  	
  1

  
	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
  EFFECTIVENESS; TERM OF
  AGREEMENT; TERMINATION OF SEVERANCE AGREEMENT

  	
   

  
	
   

  	
   

  
	
  Section 2.01.  Effectiveness; Term of Agreement;
  Termination of Severance Agreement

  	
  8

  
	
   

  	
   

  
	
  ARTICLE 3

  	
   

  
	
  POSITIONS AND DUTIES

  	
   

  
	
   

  	
   

  
	
  Section 3.01.  Employment; Positions

  	
  8

  
	
  Section 3.02.  Duties and Services

  	
  8

  
	
  Section 3.03.  Other Interests

  	
  8

  
	
   

  	
   

  
	
  ARTICLE 4

  	
   

  
	
  CERTAIN EMPLOYEE
  REPRESENTATIONS AND AGREEMENTS; IPO EQUITY GRANT[S]

  	
   

  
	
   

  	
   

  
	
  Section 4.01.  Accredited Investor Representations

  	
  9

  
	
  Section 4.02.  Transfer Restrictions

  	
  9

  
	
  Section 4.03.  Life Insurance

  	
  9

  
	
  Section 4.04.  IPO Equity Grants

  	
  9

  
	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
  CONFIDENTIAL INFORMATION,
  INVENTIONS,

  	
   

  
	
  BUSINESS OPPORTUNITIES AND
  GOODWILL

  	
   

  
	
   

  	
   

  
	
  Section 5.01.  Confidential Information, Inventions,
  Business Opportunities and Goodwill

  	
  10

  
	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
  COMPENSATION AND BENEFITS

  	
   

  
	
   

  	
   

  
	
  Section 6.01.  Base Salary

  	
  10

  
	
  Section 6.02.  Bonuses

  	
  10

  
	
  Section 6.03.  Other Benefits

  	
  11

  
	
  Section 6.04.  Expenses

  	
  11

  



 

















 


	
  Section 6.05.  Vacation and Sick Leave

  	
  11

  
	
  Section 6.06.  Offices

  	
  11

  
	
   

  	
   

  
	
  ARTICLE 7

  	
   

  
	
  TERMINATION OF EMPLOYMENT
  AND NOTICE OF TERMINATION OF EMPLOYMENT

  	
   

  
	
   

  	
   

  
	
  Section 7.01.  Termination of Employment

  	
  12

  
	
  Section 7.02.  Notice of Termination of Employment

  	
  12

  
	
  Section 7.03.  Deemed Resignations

  	
  12

  
	
   

  	
   

  
	
  ARTICLE 8

  	
   

  
	
  SEVERANCE BENEFITS

  	
   

  
	
   

  	
   

  
	
  Section 8.01.  Death, Disability, Termination for Cause or
  Resignation Without Good Reason

  	
  13

  
	
  Section 8.02.  Involuntary Termination

  	
  13

  
	
  Section 8.03.  Death, Disability or Involuntary Termination
  After Agreement Termination Date

  	
  15

  
	
   

  	
   

  
	
  ARTICLE 9

  	
   

  
	
  INTEREST ON LATE PAYMENTS

  	
   

  
	
   

  	
   

  
	
  Section 9.01.  Interest on Late Payments

  	
  15

  
	
   

  	
   

  
	
  ARTICLE 10

  	
   

  
	
  CERTAIN ADDITIONAL
  PAYMENTS BY THE COMPANY

  	
   

  
	
   

  	
   

  
	
  Section 10.01.  Gross-up Payment

  	
  15

  
	
  Section 10.02.  Disposition of Claims

  	
  16

  
	
   

  	
   

  
	
  ARTICLE 11

  	
   

  
	
  COMPETITION

  	
   

  
	
   

  	
   

  
	
  Section 11.01.  Competition

  	
  17

  
	
   

  	
   

  
	
  ARTICLE 12

  	
   

  
	
  NONDISCLOSURE OF
  CONFIDENTIAL AND PROPRIETARY INFORMATION

  	
   

  
	
   

  	
   

  
	
  Section 12.01.  Nondisclosure of Confidential and
  Proprietary Information

  	
  19

  
	
   

  	
   

  
	
  ARTICLE 13

  	
   

  
	
  INVENTIONS

  	
   

  
	
   

  	
   

  
	
  Section 13.01.  Inventions

  	
  20

  



 


ii

















 


	
  ARTICLE 14

  	
   

  
	
  INJUNCTIVE RELIEF

  	
   

  
	
   

  	
   

  
	
  Section 14.01.  Injunctive Relief

  	
  21

  
	
   

  	
   

  
	
  ARTICLE 15

  	
   

  
	
  NON-DISPARAGEMENT

  	
   

  
	
   

  	
   

  
	
  Section 15.01.  Non-Disparagement

  	
  21

  
	
   

  	
   

  
	
  ARTICLE 16

  	
   

  
	
  GENERAL

  	
   

  
	
   

  	
   

  
	
  Section 16.01.  Survivorship

  	
  22

  
	
  Section 16.02.  Arbitration

  	
  22

  
	
  Section 16.03.  Payment Obligations Absolute

  	
  23

  
	
  Section 16.04.  Successors

  	
  23

  
	
  Section 16.05.  Severability

  	
  23

  
	
  Section 16.06.  Non-alienation

  	
  23

  
	
  Section 16.07.  Notices

  	
  23

  
	
  Section 16.08.  Controlling Law and Waiver of Jury Trial

  	
  24

  
	
  Section 16.09.  Release and Delayed Payment Restriction

  	
  24

  
	
  Section 16.10.  Full Settlement

  	
  25

  
	
  Section 16.11.  Unfunded Obligation

  	
  25

  
	
  Section 16.12.  No Right to Continued Employment

  	
  25

  
	
  Section 16.13.  Withholding of Taxes and Other Employee
  Deductions

  	
  25

  
	
  Section 16.14.  Number and Gender

  	
  25

  
	
  Section 16.15.  Entire Agreement

  	
  25

  



 


Annexes and Exhibits


 


	
  Annex I

  	
  Accredited Investor Representations

  
	
  Annex II

  	
  Transfer Restrictions

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of Restricted Stock Award Agreement – Class C
  Interests

  
	
  Exhibit B

  	
  Form of Restricted Stock Award Agreement – Class D
  Interests

  
	
  Exhibit C

  	
  Form of Release

  



 


iii














 


EMPLOYMENT
AGREEMENT


 


This EMPLOYMENT AGREEMENT
(this “Agreement”) dated as of October 23,
2009, is made by and between COBALT INTERNATIONAL ENERGY, INC., a Delaware
corporation (the “Company”), and
James H. Painter (“Employee”) and,
for the limited purpose of Article 2, Cobalt International Energy, L.P.
(the “Partnership”).


 


RECITALS


 


WHEREAS, the Company desires
to attract and retain certain key employee personnel and, accordingly, the
Board of Directors of the Company has approved the Company’s entering into this
Agreement with Employee to encourage Employee’s continued service to Cobalt;


 


WHEREAS, the terms and
conditions set forth in this Agreement are similar to the terms and conditions
set forth in an existing severance agreement between Employee and the
Partnership dated as of April 20, 2009 (the “Prior
Severance Agreement”);


 


WHEREAS, upon the closing of
the IPO (as defined below), the Severance Agreement shall be terminated, and
this Agreement shall become effective.


 


AGREEMENT


 


NOW, THEREFORE, in consideration
of the foregoing and for other good and valuable consideration, the Company and
Employee agree as follows:


 


ARTICLE 1

DEFINITIONS


 


Section 1.01.  Definitions.


 


“Accrued
Obligations” shall mean Employee’s base salary through the Date of
Termination of Employment not theretofore paid, any expenses owed to Employee
under the Company’s expense reimbursement policy as in effect from time to
time, any accrued vacation pay owed to Employee pursuant to the Company’s
vacation policy as in effect from time to time, any earned but unpaid annual
performance bonus with respect to a calendar year that has ended on or before
the Date of Termination of Employment (it being understood that a bonus will
not be considered to have been unearned merely because Employee has not
remained employed through the payment date so long as Employee has remained
employed through the end of the calendar year that has ended on or before the 


 

















 


Date of Termination of
Employment), any amount accrued and arising from Employee’s participation in,
or benefits accrued under, any employee benefit plans, programs or arrangements
maintained by the Company which amounts shall be payable in accordance with the
terms and conditions of such employee benefit plans, programs or arrangements, and
such other or additional benefits as may be, or become, due to Employee under
the applicable terms of applicable plans, programs, agreements, corporate
governance documents and other arrangements of the Company and its
subsidiaries.


 


“Affiliate”
shall mean any entity that owns or controls, is owned or controlled by, or is
under common control with, the Company.


 


“Agreement
Termination Date” shall mean the fifth anniversary of the closing of
the IPO.


 


“Annual Bonus”
shall have the meaning assigned to such term in Section 6.02.


 


“Annualized
Base Salary” shall mean an amount equal to the greater of:


 


Employee’s annualized base
salary at the rate in effect on the date of his Involuntary Termination or
termination by reason of death or Disability, as applicable;


 


Employee’s annualized base
salary at the rate in effect 90 days prior to the date of his Involuntary
Termination or termination by reason of death or Disability, as applicable; or


 


Employee’s annualized base
salary at the rate in effect immediately prior to a Change in Control if, on
the date upon which such Change in Control occurs or within two years
thereafter, Employee’s employment shall be subject to an Involuntary
Termination or be terminated by reason of death or Disability.


 


For the avoidance of doubt,
for all purposes of this Agreement, base salary specifically does not include
any (A) bonuses, (B) incentive compensation or (C) equity-based
compensation.


 


“Base Salary”
shall have assigned to such term in Section 6.01.


 


“Board”
shall mean the Board of Directors of the Company.


 


“Cause”
shall mean (i) the willful failure of Employee to substantially perform
Employee’s duties as an employee of the Company (other than any such failure
resulting from Employee’s physical or mental incapacity), (ii) Employee’s
having engaged in willful misconduct, gross negligence or a breach of fiduciary
duty that results in material and demonstrable harm to the Company or any of
its 


 


2

















 


Affiliates, (iii) Employee’s
willful and material breach of this Agreement (as amended from time to time)
that results in material and demonstrable harm to the Company or any of its
Affiliates, (iv) Employee’s having been convicted of, or having entered a
plea bargain or settlement admitting guilt or the imposition of unadjudicated
probation for, any felony under the laws of the United States, any state or the
District of Columbia, where such felony involves moral turpitude or where, as a
result of such felony, the continued employment of Employee would have, or
would reasonably be expected to have, a material adverse impact on the Company’s
or any of its Affiliates’ reputations, (v) Employee’s having been the
subject of any order, judicial or administrative, obtained or issued by the Securities
and Exchange Commission, for any securities violation involving fraud
including, for example, any such order consented to by Employee in which
findings of facts or any legal conclusions establishing liability are neither
admitted nor denied, (vi) Employee’s unlawful use (including being under
the influence of) or possession of illegal drugs on the Company’s premises or
while performing Employee’s duties and responsibilities as an employee of the
Company, or (vii) Employee’s commission of an act of fraud, embezzlement,
or misappropriation, in each case, against the Company or any of its
Affiliates.  If the Company desires to
terminate Employee’s employment for Cause in accordance herewith, it shall
provide Employee with a Notice of Termination of Employment in accordance with Section 5.02
and allow Employee 30 days following the date of such notice to fully remedy,
cure or rectify, if possible, the situation giving rise to the Company’s
allegations of Cause.  For purposes of
this definition, no act, or failure to act, on the part of Employee shall be
considered “willful” unless it is done, or omitted to be done, by Employee in
bad faith or without reasonable belief that Employee’s action or omission was
in the best interests of the Company. 
Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of the Chief
Employee Officer of the Company (other than Employee if he is serving in such
capacity) or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by Employee in good
faith and in the best interests of the Company. 
The cessation of employment of Employee shall not be deemed to be for
Cause unless and until there shall have been delivered to Employee a copy of a
resolution duly adopted by the affirmative vote of a majority of the entire
membership of the Board (excluding Employee, if Employee is a member of the
Board) at a meeting of the Board at which at least a quorum is present (after
reasonable notice is provided to Employee and Employee is given an opportunity,
together with counsel for Employee, to be heard before the Board) finding that,
in the good faith opinion of the Board, Employee is guilty of the conduct described
in this definition, and specifying the particulars thereof in detail.


