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                                                                   EXHIBIT 10.13


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                            CALLON PETROLEUM COMPANY





                            2002 STOCK INCENTIVE PLAN







                                FEBRUARY 14, 2002




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                                TABLE OF CONTENTS

<Table>
<S>                                                                                                              <C>

ARTICLE I.  GENERAL...............................................................................................1
     Section 1.1.     Purpose.....................................................................................1
     Section 1.2.     Administration..............................................................................1
     Section 1.3.     Eligibility for Participation...............................................................2
     Section 1.4.     Types of Awards Under Plan..................................................................2
     Section 1.5.     Aggregate Limitation on Awards..............................................................2
     Section 1.6.     Effective Date and Term of Plan.............................................................3
ARTICLE II.  STOCK OPTIONS........................................................................................3
     Section 2.1.     Award of Stock Options......................................................................3
     Section 2.2.     Stock Option Agreements.....................................................................3
     Section 2.3.     Stock Option Price..........................................................................3
     Section 2.4.     Term and Exercise...........................................................................3
     Section 2.5.     Manner of Payment...........................................................................4
     Section 2.6.     Issuance of Certificates....................................................................4
     Section 2.7.     Death, Retirement and Termination of Employment of Optionee.................................4
     Section 2.8.     Effect of Exercise..........................................................................5
     Section 2.9.     No Reduction in Option Price................................................................5
ARTICLE III.  STOCK APPRECIATION RIGHTS...........................................................................5
     Section 3.1.     Award of Stock Appreciation Rights..........................................................5
     Section 3.2.     SAR Agreements..............................................................................5
     Section 3.3.     SAR Exercise Price..........................................................................5
     Section 3.4.     Term and Exercise...........................................................................5
     Section 3.5.     Exercise of SAR.............................................................................6
ARTICLE IV.  BONUS STOCK AWARDS...................................................................................6
     Section 4.1.     Award of Bonus Stock........................................................................6
     Section 4.2.     Bonus Stock Agreements......................................................................6
ARTICLE V.  RESTRICTED STOCK......................................................................................6
     Section 5.1.     Award of Restricted Stock...................................................................6
     Section 5.2.     Restricted Stock Agreements.................................................................6
     Section 5.3.     Stockholder Rights..........................................................................6
     Section 5.4.     Certificates................................................................................6
     Section 5.5.     Performance-Based Awards....................................................................7
     Section 5.6.     Termination of Employment...................................................................7
ARTICLE VI.  RESTRICTED STOCK UNITS...............................................................................7
     Section 6.1.     Award of Restricted Stock Units.............................................................7
     Section 6.2.     Restricted Stock Unit Agreements............................................................7
     Section 6.3.     Stockholder Rights..........................................................................7
     Section 6.4.     Certificates................................................................................7
     Section 6.5.     Performance-Based Awards....................................................................7
     Section 6.6.     Termination of Employment...................................................................8
ARTICLE VII.  PERFORMANCE SHARE AWARDS............................................................................8
     Section 7.1.     Awards Granted by Plan Administrator........................................................8
     Section 7.2.     Amount of Award.............................................................................8
     Section 7.3.     Communication of Award......................................................................8
     Section 7.4.     Amount of Award Payable.....................................................................8
</Table>


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<Table>
<S>                                                                                                              <C>

     Section 7.5.     Adjustments.................................................................................9
     Section 7.6.     Payments of Awards..........................................................................9
     Section 7.7.     Termination of Employment...................................................................9
ARTICLE VIII.  PERFORMANCE UNITS..................................................................................9
     Section 8.1.     Awards Granted by Plan Administrator........................................................9
     Section 8.2.     Amount of Award.............................................................................9
     Section 8.3.     Communication of Award......................................................................9
     Section 8.4.     Amount of Award Payable....................................................................10
     Section 8.5.     Adjustments................................................................................10
     Section 8.6.     Payments of Awards.........................................................................10
     Section 8.7.     Termination of Employment..................................................................10
ARTICLE IX.  MISCELLANEOUS.......................................................................................10
     Section 9.1.     General Restriction........................................................................10
     Section 9.2.     Assignability..............................................................................10
     Section 9.3.     Withholding Taxes..........................................................................11
     Section 9.4.     Right to Terminate Employment..............................................................11
     Section 9.5.     Non-Uniform Determinations.................................................................11
     Section 9.6.     Rights as a Stockholder....................................................................12
     Section 9.7.     Definitions................................................................................12
     Section 9.8.     Leaves of Absence..........................................................................13
     Section 9.9.     Newly Eligible Employees...................................................................13
     Section 9.10.    Adjustments................................................................................13
     Section 9.11.    Changes in the Company's Capital Structure.................................................13
     Section 9.12.    Amendment of the Plan......................................................................15
     Section 9.13.    No Loss of Rights of Grantee of an Award...................................................15
     Section 9.14.    Dividends and Dividend Equivalents.........................................................15
     Section 9.15.    Form and Time of Elections.................................................................15
     Section 9.16.    Deferral...................................................................................15
     Section 9.17.    Vesting and Award Criteria of Performance Shares...........................................15
     Section 9.18.    No Waiver..................................................................................15
</Table>



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                            CALLON PETROLEUM COMPANY

                            2002 STOCK INCENTIVE PLAN


                               ARTICLE I. GENERAL

         SECTION 1.1. PURPOSE. The purposes of this Stock Incentive Plan (the
"Plan") are to: (1) associate the interests of the directors, employees
(including executive officers) and consultants of Callon Petroleum Company and
its Subsidiaries and affiliates (collectively referred to as the "Company")
closely with the stockholders to generate an increased incentive to contribute
to the Company's future success and prosperity, thus enhancing the value of the
Company for the benefit of its stockholders; (2) provide such individuals with a
proprietary ownership interest in the Company commensurate with Company
performance, as reflected in increased stockholder value; (3) maintain
competitive compensation levels thereby attracting and retaining highly
competent and talented directors, employees and consultants; and (4) provide an
incentive to employees for continuous employment with the Company. The Plan is
intended to qualify as a "broadly based" plan under New York Stock Exchange Rule
312.03, or any successor provision. Certain capitalized terms are defined in
Section 9.7.

         SECTION 1.2. ADMINISTRATION.

