Document:

Exh1016_Restricted_Stock_Unit_Award_Agreement

		
			Exhibit 10.16
		

		
			 
		

		
			 RESTRICTED STOCK UNIT AWARD AGREEMENT UNDER THE
CALLON PETROLEUM COMPANY
2011 OMNIBUS INCENTIVE PLAN
		

		
			THIS AGREEMENT is made and entered into on this ____ day of ____,  ____ (the “Grant Date”), between Callon Petroleum Company, a Delaware corporation (the “Company”) and ___________ (“Grantee”), under and pursuant to the provisions of the Callon Petroleum Company 2011 Omnibus Incentive Plan, as adopted by the Board of Directors (the “Board”)  and effective as of May 12, 2011, and last amended May 14, 2015 (the “Plan”).  The Compensation Committee of the Board (the “Committee”) has determined that Grantee is eligible to participate as a Grantee under the Plan, and, to carry out its purposes, has effective on the Grant Date authorized, in accordance with Article 9 of the Plan, in recognition of Grantee’s past performance with the Company and to incentivize Grantee’s future performance, the award of Restricted Stock Units to Grantee.  Terms with initial capital letters as used herein that are not defined in this Agreement shall have the same meanings as ascribed thereto in the Plan.
		

		
			NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties do hereby agree as follows:
		

		
			1.Grant of Restricted Stock Units.  Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants _____ Restricted Stock Units (the “Units”) to ___________.   Subject to paragraph (3) hereof, each Unit shall initially represent one share of the Company’s Common Stock (“Share”).  Each Unit represents an unsecured promise of the Company to deliver one Share to the Grantee pursuant to the terms and conditions of the Plan and this Agreement.  As a holder of Units, the Grantee has the rights of a general unsecured creditor of the Company until the Units are converted to Shares upon vesting and transferred to Grantee, as set forth herein.
		

		
			2.Transfer Restrictions.  Grantee shall not sell, assign, transfer, exchange, pledge, encumber, gift, devise, hypothecate or otherwise dispose of (collectively, “Transfer”) any Units granted hereunder.  Any purported Transfer of Units in breach of this Agreement shall be void and ineffective, and shall not operate to Transfer any interest or title in the purported transferee.
		

		
			3.Vesting of Units.  The Units shall become 100% vested, subject to paragraphs (4), (5), (6), and (7) hereof, on the third anniversary following the Grant Date.  Except as provided in paragraphs (4), (5), (6) and (7), the Grantee must continue providing services to the Company as an employee through the applicable vesting date in order for the Units to become vested and, if Grantee ceases to provide services to the Company as an employee of the Company before the applicable vesting date (a “Separation from Service”), the remaining unvested Units shall be forfeited; provided, however, if Grantee incurs a Separation from Service, other than for Cause, the Committee may determine, in its sole discretion, that all remaining unvested Units shall be 100% vested due to a “Qualified Separation from Service.”  For purposes hereof, a “Qualified Separation from Service” is defined as a Separation from Service, other than for Cause, following a minimum of ten (10) years of Employment service with the Company and so long as (i) Grantee has attained the age of fifty-five (55) and (ii) Grantee enters into an agreement not to compete with the Company and its Affiliates for a period 
		
		
 

 

		of at least one year, which agreement, both in form and substance, is provided by the Committee or is otherwise satisfactory to the Committee.  In the event of Grantee’s Separation from Service due to Retirement of Grantee, all unvested Units as of the Separation from Service date shall fully vest and any amount due shall be payable in accordance with Section 10.  For purposes of this Agreement, and notwithstanding any different definition in the Plan, the term “Retirement” shall mean the Separation of Service of the Grantee, other than for Cause, constituting retirement for age on any date after Grantee attains the age of seventy (70).

		
		
			For purposes hereof, “Cause” shall have the meaning set forth in the Plan, except that all references to Grantee’s termination of employment shall instead refer to Grantee’s Separation from Service.  In addition to, and not in lieu of, the definition of such term in the Plan, for all purposes of this Agreement, the term “Cause” shall also mean (i) any breach of Grantee’s fiduciary duties to the Company, including, without limitation, the duties of care, loyalty and obedience to the law; and (ii) the intentional failure of Grantee to comply with the Company’s Code of Business Conduct and Ethics, or to otherwise discharge his duties in good faith and in a manner that Grantee reasonably believes to be in the best interests of the Company, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.
		