 


(a)                                  “Change in Control” means the occurrence of any one or more
of the following events:


 


3

















 


(i)                                     any “person” (as defined in Section 13(d) of
the Securities Exchange Act of 1934 (the “Act”)),  other than an employee benefit plan or trust maintained by
the Company, becomes the “beneficial owner” (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing more than 50% of the combined voting power of the Company’s
outstanding securities entitled to vote generally in the election of directors
(other than the private equity sponsors of the Company and their respective
Affiliates);


 


(ii)                                  at any time
during a period of 12  consecutive
months, individuals who at the beginning of such period constituted the Board
and any new member of the Board whose election or nomination for election was
approved by a vote of at least  a majority of
the directors then still in office who either were directors at the beginning
of such period or whose election or nomination for election was so approved,
cease for any reason to constitute a majority of members of the Board; or


 


(iii)                               the
consummation of (A) a merger or consolidation of the Company or any of its
subsidiaries with any other corporation or entity, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or being converted into voting
securities of the surviving entity or, if applicable, the ultimate parent
thereof) at least 50% of the combined voting power and total fair market value
of the securities of the Company or such surviving entity or parent outstanding
immediately after such merger or consolidation, or (B) any sale, lease,
exchange or other transfer to any Person (other than an Affiliate (as defined
in the Company Long Term Incentive Plan)) of assets of the Company and/or any
of its subsidiaries, in one transaction or a series of related transactions,
having an aggregate fair market value of more than 50% of the fair market value
of the Company and its subsidiaries (the “Company Value”)
immediately prior to such transaction(s), but only to the extent that, in
connection with such transaction(s) or within a reasonable period
thereafter, the Company’s stockholders receive distributions of cash and/or
assets having a fair market value that is greater than 50% of the Company Value
immediately prior to such transaction(s).


 


Notwithstanding the
foregoing, in no event shall a Change in Control be deemed to have occurred
with respect to Employee if Employee is part of a “group” within the meaning of
Section 13(d)(3) of the Act that consummates the Change in Control
transaction.  In addition, for purposes
of the definition of Change in Control, a person engaged in business as an
underwriter of securities shall not be deemed to be the beneficial owner of, or
to beneficially own, any securities 


 


4

















 


acquired through such person’s
participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.


 


“Cobalt
Equity Payment” means the issuance of an equity interest in Cobalt
to Employee, the accelerated vesting of any such equity interest or any other
benefit conferred to Employee in connection with any such equity interest that,
in any such case, could potentially be subject to the Excise Tax.


 


“Code”
shall mean the Internal Revenue Code of 1986, as amended.


 


“Date of
Termination of Employment” shall mean (i) if Employee’s
employment with the Company is terminated by his death, the date of Employee’s
death, or (ii) if Employee’s employment with the Company is terminated for
any reason whatsoever other than Employee’s death, the earlier of the date
indicated in the Notice of Termination of Employment or the date specified by
the Company pursuant to Section 7.02.


 


“Disability”
shall mean, at any time the Company or any Affiliate sponsors a long-term
disability plan that covers Employee and other Employee employees of the
Company, “disability” as defined in such long-term disability plan for the
purpose of determining a participant’s eligibility for benefits; provided, however, if the long-term disability plan contains
multiple definitions of disability, then “Disability” shall refer to that
definition of disability which, if Employee qualified for such disability
benefits, would provide coverage for the longest period of time.  The determination of whether Employee has a
Disability shall be made by the person or persons required to make final
disability determinations under the long-term disability plan.  At any time the Company or any Affiliate does
not sponsor such a long-term disability plan, Disability shall mean Employee’s
inability to perform, with or without reasonable accommodation, the essential
functions of his position with the Company for a total of three months during
any six-month period as a result of incapacity due to mental or physical
illness, as determined by a physician selected by the Company or its insurers
and acceptable to Employee or Employee’s legal representative, such agreement
as to acceptability not to be unreasonably withheld or delayed.  Any refusal by Employee to submit to a
medical examination for the purpose of determining Disability shall be deemed
to constitute conclusive evidence of Employee’s Disability.


 


“Effective
Time” shall have the meaning assigned such term in the
Reorganization Agreement.


 


“Excise Tax”
shall have the meaning assigned to such term in Section 10.01.


 


5

















 


“Good Reason”
shall mean the occurrence of any of the following events: (i) a material
diminution in Employee’s base salary or (ii) relocation of the geographic
location of Employee’s principal place of employment by more than 75 miles from
Houston, Texas.


 


Notwithstanding the
preceding provisions of this definition or any other provision in this
Agreement to the contrary, any assertion by Employee of a termination of
employment for “Good Reason” shall not be effective unless all of the following
conditions are satisfied: (A) the condition described in clauses (i) or
(ii) of this definition giving rise to Employee’s termination of
employment must have arisen without Employee’s consent; (B) Employee must
provide written notice to the Company of such condition in accordance with Section 16.07
within 45 days of the initial existence of the condition; (C) the
condition specified in such notice must remain uncorrected for 30 days after
receipt of such notice by the Company; and (D) the date of Employee’s
termination of employment must occur within 90 days after the initial existence
of the condition specified in such notice.


 


“Gross-up
Payment” shall have the meaning assigned to such term in Section 10.01.


 


“Inventions”
shall have the meaning assigned to such term in Article 13.


 


“IPO”
shall mean the underwritten public offering of shares of the Company’s common
stock pursuant to Registration Statement No. 333-161734 on Form S-1
filed with the Securities and Exchange Commission.


 


“Involuntary
Termination” shall mean any termination of Employee’s employment
with the Company (i) by the Company without Cause or (ii) by Employee
for Good Reason.  For the avoidance of
doubt, the term “Involuntary Termination” does not include a termination of
Employee’s employment with the Company for any other reason whatsoever,
including, without limitation, (A) by the Company for Cause, (B) by
Employee without Good Reason or (C) as a result of Employee’s death or
Disability.


 


“Non-Compete
Period” shall have the meaning assigned to such term in Section 11.01(b).


 


“Notice of
Termination of Employment” shall have the meaning assigned to such
term in Section 7.02.


 


“Parachute
Value” of a Payment shall mean the present value as of the date of
the change in ownership or effective control for purposes of Section 280G
of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the
Code, as determined for purposes of 


 


6

















 


determining whether and to
what extent the Excise Tax will apply to such Payment.


 


“Partnership
Agreement” shall mean the Fourth Amended and Restated Agreement of
Limited Partnership of Cobalt International Energy, L.P., as amended.


 


“Payment”
shall have the meaning assigned to such term in Section 10.01.


 


“Pro Rata
Bonus” shall mean an amount equal to the product of (i) the
actual annual bonus Employee would have been entitled to receive, based on the
Company’s actual performance through the end of the calendar year in which
Employee’s termination of employment with the Company occurred, determined as
if he had continued his employment with the Company through the end of such
calendar year and (ii) a fraction, the numerator of which is the number of
days during the calendar year through the date of Employee’s termination of
employment with the Company and the denominator of which is 365.


 


“Pro Rata
Bonus Payment Date” shall mean, with respect to a Pro Rata Bonus for
a particular calendar year, the date on which annual bonuses for such calendar
year are generally paid to employees of the Company who have not terminated
employment with the Company, but in no event earlier than January 1 of the
year following such calendar year nor later than December 31 of the year
following such calendar year.


 


“Reorganization
Agreement” shall mean the Reorganization Agreement to be entered
into prior to the IPO among the Partnership, the Company and the other parties
signatory thereto.


 


“Restricted
Stock” shall mean the shares of restricted stock issued to Employee
in connection with the IPO.


 


“Safe Harbor
Amount” shall mean 2.99 times Employee’s “base amount,”
within the meaning of Section 280G(b)(3) of the Code.


 


“Separation
from Service” means, with respect to Employee, the (i) cessation
of all services performed by Employee for the Company or (ii) permanent
decrease in the level of services performed by Employee for the Company
(whether as an employee or as an independent contractor) to no more than 20
percent of the average level of services performed (whether as an employee or
an independent contractor) over the immediately preceding 36-month period (or
the full period of services to the Company, if Employee has been providing
services to the Company for less than 36 months).


 


7

















 


“Severance
Amount” shall mean (i) if Employee incurs an Involuntary
Termination prior to a Change in Control or on or after the second anniversary
of the Change in Control (to the extent applicable), 100% of Annualized Base
Salary and (ii) if Employee incurs an Involuntary Termination on the date
of the Change in Control or prior to the second anniversary of the Change in
Control, 100% of Annualized Base Salary.


 


ARTICLE 2

EFFECTIVENESS; TERM OF AGREEMENT; TERMINATION OF SEVERANCE AGREEMENT


 


Section 2.01.  Effectiveness; Term of Agreement; Termination
of Severance Agreement.  This Agreement
shall become effective upon the closing of the IPO.  Subject to an earlier termination of Employee’s
employment with the Company pursuant to Article 7, this Agreement shall
terminate and be of no further force or effect on the Agreement Termination
Date.  Upon the effectiveness of this
Agreement, the Severance Agreement shall terminate and be of no further force
or effect.  If the IPO does not close by March 31,
2010, this Agreement shall be void ab initio and
the Severance Agreement shall remain in full force and effect in accordance
with its terms as of such date.


 


ARTICLE 3

POSITIONS AND DUTIES


 


Section 3.01.  Employment; Positions.  Employee initially shall be
employed as Executive Vice President of the Company.  The Company may subsequently assign Employee
to a different position with the Company or any Affiliate of the Company or
modify Employee’s duties, responsibilities and reporting relationship.  Moreover, the Company may assign this
Agreement and Employee’s employment to any Affiliate of the Company.


 


Section 3.02.  Duties and Services.  Employee agrees to serve in
the position(s) assigned pursuant to Section 3.02 and to perform
diligently and to the best of Employee’s abilities the duties and services
pertaining to such position(s), as well as such additional duties and services
that Employee from time to time may be reasonably directed to perform by the
Company. Employee’s employment shall also be subject to the policies maintained
and established by the Company that are of general applicability to the Company’s
Employees, as such policies may be amended from time to time.


 


Section 3.03.  Other Interests.  Employee agrees, during the
period of Employee’s employment by the Company, to devote substantially all of
Employee’s business time, energy and best efforts to the business and affairs
of 


 


8

















 


the Company and its
Affiliates.  Notwithstanding the
foregoing, the parties acknowledge and agree that Employee may (a) engage
in and manage Employee’s passive personal investments and (b) engage in
charitable and civic activities; provided, however,
that such activities shall be permitted so long as such activities do not
conflict with the business and affairs of the Company or interfere with
Employee’s performance of Employee’s duties hereunder.


 


ARTICLE 4

CERTAIN EMPLOYEE REPRESENTATIONS AND AGREEMENTS; IPO EQUITY GRANTS


 


Section 4.01.  Accredited Investor Representations.  Employee hereby represents
to the Company that the representations set forth in Annex I to this Agreement (a) are
true and correct as of the date of this Agreement and (b) shall be true
and correct as of the date of the closing of the IPO.


 


Section 4.02.  Transfer Restrictions.   Employee hereby represents to the Company that
he has read and understands, and agrees to be bound by, the transfer
restrictions set forth in Annex II to this Agreement.


 


Section 4.03.  Life Insurance.  This Agreement constitutes
written notice to Employee that (a) the Company or an Affiliate may insure
Employee’s life, (b) the Company or an Affiliate shall have the right to
determine the amount of insurance and the type of policies, and (c) the
Company or an Affiliate will be the beneficiaries of any proceeds payable under
such policies upon the death of Employee. 
Employee hereby irrevocably consents to being insured under the policies
described in the preceding sentence and to the coverage under such policies
continuing after the termination of this Agreement and/or Employee’s
termination of employment with the Company and its Affiliates.  Employee agrees and acknowledges that
Employee shall not have the right to designate the beneficiary or beneficiaries
of the death benefit payable pursuant to such policies, and neither Employee
nor any other person claiming through Employee shall have any interest in such
policies.  Employee shall (i) furnish
any and all information reasonably requested by the Company, any Affiliate or
the insurer to facilitate the issuance of the life insurance policy or policies
described in this paragraph or any adjustment to any such policy, and (ii) take
such physical examinations as the Company, any Affiliate or the insurer deems
necessary.  Employee shall incur no
financial obligation by executing any required document pursuant to this Section 4.03,
and shall have no interest in any such policy.


 


Section 4.04.  IPO Equity Grants.  Immediately prior to the
Effective Time, Employee received 6,500 units of Class C Interests (as
defined in the Partnership Agreement) and 9,000 units of Class D Interests
(as defined in the Partnership Agreement), which will at the Effective Time
convert to restricted shares of the Company’s common stock subject to the terms
and conditions of the Company 


 


9

















 


Long Term Incentive Plan and
the forms of Restricted Stock Award Agreements attached as Exhibit A and Exhibit B
to this Agreement.