         (a) The Plan shall be administered by a duly constituted committee of
the Board of Directors consisting of at least two members of the Board of
Directors, each of whom shall be a Non-Employee Director unless otherwise
designated by the Board of Directors. Such administrating committee shall be
referred to herein as the "Plan Administrator." The Plan Administrator may
delegate to one or more executive officers of the Company the power to make
Awards to individuals eligible to participate in the Plan pursuant to Section
1.3 who are not subject to Section 16(a) or 16(b) of the Exchange Act, provided
the Plan Administrator shall fix the maximum amount of such Awards for the group
and the maximum for any one Participant.

         (b) The Plan Administrator shall have the authority, in its sole
discretion and from time to time to:

                  (i) designate the directors, officers, employees and
         consultants of the Company and its Subsidiaries eligible to participate
         in the Plan;

                  (ii) grant Awards provided in the Plan in such form and amount
         as the Plan Administrator shall determine;

                  (iii) impose such limitations, restrictions and conditions,
         not inconsistent with this Plan, upon any such Award as the Plan
         Administrator shall deem appropriate; and

                  (iv) interpret the Plan and any agreement, instrument or other
         document executed in connection with the Plan, adopt, amend and rescind
         rules and regulations relating to the Plan, and make all other
         determinations and take all other action necessary or advisable for the
         implementation and administration of the Plan.

         (c) Decisions and determinations of the Plan Administrator on all
matters relating to the Plan shall be in its sole discretion and shall be final,
conclusive and binding upon all persons, including the



                                       1

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Company, any Participant, any stockholder of the Company, any director, any
employee and any consultant. No member of any committee acting as Plan
Administrator shall be liable for any action taken or decision made relating to
the Plan or any Award thereunder.

         SECTION 1.3. ELIGIBILITY FOR PARTICIPATION. Participants in the Plan
shall be selected by the Plan Administrator from the directors, executive
officers, employees and individuals who act as consultants of the Company and
executive officers, employees and individuals who act as consultants of any
Subsidiary of the Company; provided, however, that during any three-year period
the aggregate number of shares underlying Awards granted to officers and
directors of the Company as defined under Rule 16a-1(f) of the Exchange Act
shall not exceed 50% of the total number of shares underlying the Awards granted
to all employees during such period. Further, this Plan shall be administered at
all times in the manner necessary for the Plan to qualify as a "broadly based"
plan for purposes of the New York Stock Exchange rules.

         SECTION 1.4. TYPES OF AWARDS UNDER PLAN. Awards under the Plan may be
in the form of one or more of the following:

                  (i)   Stock Options, as described in Article II;

                  (ii)  Stock Appreciation Rights, as described in Article III;

                  (iii) Bonus Stock, as described in Article IV;

                  (iv)  Restricted Stock, as described in Article V;

                  (v)   Restricted Stock Units, as described in Article VI;

                  (vi)  Performance Shares, as described in Article VII; and/or

                  (vii) Performance Units, as described in Article VIII.

Awards under the Plan shall be evidenced by an agreement between the Company and
the recipient of the Award ("Award Agreement"), in form and substance
satisfactory to the Plan Administrator, and not inconsistent with this Plan.
Award Agreements may provide such vesting schedules for Stock Options, Bonus
Stock, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares and Performance Units, and such other terms, conditions and
provisions as are not inconsistent with the terms of this Plan. Subject to the
express provisions of the Plan, and within the limitations of the Plan, the Plan
Administrator may modify, extend or renew outstanding Award Agreements, or
accept the surrender of outstanding Awards and authorize the granting of new
Awards in substitution therefor. However, except as provided in Sections 9.1(i),
9.1(ii), 9.1(iii) and 9.11(d)(iii) of this Plan, no modification of an Award
shall impair the rights of the holder thereof without his or her consent.

         SECTION 1.5. AGGREGATE LIMITATION ON AWARDS.

         (a) Shares of stock which may be issued under the Plan shall be
authorized and unissued or treasury shares of Common Stock of the Company
("Common Stock"). The maximum number of shares of Common Stock, which may be
issued pursuant to Awards issued under the Plan, shall be 350,000 shares, which
may be increased by the Board of Directors.

         (b) For purposes of calculating the maximum number of shares of Common
Stock which may be issued under the Plan at any time:

                  (i) only the net shares issued (including the shares, if any,
         withheld for tax withholding requirements) under the Plan shall be
         counted when issued upon exercise of a Stock Option; and



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                  (ii) only the shares issued (including the shares, if any,
         withheld for tax withholding requirements) as a result of an exercise
         of a Stock Appreciation Right shall be counted;

                  (iii) only the net shares issued (including the shares, if
         any, withheld for tax withholding requirements) shall be counted when
         shares of Common Stock are used as full or partial payment for shares
         issued upon exercise of a Stock Option; and

                  (iv) only the net shares issued (including the shares, if any,
         withheld for tax withholding requirements) as Bonus Stock, Restricted
         Stock, Restricted Stock Units, Performance Shares or Performance Units
         shall be counted (shares reacquired by the Company because of failure
         to achieve a performance target or failure to become fully vested for
         any other reason shall again be available for issuance under the Plan).

         (c) Any shares of Common Stock subject to a Stock Option, which for any
reason is terminated unexercised or expires shall again be available for
issuance under the Plan, but shares subject to a Stock Option which are not
issued as a result of the exercise of a tandem Stock Appreciation Right shall
not again be available for issuance under the Plan.

         SECTION 1.6. EFFECTIVE DATE AND TERM OF PLAN.

         (a) The Plan shall become effective on the date adopted by the Board of
Directors.

         (b) The Plan and all Awards made under the Plan shall remain in effect
until such Awards have been satisfied or terminated in accordance with the Plan
and the terms of such Awards.

                            ARTICLE II. STOCK OPTIONS

         SECTION 2.1. AWARD OF STOCK OPTIONS. The Plan Administrator may from
time to time, and subject to the provisions of the Plan and such other terms and
conditions as the Plan Administrator may prescribe, grant to any person eligible
to participate in the Plan one or more options to purchase for cash or shares
the number of shares of Common Stock ("Stock Options") allotted by the Plan
Administrator. The date a Stock Option is granted shall mean the date selected
by the Plan Administrator as of which the Plan Administrator allots a specific
number of shares to a Participant pursuant to the Plan.

         SECTION 2.2. STOCK OPTION AGREEMENTS. The grant of a Stock Option shall
be evidenced by a written Award Agreement, executed by the Company and the
holder of a Stock Option (the "Optionee"), stating the number of shares of
Common Stock subject to the Stock Option evidenced thereby, and in such form as
the Plan Administrator may from time to time determine.

