Document:

ex10_1.htm

    
      

    

    
       
Exhibit
10.1

    

    

    AMENDMENT
NO. 3 TO

     

    CALLON
PETROLEUM COMPANY

     

    1996
STOCK INCENTIVE PLAN

     

    THIS AMENDMENT is entered into
as of December 31, 2008 by Callon Petroleum Company (the “Company”).

     

    WITNESSETH
THAT:

     

    WHEREAS, the Company
previously adopted and amended the Callon Petroleum Company 1996 Stock Incentive
Plan  (the “Plan”);
and

     

    WHEREAS, the Company desires
to amend the Plan for compliance with Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”).

     

    NOW, THEREFORE, effective as
of December 31, 2008, the Plan is amended as follows:

     

    
      	
               
      

            	
              1.

            	
              Section
      1.4 of the Plan is hereby amended by adding the following sentence to the
      end of said Section:

            

    

    
      

    

    
      
        	
              	
                 
      

              	
                Notwithstanding
      the preceding provisions of this Section, (i) no amendment or other
      modification of an Award shall be made to the extent such modification
      results in any Stock Option with an exercise price less than 100% of the
      Fair Market Value per share on the date of grant, and (ii) no
      acceleration of vesting, extension of exercisability or other modification
      shall be made that will subject the participant to adverse taxation under
      Code Section 409A.

              

      

    

     

    
      	
               
      

            	
              2.

            	
              Section
      2.3 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

    Section
2.3.  Stock Option Price.  The option price per share
of Common Stock under each Stock Option shall be determined by the Plan
Administrator; provided however, that such exercise price shall not be less than
100% of the Fair Market Value per share on the date the Stock Option is
granted.

     

    
      	
               
      

            	
              3.

            	
              Section
      2.7(b) of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

    
            
 (b)    Upon
termination of the Optionee's employment by reason of Retirement or
perma­nent disability (as 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) six
months (in the case of permanent disability) or three months (in the case of
Retirement).

    

    

    
      	
               
      

            	
              4.

            	
              Section
      2.7(c) of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

    
             
(c)    Upon
termination of the Optionee's employment by reason other than death, Retirement,
dis­abil­ity or cause (as each, other than Retirement, 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) 30 days of the date of termination.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              5.

            	
              Section
      3.7 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

    Section
3.7.  Retirement or Disability.  Unless otherwise
provided in an Award Agreement or otherwise agreed to by the Plan Administrator,
upon the termination of the Optionee's employment by reason of permanent
disability (as determined by the Plan Administrator) or Retirement, the Optionee
may exercise any Incentive Stock Options, provided such option exercise occurs
within both (i) the remaining Option Term of the Incentive Stock Option and (ii)
one year (in the case of permanent disability) or three months (in the case of
Retirement).  Notwithstanding the terms of an Award Agreement, the tax
treatment available pursuant to Section 422 of the Internal Revenue Code of 1986
(the “Code”) upon the exercise of an Incentive Stock Option shall not be
available to an Optionee who exercises any Incentive Stock Options more than (i)
one year after the date of termination of employment due to permanent disability
or (ii) three months after the date of termination of employment due to
Retirement.

    

    
      	
               
      

            	
              6.

            	
              Section
      4.6 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

     

     

    Section
4.6.  Termination of Employment.  Unless the Award
Agreement provides for vesting upon death, disability, Retirement or 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.

    

    
      	
               
      

            	
              7.

            	
              Section
      6.7(b) of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

     

    
      
               
(b)    “Fair
Market Value” means, while the Company is a publicly-held corporation, the
average of the opening and closing prices of a share of Common Stock on the date
as of which Fair Market Value is to be determined, or if no such sales were made
on such date, the closing sales price on the immediately preceding business day
of a share as reported on the New York Stock Exchange or other principal
securities exchange on which Shares are then listed or admitted to
trading.  If the Company is not a publicly-held corporation at the
time a determination of the Fair Market Value of the Common Stock is required to
be made hereunder, the determination of Fair Market Value for purposes of the
Plan shall be made by the Plan Administrator in its sole and absolute discretion
and using a reasonable valuation method in accordance with the requirements of
Code Section 409A and the regulations and other guidance issued thereunder. In
this respect, the Plan Administrator 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.