 


ARTICLE 5

CONFIDENTIAL INFORMATION, INVENTIONS,

BUSINESS OPPORTUNITIES AND GOODWILL


 


Section 5.01.  Confidential Information, Inventions,
Business Opportunities and Goodwill.  The Company
shall (a) disclose to Employee, and place Employee in a position to have
access to or develop, confidential or proprietary information and Inventions of
the Company (or its Affiliates); (b) entrust Employee with business
opportunities of the Company (or its Affiliates); and (c) place Employee
in a position to develop business good will on behalf of the Company (or its
Affiliates).


 


ARTICLE 6

COMPENSATION AND BENEFITS


 


Section 6.01.  Base Salary. 
During the term of this Agreement, Employee shall receive a minimum,
annualized base salary of $630,000 (the “Base Salary”).  Employee’s Base Salary shall be reviewed
periodically by the Board (or a committee thereof) and, in the sole discretion
of the Board (or a committee thereof), the Base Salary may be increased (but
not decreased) effective as of any date determined by the Board (or a committee
thereof).  Employee’s Base Salary shall
be paid in equal installments in accordance with the Company’s standard policy
regarding payment of compensation to Employees but no less frequently than
monthly.


 


Section 6.02.  Bonuses. 
Employee shall be eligible to receive an annual, calendar-year bonus
(payable in a single lump sum) based on criteria determined in the discretion
of the Board (or a committee thereof) (the “Annual Bonus”),
it being understood that (a) the target bonus at planned or targeted
levels of performance shall equal 100% of Employee’s Base Salary and (b) the
actual amount of each Annual Bonus shall be determined in the discretion of the
Board (or a committee thereof).  The
Company shall use commercially reasonable efforts to pay each Annual Bonus with
respect to a calendar year on or before March 15 of the following calendar
year (and in no event shall an Annual Bonus be paid after December 31 of
the following calendar year).  If the
Effective Time occurs after January 1, 2010, then the Annual Bonus for
calendar year 2010 shall be determined as if Employee’s employment with the
Company commenced on January 1, 2010.


 


10














 


Section 6.03.  Other Benefits.  During Employee’s employment
hereunder, Employee shall be permitted to participate in all benefit plans and
programs of the Company, including improvements or modifications of the same,
which are now, or may hereafter be, available to other senior Employees of the
Company.  The Company shall not, however,
by reason of this Section 6.03, be obligated to institute, maintain, or
refrain from changing, amending, or discontinuing, any such benefit plan or
program, so long as such changes are similarly applicable to other senior
employees generally.


 


Section 6.04.  Expenses. 
The Company shall reimburse Employee for all reasonable business
expenses incurred by Employee in performing services hereunder, including all
expenses of travel and living expenses while away from home on business or at
the request of and in the service of the Company; provided, in each case, that
such expenses are incurred and accounted for in accordance with the policies
and procedures established by the Company. 
Any such reimbursement of expenses shall be made by the Company upon or
as soon as practicable following receipt of supporting documentation reasonably
satisfactory to the Company (but in any event not later than the close of
Employee’s taxable year following the taxable year in which the expense is
incurred by Employee); provided, however,
that, upon Employee’s termination of employment with the Company, in no event
shall any additional reimbursement be made prior to the date that is six months
after Employee’s termination of employment with the Company to the extent such
payment delay is required under section 409A(a)(2)(B)(i) of the Code.


 


Section 6.05.  Vacation and Sick Leave.  During Employee’s employment
hereunder, Employee shall be entitled to (a) sick leave in accordance with
the Company’s policies applicable to its senior Employees and (b) five
weeks paid vacation each calendar year (none of which may be carried forward to
a succeeding year except to the extent permitted under the Company’s vacation
policy generally applicable to its salaried employees).  For the calendar year during which the
Effective Time occurs, Employee’s sick leave and vacation entitlement for the
portion of such year from and after the effective date of this Agreement shall
be equal to the entitlements described in the preceding sentence but reduced by
the amount of sick leave and vacation Employee used during the portion of such
year preceding the Effective Time while employed by the Partnership.


 


Section 6.06.  Offices. 
Subject to Articles 3 and 6, Employee agrees to serve without
additional compensation, if elected or appointed thereto, as a director of the
Company or any Affiliate and as a member of any committees of the board of
directors of any such entities, and in one or more Employee positions of any
Affiliate.


 


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ARTICLE 7

TERMINATION OF EMPLOYMENT AND NOTICE OF TERMINATION OF EMPLOYMENT


 


Section 7.01.  Termination of Employment.  Employee’s employment with the
Company may be terminated by the Company or Employee under the following
circumstances: (a) Employee’s death; (b) Employee’s Disability; (c) termination
by the Company for Cause; (d) termination by the Company without Cause; (e) resignation
by Employee for Good Reason; or (f) resignation by Employee without Good
Reason.  For all purposes of this
Agreement, Employee shall be considered to have terminated employment with the
Company when Employee incurs a Separation from Service.


 


Section 7.02.  Notice of Termination of Employment.  Any termination of Employee’s
employment by the Company or by Employee (other than termination by reason of
Employee’s death) shall be communicated by a written notice to the other party
hereto indicating the specific termination provision in the first sentence of Section 7.02
relied upon, setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee’s employment under the
provision so indicated, and specifying a Date of Termination of Employment
which, if submitted by Employee, shall be at least 30 days following the date
of such notice (a “Notice of Termination of
Employment”); provided, however,
that in the case of any Notice of Termination of Employment submitted by Employee,
the Company may, in its sole discretion, advance the Date of Termination of
Employment to any date following the Company’s receipt of the Notice of
Termination of Employment (and, if the Date of Termination of Employment is so
advanced, it shall not change the basis for Employee’s termination nor be
construed or interpreted as a termination of Employee’s employment by the
Company for any reason whatsoever).  A
Notice of Termination of Employment submitted by the Company may provide for a
Date of Termination of Employment on the date Employee receives the Notice of
Termination of Employment, or any date thereafter elected by the Company in its
sole discretion.  The failure by Employee
or the Company to set forth in the Notice of Termination of Employment any fact
or circumstance which contributes to a showing of Cause or Good Reason shall
not waive any right of Employee or the Company hereunder or preclude Employee
or the Company from asserting such fact or circumstance in enforcing Employee’s
or the Company’s rights hereunder.


 


Section 7.03.  Deemed Resignations.  Unless otherwise agreed to
in writing by the Company and Employee prior to the termination of Employee’s
employment, any termination of Employee’s employment shall constitute an
automatic resignation of Employee:  (i) as
an officer of the Company and each Affiliate; (ii) as a member of the
Board (if applicable); (iii) from the board of directors or similar
governing body of any Affiliate; and (iv) from the board of directors or
similar governing body of any corporation, limited liability entity or 


 


12

















 


other entity in which the
Company or any Affiliate holds an equity interest and with respect to which
board or similar governing body Employee serves as the Company’s or such
Affiliate’s designee or other representative.


 


ARTICLE 8

SEVERANCE BENEFITS


 


Section 8.01.  Death, Disability, Termination for Cause or
Resignation Without Good Reason.  If Employee’s
employment with the Company is terminated by the Company for Cause or by
Employee without Good Reason, or if such employment terminates by reason of
Employee’s death or Disability, then, upon such termination, Employee (or
Employee’s estate) shall be entitled to receive the Accrued Obligations (other than
in the case of a termination by the Company for Cause, any bonus or incentive
compensation that under the applicable plan requires Employee to be employed on
the date of payment).  If Employee’s
employment with the Company terminates by reason of death or Disability, then
the Company shall also pay to Employee (or Employee’s estate or legal
representatives, as applicable) on the Pro Rata Bonus Payment Date an amount in
cash equal to the Pro Rata Bonus.


 


Section 8.02.  Involuntary Termination.  If Employee’s employment
with the Company shall be subject to an Involuntary Termination, Employee shall
be entitled to receive the Accrued Obligations and, subject to the provisions
of Section 16.09, the Company will, as additional compensation for
services rendered to the Company (including its Affiliates), pay to Employee
the following amounts and take the following actions after the last day of
Employee’s employment with the Company:


 


(a)                                  if the
Involuntary Termination occurs prior to a Change in Control or on or after the
second anniversary of the Change in Control, pay to Employee in equal monthly
installments an amount in cash equal to the Severance Amount, the first
installment to be paid on the date that is 60 days after the date of Employee’s
termination of employment with the Company and subsequent installments to be
paid on the first day of each of the next 11 calendar months thereafter or such
lesser number of installments such that no installment is paid after March 1st
of the year following the year in which Employee’s employment was terminated,
with each installment equal to the Severance Amount divided by the total number
of such installments to be paid;


 


(b)                                 if the
Involuntary Termination occurs on the date of a Change in Control or before the
second anniversary of the Change in Control, pay to Employee on the date that
is 60 days after the date of Employee’s termination of employment with the
Company a lump sum cash payment in an amount equal to the Severance Amount;


 


13

















 


(c)                                  pay to Employee
on the Pro Rata Bonus Payment Date an amount in cash equal to the Pro Rata
Bonus; provided, however, that if this
paragraph applies with respect to a Pro Rata Bonus for a calendar year
beginning on or after January 1, 2010 and is intended to constitute
performance-based compensation within the meaning of, and for purposes of, Section 162(m) of
the Code, then this paragraph shall apply with respect to such Pro Rata Bonus
only to the extent the applicable performance criteria have been satisfied as
certified by a committee of the Board as required under Section 162(m) of
the Code; and


 


(d)                                 during the
portion, if any, of the 18-month period following the date of Employee’s
termination of employment with the Company that Employee elects to continue
coverage for Employee and Employee’s eligible dependents under the Company’s
group health plans under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and/or Sections 601 through 608 of the Employee Retirement
Income Security Act of 1974, as amended, the Company shall promptly reimburse
Employee on a monthly basis for the difference, if any, between (i) the
amount Employee pays to effect and continue such coverage and (ii) the
amount charged to a similarly situated active employee of the Company for
similar coverage.


 


Notwithstanding the
foregoing, if Employee is entitled to receive severance payments under Section 8.02(a) or
(b), as applicable, and under Section 8.02(c), the aggregate amount
payable pursuant to Sections 8.02(a) or (b), as applicable, and Section 8.02(c) (the
“Aggregate Severance Amount”) shall be
reduced (but not below zero) by the fair market value, as of the Employee’s
Date of Termination of Employment, of the Restricted Stock held by Employee
that has then vested, or that may vest at any time after the Employee’s Date of
Termination of Employment (the “Carried Amount”).  If the Carried Amount exceeds the Aggregate
Severance Amount prior to the commencement of payment of any of the severance
benefits described in Section 8.02(a) or (b), as applicable, and Section 8.02(c),
then Executive shall not be entitled to receive any payments pursuant to 8.02(a) or
(b), as applicable, or Section 8.02(c). 
If the Carried Amount does not exceed the Aggregate Severance Amount
prior to the commencement of payment of any of the severance benefits described
in Sections 8.02(a) or (b), as applicable, and Section 8.02(c), then
the reduction shall be effected as follows: first, the payment provided for in Section 8.02(c) shall
be reduced by the Carried Amount if the Carried Amount or any portion thereof
has been paid prior to the payment date provided for in Section 8.02(c),
and if necessary, payments of the amounts provided for in Section 8.02(a) or
(b), as applicable, shall be reduced pro rata by any additional Carried
Amount.  If at any time after the
commencement of payment of the severance benefits described in Section 8.02(a) or
(b), as applicable, and Section 8.02(c), the Carried Amount not yet
applied as a reduction in the severance benefits exceeds the remaining
severance benefits to be paid, the Company shall cease to make any further
payments in respect of either severance benefit, but no amount previously paid
to 


 


14

















 


Executive pursuant to Section 8.02(a) or
(b), as applicable, and Section 8.02(c) shall be repaid to the
Company.


 


Section 8.03.  Death, Disability or Involuntary Termination
After Agreement Termination Date.  If, after the
Agreement Termination Date but prior to the payment date of the Annual Bonus
for the calendar year in which the Agreement Termination Date occurs, Employee’s
employment with the Company terminates by reason of the Employee’s death or by
reason of what would have otherwise qualified as Disability or Involuntary
Termination under this Agreement if this Agreement was still in effect at the
time of such termination of employment, the Company shall pay to Employee (or
Employee’s estate or legal representatives, as applicable), subject to the
provisions of Section 16.09, on the Pro Rata Bonus Payment Date an amount
in cash equal to the Pro Rata Bonus.


 


ARTICLE 9

INTEREST ON LATE PAYMENTS


 


Section 9.01.  Interest on Late Payments.  If any payment provided for
in Section 8.02(a), (b) or (c) or Section 8.03 is not made
when due, then the Company shall pay to Employee interest on the amount payable
from the date that such payment should have been made under such Section until
such payment is made, which interest shall be calculated at 5% plus the prime
rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at
its principal office in New York, and shall change when and as any such change
in such prime rate shall be announced by such bank.