         SECTION 2.3. STOCK OPTION PRICE. The Option Price per share of Common
Stock deliverable upon the exercise of a Stock Option shall be 100% of the Fair
Market Value of a share of Common Stock on the date the Stock Option is granted,
unless the Plan Administrator determines a higher price.

         SECTION 2.4. TERM AND EXERCISE. Stock Options shall be subject to such
vesting scheduling and term ("Option Term") as the Plan Administrator may
provide in an Award Agreement. No Stock Option shall be exercisable after the
expiration of its Option Term. Unless otherwise provided by the Plan
Administrator, the Option Term shall be 10 years.



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         SECTION 2.5. MANNER OF PAYMENT. Each Award Agreement providing for
Stock Options shall set forth the procedure governing the exercise of the Stock
Option granted thereunder subject to the following:

         (a) Subject to the following provisions of this Section 2.5, upon the
exercise in respect of any shares of Common Stock subject to the Stock Option,
the Optionee shall pay to the Company, in full, the Option Price for such shares
(except that, in the case of an exercise arrangement approved by the Plan
Administrator and described in Section 2.5(c)), payment may be made as soon as
practicable after the exercise.

         (b) The Option Price shall be payable in cash or, if authorized by the
Plan Administrator, by tendering shares of Common Stock in a manner acceptable
to the Plan Administrator and valued at Fair Market Value as of the day of
exercise of the Stock Option, or in any combination thereof approved by the Plan
Administrator.

         (c) The Plan Administrator may permit an Optionee to elect to pay the
Option Price upon the exercise of a Stock Option through a cashless exercise
procedure approved by the Plan Administrator by irrevocably authorizing a broker
to sell shares of Common Stock (or a sufficient portion of the shares) acquired
upon exercise of the Stock Option and remit to the Company a sufficient portion
of the sale proceeds to pay the entire Option Price and any tax withholding
resulting from such exercise.

         SECTION 2.6. ISSUANCE OF CERTIFICATES. As soon as practicable after
receipt of payment, the Company shall deliver to the Optionee a certificate or
certificates for such shares of Common Stock unless (i) such certificate or
certificates have been previously delivered to a broker pursuant to Section
2.5(c) or (ii) the Award Agreement for such Stock Options allows the Plan
Administrator or the Optionee to defer delivery of such certificates. The
Optionee shall become a stockholder of the Company with respect to Common Stock
represented by share certificates so issued and as such shall be fully entitled
to receive dividends, to vote and to exercise all other rights of a stockholder
unless the Plan Administrator, in its discretion, imposes conditions,
restrictions or contingencies with respect to such shares in the applicable
Award Agreement.

         SECTION 2.7. DEATH, RETIREMENT AND TERMINATION OF EMPLOYMENT OF
OPTIONEE. Unless otherwise provided in an Award Agreement or otherwise agreed to
by the Plan Administrator:

         (a) Upon the death of the Optionee, any rights to the extent
exercisable on the date of death may be exercised by the Optionee's estate, or
by a person who acquires the right to exercise such Stock Option by bequest or
inheritance or by reason of the death of the Optionee, provided that such
exercise occurs within both (i) the remaining Option Term of the Stock Option
and (ii) two years after the Optionee's death. The provisions of this Section
shall apply notwithstanding the fact that the Optionee's employment may have
terminated prior to death, but only to the extent of any Stock Options
exercisable on the date of death.

         (b) Upon termination of the Optionee's employment by reason of
retirement or permanent disability (as each is determined by the Plan
Administrator), the Optionee may exercise any Stock Options, provided such
option exercise occurs within both (i) the remaining Option Term of the Stock
Option and (ii) one year.

         (c) Upon termination of the Optionee's employment by reason other than
death, retirement, disability or cause (as each is determined by the Plan
Administrator), the Optionee may exercise any Stock



                                       4

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Options, provided such option exercise occurs within both (i) the remaining
Option Term of the Stock Option and (ii) 30 days of the date of termination.

         (d) Except as provided in Subsections (a), (b), and (c) of this Section
2.7, all Stock Options shall terminate immediately upon the termination of the
Optionee's employment.

         SECTION 2.8. EFFECT OF EXERCISE. The exercise of any Stock Option shall
cancel that number of tandem SARs, if any, which is equal to the number of
shares of Common Stock purchased pursuant to said Stock Option unless otherwise
agreed by the Plan Administrator in an Award Agreement or otherwise.

         SECTION 2.9. NO REDUCTION IN OPTION PRICE. The Option Price of Stock
Options issued under the Plan shall not be reduced following the Award of such
Stock Options. The Plan Administrator shall not authorize the Award of Stock
Options for outstanding Stock Options which have a lower Option Price.

                     ARTICLE III. STOCK APPRECIATION RIGHTS

         SECTION 3.1. AWARD OF STOCK APPRECIATION RIGHTS. The Plan Administrator
may from time to time, and subject to the provisions of the Plan and such other
terms and conditions as the Plan Administrator may prescribe, grant to any
person eligible to participate in the Plan one or more stock appreciation rights
("SAR") entitling the Participant, upon exercise, to receive, in cash or shares
of Common Stock, value equal to (or otherwise based on) the excess of: (i) the
Fair Market Value of a specified number of shares of Common Stock at the time of
exercise over (ii) an Exercise Price established by the Plan Administrator, or,
if granted in tandem with an Option, the Option Price with respect to shares
under the tandem Option. The date an SAR is granted shall mean the date selected
by the Plan Administrator as of which the Plan Administrator specifies the
number of shares upon which the SAR will be based.

         SECTION 3.2. SAR AGREEMENTS. The grant of an SAR shall be evidenced by
a written Award Agreement, executed by the Company and the holder of the SAR
("SAR Holder") stating the number of shares of Common Stock upon which the SAR
is based, and in such form as the Plan Administrator may from time to time
determine. SARs may be granted in tandem with all or any portion of a previously
or contemporaneously granted Option.

         SECTION 3.3. SAR EXERCISE PRICE. The exercise price per share of Common
Stock ("Exercise Price") used to determine the value to be received upon the
exercise of an SAR shall be 100% of the Fair Market Value of a share of Common
Stock on the date the SAR is granted unless otherwise determined by the Plan
Administrator.