		
			4.Change in Control.  In the event of the Grantee’s involuntary Separation from Service without Cause within the two-year period immediately following the effective date of a Change in Control (“Change in Control Date”), all non-vested Units then outstanding shall immediately vest. For purposes hereof, a “Change in Control” shall have occurred if any of the following occur:
		

		
			(a)Change in Ownership.    A change in ownership of the Company occurs on the date that any Person, other than (1) the Company or any of its Subsidiaries, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding stock pursuant to an offering of such stock, or (4) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of the Company’s stock, acquires ownership of the Company’s stock that, together with stock held by such Person, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the Company’s stock.  However, if any Person is considered to own already more than fifty percent (50%) of the total fair market value or total voting power of the Company’s stock, the acquisition of additional stock by the same Person is not considered to be a Change of Control.  In addition, if any Person has effective control of the Company through ownership of thirty percent (30%) or more of the total voting power of the Company’s stock, as discussed in paragraph (b) below, the acquisition of additional control of the Company by the same Person is not considered to cause a Change in Control pursuant to this paragraph (a); or
		

		
			(b)Change in Effective Control.    Even though the Company may not have undergone a change in ownership under paragraph (a) above, a change in the effective control of the Company occurs on either of the following dates:
		

		
			(1)the date that any Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) 
		
		
 

		

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		ownership of the Company’s stock possessing thirty percent (30%) or more of the total voting power of the Company’s stock.  However, if any Person owns thirty percent (30%) or more of the total voting power of the Company’s stock, the acquisition of additional control of the Company by the same Person is not considered to cause a Change in Control pursuant to this subparagraph (b)(1); or

		
		
			(2)the date during any 12-month period when a majority of members of the Board is replaced by directors whose appointment or election is not endorsed by a majority of the Board before the date of the appointment or election; provided, however, that any such director shall not be considered to be endorsed by the Board if his or her initial assumption of office occurs as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
		

		
			(c)Change in Ownership of Substantial Portion of Assets.    A change in the ownership of a substantial portion of the Company’s assets occurs on the date that a Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) assets of the Company that have a total gross fair market value equal to at least forty percent (40%) of the total gross fair market value of all of the Company’s assets immediately before such acquisition or acquisitions.  However, there is no Change in Control when there is such a transfer to an entity that is controlled by the shareholders of the Company immediately after the transfer, through a transfer to (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock; (2) an entity, at least fifty percent (50%) of the total value or voting power of the stock of which is owned, directly or indirectly, by the Company; (3) a Person that owns directly or indirectly, at least fifty percent (50%) of the total value or voting power of the Company’s outstanding stock; or (4) an entity, at least fifty percent (50%) of the total value or voting power of the stock of which is owned by a Person that owns, directly or indirectly, at least fifty percent (50%) of the total value or voting power of the Company’s outstanding stock.
		

		
			For purposes of this paragraph (3):
		

		
			(i)“Person” shall have the meaning given in Section 7701(a)(1) of the Code.  Person shall include more than one Person acting as a group as defined by the final Treasury Regulations issued under Section 409A of the Code.
		

		
			(ii)“Affiliate” shall have the meaning set forth in Rule 12b‐2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended.
		

		
			5.Termination of Service upon Death.  Notwithstanding paragraph (3) hereof, in the event Grantee has a Separation from Service with the Company due to the death of Grantee, all unvested Units shall automatically 100% vest in favor of Grantee’s estate or a person who acquires the rights to the Units under the terms of the Plan or the laws of descent and distribution.
		

		 

		

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			6.Termination of Service upon Disability.  Notwithstanding paragraph (3) hereof, in the event Grantee has a Separation from Service with the Company due to the Disability of Grantee, all unvested Units shall automatically 100% vest.  For purposes hereof, the Disability of Grantee shall mean the physical or mental inability of Grantee to carry out the normal and usual duties of his position on a full-time basis for an entire period of six (6) continuous months together with the reasonable likelihood, as determined by the Board (excluding Grantee), that Grantee, upon the advice of a qualified physician, will be unable to carry out the normal and usual duties of his position.
		