 


ARTICLE 10

CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY


 


Section 10.01.  Gross-up Payment.  Notwithstanding anything to
the contrary in this Agreement (but subject to the remaining provisions of this
Article 10), in the event that any payment, benefit or distribution by the
Company to or for the benefit of Employee, whether paid, payable, provided,
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest or penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall pay to Employee an
additional payment (a “Gross-up Payment”)
in an amount such that after payment by Employee of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed on any Gross-up Payment, Employee retains an amount of the Gross-up
Payment equal to the Excise Tax imposed upon all 


 


15

















 


Payments except for the
Cobalt Equity Payments.  Notwithstanding
the provisions of the preceding sentence, if it shall be determined that
Employee is entitled to the Gross-up Payment, but that the Parachute Value of
all Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-up
Payment shall be made to Employee and the amounts payable under Article 6
shall be reduced so that the Parachute Value of all Payments, in the aggregate,
equals the Safe Harbor Amount.  The
reduction of the amounts payable under Article 8, if applicable, shall be
made by reducing Payments payable hereunder (including reducing a Payment to
zero) in the order in which such Payments would be made (beginning with such
Payment that would be made first in time and continuing, to the extent
necessary, through to such Payment that would be made last in time).  For purposes of reducing the Payments to the
Safe Harbor Amount, only amounts payable under Article 8 (and no other
Payments) shall be reduced.  If the
reduction of the amount payable under Article 6 would not result in a
reduction of the Parachute Value of all Payments to the Safe Harbor Amount,
then no amounts payable under Article 8 shall be reduced pursuant to this Section 10.01.  The Company’s obligation to make a Gross-up
Payment under this Article 10 shall not be conditioned upon Employee’s
termination of employment.  The Gross-up
Payment attributable to a particular Payment shall be made at the time such
Payment is made; provided, however, that in no
event shall the Gross-up Payment be made later than the end of Employee’s
taxable year next following Employee’s taxable year in which Employee remits
the related taxes.  The Company and
Employee shall make an initial determination as to whether a Gross-up Payment
is required and the amount of any such Gross-up Payment.


 


Section 10.02.  Disposition of Claims.  Employee shall notify the
Company immediately in writing of any claim by the Internal Revenue Service
which, if successful, would require the Company to make a Gross-up Payment (or
a Gross-up Payment in excess of that, if any, initially determined by the
Company and Employee) within five days of the receipt of such claim.  The Company shall notify Employee in writing
at least five days prior to the due date of any response required with respect
to such claim if it plans to contest the claim. 
If the Company decides to contest such claim, Employee shall cooperate
fully with the Company in such action; provided, however,
the Company shall bear and pay directly or indirectly all costs and expenses
(including additional interest and penalties) incurred in connection with such
action and shall indemnify and hold Employee harmless, on an after-tax basis, for
any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of the Company’s action.  If, as a result of the Company’s action with
respect to a claim, Employee receives a refund of any amount paid by the Company
with respect to such claim, Employee shall promptly pay such refund to the
Company.  If the Company fails to timely
notify Employee whether it will contest such claim or the Company determines
not to contest such claim, then the Company shall 


 


16

















 


immediately pay to Employee
the portion of such claim, if any, which it has not previously paid to
Employee.


 


ARTICLE 11

COMPETITION.


 


Section 11.01.  Competition.


 


(a)                                  Employee and
the Company agree to the restrictive covenants of this Article 11:  (i) in consideration for the
confidential information provided by the Company to Employee pursuant to Article 5
or otherwise during the course of his employment; (ii) as part of the
consideration for the compensation and benefits to be paid to Employee by the
Company; (iii) to protect the (A) trade secrets and confidential
information of the Company disclosed or entrusted to Employee by the Company
and (B) business goodwill of the Company or its subsidiaries developed through
the efforts of Employee and/or the business opportunities disclosed or
entrusted to Employee by the Company; and (iv) as an additional incentive
for the Company to enter into this Agreement.


 


(b)                                 Subject to the
exceptions set forth in the last sentence of this Section 11.01(b),
Employee shall not at any time while employed by the Company and for a 1-year
period following the Date of Termination of Employment (the “Non-Compete Period”), directly or indirectly engage in, have
any equity interest in, be affiliated with, or manage or operate any person,
firm, corporation, partnership, entity or business (whether as director,
officer, employee, agent, representative, partner, member, security holder,
consultant or otherwise) that engages in any business that competes with any
Business (as defined below) of the Company in the states within the United
States (or District of Columbia, if applicable) and in the geographic regions
outside of the United States (i) in which the Company conducts operations
or (ii) with respect to which the Company devotes more than de minimis resources in the furtherance of the Business; provided, however, that Employee shall be permitted to
acquire a passive stock interest in such a business if the stock acquired is
publicly traded and is not more than two percent of the outstanding interest in
such business.  Notwithstanding the
foregoing or anything to the contrary in this Agreement, it shall not be a
violation of this Article 11 for Employee to (A) provide services to
any person or entity engaged in the Business if Employee is not involved,
directly or indirectly, in the management, supervision or operations of the
Business (including by reason of any individual reporting to Employee) and the
gross revenues generated by the Business do not constitute more than 33% of the
consolidated gross revenues of such person or entity and its affiliates and (B) provide
services to or otherwise be affiliated with a venture capital or private equity
firm that holds investments in entities engaged in the Business if Employee is
not involved, directly or indirectly, in the identification, evaluation,
recommendation, acquisition, management, operation, 


 


17

















 


supervision or disposition
of such investments, and the gross revenues generated by such Business do not
constitute more than the 33% of the consolidated gross revenues of such firm
and its affiliates.


 


(c)                                  During the
Non-Compete Period, Employee shall not, directly or indirectly, recruit or
otherwise solicit or induce any employee of the Company, except on behalf of
the Company, (i) to terminate his or her employment with the Company, or (ii) to
establish any relationship with Employee or any of his affiliates for any
business purpose competitive with the Business of the Company, provided, however, that a general solicitation of the public
for employment shall not constitute a solicitation hereunder so long as such
general solicitation is not designed to target any employee of the Company.


 


(d)                                 Employee and
the Company agree that the foregoing restrictions are reasonable under the
circumstances, are necessary to protect the Company’s legitimate business
interests and that any breach of such restrictions would cause irreparable
injury to the Company.  Employee
understands that the foregoing restrictions may limit Employee’s ability to
engage in certain businesses anywhere in the United States and outside the
United States during the Non-Compete Period but acknowledges that he will
receive sufficiently high remuneration and other benefits from the Company to
justify such restrictions.  Further,
Employee acknowledges that his skills are such that he can be gainfully
employed in non-competitive employment, and that the agreement not to compete
will not prevent him from earning a living. 
Nevertheless, in the event the terms of this Article 11 shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too great a period of time or over too great a geographical
area or by reason of its being too extensive in any other respect, it will be
interpreted to extend only over the maximum period of time for which it may be
enforceable, over the maximum geographical area as to which it may be
enforceable, or to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.


 


(e)                                  Employee hereby
represents to the Company that he has read and understands, and agrees to be
bound by, the terms of this Article 11. 
Employee acknowledges that the geographic scope and duration of the
covenants contained in this Article 11 are the result of arm’s-length
bargaining and are fair and reasonable in light of (i) the nature and wide
geographic scope of the Company’s operations of, and in, the Business, (ii) Employee’s
level of control over and contact with the Company’s operations of, and in, the
Business in all jurisdictions in which it is conducted, (iii) the
geographic breadth in which the Company conducts the Business and (iv) the
amount of consideration (including confidential information and trade secrets)
that Employee is receiving from the Company.


 


18

















 


(f)                                    As used in this
Article 11, (i) the term “Company” shall
include the Company and its subsidiaries and (ii) the term “Business” shall mean the exploration for, and the
development and production of, oil and natural gas and the acquisition of
leases and other real property in connection therewith, as such business may be
expanded or altered by the Company during the period of Employee’s employment
by the Company; provided, that any business or
endeavor shall cease to be the “Business” if the Company is not or ceases to be
engaged in such business or endeavor.


 


(g)                                 In consideration
of the Company’s promises herein, during the Non-Compete Period, Employee
promises to disclose to the Company any employment, consulting, or other
service relationship that Employee enters into after the termination of
Employee’s employment with the Company for any reason.  Such disclosure shall be made within seven
business days after Employee enters into such employment, consulting or other
service relationship.  Employee expressly
consents to and authorizes the Company to disclose both the existence and terms
of this Agreement to any future employer or recipient of Employee’s services
and to take any steps the Company deems necessary to enforce this Agreement.


 


ARTICLE 12

NONDISCLOSURE OF CONFIDENTIAL AND PROPRIETARY INFORMATION


 


Section 12.01.  Nondisclosure of Confidential and Proprietary
Information.  (a)   Except in connection with the faithful performance of
Employee’s duties for the Company or pursuant to Section 12.01(c) or
(e), Employee shall, in perpetuity, maintain in confidence and shall not
directly, indirectly or otherwise, (i) use, disseminate, disclose or
publish, or use for his benefit or the benefit of any person, firm, corporation
or other entity, any (A) confidential or proprietary information or trade
secrets of or relating to the Company (including, without limitation,
intellectual property in the form of patents, trademarks and copyrights and
applications therefor, ideas, inventions, works, discoveries, improvements,
information, documents, formulae, practices, processes, methods, developments,
source code, modifications, technology, techniques, data, programs, other
know-how or materials, in each case, that are confidential and/or proprietary
and owned, developed or possessed by the Company, whether in tangible or
intangible form) or (B) confidential or proprietary information with
respect to the Company’s operations, processes, products, inventions, business
practices, strategies, business plans, finances, principals, vendors,
suppliers, customers, potential customers, marketing methods, costs, prices,
contractual relationships, regulatory status, prospects and compensation paid
to employees or other terms of employment or (ii) deliver to any person,
firm, corporation or other entity any document, record, notebook, computer
program or similar repository of or containing any such confidential or
proprietary information or trade secrets. 
The parties hereby 


 


19

















 


stipulate and agree that as
between them the foregoing matters are important, material and confidential
proprietary information and trade secrets and materially affect the successful
conduct of the businesses of the Company (and any successor or assignee of the
Company).


 


(b)                                 Upon the
termination of Employee’s employment with the Company for any reason, Employee
will promptly deliver to the Company all correspondence, drawings, manuals,
letters, notes, notebooks, reports, programs, plans, proposals, financial
documents and electronically stored information, in each case, that are
confidential or proprietary to the Company, or any other confidential or
proprietary documents (including electronically stored information) concerning
the Company’s customers, business plans, strategies, products or processes.


 


(c)                                  Employee may
respond to a lawful and valid subpoena or other legal process relating to the
business of the Company or the performance of his duties on behalf of the
Company but shall (i) give the Company prompt notice thereof, (ii) make
available to the Company and its counsel the documents and other information
sought that are not subject to a binding confidentiality agreement and (iii) assist
such counsel at Company’s expense in resisting or otherwise responding to such
process.


 


(d)                                 As used in this
Article 12 and Article 13, the term “Company”
shall include the Company and its subsidiaries.


 


(e)                                  Nothing in this
Agreement shall prohibit Employee from (i) disclosing information and
documents when required by law, subpoena, court order or legal process, (ii) disclosing
information and documents to his immediate family members or, for the purpose
of securing legal or tax advice, attorney or tax adviser (provided that the
persons to whom such disclosures are made shall be informed of their obligation
to maintain the strict confidentiality of any information provided to them), (iii) disclosing
the post-employment restrictions in this Agreement in confidence to any
potential new employer or person or entity to whom he may provide consulting
services, or (iv) retaining, at any time, his personal correspondence and
rolodex or address book and documents related to his own personal benefits,
entitlements and obligations.


 


ARTICLE 13

INVENTIONS


 


Section 13.01.  Inventions. 
All rights to discoveries, inventions, improvements and innovations (including
all data and records pertaining thereto) related to the business of the
Company, whether or not patentable, copyrightable, registrable as a trademark,
or reduced to writing, that Employee may discover, 


 


20

















 


invent or originate during
the period of his employment with the Company, either alone or with others and
whether or not during working hours or by the use of the facilities of the
Company (“Inventions”), shall be the exclusive
property of the Company.  Employee shall
promptly disclose all Inventions to the Company, shall execute at the request
of the Company any assignments or other documents the Company may deem
reasonably necessary to protect or perfect its rights therein, and shall assist
the Company, upon reasonable request and at the Company’s expense, in
obtaining, defending and enforcing the Company’s rights therein.  Employee hereby appoints the Company as his
attorney-in-fact to execute on his behalf any assignments or other documents reasonably
deemed necessary by the Company to protect or perfect its rights to any
Inventions.