         SECTION 3.4. TERM AND EXERCISE. An SAR that is not granted in tandem
with an Option shall not be exercisable prior to six months from the date of its
grant, unless a shorter period is provided by the Plan Administrator or by
another Section of this Plan, and may be subject to such vesting scheduling and
term ("SAR Term") as the Plan Administrator may provide in an Award Agreement.
No SAR shall be exercisable after the expiration of its SAR Term. An SAR granted
in tandem with an Option is exercisable at the time the tandem Option is
exercisable, unless the Plan Administrator provides for a longer period. A
tandem SAR shall be subject to the same Option Term as the tandem Option to
which it relates, unless the Plan Administrator specifies a different SAR Term
in the applicable Award Agreement. The exercise of an SAR granted in tandem with
an Option will result in the cancellation of an equal number of corresponding
Options related to the tandem SAR. The Plan Administrator may, in its
discretion, prescribe additional conditions to the exercise of any SAR.



                                       5
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         SECTION 3.5. EXERCISE OF SAR. Each Award Agreement providing for SARs
shall set forth procedures governing the exercise of the SAR granted thereunder.
Settlement of SARs may be made in shares of Common Stock (valued at their Fair
Market Value at the time of exercise), in cash or in a combination thereof, as
determined in the discretion of the Plan Administrator. As soon as practicable
after the exercise of an SAR for shares of Common Stock, the Company shall
deliver to the SAR Holder a certificate or certificates for such shares of
Common Stock unless the Award Agreement for such SARs allows the Plan
Administrator or the SAR Holder to defer delivery of such shares of Common
Stock. The SAR Holder shall become a stockholder of the Company with respect to
Common Stock represented by share certificates so issued and as such shall be
fully entitled to receive dividends, to vote and to exercise all other rights of
a stockholder, unless the Plan Administrator, in its discretion, imposes
conditions, restrictions or contingencies with respect to such shares in the
applicable Award Agreement.

                         ARTICLE IV. BONUS STOCK AWARDS

         SECTION 4.1. AWARD OF BONUS STOCK. The Plan Administrator may from time
to time, and subject to the provisions of this Plan and such other terms and
conditions as the Plan Administrator may prescribe, grant to any person eligible
to participate in the Plan shares of Common Stock ("Bonus Stock").

         SECTION 4.2. BONUS STOCK AGREEMENTS. The grant of a Bonus Stock shall
be evidenced by a written Award Agreement, executed by the Company and the
recipient of Bonus Stock, in such form as the Plan Administrator may from time
to time determine, providing for the terms of such grant, including any vesting
schedule, restrictions on the transfer of such Common Stock or other matters.

                           ARTICLE V. RESTRICTED STOCK

         SECTION 5.1. AWARD OF RESTRICTED STOCK. The Plan Administrator may
grant shares of restricted stock, the vesting of which is subject to certain
conditions established by the Plan Administrator with some or all of those
conditions relating to events (such as performance or continued employment)
occurring after the date of grant ("Restricted Stock"). The date Restricted
Stock is granted shall mean the date selected by the Plan Administrator as of
which the Plan Administrator allots a specified number of shares to a
Participant pursuant to the Plan.

         SECTION 5.2. RESTRICTED STOCK AGREEMENTS. The grant of Restricted Stock
shall be evidenced by a written Award Agreement, executed by the Company and the
holder of the Restricted Stock stating the number of shares of Common Stock that
are subject to the Restricted Stock Award and the conditions to vesting, and in
such form as the Plan Administrator may from time to time determine.

         SECTION 5.3. STOCKHOLDER RIGHTS. Unless otherwise provided by the Plan
Administrator, Restricted Stock may not be sold, assigned, transferred, pledged,
or otherwise encumbered during the Restricted Period. Except for such
restrictions and any other restrictions imposed by the Plan Administrator,
holders of Restricted Stock shall have all of the rights of a stockholder,
including, but not limited to, the right to vote such shares and the right to
receive all dividends paid on such shares.

         SECTION 5.4. CERTIFICATES. Unless otherwise provided by the Plan
Administrator, each certificate issued in respect of shares of Restricted Stock
granted under the Plan shall be registered in the name of the holder of such
Restricted Stock and shall be deposited with the Company with a stock power
endorsed in blank. Upon the vesting of Restricted Stock, such Restricted Stock
shall be transferred free of all restrictions to the Participant.



                                       6
<PAGE>

         SECTION 5.5. PERFORMANCE-BASED AWARDS. The Plan Administrator may award
performance-based Restricted Stock that becomes vested (or for which vesting is
accelerated) upon the achievement of Performance Targets established pursuant to
the requirements of Section 7.4 by the Plan Administrator. The Plan
Administrator may specify the number of shares that will vest upon the
achievement of different levels of performance. Except as otherwise provided by
the Plan Administrator, achievement of maximum target levels during the
Performance Cycle shall result in the Participant's receipt of the full
performance-based Restricted Stock Award. For achievement of the minimum target,
but less than the maximum target, the Plan Administrator may establish a portion
of the Award that the Participant is entitled to receive. Any performance-based
Restricted Stock that is not earned by the end of a Performance Cycle shall be
forfeited unless the Plan Administrator provides otherwise in the applicable
Award Agreement.

         SECTION 5.6. TERMINATION OF EMPLOYMENT. Unless the applicable Award
Agreement provides for vesting upon death, disability, retirement or other
termination of employment, upon any such termination of employment of a
Participant prior to vesting of Restricted Stock, all outstanding and unvested
Awards of Restricted Stock to such Participant shall be canceled, shall not vest
and shall be returned to the Company.

                       ARTICLE VI. RESTRICTED STOCK UNITS

         SECTION 6.1. AWARD OF RESTRICTED STOCK UNITS. The Plan Administrator
may grant rights to receive stock in the future, the vesting of which is subject
to certain conditions established by the Plan Administrator with some or all of
those conditions relating to events (such as performance or continued
employment) occurring after the date of grant ("Restricted Stock Units"). The
date a Restricted Stock Unit is granted shall mean the date selected by the Plan
Administrator as of which the Plan Administrator allots a specified number of
shares to a Participant pursuant to the Plan.

         SECTION 6.2. RESTRICTED STOCK UNIT AGREEMENTS. The grant of Restricted
Stock Units shall be evidenced by a written Award Agreement, executed by the
Company and the holder of the Restricted Stock Unit stating the number of shares
of Common Stock that are subject to the Restricted Stock Unit Award and the
conditions to vesting, and in such form as the Plan Administrator may from time
to time determine.