      

    

     

    
      	
               
      

            	
              8.

            	
              A
      new Section 6.7(g) is added to the Plan as
  follows:

            

    

     

    (g)           “Retirement”
means the voluntary termination of employment from the Company constituting
retirement for age on any date after the participant attains the normal
retirement age of 70 years.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              9.

            	
              Section
      6.11(d) is hereby deleted in its entirety and replaced with the
      following:

            

    

     

    
              
(d)   If the
Company has a “Change in Control” (as defined herein) under circumstances where
the Company is not the surviving corporation, while unvested Performance Shares
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 Change in Control,
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 Change in Control, and the terms
of such Option shall apply as nearly as practicable to the shares of stock or
other securities purchasable upon exercise of the Option following such Change
in Control;

    

    (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 or Performance
Share such that (A) such Option shall become exercisable prior to the record or
effective date of such Change in Control or (B) the vesting of such Performance
Share shall occur upon such Change in Control; and/or

    

    (iii)         The
Plan Administrator may cancel all outstanding Options as of the effective date
of any such Change in Control 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 Change in Control, and each holder of an Option shall
have the right to exercise such Option in full during a period of not less than
30 days prior to the effective date of such Change in Control.

    

     

    
      For all
purposes of this Plan, a “Change in Control” of the Company occurs upon a change
in the Company’s ownership, its effective control or the ownership of a
substantial portion of its assets, as follows:

    

    
      

    

    
      
        	
              	
                (a)

              	
                Change in
      Ownership.  A change in ownership of the Company occurs
      on the date that any “Person” (as defined in below), 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 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 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 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

              

      

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
      
        	
              	
                (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) ownership of the
Company’s stock possessing 30 percent or more of the total voting power of the
Company’s stock.  However, if any Person owns 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 of
Directors is replaced by directors whose appointment or election is not endorsed
by a majority of the Board of Directors before the date of the appointment or
election; provided, however, that any such director shall not be considered to
be endorsed by the Board of Directors 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 of Directors;
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 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 (i) a shareholder of the Company
      (immediately before the asset transfer) in exchange for or with respect to
      the Company’s stock; (ii) an entity, at least 50% of the total value or
      voting power of the stock of which is owned, directly or indirectly, by
      the Company; (iii) a Person that owns directly or indirectly, at least 50%
      of the total value or voting power of the Company’s outstanding stock; or
      (iv) an entity, at least 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 50% of the total value or voting power of the Company’s outstanding
      stock.

              

      

    

    
      

    

    
      For
purposes of the foregoing definition,

    

    
      

    

    
      
        	
              	
                (a)

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

              

      

    

    
      

    

    
      
        	
              	
                (b)

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

              

      

    

    
      

    

    
      The
provisions of this Section 6.11(d) shall be interpreted in accordance with the
requirements of the Final Treasury Regulations under Code Section 409A, it being
the intent of the parties that this Section 6.11(d) shall be in compliance with
the requirements of said Code Section and said
Regulations.

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              10.

            	
              A
      new Section 6.14 is added to the Plan as
  follows:

            

    

    

     

    
      Section
6.14.  Section 409A Compliance.  To the extent that the
Plan provides for the payment of amounts that constitute “nonqualified deferred
compensation” under Code Section 409A, the Plan is intended to comply with the
provisions of Code Section 409A so as to prevent the inclusion of gross income
of any amounts deferred hereunder in a taxable year that is prior to the taxable
year or years in which such amounts would otherwise be actually distributed and
made available to participants or beneficiaries.

    

     

    
      	
               
      

            	
              11.

            	
              This
      Amendment may be executed in any number of counterparts, each of which
      shall be an original, and all of which together shall constitute one
      agreement.

            

    

    
       

            IN
WITNESS WHEREOF, the Company has caused this Amendment to be duly executed in
its name and on its behalf by its duly authorized officer, effective as of the
date first written above.