		
			7.Forfeiture Upon Termination of Service for Other Reasons.  If Grantee’s Separation from Service (a) is for any reason other than pursuant to paragraphs (3), (5), or (6) hereof, and (b) occurs prior to a Change in Control pursuant to paragraph (4), all unvested Units shall be completely forfeited.  Upon forfeiture, all of Grantee’s rights with respect to the forfeited Units shall cease and terminate, without any further obligations on the part of the Company.
		

		
			8.Notice of Termination.  Any Separation from Service that is initiated by the Company or by Grantee (other than termination pursuant to paragraph (5)) shall be communicated by written Notice of Termination to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth the facts and circumstances that provide the basis for termination of Grantee under the provision so indicated.
		

		
			9.Restrictions on Units.  Subject to the provisions of the Plan and the terms of this Agreement, from the Grant Date until the date the Units are vested in accordance with paragraph (3), (4), (5), or (6), as applicable, and are no longer subject to forfeiture in accordance with paragraph (7) (the “Restriction Period”), Grantee shall not be permitted to sell, transfer, pledge, hypothecate, margin, assign or otherwise encumber any of the Units.  Except for these limitations, the Committee may, in its sole discretion, remove any or all of the restrictions on such Units whenever it may determine that, by reason of a change in applicable law after the Grant Date, such action is necessary or appropriate to the extent consistent with Section 409A of the Internal Revenue Code.
		

		
			10.Settlement of Units.  Within thirty (30) days after any Unit becomes vested, the Company shall transfer to Grantee the number of Shares for the vested Units and such Units shall expire when exchanged for such Shares.  Such settlement may be made in Shares, cash or a combination thereof.  All Shares delivered to or on behalf of Grantee in exchange for vested Units shall be subject to any further transfer or other restrictions as may be required by securities law or other applicable law as determined by the Company.  Certificates for Shares shall be delivered to Grantee, free of any legend, promptly after, and only after, the Restriction Period has expired without forfeiture.
		

		
			11.No Voting Rights and Dividends.  Subject to paragraphs (6) and (8), Grantee, as the holder of Units, shall not have any rights as a stockholder of Shares, unless and until such time as the Units are converted to Shares hereunder.
		

		 

		

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			12.No Service Commitment.  Grantee acknowledges that neither the grant of the Units, nor the execution of this Agreement by the Company, shall be interpreted or construed as imposing upon the Company an obligation to retain his services in any capacity or for any stated period of time.
		

		
			13.Other Terms, Conditions and Provisions.  As previously provided, the Units are granted subject to all of the terms, conditions and provisions of the Plan.  Grantee hereby acknowledges receipt of a copy of the Plan.  The parties agree that the entire text of the Plan be, and it is, hereby fully incorporated herein by reference.  Reference to the Plan is therefore made for a full description of the rights, the adjustments to be made in the event of changes in the capital structure of the Company, and of all of the other provisions, terms and conditions of the Plan that are applicable to the Units.  
		

		
			If the Company (i) declares a stock dividend or makes a distribution on its Common Stock in Shares, (ii) subdivides or reclassifies outstanding Shares into a greater number of Shares, or (iii) combines or reclassifies outstanding Shares into a smaller number of Shares, then the number of Units granted under this Agreement shall be proportionately increased or reduced, as applicable and determined by the Company, so as to prevent the enlargement or dilution of Grantee’s rights and duties hereunder.
		

		
			14.Tax Requirements.  Grantee is hereby advised to consult immediately with his own tax advisor regarding the tax consequences of this Agreement.  Grantee expressly agrees that Grantee shall include in his gross income for federal, and where applicable, state and local, income tax, the Fair Market Value (as defined in the Plan) of the Shares received when the vested Units are converted to Shares.
		

		
			15.Tax Withholding.  To the extent that the receipt of Shares hereunder results in compensation income to Grantee for federal, state or local income tax purposes, Grantee shall deliver to Company at such time the sum that the Company requires to meet its tax withholding obligations under applicable law or regulation, and, if Grantee fails to do so, Company is authorized to (a) withhold from any cash or other remuneration (including any Shares), then or thereafter payable to Grantee, any tax required to be withheld; or (b) sell such number of Shares as is appropriate to satisfy such tax withholding requirements before transferring the resulting net number of Shares to Grantee in satisfaction of its obligations under this Agreement.
		