         SECTION 6.3. STOCKHOLDER RIGHTS. Except as otherwise provided in this
Section 6.3, prior to the vesting and settlement of Restricted Stock Units in
shares of Common Stock, holders of Restricted Stock Units shall not have any of
the rights of a stockholder. Unless the Plan Administrator provides otherwise,
holders of Restricted Stock Units shall have the right, subject to any
restrictions or vesting requirements imposed by the Plan Administrator, to
receive a payment from the Company in lieu of a dividend in an amount equal to
such dividends and at such times as dividends would otherwise be paid.

         SECTION 6.4. CERTIFICATES. As soon as practicable after the vesting of
Restricted Stock Units, the Company shall deliver to the Participant a
certificate or certificates for such shares of Common Stock unless the Award
Agreement for such Restricted Stock Units allows the Plan Administrator or the
Participant to defer delivery of such shares of Common Stock. The Participant
shall become a stockholder of the Company with respect to Common Stock
represented by share certificates so issued and as such shall be fully entitled
to receive dividends, to vote and to exercise all other rights of a stockholder
unless the Plan Administrator, in its discretion, imposes conditions,
restrictions or contingencies with respect to such shares in the applicable
Award Agreement.

         SECTION 6.5. PERFORMANCE-BASED AWARDS. The Plan Administrator may award
performance-based Restricted Stock Units that becomes vested (or for which
vesting is accelerated) upon the


                                       7
<PAGE>

achievement of Performance Targets established pursuant to the requirements of
Section 8.4 by the Plan Administrator. The Plan Administrator may specify the
number of shares that will vest upon the achievement of different levels of
performance. Except as otherwise provided by the Plan Administrator, achievement
of maximum target levels during the Performance Cycle shall result in the
Participant's receipt of the full performance-based Restricted Stock Unit Award.
For achievement of the minimum target, but less than the maximum target, the
Plan Administrator may establish a portion of the Award that the Participant is
entitled to receive. Any performance-based Restricted Stock Unit that is not
earned by the end of a Performance Cycle shall be forfeited unless the Plan
Administrator provides otherwise in the applicable Award Agreement.

         SECTION 6.6. TERMINATION OF EMPLOYMENT. Unless the applicable Award
Agreement provides for vesting upon death, disability, retirement or other
termination of employment, upon any such termination of employment of a
Participant prior to vesting of Restricted Stock, all outstanding and unvested
Awards of Restricted Stock to such Participant shall be canceled, shall not vest
and shall be returned to the Company.

                      ARTICLE VII. PERFORMANCE SHARE AWARDS

         SECTION 7.1. AWARDS GRANTED BY PLAN ADMINISTRATOR. Coincident with or
following designation for participation in the Plan, a person eligible to
participate in the Plan may be granted Performance Shares. Certificates
representing Performance Shares shall be issued to the Participant effective as
of the date of the Award. Holders of Performance Shares shall have all of the
voting, dividend, and other rights of stockholders of the Company, subject to
the terms of any Award Agreement.

         SECTION 7.2. AMOUNT OF AWARD. The Plan Administrator shall establish a
maximum amount of a Participant's Award, which amount shall be denominated in
shares of Common Stock.

         SECTION 7.3. COMMUNICATION OF AWARD. Written notice of the maximum
amount of a Participant's Award and the Performance Cycle determined by the Plan
Administrator, if any, shall be given to a Participant as soon as practicable
after approval of the Award by the Plan Administrator. The grant of Performance
Shares shall be evidenced by a written Award Agreement, executed by the Company
and the recipient of Performance Shares, in such form as the Plan Administrator
may from time to time determine, providing for the terms of such grant.

         SECTION 7.4. AMOUNT OF AWARD PAYABLE. Performance Shares may be granted
based upon past performance or future performance. In addition to any other
restrictions the Plan Administrator may place on Performance Shares, the Plan
Administrator may, in its discretion, provide that Performance Shares shall vest
upon the satisfaction of Performance Targets to be achieved during an applicable
Performance Cycle. Failure to satisfy the Performance Targets may result, in the
Plan Administrator's discretion as set forth in an Award Agreement, in the
forfeiture of the Performance Shares by the Participant and the return of such
shares to the Company, or have any other consequence as determined by the Plan
Administrator. Multiple Performance Targets may be used and the components of
multiple Performance Targets may be given the same or different weight in
determining the amount of an Award earned, and may relate to absolute
performance or relative performance measured against other groups, units,
individuals or entities. The Plan Administrator may also establish that none, a
portion, or all of a Participant's Award will vest (subject to Section 7.6) for
performance that falls below the Performance Target applicable to such Award.
Certificates representing Performance Shares shall bear a legend restricting
their transfer and requiring the forfeiture of the shares to the Company if any
Performance Targets or other conditions to vesting are not met. The Plan
Administrator may also require a Participant



                                       8

<PAGE>

to deliver certificates representing unvested Performance Shares to the Company
in escrow until the Performance Shares vest.

         SECTION 7.5. ADJUSTMENTS. At any time prior to vesting of a Performance
Share, the Plan Administrator may adjust previously established Performance
Targets or other terms and conditions to reflect events such as changes in laws,
regulations, or accounting practice, or mergers, acquisitions, divestitures or
any other event determined by the Plan Administrator.

         SECTION 7.6. PAYMENTS OF AWARDS. Following the conclusion of each
Performance Cycle, the Plan Administrator shall determine the extent to which
Performance Targets have been attained, and the satisfaction of any other terms
and conditions with respect to the vesting of an Award relating to such
Performance Cycle. Subject to the provisions of Section 7.3, to the extent the
Plan Administrator determines Performance Shares have vested, the Company shall
issue to the Participant certificates representing vested shares free of any
legend regarding Performance Targets or forfeiture in exchange for such
Participant's legended certificates.

         SECTION 7.7. TERMINATION OF EMPLOYMENT. Unless the Award Agreement
provides for vesting upon death, disability, retirement or other termination of
employment, upon any such termination of employment of a Participant prior to
vesting of Performance Shares, all outstanding and unvested Awards of
Performance Shares to such Participant shall be canceled, shall not vest and
shall be returned to the Company.

                         ARTICLE VIII. PERFORMANCE UNITS

         SECTION 8.1. AWARDS GRANTED BY PLAN ADMINISTRATOR. Coincident with or
following designation for participation in the Plan, a person eligible to
participate in the Plan may be granted the right to receive value for
performance units, denominated in dollars or shares of Common Stock at the end
of a Performance Cycle ("Performance Units"). The date a Performance Unit is
granted shall mean the date selected by the Plan Administrator as of which the
Plan Administrator allots a specified dollar amount or number of shares to a
Participant pursuant to the Plan.