 


ARTICLE 14

INJUNCTIVE RELIEF


 


Section 14.01.  Injunctive Relief.  It is recognized and
acknowledged by Employee that a breach of the covenants contained in Articles
11, 12, 13 and 15 will cause irreparable damage to Company and its Affiliates
and their goodwill, the exact amount of which will be difficult or impossible
to ascertain, and that the remedies at law for any such breach will be
inadequate.  Accordingly, Employee agrees
that in the event of a breach of any of the covenants contained in Articles 11,
12 ,13 and 15, in addition to any other remedy which may be available at law or
in equity, the Company will be entitled to specific performance and injunctive
relief.


 


ARTICLE 15

NON-DISPARAGEMENT


 


Section 15.01.  Non-Disparagement.  During Employee’s employment
with the Company and following termination of his employment with the Company
for any reason, (a) Employee agrees not to disparage in any material
respect the Company, its subsidiaries, any of their products or practices, or
any of their directors, officers, agents, representatives, members, partners or
stockholders, either orally or in writing, and (b) the Company agrees that
it and its subsidiaries will (i) not make any formal statements that
disparage in any material respect Employee and (ii) use commercially
reasonable efforts to advise its directors and officers not to disparage in any
material respect Employee.


 


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ARTICLE 16

GENERAL


 


Section 16.01.  Survivorship. 
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations.


 


Section 16.02.  Arbitration. 
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before an
arbitrator in Houston, Texas in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association then
in effect.  Judgment may be entered on
the arbitration award in any court having jurisdiction; provided,
however, that the Company shall be entitled to seek a restraining
order or injunction in any court of competent jurisdiction to prevent any
violation or continuation of any violation of the provisions of Articles 11,
12, 13 or 15 of this Agreement and Employee hereby consents that such
restraining order or injunction may be granted without requiring the Company to
post a bond.  Only individuals who are on
the AAA register of arbitrators shall be selected as an arbitrator.  Within 20 days of the conclusion of the arbitration
hearing, the arbitrator(s) shall prepare written findings of fact and
conclusions of law.  It is mutually
agreed that the written decision of the arbitrator(s) shall be valid,
binding, final and non-appealable; provided however,
that the parties hereto agree that the arbitrator shall not be empowered to
award punitive damages against any party to such arbitration.  The Company shall bear all administrative
fees and expenses of the arbitration and each party shall bear its own counsel
fees and expenses except as otherwise provided in this paragraph.  If Employee makes a claim against the Company
relating to the performance of, or the rights and obligations of, the Company
arising under, relating to or in connection with this Agreement (a “Covered Claim by the Employee”), the arbitrators shall award
Employee his reasonable legal fees and expenses if Employee prevails on one
material Covered Claim by the Employee (as determined by the arbitrator).  If a claim is made by the Company against
Employee relating to the performance of, or the rights and obligations of,
Employee arising under, relating to or in connection with this Agreement (a “Covered Claim by the Company”), the arbitrators shall award
Employee his reasonable legal fees and expenses; provided
that if such Covered Claim by the Company relates to Employee’s performance or
obligations under Articles 11, 12, 13 or 15, the arbitrators shall award
Employee his legal fees and expenses only if the Company does not prevail on
any Covered Claim by the Company relating to any such Section (as
determined by the arbitrator).  Any reimbursement
of reasonable legal fees and expenses required under this Section 16.02
and any reimbursement of expenses included in the Accrued Obligations payable
to Employee under Article 6 shall be made not later than the close of
Employee’s taxable year following the taxable year in which Employee incurs the
expense; provided, however, that, upon Employee’s
termination of employment 


 


22

















 


with the Company, in no
event shall any additional reimbursement be made prior to the date that is six
months after the date of Employee’s termination of employment to the extent
such payment delay is required under Section 409A(a)(2)(B)(i) of the
Code.  In no event shall any
reimbursement be made to Employee for such fees and expenses incurred after the
date that is 10 years after the date of Employee’s termination of employment
with the Company.


 


Section 16.03.  Payment Obligations Absolute.  The Company’s obligation to
pay Employee the amounts and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense
or other right which the Company (including its subsidiaries) may have against
him or anyone else.  All amounts payable
by the Company shall be paid without notice or demand.  Employee shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and the obtaining of any such other employment
shall in no event effect any reduction of the Company’s obligations to make (or
cause to be made) the payments and arrangements required to be made under this
Agreement.


 


Section 16.04.  Successors. 
This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, by merger or otherwise.  This Agreement shall also be binding upon and
inure to the benefit of Employee and his estate.  If Employee shall die prior to full payment
of amounts due pursuant to this Agreement, such amounts shall be payable
pursuant to the terms of this Agreement to his estate.


 


Section 16.05.  Severability. 
Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction by reason of applicable law shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.


 


Section 16.06.  Non-alienation.  Employee shall not have any
right to pledge, hypothecate, anticipate or assign this Agreement or the rights
hereunder, except by will or the laws of descent and distribution.


 


Section 16.07.  Notices. 
Any notices or other communications provided for in this Agreement
shall be sufficient if in writing.  In
the case of Employee, such notices or communications shall be effectively
delivered if hand-delivered to Employee at his principal place of employment or
if sent by registered or certified mail to Employee at the last address he has
filed with the Company.  In the case of
the Company, such notices or communications shall be effectively delivered if
sent by registered or certified mail to the Company at its principal Employee
offices.


 


23

















 


Section 16.08.  Controlling Law and Waiver of Jury
Trial.  This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Texas.  With respect to any claim or
dispute related to or arising under this Agreement, Employee and the Company
hereby consent to the exclusive jurisdiction, forum and venue of the state and
federal courts located in Harris County, Texas. 
Notwithstanding the foregoing, Section 4.02 and the transfer restrictions
set forth in Annex II shall be governed by, and construed in accordance with,
the laws of the State of Delaware. 
Furthermore, with respect to any claim or dispute related to or arising
under Section 4.02 and the transfer restrictions set forth in Annex II,
Employee and the Company hereby consent to the exclusive jurisdiction, forum
and venue of the Court of Chancery of the State of Delaware.  Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury in any legal proceeding arising out
of or related to this Agreement or the transactions contemplated hereby.


 


Section 16.09.  Release and Delayed Payment Restriction.


 


(a)                                  As a condition
to the receipt of any benefit under Article 5 hereof (except in the case
of the termination of Employee’s employment with the Company by reason of
Employee’s death or Disability and except for the Accrued Obligations), Employee
shall first execute a release in the form attached hereto as Exhibit C
(with such changes therein as the Company may reasonably require to reflect
changes in applicable law and the circumstances relating to the termination of
Employee’s employment), releasing the Company and certain other persons and
entities from certain claims and other liabilities.


 


(b)                                 The release
described in Section 16.09(a) hereof must be effective and
irrevocable within 55 days after the date of the termination of Employee’s
employment with the Company. 
Notwithstanding any provision in this Agreement to the contrary, if the
payment of any amount or benefit under this Agreement would be subject to
additional taxes and interest under Section 409A of the Code because the
timing of such payment is not delayed as provided in
Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, then
any such payment or benefit that Employee would otherwise be entitled to during
the first six months following the date of Employee’s termination of employment
shall be accumulated and paid or provided, as applicable, on the date that is
six months after the date of Employee’s termination of employment (or if such
date does not fall on a business day of the Company, the next following business
day of the Company), or such earlier date upon which such amount can be paid or
provided under Section 409A of the Code without being subject to such
additional taxes and interest.  If this
Section 16.09(b) becomes applicable such that the payment of any amount
is delayed, any payments that are so delayed shall accrue interest on a
non-compounded basis, from the date such payment would have been made had this
Section 16.09(b) not applied to the actual date of payment, at the
prime rate of interest announced by JPMorgan Chase Bank (or any successor 


 


24

















 


thereto) at its principal
office in New York on the date of Employee’s termination of employment (or the
first business day following such date if such termination does not occur on a
business day) and shall be paid in a lump sum on the actual date of payment of
the delayed payment amount.  Employee
hereby agrees to be bound by the Company’s determination of its “specified employees”
(as such term is defined in Section 409A of the Code) in accordance with
any of the methods permitted under the regulations issued under
Section 409A of the Code.


 


Section 16.10.  Full Settlement.  If Employee is entitled to
and receives the benefits provided hereunder, performance of the obligations of
the Company hereunder will constitute full settlement of all claims that
Employee might otherwise assert against the Company on account of his
termination of employment.


 


Section 16.11.  Unfunded Obligation.  The obligation to pay amounts
under this Agreement is an unfunded obligation of the Company, and no such
obligation shall create a trust or be deemed to be secured by any pledge or
encumbrance on any property of the Company.


 


Section 16.12.  No Right to Continued Employment.  Employee and the Company
recognize and agree that subject to the terms of this Agreement (including the
notice provisions of Section 7.02), (i) the Company may terminate
Employee’s employment at any time, for any reason or no reason at all and (ii) Employee
may terminate his employment at any time, for any reason or no reason at all.


 


Section 16.13.  Withholding of Taxes and Other Employee
Deductions.  The Company may
withhold from any benefits and payments made pursuant to this Agreement
(whether actually or constructively made to Employee or treated as included in
Employee’s income under Section 409A of the Code) all federal, state,
city, foreign and other applicable taxes and withholdings as may be required
pursuant to any law or governmental regulation or ruling and all other
customary deductions made with respect to the Company’s employees generally.


 


Section 16.14.  Number and Gender.  Wherever appropriate herein,
words used in the singular shall include the plural and the plural shall
include the singular.  The masculine
gender where appearing herein shall be deemed to include the feminine gender.


 


Section 16.15.  Entire Agreement.  This Agreement, including
the Annexes and Exhibits attached hereto, constitutes the entire agreement of
the parties with regard to the subject matter hereof and supersedes any and all
prior understandings, agreements or correspondence between the parties.  Any modification of this Agreement will be
effective only if it is in writing and signed by the party to be charged.


 


25

















 


IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date and year first written
above.


 


	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JAMES H. PAINTER

  
	
   

  	
   

  	
  Name:

  	
  James H. Painter

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COBALT INTERNATIONAL ENERGY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SAMUEL H. GILLESPIE

  
	
   

  	
   

  	
  Name:

  	
  Samuel H. Gillespie

  
	
   

  	
   

  	
  Title:

  	
  General Counsel and Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COBALT INTERNATIONAL ENERGY, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SAMUEL H. GILLESPIE

  
	
   

  	
   

  	
  Name:

  	
  Samuel H. Gillespie

  
	
   

  	
   

  	
  Title:

  	
  General Counsel and Executive Vice President

  



 


26














 


ANNEX I


 


ACCREDITED INVESTOR
REPRESENTATIONS


 


Employee hereby represents and warrants that
he qualifies as an “accredited investor”
(as defined in Regulation D of the Securities Act of 1933) by satisfying one or
more of the following criteria:


 


(i)                                   Employee’s
individual net worth or joint net worth with Employee’s spouse exceeds
$1,000,000; or


 


(ii)                                Employee has
individual income in excess of $200,000 in each of the two most recent years or
joint income with Employee’s spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in the
current year.


 


Employee is acquiring interests in the
Partnership and / or shares of Company common stock for investment for his own
account and not with a view to, or for sale in connection with, any
distribution thereof and hereby agrees not to sell any shares of Company common
stock in violation of the Federal securities laws.


 


I-1

















 


ANNEX II


 


TRANSFER RESTRICTIONS


 


Employee agrees not to Transfer prior to the
Termination Date the Specified Number of the shares of Company common stock
issued to the Employee upon conversion of Class A and Class B
Interests (as defined in the Partnership Agreement) in connection with the
IPO.  Employee will have the discretion
to determine, from time to time, which specific shares of Company common stock
are subject to this limitation.


 


For purposes of this agreement, the following terms
have the following meanings:


 


“Specified Number”
means, as of any date, a number of shares equal to the sum of


 


(a) the product of 80% (or on or after a Change in
Control, the lesser of 80% and the remainder set forth in (x) below) and
the aggregate number of shares of Company common stock issued to Employee upon
conversion of Class B Interests in connection with the IPO, plus


 


(b) the product of (x) one minus a fraction,
the numerator of which is the aggregate number of shares of Company common
stock owned by the Sponsors immediately after the closing of the IPO and sold
by the Sponsors after the closing of the IPO and prior to such date (other than
with respect to any shares of common stock sold by any Sponsor to any of its
Affiliates), and the denominator of which is the aggregate number of shares of
Company common stock owned by the Sponsors immediately after the closing of the
IPO, and (y) the aggregate number of shares of Company common stock issued
to Employee upon conversion of Class A Interests in connection with the
IPO.