    

    
      

    

    
      

    

    
      
        	 
      	
                CALLON
      PETROLEUM COMPANY

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:______________________________

              	 
      
	 
      	
                Name:   Fred
      L. Callon

              	 
      
	 
      	
                Title:     President
      & Chief Executive Officer

              	 
      

      

    

     

     

    10ex10_2.htm

    
      

    

    
      Exhibit
10.2

    

    

     

    AMENDMENT
NO. 1 TO

     

    CALLON
PETROLEUM COMPANY

     

    2002
STOCK INCENTIVE PLAN

     

    THIS AMENDMENT is entered into
as of December 31, 2008 by Callon Petroleum Company (the “Company”).

     

    WITNESSETH
THAT:

     

    WHEREAS, the Company
previously adopted the Callon Petroleum Company 2002 Stock Incentive
Plan  (the “Plan”);
and

     

    WHEREAS, the Company desires
to amend the Plan for compliance with Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”).

     

    NOW, THEREFORE, effective as
of December 31, 2008, the Plan is amended as follows:

     

    
      	
               
      

            	
              1.

            	
              Section
      1.4 of the Plan is hereby amended by adding the following sentence to the
      end of said Section:

            

    

     

    
      
        Notwithstanding
the preceding provisions of this Section, (i) no amendment or other modification
of an Award shall be made to the extent such modification results in any Stock
Option or Stock Appreciation Right with an exercise price less than 100% of the
Fair Market Value per share on the date of grant, and (ii) no acceleration
of vesting, extension of exercisability or other modification shall be made that
will subject the Participant to adverse taxation under Code Section
409A.

      

    

     

    
      	
               
      

            	
              2.

            	
              Section
      2.6 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

    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 such certificate or certificates have been
previously delivered to a broker pursuant to Section 2.5(c).  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.

     

    
      	
               
      

            	
              3.

            	
              Section
      2.7(b) of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

     

    
             
(b)    Upon
termination of the Optionee's employment by reason of Retirement or
perma­nent disability (as 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.

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              4.

            	
              Section
      2.7(c) of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

    
              
(c)    Upon
termination of the Optionee's employment by reason other than death, Retirement,
dis­abil­ity or cause (as each, other than Retirement, 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) 30 days of the date of termination.

    

    

    
      	
               
      

            	
              5.

            	
              Section
      3.3 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

    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 a SAR
shall be no less than 100% of the Fair Market Value of a share of Common Stock
on the date the SAR is granted.

     

    
      	
               
      

            	
              6.

            	
              Section
      3.5 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

           
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.  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.

     

    
      	
               
      

            	
              7.

            	
              Section
      5.6 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

    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.

     

    
      	
               
      

            	
              8.

            	
              Section
      6.4 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

    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.  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.

     

    
      	
               
      

            	
              9.

            	
              Section
      6.6 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    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 Units, all outstanding and unvested Awards of Restricted Stock
Units to such Participant shall be canceled, shall not vest and shall be
returned to the Company.

     

    
      	
               
      

            	
              10.

            	
              Section
      7.7 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

    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.

     

    
      	
               
      

            	
              11.

            	
              Section
      8.6 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

           
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.

     

    
      	
               
      

            	
              12.

            	
              Section
      8.7 of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

    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.

     

    
      	
               
      

            	
              13.

            	
              Section
      9.7(e) of the Plan is hereby deleted in its entirety and replaced with the
      following:

            

    

     

    
      
                
(e)    “Fair
Market Value” means, while the Company is a publicly-held corporation, the
average of the opening and closing prices of a share of Common Stock on the date
as of which Fair Market Value is to be determined, or if no such sales were made
on such date, the closing sales price on the immediately preceding business day
of a share as reported on the New York Stock Exchange or other principal
securities exchange on which Shares are then listed or admitted to
trading.  If the Company is not a publicly-held corporation at the
time a determination of the Fair Market Value of the Common Stock is required to
be made hereunder, the determination of Fair Market Value for purposes of the
Plan shall be made by the Plan Administrator in its sole and absolute discretion
and using a reasonable valuation method in accordance with the requirements of
Code Section 409A and the regulations and other guidance issued thereunder. In
this respect, the Plan Administrator 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.

      

    

     

    
      	
               
      

            	
              14.

            	
              A
      new Section 9.7(m) is added to the Plan, and the existing Section 9.7(m)
      and is re-labeled as Section 9.7(n), as
follows:

            

    

     

    
      	
               
      

            	
              (m)

            	
              “Retirement”
      means the voluntary termination of employment from the Company
      constituting retirement for age on any date after the participant attains
      the normal retirement age of
70 years.