         SECTION 8.2. AMOUNT OF AWARD. The Plan Administrator shall establish a
maximum amount of a Participant's Award, which amount shall be denominated in
dollars or shares of Common Stock. Performance Units shall be paid in shares of
Common Stock unless the Plan Administrator provides in the Award Agreement for
payment in cash, or a combination of shares of Common Stock and cash.
Performance Units denominated in dollars shall be paid the number of shares of
Common Stock determined by dividing the dollar denominated value of a
Performance Unit by the Fair Market Value of a share of Common Stock on the
effective date of the grant. If a cash payment is made for a Performance Unit
denominated in shares of Common Stock, the cash payment per share shall be equal
to the Fair Market Value of a share of Common Stock on the date of vesting.

         SECTION 8.3. COMMUNICATION OF AWARD. Written notice of the maximum
amount of a Participant's Award and the Performance Cycle determined by the Plan
Administrator, if any, shall be given to a Participant as soon as practicable
after approval of the Award by the Plan Administrator. The grant of Performance
Units shall be evidenced by a written Award Agreement, executed by the Company
and the recipient of Performance Units, in such form as the Plan Administrator
may from time to time determine, providing for the terms of such grant.



                                       9
<PAGE>

         SECTION 8.4. AMOUNT OF AWARD PAYABLE. Performance Units may be granted
based upon past performance or future performance. In addition to any other
restrictions the Plan Administrator may place on Performance Units, the Plan
Administrator may, in its discretion, provide that Performance Units shall vest
upon the satisfaction of Performance Targets to be achieved during an applicable
Performance Cycle. Failure to satisfy the Performance Targets may result, in the
Plan Administrator's discretion as set forth in an Award Agreement, in the
forfeiture of the Performance Units by the Participant, or have any other
consequence as determined by the Plan Administrator. Multiple Performance
Targets may be used and the components of multiple Performance Targets may be
given the same or different weight in determining the amount of an Award earned,
and may relate to absolute performance or relative performance measured against
other groups, units, individuals or entities. The Plan Administrator may also
establish that none, a portion, or all of a Participant's Award will vest
(subject to Section 8.6) for performance that falls below the Performance Target
applicable to such Award.

         SECTION 8.5. ADJUSTMENTS. At any time prior to vesting of a Performance
Unit, the Plan Administrator may adjust previously established Performance
Targets or other terms and conditions to reflect events such as changes in laws,
regulations, or accounting practice, or mergers, acquisitions, divestitures or
any other event determined by the Plan Administrator.

         SECTION 8.6. PAYMENTS OF AWARDS. Following the conclusion of each
Performance Cycle, the Plan Administrator shall determine the extent to which
performance targets have been attained, and the satisfaction of any other terms
and conditions with respect to the vesting of an Award relating to such
Performance Cycle. Subject to the provisions of Section 8.3, to the extent the
Plan Administrator determines Performance Units have vested, the Company shall
issue to the Participant certificates representing vested shares, cash payment,
or a combination of both as provided in the applicable Award Agreement unless
the Award Agreement for such Performance Units allows the Plan Administrator or
the Participant to defer delivery of such Common Stock or cash payment.

         SECTION 8.7. TERMINATION OF EMPLOYMENT. Unless the Award Agreement
provides for vesting upon death, disability, retirement or other termination of
employment, upon any such termination of employment of a Participant prior to
vesting of Performance Unit, all outstanding and unvested Awards of Performance
Shares to such Participant shall be canceled and shall not vest.

                            ARTICLE IX. MISCELLANEOUS

         SECTION 9.1. GENERAL RESTRICTION. Each Award under the Plan shall be
subject to the requirement that, if at any time the Plan Administrator shall
determine that (i) the listing, registration or qualification of the shares of
Common Stock which is the subject of such Award is necessary under the rules and
regulations of any securities exchange or under any state or federal law, (ii)
the consent or approval of any government regulatory body, or (iii) an agreement
by the grantee of an Award with respect to the disposition of shares of Common
Stock is necessary or desirable as a condition of, or in connection with, the
granting of such Award or the issue or purchase of shares of Common Stock
thereunder, such Award may not be consummated in whole or in part unless such
listing, registration, qualification, consent, approval or agreement shall have
been effected or obtained free of any conditions not acceptable to the Plan
Administrator.

         SECTION 9.2. ASSIGNABILITY. Awards under the Plan (other than Stock
Options) may not be transferred, assigned, pledged, hypothecated or otherwise
conveyed or encumbered other than by will or the laws of descent and
distribution and may be exercised during the lifetime of the Participant only by
the Participant



                                       10

<PAGE>

or the Participant's legally authorized representative. The designation by a
Participant of a beneficiary will not constitute a transfer of the Award.

Unless otherwise provided by the Plan Administrator, Stock Options may be
transferred by gift or domestic relations order by a Participant to (i) a spouse
(or former spouse), child, stepchild, grandchild, parent, stepparent,
grandparent, sibling, niece, nephew, mother-in-law, father-in-law,
daughter-in-law, son-in-law, brother-in-law, or sister-in-law of the Participant
("FAMILY MEMBERS"), (ii) a trust or trusts in which Family Members have more
than fifty percent of the beneficial interest, (iii) a foundation in which
Family Members (or the Participant) control the management of assets, or (iv)
any entity in which Family Members (or the Participant) own more than fifty
percent of the voting interests. A transfer of a Stock Option must be made
without value, provided that, a transfer to an entity in which more than fifty
percent of the voting interests are owned by Family Members (or the Participant)
in exchange for an interest in the entity is considered to be made without
value. Subsequent transfers of transferred Stock Options shall be prohibited
except those by will or the laws of descent and distribution.

Following any transfer, any such Stock Option shall continue to be subject to
the same terms and conditions as were applicable immediately prior to transfer.
The provisions of Section 2.7 shall continue to be applied with respect to the
original Participant, following which the Stock Options shall be exercisable by
the transferee only to the extent and for the periods specified in the Award
Agreement. The Plan Administrator and the Company shall have no obligation to
inform any transferee of a Stock Option of any expiration, termination, lapse or
acceleration of such Stock Option. The Company shall have no obligation to
register with any federal or state securities commission or agency any Common
Stock issuable or issued under a Stock Option that has been transferred by a
Participant under this Section 9.2.