 


If,
at any time prior to the Termination Date, the outstanding shares of Company
common stock shall be changed into a different number of shares or a different
class (including by reason of any reclassification, recapitalization, stock
split (including reverse stock split) or combination, exchange or readjustment
of shares, or any stock dividend or distribution paid in stock thereon with a
record date during such period or any similar transaction), the calculation of
the Specified Number shall be appropriately adjusted.


 


“Sponsors” shall have the meaning as set forth in the
Company’s certificate of incorporation as of the closing of the IPO.


 


II-1

















 


“Termination Date” means the earliest of (i) the fifth
anniversary of the closing of the IPO, (ii) the date of termination of
employment with the Company other than a termination by the Company for Cause, (iii) the
first date on which a Change in Control occurs; provided
that if prior to the date of such Change in Control, the Company or the
acquiror requests in writing that Employee continue to provide services to the
Company (or the successor or surviving entity) for a specified period not to
exceed 12 months after the Change in Control, the Termination Date shall not
expire on the date of the Change in Control but shall expire on the earliest of
(x) the last day of the requested period, (y) the date provided in
clause (i) or (z) the date, if any, of the termination of employment
by the Company (or the successor or surviving entity) without Cause, by
Employee for Good Reason or due to Employee’s death or Disability or (iv) the
first date on which the Sponsors have sold a number of shares of Company common
stock equal to the aggregate number owned by the Sponsors immediately after the
closing of the IPO (other than with respect to any shares of common stock sold
by any Sponsor to any of its Affiliates).


 


“Transfer” means (a) offer, sell, pledge, or hypothecate
any legal or beneficial interest, including the grant of an option or other
right or otherwise transfer or enter into an agreement to do so or (b) entry
into any hedge, swap or any other agreement that transfers, in whole or in
part, any of the economic consequences of ownership (whether such transaction
is settled by delivery of cash, shares or otherwise).


 


All capitalized terms defined in the agreement to
which this Annex is attached and used but not otherwise defined herein are used
as therein defined.


 


Notwithstanding the foregoing, Employee may
Transfer:


 


(i)                                                       any shares of
Company common stock issued to Employee upon conversion of Class A and Class B
Interests in connection with the IPO in excess of the Specified Number, so long
as such shares are not Restricted Shares (as defined in the Award Agreement).


 


(ii)                                                    any shares of
Company common stock issued to Employee upon conversion of Class A and Class B
Interests in connection with the IPO (including all or a portion of the
Specified Number of such shares):


 


(a) by will or the laws of descent and distribution,


 


(b) by gift to a spouse, former spouse, lineal ancestor, lineal
descendant, legally adopted child, sibling or lineal 


 


2

















 


descendant or legally adopted child of a sibling of Employee or a trust
or other entity for the primary benefit of Employee or any such persons if the
transferee agrees in writing to be bound by the provisions of this agreement,
or


 


(c) to any institution qualified as tax-exempt under Section 501(c)(3) of
the Internal Revenue Code of 1986 if the institution agrees in writing to be
bound by the provisions of this agreement.


 


(iii)                                                 with the
consent of the Compensation Committee of the Company’s board of directors
(which consent will not be unreasonably withheld), a number of shares of
Company common stock, in addition to the shares otherwise transferable pursuant
to (i) above, necessary to pay income taxes arising from the vesting of
any Restricted Shares issued to Employee upon conversion of Class B
Interests in connection with the IPO.


 


(iv)                                                if the
Company’s board of directors (or a committee thereof) in its reasonable
judgment makes a good faith determination that Employee has incurred an
unforeseeable emergency resulting in severe financial hardship, then Employee
may sell a number of shares of Company common stock reasonably necessary to
satisfy the emergency need (which may include amounts necessary to pay Federal,
state, local or foreign income and employment taxes reasonably anticipated to
result from the sale), such number to be determined through the good faith
consultation of the Company’s board of directors and Employee; provided that, in all cases, any such sale shall be made
only from shares of Company common stock with respect to which Employee has a
100% vested and nonforfeitable interest.


 


3

















 


EXHIBIT
A


 


FORM OF
RESTRICTED STOCK AWARD AGREEMENT — CLASS C INTERESTS


 


COBALT
INTERNATIONAL ENERGY, INC.


LONG
TERM INCENTIVE PLAN


 


Restricted
Stock Award Agreement


IPO Award — Class C
Interests


 


You have been granted restricted stock (this “Award”) on the following terms and subject
to the provisions of Attachment A and the Cobalt Energy
International, Inc. Long Term Incentive Plan (the “Plan”). 
Unless defined in this Award agreement (including Attachment A, this “Agreement”), capitalized terms will have
the meanings assigned to them in the Plan. 
In the event of a conflict among the provisions of the Plan, this
Agreement and any descriptive materials provided to you, the provisions of the
Plan will prevail.


 


	
  Participant

  	
   

  	
  [Full name]

  
	
   

  	
   

  	
   

  
	
  Number of Shares Underlying
  Award

  	
   

  	
  [·] Shares (the “Restricted Shares”)

  
	
   

  	
   

  	
   

  
	
  Grant Date

  	
   

  	
  [Date of closing of IPO]

  
	
   

  	
   

  	
   

  
	
  Vesting

  	
   

  	
  Subject to Section 3 of Attachment A, the
  Restricted Shares shall fully vest on [January 1, 2013](1) [fifth
  anniversary of closing of IPO](2) (the “Scheduled Vesting Date”) if the Participant does not
  experience a Termination of Service at any time prior to the Scheduled
  Vesting Date (the “Service Condition”).

  



 






(1) For Class C Interests currently
outstanding.


 


(2) For Class C Interests available for
grant in connection with IPO.


 


A-1

















 


Attachment A


 


Restricted Stock Award Agreement


Terms and Conditions


 


Grant to:  [Full name]


 


Section 1.  Grant of
Restricted Stock Award. 
Subject to the terms and conditions of the Plan and this Agreement, the
Company hereby grants Restricted Stock to the Participant on the Grant Date on
the terms set forth on the cover page of this Agreement, as more fully
described in this Attachment A.  This
Award is granted under the Plan, which is incorporated herein by this reference
and made a part of this Agreement.


 


Section 2.  Issuance
of Shares.


 


(a)                                  The Restricted
Shares shall be evidenced by book-entry registration; provided,
however, that the Committee may determine that the Restricted Shares
shall be evidenced in such other manner as it deems appropriate, including the
issuance of a stock certificate or certificates.  In the event that any stock certificate is
issued in respect of the Restricted Shares, such certificate shall (i) be
registered in the name of the Participant, (ii) bear an appropriate legend
referring to the terms, conditions and restrictions applicable to the
Restricted Shares and (iii) be held in custody by the Company.


 


(b)                                 Voting
Rights.  The Participant shall have
voting rights with respect to the Restricted Shares.


 


(c)                                  Dividends.  All cash and other dividends and
distributions, if any, that are paid with respect to any Restricted Shares
shall be withheld by the Company and paid to the Participant, without interest,
only when, and if, the Restricted Shares become vested in accordance with this
Agreement.


 


(d)                                 Transferability.  Unless and until the Restricted Shares become
vested in accordance with this Agreement, the Restricted Shares shall not be
assigned, sold, transferred or otherwise be subject to alienation by the
Participant.


 


(e)                                  Section 83(b) Election.  If the Participant chooses, the Participant
may make an election under Section 83(b) of the Code with respect to
the Restricted Shares, which would cause the Participant currently to recognize
income for U.S. federal income tax purposes in an amount equal to the excess
(if any) of the fair market value of the Restricted Shares (determined as of
the Grant Date) over the amount, if any, that the Participant paid for the
Restricted Shares, which excess will be subject to U.S. federal income
tax.  The form for making a Section 83(b) election is attached as
Attachment B. 
The Participant 


 


2

















 


acknowledges that (i) the Participant is solely
responsible for the decision whether or not to make a Section 83(b) election,
and the Company is not making any recommendation with respect thereto, (ii) it
is his or her sole responsibility to timely file the Section 83(b) election
within 30 days after the Grant Date, if the Participant decides to make such
election, and (iii) if the Participant does not make a valid and timely Section 83(b) election,
the Participant will be required to recognize ordinary income at the time of
vesting on any future appreciation on the Restricted Shares.


 


(f)                                    Withholding
Requirements.  The Company
may withhold any tax (or other governmental obligation) that becomes due with
respect to the Restricted Shares (or any dividend or distribution thereon), and
the Participant shall make arrangements satisfactory to the Company to enable
the Company to satisfy all such withholding requirements.  Notwithstanding the foregoing, the Committee
may permit, in its sole discretion, the Participant to satisfy any such
withholding requirement by transferring to the Company pursuant to such
procedures as the Committee may require, effective as of the date on which a
withholding obligation arises, a number of vested Shares owned and designated
by the Participant having an aggregate fair market value as of such date that
is equal to the minimum amount required to be withheld.  If the Committee permits the Participant to
satisfy any such withholding requirement pursuant to the preceding sentence,
the Company shall remit to the Internal Revenue Service and appropriate state
and local revenue agencies, for the credit of the Participant, an amount of
cash withholding equal to the fair market value of the Shares transferred to the
Company as provided above.


 


Section 3.  Vesting of
Restricted Shares.


 


(a)                                  Termination
of Service.


 


(i)                                     Death
or Disability.  In the
event of the Participant’s Termination of Service at any time due to the
Participant’s death or Disability, the Restricted Shares shall fully vest as of
the date of such termination.


 


(ii)                                  Any
Other Termination of Service.  In the event of the Participant’s Termination
of Service at any time for any reason (other than due to the Participant’s
death or Disability), the Restricted Shares shall be forfeited in their
entirety as of the date of such termination without any payment to the
Participant.


 


Notwithstanding
the foregoing, in the event of the Participant’s Termination of Service other
than by the Company for Cause, the Committee may, in its sole discretion,
accelerate the vesting or waive any term or condition (including the Service
Condition) of this Agreement, subject to such terms and 


 


3

















 


conditions
as the Committee deems appropriate, with respect to all or a portion of the
Restricted Shares.


 


(b)                                 Change
in Control.  If a Change
in Control occurs at any time, the Restricted Shares shall fully vest as of the
date of such Change in Control.


 


(c)                                  Committee’s
Failure to Grant Specified Awards.  The Restricted Shares shall fully vest as of
the third anniversary of the IPO if, during the period commencing on the Grant
Date and ending on the third anniversary of the IPO, the Committee has not
granted Awards under the Plan with terms substantially similar to the terms set
forth in the form of restricted stock award agreement appended to the
Reorganization Agreement as Exhibit A-3 (other than Section 4(c) of
such agreement) with respect to [insert number equal to 95% of the excess of
the total number of Shares issuable with respect to 100,000 Class D Units
less the number of shares issued to Class D holders upon the IPO] Shares
in the aggregate.  For the avoidance of
doubt, IPO Awards granted under the Plan shall not constitute Awards granted
for purposes of this Section 4(c)).


 


(d)                                 Effect
of Vesting.  Subject to
the provisions of this Agreement, upon the vesting of Restricted Shares, the
restrictions under this Award with respect to such Shares shall lapse, and
subject to any applicable Lock Up Agreement, such Shares shall be fully
assignable, saleable and transferable by the Participant, and the Company shall
deliver such Shares, along with any dividends and other distributions that were
paid with respect to such Shares but withheld pending vesting, to the
Participant.  Subject to any applicable
Lock Up Agreement, such Shares shall be delivered by transfer to the Depository
Trust Company for the benefit of the Participant or by delivery of a stock
certificate registered in the Participant’s name.


 


Section 4.  Miscellaneous
Provisions.


 


(a)                                  Notices. All notices,
requests and other communications under this Agreement shall be in writing and
shall be delivered in person (by courier or otherwise), mailed by certified or
registered mail, return receipt requested, or sent by facsimile transmission,
as follows:


 


if
to the Company, to:


 


Cobalt
International Energy, Inc.


Two
Post Oak Central


1980
Post Oak Blvd., Suite 1200


Attention:
[General Counsel]


Facsimile:
[number]


 


4

















 


if
to the Participant, to the address that the Participant most recently provided
to the Company,


 


or
to such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto.  All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. on a business day in the place of
receipt.  Otherwise, any such notice,
request or communication shall be deemed received on the next succeeding
business day in the place of receipt.


 


(b)                                 Entire
Agreement.  This
Agreement, the Plan, and any other agreements referred to herein and therein
and any schedules, exhibits and other documents referred to herein or therein,
constitute the entire agreement and understanding between the parties in
respect of the subject matter hereof and supersede all prior and
contemporaneous arrangements, agreements and understandings, both oral and
written, whether in term sheets, presentations or otherwise, between the
parties with respect to the subject matter hereof.