		
			16.Grantee’s Representations.  Notwithstanding any provision hereof to the contrary, Grantee hereby agrees and covenants that Grantee will not acquire any Units or Shares, and that the Company will not be obligated to issue any Units or Shares to the Grantee hereunder, if the issuance of such Units or Shares constitutes a violation by the Grantee or the Company of any applicable federal or state securities or other laws or regulations, or any rules or regulations of any stock exchange on which the Common Stock is listed.  The rights and obligations of the Company and the Grantee are subject to all applicable laws and regulations.
		

		
			17.Miscellaneous.  
		

		
			(a)Shares Reserved.  The Company shall, at all times during the period that any Units remain subject to this Agreement, reserve under the Plan such number of 
		

		 

		

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		shares of Common Stock as shall be sufficient to satisfy the requirements of this Agreement.
		

		
			(b)Amendment, Termination and Waiver.  This Agreement may be amended, modified, terminated or superseded only by written instrument executed by or on behalf of the Company and Grantee.  Any waiver of the terms or conditions hereof shall be made only by a written instrument executed and delivered by the party waiving compliance.  Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company other than Grantee.  The failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same.  No waiver by any party of any term or condition herein, or the breach thereof, in one or more instances shall be deemed to be, or construed as, a further or continuing waiver of any such condition or breach or a waiver of any other condition or the breach of any other term or condition.
		

		
			(c)No Guarantee of Tax Consequences.  The Company makes no commitment or guarantee that any tax treatment will apply or be available to Grantee or any other person.  The Grantee has been advised, and provided with the opportunity, to obtain independent legal and tax advice regarding the grant, vesting, transfer and disposition of the Units and the Shares attributable thereto.
		

		
			(d)Severability.  In the event that any provision of this Agreement shall be held illegal, invalid, or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of the Agreement, and the Agreement shall be construed and enforced as if the illegal, invalid, or unenforceable provision had not been included herein.
		

		
			(e)Supersedes Prior Agreements.  This Agreement shall supersede and replace all prior agreements and understandings, oral or written, between the Company and the Grantee regarding the Units hereunder.  
		

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

		
			(g)Successors and Assigns.  This Agreement shall bind, be enforceable by, and inure to the benefit of, the Company and Grantee and any permitted successors and assigns under the Plan.
		

		
			 
		

		
			[Signature page follows.]
		

		

		

		 

		

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		IN WITNESS WHEREOF, this Agreement is executed and entered into effective on the day first above written.
		

			
					
						ATTEST:

					
					
						CALLON PETROLEUM COMPANY

				
	
					
						 

					
						By:      

					
						 

					
						_______________________________

					
						 

					
						B. F. Weatherly

					
						Corporate Secretary

					
						Date:    __________,_____

					
					
						 

					
						By:

					
						 

					
						_______________________________

					
						 

					
						Fred L. Callon

					
						Chief Executive Officer

					
						Date:    __________,_____

				
	
					
						 

					
					
						 

					
						 

					
						 

				
	
					
						 

					
					
						Agreed to and Accepted:

					
						 

					
						GRANTEE

					
						 

					
						 

				
	
					
						 

					
					
						By:

					
						 

					
						___________________________________

					
						 

					
						Date:    ________________________

				

		
			 
		

		 

		

			-  7  -Exh1017_Phantom_Share_Award_Agreement

		

			

		

		
			Exhibit 10.17
		

		
			 
		

		
			CALLON PETROLEUM COMPANY
		

		
			PHANTOM SHARE AWARD AGREEMENT
		

		
			Grantee:  __________
		

		
			 
		

		
			 
		

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

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

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

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

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

		
			6.Accelerated Vesting and Events of Forfeiture.
		

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

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

		 

 

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

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

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

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

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

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

		 

		

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

		
			7.Payment for Phantom Shares upon Vesting Date.  Subject to Section 8, upon determination of the Adjusted Phantom Shares in accordance with Exhibit A for those shares settleable in cash, the Grantee shall be entitled to receive a cash lump sum payment in an amount, net of applicable withholdings, if any, that is equal to the closing price of the company’s common stock multiplied by the Adjusted Phantom Shares on the Vesting Date.  For those shares settleable in Company stock, the Grantee shall be entitled to receive the number of shares adjusted in accordance with the payout percentage that is based on the Company’s relative ranking with the peer companies as shown in the calculation of Adjusted Phantom Shares under Exhibit A. This amount shall be paid by the Company within forty-five (45) calendar days from the Vesting Date.
		