         SECTION 9.3. WITHHOLDING TAXES. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the grantee to remit to the Company an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares. Alternatively, the Company may issue, transfer, or vest only such number
of shares of the Company net of the number of shares sufficient to satisfy the
statutory minimum withholding tax requirements. For withholding tax purposes,
the shares of Common Stock shall be valued on the date the withholding
obligation is incurred. Unless the Plan Administrator provides otherwise in the
applicable Award Agreement, Participants may elect to satisfy tax withholding
obligations through the surrender of shares of Common Stock which the
Participant already owns or through the surrender of shares of Common Stock to
which the Participant is otherwise entitled under the Plan.

         SECTION 9.4. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or in
any agreement entered into pursuant to the Plan shall confer upon any
Participant the right to continue in the employment of the Company or affect any
right that the Company may have to terminate the employment of such Participant.

         SECTION 9.5. NON-UNIFORM DETERMINATIONS. The Plan Administrator's
determinations under the Plan (including without limitation determinations of
the persons to receive Awards, the form, amount and timing of such Awards, the
terms and provisions of such Awards and the agreements evidencing the same) need
not be uniform and may be made by it selectively among persons who receive, or
are eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.



                                       11
<PAGE>

         SECTION 9.6. RIGHTS AS A STOCKHOLDER. Unless otherwise provided in the
Plan, the recipient of any Award under the Plan shall have no rights as a
stockholder with respect thereto unless and until certificates for shares of
Common Stock are issued to him.

         SECTION 9.7. DEFINITIONS. In this Plan the following definitions shall
apply:

         (a) "Affiliate" means any person or entity which directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with Callon Petroleum Company.

         (b) "Award" shall mean a grant of Stock Options, Bonus Stock, SARs,
Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units under the Plan.

         (c) "Code" means the Internal Revenue Code of 1986, as amended. A
reference to any provision of the Code shall include any successor provision of
the Code.

         (d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

         (e) "Fair Market Value" as of any date and in respect of any share of
Common Stock means the closing price on such date or on the next business day,
if such date is not a business day, of a share of Common Stock reflected in the
consolidated trading tables of The Wall Street Journal (presently the NYSE -
Composite Transactions) or any other publication selected by the Plan
Administrator, provided that, if shares of Common Stock shall not have been
traded on the New York Stock Exchange for more than 10 days immediately
preceding such date or if deemed appropriate by the Plan Administrator for any
other reason, the Fair Market Value of shares of Common Stock shall be as
determined by the Plan Administrator in such other manner as it may deem
appropriate. In no event shall the Fair Market Value of any share of Common
Stock be less than its par value.

         (f) "Non-Employee Director" shall mean a director who (i) is not an
officer of the Company or a parent or Subsidiary of the Company, or otherwise
employed by the Company or parent or Subsidiary of the Company; (ii) does not
receive compensation, either directly or indirectly, from the Company or a
parent or Subsidiary of the Company, for services rendered as a consultant or in
any capacity other than as a director, except for an amount not exceeding
$60,000; (iii) does not possess an interest in any transaction for which
disclosure would be required under Item 404(a) of Regulation S-K of the
Securities Act of 1933, as amended ("Securities Act"); or (iv) is not engaged in
a business relationship for which disclosure would be required pursuant to Item
404(b) of Regulation S-K of the Securities Act.

         (g) "Option" means a Stock Option.

         (h) "Option Price" means the purchase price per share of Common Stock
deliverable upon the exercise of a Stock Option.

         (i) "Participant" means a director, executive officer, employee, or
consultant of the Company or any Subsidiary who holds an outstanding Award
granted under the Plan

         (j) "Performance Cycle" means the period of time, if any, as specified
by the Plan Administrator over which Performance Shares are to be vested.

         (k) "Performance Target" means those targets established by the Plan
Administrator that relate to corporate, group, unit or individual performance
and are established in terms of market price of



                                       12
<PAGE>

common stock, cash flow or cash flow per share, reserve value or reserve value
per share, net asset or net asset value per share or earnings per share.

         (l) "Restricted Period" means the period of time for which Restricted
Stock is subject to forfeiture pursuant to the Plan.

         (m) "Subsidiary" means any corporation or other entity of which at
least 50% of the voting securities entitled to vote generally in an election of
directors are owned by the Company directly or through one or more other
corporations or other entities, each of which is also a Subsidiary. With respect
to non-corporate entities, Subsidiary shall mean an entity managed or controlled
by the Company or any Subsidiary and with respect to which the Company or any
Subsidiary is allocated more than half of the profits and losses thereof.

         SECTION 9.8. LEAVES OF ABSENCE. The Plan Administrator shall be
entitled to make such rules, regulations, and determinations as it deems
appropriate under the Plan in respect of any leave of absence taken by the
recipient of any Award. Without limiting the generality of the foregoing, the
Plan Administrator shall be entitled to determine (i) whether or not any such
leave of absence shall constitute a termination of employment within the meaning
of the Plan and (ii) the impact, if any, of any such leave of absence on Awards
under the Plan theretofore made to any recipient who takes such leave of
absence.

         SECTION 9.9. NEWLY ELIGIBLE EMPLOYEES. The Plan Administrator shall be
entitled to make such rules, regulations, determinations and Awards as it deems
appropriate in respect of any employee who becomes eligible to participate in
the Plan or any portion thereof after the commencement of an Award or incentive
period.

         SECTION 9.10. ADJUSTMENTS. In the event of any change in the
outstanding Common Stock by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like, the Plan Administrator in its sole discretion may
appropriately adjust the number of shares of Common Stock which may be issued
under the Plan, the number of shares of Common Stock subject to Options, Bonus
Stock, SARs, Restricted Stock, Restricted Stock Units, Performance Shares or
Performance Units theretofore granted under the Plan, and any and all other
matters deemed appropriate by the Plan Administrator, including Exercise Price
and Option Price of outstanding Awards and the types of securities subject to
Awards.

         SECTION 9.11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.

         (a) The existence of outstanding Options, Bonus Stock, SARs, Restricted
Stock, Restricted Stock Units, Performance Shares or Performance Units shall not
affect in any way the right or power of the Company or its stockholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

         (b) If, while there are outstanding Options, the Company shall effect a
subdivision or consolidation of shares or other increase or reduction in the
number of shares of the Common Stock outstanding without receiving compensation
therefor in money, services or property, then, subject to the provisions, if
any, in the Award Agreement (a) in the event of an increase in the number of
such shares



                                       13
<PAGE>

outstanding, the number of shares of Common Stock then subject to Options
hereunder shall be proportionately increased; and (b) in the event of a decrease
in the number of such shares outstanding the number of shares then available for
Option hereunder shall be proportionately decreased.