 


(c)                                  Amendment;
Waiver.  No amendment or modification
of any provision of this Agreement shall be effective unless signed in writing
by or on behalf of the Company and the Participant, except that the Company may
amend or modify the Agreement without the Participant’s consent in accordance
with the provisions of the Plan or as otherwise set forth in this
Agreement.  No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition whether of like or different nature.  Any amendment or modification of or to any
provision of this Agreement, or any waiver of any provision of this Agreement,
shall be effective only in the specific instance and for the specific purpose
for which made or given.


 


(d)                                 Assignment.  Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Participant.


 


(e)                                  Successors
and Assigns; No Third Party Beneficiaries.  This Agreement shall inure to the benefit of
and be binding upon the Company and the Participant and their respective heirs,
successors, legal representatives and permitted assigns.  Nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the Company and the
Participant, and their respective heirs, successors, legal representatives and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.


 


(f)                                    Counterparts.  This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.


 


5

















 


(g)                                 Participant
Undertaking.  The
Participant agrees to take whatever additional action and execute whatever
additional documents the Company may deem necessary or advisable to carry out
or give effect to any of the obligations or restrictions imposed on either the
Participant or the Restricted Shares pursuant to the provisions of this
Agreement.


 


(h)                                 Plan.  The Participant acknowledges and understands
that material definitions and provisions concerning the Restricted Shares and
the Participant’s rights and obligations with respect thereto are set forth in
the Plan.  The Participant has read
carefully, and understands, the provisions of the Plan.


 


(i)                                     Governing
Law.  The Agreement shall be
governed by the laws of the State of Delaware, without application of the
conflicts of law principles thereof.


 


(j)                                     Jurisdiction.  The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby (whether brought by any party or any of its affiliates or
against any party or any of its affiliates) shall be brought in the Delaware
Chancery Court or, if such court shall not have jurisdiction, any federal court
located in the State of Delaware or other Delaware state court, and each of the
parties hereby irrevocably consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum.  Process in any such suit, action
or proceeding may be served on each party anywhere in the world, whether within
or without the jurisdiction of any such court. 
Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 4(a) shall be deemed
effective service of process on such party.


 


(k)                                  WAIVER
OF JURY TRIAL.  EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.


 


6

















 


IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.


 


 


	
   

  	
  COBALT
  INTERNATIONAL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name
  of Participant]

  



 


7














 


Attachment
B


 


SECTION 83(b) ELECTION


 


	
   

  	
  This
  statement is being made under Section 83(b) of the Internal Revenue
  Code, pursuant to Treas. Reg. Section 1.83-2.

  
	
   

  	
   

  
	
  (1)

  	
  The
  taxpayer performing the services is:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Address:

  
	
   

  	
  Social
  Security Number:

  
	
   

  	
   

  
	
  (2)

  	
  The
  property with respect to which the election is being made is                     
  shares (the “Restricted Shares”) of common
  stock, par value $.01 per share, of Cobalt
  International Energy, Inc. (the “Company”)

  
	
   

  	
   

  
	
  (3)

  	
  The
  Restricted Shares were transferred on                                   .

  
	
   

  	
   

  
	
  (4)

  	
  The
  taxable year in which the election is being made is the calendar year
                     .

  
	
   

  	
   

  
	
  (5)

  	
  The
  Restricted Shares are not transferable and are subject to a substantial risk
  of forfeiture within the meaning of Section 83(c)(1) of the
  Internal Revenue Code until and unless specified conditions are satisfied or
  a specified event occurs, in each case as set forth in the Company’s Long Term Incentive Plan and the
  Restricted Stock Award Agreement pursuant to which the Restricted Shares were
  issued.

  
	
   

  	
   

  
	
  (6)

  	
  The
  fair market value of the Restricted Shares at the time of transfer
  (determined without regard to any restriction other than a restriction which
  by its terms will never lapse) is $                    per share.

  
	
   

  	
   

  
	
  (7)

  	
  The
  amount paid by the taxpayer for the Restricted Shares is
  $                    per share.

  
	
   

  	
   

  
	
  (8)

  	
  A
  copy of this statement has been furnished to the Company, for whom the
  taxpayer will be performing services underlying the transfer of the
  Restricted Shares.

  
	
   

  	
   

  
	
  (9)

  	
  This
  statement is executed on                                           .

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Spouse
  (if any)

  	
   

  	
  Taxpayer

  
	
   

  	
   

  
	
   

  	
  This
  statement must be filed with the Internal Revenue Service Center with which
  you filed your last U.S. federal income tax return within 30 days after the
  grant date of the Restricted Stock Award Agreement.  This filing should be made by registered or
  certified mail, return receipt requested. 
  You are also required to (i) deliver a copy of this statement to
  the Company and (ii) attach a copy of this statement to your federal
  income tax return for the taxable year that includes the grant date (and may
  also be required to

  



 


8

















 


	
   

  	
  attach
  a copy of this statement to your state income tax return for such year).  You should also retain a copy of this
  statement for your records.

  



 


9

















 


EXHIBIT
B


 


FORM OF
RESTRICTED STOCK AWARD AGREEMENT — CLASS D INTERESTS


 


COBALT
INTERNATIONAL ENERGY, INC.


LONG
TERM INCENTIVE PLAN 

Restricted Stock Award Agreement


IPO Award — Class D
Interests


 


You have been granted restricted stock (this “Award”) on the following terms and subject
to the provisions of Attachment A and the Cobalt Energy
International, Inc. Long Term Incentive Plan (the “Plan”). 
Unless defined in this Award agreement (including Attachment A, this “Agreement”), capitalized terms will have
the meanings assigned to them in the Plan. 
In the event of a conflict among the provisions of the Plan, this
Agreement and any descriptive materials provided to you, the provisions of the
Plan will prevail.


 


	
  Participant

  	
   

  	
  [Full name]

  
	
   

  	
   

  	
   

  
	
  Number of Shares Underlying
  Award

  	
   

  	
  [·] Shares (the “Restricted Shares”)

  
	
   

  	
   

  	
   

  
	
  Grant Date

  	
   

  	
  [Date of closing of IPO]

  
	
   

  	
   

  	
   

  
	
  Vesting

  	
   

  	
  Subject to Section 3 of Attachment A, the
  Restricted Shares shall fully vest on [fifth anniversary of closing of IPO]
  (the “Scheduled Vesting Date”)
  if each of the following conditions is satisfied:

   

  ·                  the Participant does not experience a Termination of
  Service at any time prior to the Scheduled Vesting Date (the “Service Condition”); and

   

   ·               the average of the volume weighted
  average price of a Share for each trading day during the 90-day period ending
  on the day before the Scheduled Vesting Date equals or exceeds $[price to
  public in IPO] (the “Value Condition”).
  The “volume weighted average price” of a Share shall be computed based on
  composite trading between 9:30 a.m. and 4:00 p.m. New York City
  time on the applicable date (i) as reported by The Bloomberg
  Professional Service on the Company’s page under the “VWAP” field, at
  4:00 p.m. on such date; or (ii) if the volume weighted

  



 


B-1

















 


	
   

  	
   

  	
  average price is not available from The Bloomberg
  Professional Service in such manner, as reported from a different third party
  source to which the Company has access on such date or, if the Company does
  not have access to such a third party source, the high and low sale prices
  (regular way) of a Share on such date.

  



 


2

















 


Attachment A


 


Restricted Stock Award Agreement


Terms and Conditions


 


Grant to:  [Full name]


 


Section 1.  Grant of
Restricted Stock Award. 
Subject to the terms and conditions of the Plan and this Agreement, the
Company hereby grants Restricted Stock to the Participant on the Grant Date on
the terms set forth on the cover page of this Agreement, as more fully
described in this Attachment A.  This
Award is granted under the Plan, which is incorporated herein by this reference
and made a part of this Agreement.


 


Section 2.  Issuance
of Shares.


 


(a)                                  The Restricted
Shares shall be evidenced by book-entry registration; provided,
however, that the Committee may determine that the Restricted Shares
shall be evidenced in such other manner as it deems appropriate, including the
issuance of a stock certificate or certificates.  In the event that any stock certificate is
issued in respect of the Restricted Shares, such certificate shall (i) be
registered in the name of the Participant, (ii) bear an appropriate legend
referring to the terms, conditions and restrictions applicable to the
Restricted Shares and (iii) be held in custody by the Company.


 


(b)                                 Voting
Rights.  The Participant shall have
voting rights with respect to the Restricted Shares.


 


(c)                                  Dividends.  All cash and other dividends and
distributions, if any, that are paid with respect to any Restricted Shares
shall be withheld by the Company and paid to the Participant, without interest,
only when, and if, the Restricted Shares become vested in accordance with this
Agreement.


 


(d)                                 Transferability.  Unless and until the Restricted Shares become
vested in accordance with this Agreement, the Restricted Shares shall not be
assigned, sold, transferred or otherwise be subject to alienation by the
Participant.


 


(e)                                  Section 83(b) Election.  If the Participant chooses, the Participant
may make an election under Section 83(b) of the Code with respect to
the Restricted Shares, which would cause the Participant currently to recognize
income for U.S. federal income tax purposes in an amount equal to the excess
(if any) of the fair market value of the Restricted Shares (determined as of
the Grant Date) over the amount, if any, that the Participant paid for the
Restricted Shares, which excess will be subject to U.S. federal income
tax.  The form for making a Section 83(b) election is attached as
Attachment B. 
The Participant


 


3

















 


acknowledges that (i) the Participant is solely
responsible for the decision whether or not to make a Section 83(b) election,
and the Company is not making any recommendation with respect thereto, (ii) it
is his or her sole responsibility to timely file the Section 83(b) election
within 30 days after the Grant Date, if the Participant decides to make such
election, and (iii) if the Participant does not make a valid and timely Section 83(b) election,
the Participant will be required to recognize ordinary income at the time of vesting
on any future appreciation on the Restricted Shares.


 


(f)                                    Withholding
Requirements.  The Company
may withhold any tax (or other governmental obligation) that becomes due with
respect to the Restricted Shares (or any dividend or distribution thereon), and
the Participant shall make arrangements satisfactory to the Company to enable
the Company to satisfy all such withholding requirements.  Notwithstanding the foregoing, the Committee
may permit, in its sole discretion, the Participant to satisfy any such
withholding requirement by transferring to the Company pursuant to such
procedures as the Committee may require, effective as of the date on which a
withholding obligation arises, a number of vested Shares owned and designated
by the Participant having an aggregate fair market value as of such date that
is equal to the minimum amount required to be withheld.  If the Committee permits the Participant to
satisfy any such withholding requirement pursuant to the preceding sentence,
the Company shall remit to the Internal Revenue Service and appropriate state
and local revenue agencies, for the credit of the Participant, an amount of
cash withholding equal to the fair market value of the Shares transferred to
the Company as provided above.


 


Section 3.  Vesting of Restricted
Shares.


 


(a)                                  Termination
of Service.


 


(i)                                     Death
or Disability.  In the
event of the Participant’s Termination of Service at any time due to the
Participant’s death or Disability, (x) the Service Condition shall be
deemed to be satisfied as of the date of such termination and (y) if the
Value Condition is satisfied as of the Scheduled Vesting Date, the Restricted
Shares shall fully vest as of such date.


 


(ii)                                  Any
Other Termination of Service.  In the event of the Participant’s Termination
of Service at any time for any reason (other than due to the Participant’s
death or Disability), the Restricted Shares shall be forfeited in their
entirety as of the date of such termination without any payment to the
Participant.


 


Notwithstanding
the foregoing, in the event of the Participant’s Termination of Service other
than by the Company for Cause, the Committee may,


 


4

















 


in
its sole discretion, accelerate the vesting or waive any term or condition
(including the Service Condition and/or Value Condition) of this Agreement,
subject to such terms and conditions as the Committee deems appropriate, with
respect to all or a portion of the Restricted Shares.


 


(b)                                 Change
in Control.  If a Change
in Control occurs at any time and the Value Condition is satisfied as of the
date of such Change in Control (as described below), the Restricted Shares
shall fully vest as of the date of such Change in Control; provided that
if prior to the date of such Change in Control, the Company or the acquirer
requests in writing that the Participant continue to provide services to the
Company (or the successor or surviving entity) for a specified period not to
exceed 12 months after such Change in Control, the Restricted Shares shall vest
as of the earliest of (x) the last day of such requested period, (y) the
Scheduled Vesting Date or (z) the date, if any, of the Participant’s
Termination of Service by the Company (or the successor or surviving entity)
without Cause, by the Participant for Good Reason or due to the Participant’s
death or Disability (such earliest date, the “Change in Control Vesting
Date”).  The Restricted Shares shall be
forfeited in their entirety without any payment to the Participant upon his or
her Termination of Service by the Company (or the successor or surviving
entity) for Cause or by the Participant without Good Reason at any time prior
to the Change in Control Vesting Date. 
If a Change in Control occurs at any time and the Value Condition is not
satisfied as of the date of such Change in Control, the Restricted Shares shall
be forfeited in their entirety as of the date of such Change in Control without
any payment to the Participant.