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

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

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

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

		

		

		 

		

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		10.Withholding of Taxes.  The Company shall have the right to (a) make deductions from the cash otherwise deliverable upon payment for the vested Adjusted Phantom Shares in an amount sufficient to satisfy all required withholding of any federal, state, local or foreign taxes, or (b) take such other action as deemed necessary or appropriate to satisfy any withholding obligations.
		

		
			11.General.
		

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

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

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

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

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

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

		
			11.7.Covenants and Agreements as Independent Agreements.  Each of the covenants and agreements that are set forth in this Agreement shall be 
		

		 

		

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		construed as a covenant and agreement independent of any other provision of this Agreement.  The existence of any claim or cause of action of Grantee against the Company or an Affiliate, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.
		

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

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

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

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

		
			12.1.Grantee:  ___________
		

		
			12.2.Grant Date:  __________,_____
		

		
			12.3.Number of Phantom Shares Granted:  _________
		

		
			12.4.Vesting Schedule:  None of the Phantom Shares covered by this Agreement shall vest on the Grant Date.  Upon vesting of the Phantom Shares, fifty percent (50%) of the Phantom Shares shall be settled in shares of Company stock and fifty percent (50%) shall be settled in cash. Subject to earlier vesting pursuant to Section 6 above, if the Grantee remains in continuous Employment from the Grant Date, all of the Phantom Shares shall vest on __________,_____ (the “Vesting Date”) and shall be adjusted based on the performance goals as set out in Exhibit A.
		

		
			 
		

		
			[Signature page follows.]
		

		

		

		 

		

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

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						ATTEST:

					
					
						CALLON PETROLEUM COMPANY

				
	
					
						 

					
						 

					
						 

					
					
						 

				
	
					
						By: 

					
						 

					
						_______________________________

					
						           B. F. Weatherly

					
						           Corporate Secretary

					
						 

					
					
						By:  

					
						 

					
						___________________________________

					
						           Fred L. Callon, President and

					
						           Chief Executive Officer

					
						 

				
	
					
						           Date: __________,_____

					
						 

					
					
						           Date: __________,_____

					
						 

				
	
					
						 

					
						Chief Executive Officer 

					
					
						 

				

		
			 
		

		
			Address for Notices:
		

		
			 
		

		
			200 North Canal Street
		

		
			Natchez, MS 39120
		

		
			Attention: Corporate Secretary
		

		
			 
		

		
			 
		

		
			Accepted and Agreed:
		

		
			 
		

		
			GRANTEE
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Signature:

					
					
						 

					
					
						 

					
					
						Date:

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			Address for Notices:
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			 
		

		

		

		 

		

			6

		

 

		

			 

		

		Exhibit A
		

		
			Calculation of the
Adjusted Phantom Shares 
		

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

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

			
					
						 

					
					
						 

				
	
					
						(EP + CD) - BP

					
					
						= % increase or decrease

				
	
					
						BP

					
					
						 

				

		
			 
		

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

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

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

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

			
					
						 

					
					
						 

				
	
					
						Percentile Ranking

					
					
						Payout as a % of Award

				
	
					
						>90th Percentile

					
					
						200%

				
	
					
						50th Percentile

					
					
						100%

				
	
					
						25th Percentile

					
					
						25%

				
	
					
						<25th Percentile

					
					
						0%

				

		
			 
		

		
			Note: Percentile ranks between these points would be interpolated.
		

		

		

		 

		

			 

		

 

		

			 

		

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

			
					
						 

					
					
						 

					
					
						 

				
	
					
						Rank

					
					
						 

					
					
						Payout (as a % of Award)

				
	
					
						1-2

					
					
						 

					
					
						200%

				
	
					
						3

					
					
						 

					
					
						183%

				
	
					
						4

					
					
						 

					
					
						163%

				
	
					
						5

					
					
						 

					
					
						142%

				
	
					
						6

					
					
						 

					
					
						121%

				
	
					
						7

					
					
						 

					
					
						100%

				
	
					
						8

					
					
						 

					
					
						75%

				
	
					
						9

					
					
						 

					
					
						50%

				
	
					
						10

					
					
						 

					
					
						25%

				
	
					
						11-13

					
					
						 

					
					
						0%

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						Peer Companies:

					
					
						20-day Avg. Closing Price

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				
	
					
						__________________________

					
					
						$____

				

		
			 
		

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

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

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