         (c) After a merger of one or more corporations into the Company, or
after a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, (i) each holder of an outstanding
Option shall, at no additional cost, be entitled upon exercise of such Option to
receive (subject to any required action by stockholders) in lieu of the number
of shares as to which such Option shall then be so exercisable, the number and
class of shares of stock, other securities or consideration to which such holder
would have been entitled to receive pursuant to the terms of the agreement of
merger or consolidation if, immediately prior to such merger or consolidation,
such holder had been the holder of record of a number of shares of the Company
equal to the number of shares as to which such Option had been exercisable and
(ii) unless otherwise provided by the Plan Administrator, the number of shares
of Common Stock, other securities or consideration to be received with respect
to unvested Bonus Stock, SARs, Restricted Stock, Restricted Stock Units,
Performance Shares and Performance Units shall continue to be subject to the
Award Agreement, including vesting provisions hereof.

         (d) If the Company is about to be merged into or consolidated with
another corporation or other entity under circumstances where the Company is not
the surviving corporation, or if the Company is about to sell or otherwise
dispose of substantially all of its assets to another corporation or other
entity while unvested Bonus Stock, SARs, Restricted Stock, Restricted Stock
Units, Performance Shares or Performance Units or unexercised Options remain
outstanding, then the Plan Administrator may direct that any of the following
shall occur:

                  (i) If the successor entity is willing to assume the
         obligation to deliver shares of stock or other securities after the
         effective date of the merger, consolidation or sale of assets, as the
         case may be, each holder of an outstanding Option shall be entitled to
         receive, upon the exercise of such Option and payment of the Option
         Price, in lieu of shares of Common Stock, such shares of stock or other
         securities as the holder of such Option would have been entitled to
         receive had such Option been exercised immediately prior to the
         consummation of such merger, consolidation or sale, and the terms of
         such Option and any tandem SAR associated with such Option shall apply
         as nearly as practicable to the shares of stock or other securities
         purchasable upon exercise of the Option following such merger,
         consolidation or sale of assets;

                  (ii) The Plan Administrator may waive any limitations set
         forth in or imposed pursuant to this Plan or any Award Agreement with
         respect to such Option and any tandem SAR, Bonus Stock, SAR, Restricted
         Stock, Restricted Stock Unit, Performance Share or Performance Unit
         such that (A) such Option and tandem SAR shall become exercisable prior
         to the record or effective date of such merger, consolidation or sale
         of assets or (B) the vesting of such Bonus Stock, SAR, Restricted
         Stock, Restricted Stock Unit, Performance Share or Performance Unit
         shall occur upon such merger, consolidation or sale of assets; and/or

                  (iii) The Plan Administrator may cancel all outstanding
         Options and tandem SARs as of the effective date of any such merger,
         consolidation or sale of assets provided that prior notice of such
         cancellation shall be given to each holder of an Option at least 30
         days prior to the effective date of such merger, consolidation or sale
         of assets, and each holder of an Option shall have the right to
         exercise such Option or any tandem SARs in



                                       14
<PAGE>

         full during a period of not less than 30 days prior to the effective
         date of such merger, consolidation or sale of assets.

         (e) Except as herein provided, the issuance by the Company of Common
Stock or any other shares of capital stock or securities convertible into shares
of capital stock, for cash, property, labor done or other consideration, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock then subject to outstanding
Options.

         SECTION 9.12. AMENDMENT OF THE PLAN. Subject to Section 2.9 and Section
9.13, the Board of Directors may, without approval by the stockholders and
without receiving further consideration from the Participants, amend this Plan
or condition or modify Awards under this Plan, including increases to the number
of shares which may be covered by Awards under this Plan.

         SECTION 9.13. NO LOSS OF RIGHTS OF GRANTEE OF AN AWARD. Nothing in this
Plan shall give the Plan Administrator or any other person the right, power or
authority to change, amend, alter or repeal the terms of any Award granted under
this Plan, except as otherwise expressly set forth in the grant of such Award,
without the prior written consent of the grantee of such Award.

         SECTION 9.14. DIVIDENDS AND DIVIDEND EQUIVALENTS. An Award Agreement
for any Award other than an Option or SAR Award may provide the Participant with
the right to receive dividend payments or dividend equivalent payments with
respect to Common Stock subject to the Award Agreement (both before and after
the Common Stock subject to the Award Agreement is earned, vested, or acquired),
which payments may be either made currently or credited to an account for the
Participant, and may be settled in cash or Common Stock as determined by the
Plan Administrator. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Common Stock, may be subject
to such conditions, restrictions and contingencies as the Plan Administrator
shall establish, including the reinvestment of such credited amounts in Common
Stock equivalents. An Award Agreement shall not provide such rights with respect
to Option or SAR Awards.

         SECTION 9.15. FORM AND TIME OF ELECTIONS. Unless otherwise specified
herein, each election required or permitted to be made by any Participant or
other person entitled to benefits under the Plan, and any permitted
modification, or revocation thereof, shall be in writing filed with the Plan
Administrator at such times, in such form, and subject to such restrictions and
limitations, not inconsistent with the terms of the Plan, as the Plan
Administrator shall require.

         SECTION 9.16. DEFERRAL. The Plan Administrator may provide in any Award
Agreement that the Plan Administrator or the Participant may, upon the vesting
of any Award under this Plan, defer the receipt of any shares of Common Stock or
cash to be paid to the Participants as a result of the vesting of an Award under
this Plan.

         SECTION 9.17. VESTING AND AWARD CRITERIA OF PERFORMANCE SHARES.
Notwithstanding the provisions of Articles V, VI, VII and VIII, the Plan
Administrator shall not make any Award under such Articles which vests in less
than one year. Any Award under such Articles shall also be made by the Plan
Administrator following a determination that such Award was in lieu of other
compensation which would have been paid to such employee.

         SECTION 9.18. NO WAIVER. The Plan Administrator shall not waive any
provision of an Award that provides for vesting, performance criteria or other
material conditions to receipt or exercise of the Award.



                                       15
<PAGE>

         The undersigned hereby certifies that this is a true and correct copy
of the Callon Petroleum Company 2002 Stock Incentive Plan as approved and
adopted by the Board of Directors on February 14, 2002.



                                                  By: /s/ Robert A. Mayfield
                                                      -------------------------
                                                      Robert A. Mayfield
                                                      Corporate Secretary