            

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              15.

            	
              Section
      9.11(d) is hereby deleted in its entirety and replaced with the
      following:

            

    

     

    (d)           If
the Company has a “Change in Control” (as defined herein)  under
circumstances where the Company is not the surviving corporation, 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 Change in Control,
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 Change in Control, 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 Change in Control;

     

    (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 Change in Control or
(B) the vesting of such Bonus Stock, SAR, Restricted Stock, Restricted
Stock Unit, Performance Share or Performance Unit shall occur upon such Change
in Control; and/or

     

    (iii)        The
Plan Administrator may cancel all outstanding Options and tandem SARs as of the
effective date of any such Change in Control 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 Change in Control, and each holder of an Option
shall have the right to exercise such Option or any tandem SARs in full during a
period of not less than 30 days prior to the effective date of such Change in
Control.

     

    
      For all
purposes of this Plan, a “Change in Control” of the Company occurs upon a change
in the Company’s ownership, its effective control or the ownership of a
substantial portion of its assets, as follows:

    

    
      

    

    
      
        	
              	
                (a)

              	
                Change in
      Ownership.  A change in ownership of the Company occurs
      on the date that any “Person” (as defined in below), 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 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 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 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

              

      

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    
      
        	
              	
                (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) ownership of the
Company’s stock possessing 30 percent or more of the total voting power of the
Company’s stock.  However, if any Person owns 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 of
Directors is replaced by directors whose appointment or election is not endorsed
by a majority of the Board of Directors before the date of the appointment or
election; provided, however, that any such director shall not be considered to
be endorsed by the Board of Directors 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 of Directors;
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 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 (i) a shareholder of the Company
      (immediately before the asset transfer) in exchange for or with respect to
      the Company’s stock; (ii) an entity, at least 50% of the total value or
      voting power of the stock of which is owned, directly or indirectly, by
      the Company; (iii) a Person that owns directly or indirectly, at least 50%
      of the total value or voting power of the Company’s outstanding stock; or
      (iv) an entity, at least 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 50% of the total value or voting power of the Company’s outstanding
      stock.

              

      

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    
      For
purposes of the foregoing definition,

    

    
      

    

    
      
        	
              	
                (a)

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

              

      

    

    
      

    

    
      
        	
              	
                (b)

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

              

      

    

    
      

    

    
      The
provisions of this Section 9.11(d) shall be interpreted in accordance with the
requirements of the Final Treasury Regulations under Code Section 409A, it being
the intent of the parties that this Section 9.11(d) shall be in compliance with
the requirements of said Code Section and said Regulations.

    

     

    
      	
               
      

            	
              16.

            	
              Section
      9.16 is hereby deleted in its entirety and replaced with the
      following:

            

    

    

     

    Section
9.16.                                [RESERVED]

     

    
      	
               
      

            	
              17.

            	
              A
      new Section 9.19 is added to the Plan as
  follows:

            

    

    

     

    
             
Section 9.19.  Section 409A Compliance.  To the extent that the
Plan provides for the payment of amounts that constitute “nonqualified deferred
compensation” under Code Section 409A, the Plan is intended to comply with the
provisions of Code Section 409A so as to prevent the inclusion of gross income
of any amounts deferred hereunder in a taxable year that is prior to the taxable
year or years in which such amounts would otherwise be actually distributed and
made available to participants or beneficiaries.

    

     

    
      	
               
      

            	
              18.

            	
              This
      Amendment may be executed in any number of counterparts, each of which
      shall be an original, and all of which together shall constitute one
      agreement.

            

    

    

     

    
      

    

    
      IN
WITNESS WHEREOF, the Company has caused this Amendment to be duly executed in
its name and on its behalf by its duly authorized officer, effective as of the
date first written above.

    

    
      

    

    
      

    

    
      
        	 
      	
                CALLON
      PETROLEUM COMPANY

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:______________________________

              	 
      
	 
      	
                Name:   Fred
      L. Callon

              	 
      
	 
      	
                Title:     President
      & Chief Executive Officer

              	 
      

      

    

     

    
16

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