 


If
a Change in Control results from the occurrence of an event within the meaning
of:


 


(i)                                     clause (i) or
(iii) of the definition of “Change in Control,” the Value Condition shall
be deemed to be satisfied as of the date of such Change in Control if the price
or implied price per Share in such Change in Control equals or exceeds $[price
to public in IPO]; or


 


(ii)                                  clause (ii) of
the definition of “Change in Control,” the Value Condition shall be deemed to
be satisfied if the average of the volume weighted average price of a Share for
each trading day during the 90-day period ending on the day before such Change
in Control equals or exceeds $[price to public in IPO].


 


(c)                                  Committee’s
Failure to Grant Specified Awards.  The Restricted Shares shall fully vest as of
the third anniversary of the IPO if, during the period commencing on the Grant
Date and ending on the third anniversary of the IPO, the Committee has not
granted Awards under the Plan with terms substantially similar to the terms set
forth in this Agreement (other than this Section 4(c)) with


 


5

















 


respect
to [insert number equal to 95% of the excess of the total number of Shares
issuable with respect to 100,000 Class D Units less the number of Shares
issued to Class D holders upon the IPO] Shares in the aggregate.  For the avoidance of doubt, IPO Awards
granted under the Plan shall not constitute Awards granted for purposes of this
Section 4(c)).


 


(d)                                 Effect
of Vesting.  Subject to
the provisions of this Agreement, upon the vesting of Restricted Shares, the
restrictions under this Award with respect to such Shares shall lapse, and
subject to any applicable Lock Up Agreement, such Shares shall be fully
assignable, saleable and transferable by the Participant, and the Company shall
deliver such Shares, along with any dividends and other distributions that were
paid with respect to such Shares but withheld pending vesting, to the
Participant.  Subject to any applicable
Lock Up Agreement, such Shares shall be delivered by transfer to the Depository
Trust Company for the benefit of the Participant or by delivery of a stock
certificate registered in the Participant’s name.


 


Section 4.  Miscellaneous
Provisions.


 


(a)                                  Notices. All notices,
requests and other communications under this Agreement shall be in writing and
shall be delivered in person (by courier or otherwise), mailed by certified or
registered mail, return receipt requested, or sent by facsimile transmission,
as follows:


 


if
to the Company, to:


 


Cobalt
International Energy, Inc.


Two
Post Oak Central


1980
Post Oak Blvd., Suite 1200


Attention:
[General Counsel]


Facsimile:
[number]


 


if
to the Participant, to the address that the Participant most recently provided
to the Company,


 


or
to such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto.  All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. on a business day in the place of
receipt.  Otherwise, any such notice,
request or communication shall be deemed received on the next succeeding
business day in the place of receipt.


 


(b)                                 Entire
Agreement.  This
Agreement, the Plan, and any other agreements referred to herein and therein
and any schedules, exhibits and other


 


6

















 


documents
referred to herein or therein, constitute the entire agreement and
understanding between the parties in respect of the subject matter hereof and
supersede all prior and contemporaneous arrangements, agreements and
understandings, both oral and written, whether in term sheets, presentations or
otherwise, between the parties with respect to the subject matter hereof.


 


(c)                                  Amendment;
Waiver.  No amendment or modification
of any provision of this Agreement shall be effective unless signed in writing
by or on behalf of the Company and the Participant, except that the Company may
amend or modify the Agreement without the Participant’s consent in accordance
with the provisions of the Plan or as otherwise set forth in this
Agreement.  No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition whether of like or different nature.  Any amendment or modification of or to any
provision of this Agreement, or any waiver of any provision of this Agreement,
shall be effective only in the specific instance and for the specific purpose
for which made or given.


 


(d)                                 Assignment.  Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Participant.


 


(e)                                  Successors
and Assigns; No Third Party Beneficiaries.  This Agreement shall inure to the benefit of
and be binding upon the Company and the Participant and their respective heirs,
successors, legal representatives and permitted assigns.  Nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the Company and the
Participant, and their respective heirs, successors, legal representatives and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.


 


(f)                                    Counterparts.  This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.


 


(g)                                 Participant
Undertaking.  The
Participant agrees to take whatever additional action and execute whatever
additional documents the Company may deem necessary or advisable to carry out
or give effect to any of the obligations or restrictions imposed on either the
Participant or the Restricted Shares pursuant to the provisions of this
Agreement.


 


(h)                                 Plan.  The Participant acknowledges and understands
that material definitions and provisions concerning the Restricted Shares and
the Participant’s rights and obligations with respect thereto are set forth in
the Plan.  The Participant has read
carefully, and understands, the provisions of the Plan.


 


7

















 


(i)                                     Governing
Law.  The Agreement shall be
governed by the laws of the State of Delaware, without application of the
conflicts of law principles thereof.


 


(j)                                     Jurisdiction.  The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby (whether brought by any party or any of its affiliates or
against any party or any of its affiliates) shall be brought in the Delaware
Chancery Court or, if such court shall not have jurisdiction, any federal court
located in the State of Delaware or other Delaware state court, and each of the
parties hereby irrevocably consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.  Process in any such suit, action
or proceeding may be served on each party anywhere in the world, whether within
or without the jurisdiction of any such court. 
Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 4(a) shall be deemed
effective service of process on such party.


 


(k)                                  WAIVER
OF JURY TRIAL.  EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.


 


8

















 


IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.


 


 


	
   

  	
  COBALT
  INTERNATIONAL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name
  of Participant]

  



 


9














 


Attachment B


 


SECTION 83(b) ELECTION


 


	
   

  	
  This
  statement is being made under Section 83(b) of the Internal Revenue
  Code, pursuant to Treas. Reg. Section 1.83-2.

  
	
   

  	
   

  
	
  (1)

  	
  The
  taxpayer performing the services is:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Address:

  
	
   

  	
  Social
  Security Number:

  
	
   

  	
   

  
	
  (2)

  	
  The
  property with respect to which the election is being made is                     
  shares (the “Restricted Shares”) of common
  stock, par value $.01 per share, of Cobalt
  International Energy, Inc. (the “Company”)

  
	
   

  	
   

  
	
  (3)

  	
  The
  Restricted Shares were transferred on                                   .

  
	
   

  	
   

  
	
  (4)

  	
  The
  taxable year in which the election is being made is the calendar year
                     .

  
	
   

  	
   

  
	
  (5)

  	
  The
  Restricted Shares are not transferable and are subject to a substantial risk
  of forfeiture within the meaning of Section 83(c)(1) of the
  Internal Revenue Code until and unless specified conditions are satisfied or
  a specified event occurs, in each case as set forth in the Company’s Long Term Incentive Plan and the
  Restricted Stock Award Agreement pursuant to which the Restricted Shares were
  issued.

  
	
   

  	
   

  
	
  (6)

  	
  The
  fair market value of the Restricted Shares at the time of transfer
  (determined without regard to any restriction other than a restriction which
  by its terms will never lapse) is $                    per share.

  
	
   

  	
   

  
	
  (7)

  	
  The
  amount paid by the taxpayer for the Restricted Shares is
  $                    per share.

  
	
   

  	
   

  
	
  (8)

  	
  A
  copy of this statement has been furnished to the Company, for whom the
  taxpayer will be performing services underlying the transfer of the
  Restricted Shares.

  
	
   

  	
   

  
	
  (9)

  	
  This
  statement is executed on                                           .

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   Spouse
  (if any)

  	
   

  	
  Taxpayer

  
	
   

  	
   

  
	
   

  	
  This
  statement must be filed with the Internal Revenue Service Center with which
  you filed your last U.S. federal income tax return within 30 days after the
  grant date of the Restricted Stock Award Agreement.  This filing should be made by registered or
  certified mail, return receipt requested. 
  You are also required to (i) deliver a copy of this statement to
  the Company and (ii) attach a copy of this statement to your federal
  income tax return for the taxable year that includes the grant date (and may
  also be required to 

  



 


10

















 


	
   

  	
  attach
  a copy of this statement to your state income tax return for such year).  You should also retain a copy of this
  statement for your records.

  



 


11

















 


EXHIBIT C


 


FORM OF RELEASE


 


For and in consideration of certain payments and
other benefits due to [·] (“Employee”) pursuant to the Employment Agreement (the “Employment Agreement”) dated as of [·], 20    , between Cobalt
International Energy, Inc., (the “Company”) and
Employee, and for other good and valuable consideration, Employee hereby
agrees, for Employee, Employee’s spouse and child or children (if any),
Employee’s heirs, beneficiaries, devisees, executors, administrators,
attorneys, personal representatives, successors and assigns, to forever
release, discharge and covenant not to sue the Company and its divisions,
affiliates, subsidiaries, parents, branches, predecessors, successors, assigns,
and, with respect to such entities, their officers, directors, trustees,
employees, agents, shareholders, administrators, general or limited partners,
members, representatives, attorneys, insurers and fiduciaries, past, present
and future (the “Released Parties”) from any and
all claims of any kind arising out of, or related to, his employment with the
Company, its affiliates or subsidiaries (collectively, with the Company, the “Affiliated Entities”) or Employee’s separation from
employment with the Affiliated Entities, which Employee now has or may have
against the Released Parties, whether known or unknown to Employee, by reason
of facts which have occurred on or prior to the date that Employee has signed
this Release.  Such released claims
include, without limitation, any and all claims relating to the foregoing under
federal, state or local laws pertaining to employment, including, without
limitation, the Age Discrimination in Employment Act, Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. Section 2000e et seq., the Fair Labor Standards Act, as amended, 29 U.S.C.
Section 201 et seq., the Americans with
Disabilities Act, as amended, 42 U.S.C. Section 12101 et seq.
the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981
et seq., the Rehabilitation Act of 1973,
as amended, 29 U.S.C. Section 701 et seq., the
Family and Medical Leave Act of 1992, 29 U.S.C. Section 2601 et seq., and any and all state or local laws regarding
employment discrimination, the payment of wages and/or federal, state or local
laws of any type or description regarding employment, including but not limited
to any claims arising from or derivative of Employee’s employment with the
Affiliated Entities, as well as any and all such claims under state contract or
tort law.  By signing this Release,
Employee is bound by it.  Anyone who
succeeds to Employee’s rights and responsibilities, such as heirs or the
executor of Employee’s estate, is also bound by this Release.  This Release also applies to any claims
brought by any person or agency or class action under which Employee may have a
right or benefit.  Notwithstanding this
release of liability, nothing in this Release prevents Employee from filing any
non-legally waivable claim (including a challenge to the validity of this
Release) with the Equal Employment Opportunity Commission (the “EEOC”) or comparable state or local agency or participating
in any 


 


C-1

















 


investigation or proceeding conducted by the
EEOC or comparable state or local agency; however, Employee understands and
agrees that Employee is waiving any and all rights to recover any monetary or
personal relief or recovery as a result of such EEOC or comparable state or
local agency proceeding or subsequent legal actions.


 


Employee has read this Release carefully,
acknowledges that Employee has been given at least [21] [45] days to consider
all of its terms and has been and is hereby advised to consult with an attorney
and any other advisors of Employee’s choice prior to executing this Release,
and Employee fully understands that by signing below Employee is voluntarily
giving up any right which Employee may have to sue or bring any other claims
against the Released Parties, including any rights and claims under the Age
Discrimination in Employment Act. 
Employee also understands that Employee has a period of seven days after
signing this Release within which to revoke his agreement, and that neither the
Company nor any other person is obligated to make any payments or provide any
other benefits to Employee pursuant to the Severance Agreement until eight days
have passed since Employee’s signing of this Release without Employee’s
signature having been revoked other than any accrued obligations or other
benefits payable pursuant to the terms of the Company’s normal payroll
practices or employee benefit plans. 
Finally, Employee expressly represents that he has not been forced or
pressured in any manner whatsoever to sign this Release, and Employee agrees to
all of its terms voluntarily.


 


Notwithstanding anything else herein to the
contrary, this Release shall not affect: (i) the Company’s obligations
under any compensation or employee benefit plan, program or arrangement
(including, without limitation, obligations to Employee under the Employment
Agreement or any stock option, stock award or agreements or obligations under
any pension, deferred compensation or retention plan) provided by the
Affiliated Entities where Employee’s compensation or benefits are intended to
continue or Employee is to be provided with compensation or benefits, in
accordance with the express written terms of such plan, program or arrangement,
beyond the date of Employee’s termination and (ii) rights to
indemnification Employee may have under (A) applicable law, (B) any
other agreement between Employee and a Released Party and (C) as an
insured under any director’s and officer’s liability insurance policy now or
previously in force.


 


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This Release is final and binding and may not be
changed or modified except in a writing signed by both parties.


 


	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  [Employee]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cobalt
  International Energy, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


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