Document:

Exhibit 10.2

 

SEVERANCE AGREEMENT

 

dated as of October 23,
2009,

 

 

between

 

 

COBALT INTERNATIONAL ENERGY,
INC.,

(the
Company)

 

and

 

 

Samuel H.
Gillespie,

(Employee)

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  Article 1

  	
   

  	
   

  
	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01. Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Article 2

  	
   

  	
   

  
	
  EFFECTIVENESS; TERM OF AGREEMENT; PRIOR SEVERANCE
  AGREEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 3

  	
   

  	
   

  
	
  CERTAIN EMPLOYEE REPRESENTATIONS AND AGREEMENTS; IPO
  EQUITY GRANT.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01. Services

  	
   

  	
  8

  
	
  Section 3.02. Accredited Investor Representations

  	
   

  	
  8

  
	
  Section 3.03. Transfer Restrictions

  	
   

  	
  8

  
	
  Section 3.04. Life Insurance

  	
   

  	
  8

  
	
  Section 3.05. IPO Equity Grant

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Article 4

  	
   

  	
   

  
	
  CONFIDENTIAL INFORMATION, INVENTIONS, BUSINESS

  	
   

  	
   

  
	
  OPPORTUNITIES AND GOODWILL

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01. Confidential Information, Inventions, Business
  Opportunities and Goodwill

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Article 5

  	
   

  	
   

  
	
  TERMINATION OF EMPLOYMENT AND NOTICE OF TERMINATION
  OF EMPLOYMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01. Termination of Employment

  	
   

  	
  9

  
	
  Section 5.02. Notice of Termination of Employment

  	
   

  	
  9

  
	
  Section 5.03. Deemed Resignations

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Article 6

  	
   

  	
   

  
	
  SEVERANCE BENEFITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01. Death, Disability, Termination for Cause or
  Resignation Without Good Reason

  	
   

  	
  10

  
	
  Section 6.02. Involuntary Termination

  	
   

  	
  11

  

 

i

 

	
  Section 6.03. Death, Disability or Involuntary Termination
  After Agreement Termination Date

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 7

  	
   

  	
   

  
	
  INTEREST ON LATE PAYMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01. Interest on Late Payments

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  Article 8

  	
   

  	
   

  
	
  CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01. Gross-up Payment

  	
   

  	
  13

  
	
  Section 8.02. Disposition of Claims

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  Article 9

  	
   

  	
   

  
	
  COMPETITION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01. Competition

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  Article 10

  	
   

  	
   

  
	
  NONDISCLOSURE OF CONFIDENTIAL AND PROPRIETARY
  INFORMATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01. Nondisclosure of Confidential and Proprietary
  Information

  	
   

  	
  17

  
	
   

  	
   

  	
   

  
	
  Article 11

  	
   

  	
   

  
	
  INVENTIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01. Inventions

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  Article 12

  	
   

  	
   

  
	
  INJUNCTIVE RELIEF

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.01. Injunctive Relief

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
  Article 13

  	
   

  	
   

  
	
  NON-DISPARAGEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.01. Non-disparagement

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
  Article 14

  	
   

  	
   

  
	
  GENERAL

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.01. Survivorship

  	
   

  	
  19

  
	
  Section 14.02. Arbitration

  	
   

  	
  19

  
	
  Section 14.03. Payment Obligations Absolute

  	
   

  	
  20

  
	
  Section 14.04. Successors

  	
   

  	
  21

  

 

ii

 

	
  Section 14.05. Severability

  	
   

  	
  21

  
	
  Section 14.06. Non-alienation

  	
   

  	
  21

  
	
  Section 14.07. Notices

  	
   

  	
  21

  
	
  Section 14.08. Controlling Law and Waiver of Jury Trial

  	
   

  	
  21

  
	
  Section 14.09. Release and Delayed Payment Restriction

  	
   

  	
  22

  
	
  Section 14.10. Full Settlement

  	
   

  	
  22

  
	
  Section 14.11. Unfunded Obligation

  	
   

  	
  22

  
	
  Section 14.12. Not a Contract of Employment

  	
   

  	
  23

  
	
  Section 14.13. Withholding of Taxes and Other Employee
  Deductions

  	
   

  	
  23

  
	
  Section 14.14. Number and Gender

  	
   

  	
  23

  
	
  Section 14.15. Entire Agreement

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  Annexes and
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Annex I

  	
  Accredited
  Investor Representations

  	
   

  	
   

  
	
  Annex II

  	
  Transfer
  Restrictions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of
  Restricted Stock Award Agreement

  	
   

  	
   

  
	
  Exhibit B

  	
  Form of
  Release

  	
   

  	
   

  

 

iii

 

SEVERANCE AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

AGREEMENT

 

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

 

ARTICLE
1

DEFINITIONS

 

Section 1.01.  Definitions.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

(i)            any “person” (as
defined in Section 13(d) of the Securities Exchange Act of 1934 (the
“Act”)),  other
than an employee benefit plan or trust maintained by the Company, becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of 

 

3

 

the
Company representing more than 50% of the combined voting power of the
Company’s outstanding securities entitled to vote generally in the election of
directors (other than the private equity sponsors of the Company and their
respective Affiliates);

 

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

 

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

 

Notwithstanding the foregoing, in no event
shall a Change in Control be deemed to have occurred with respect to Employee
if Employee is part of a “group” within the meaning of Section 13(d)(3) of
the Act that consummates the Change in Control transaction.  In addition, for purposes of the definition
of Change in Control, a person engaged in business as an underwriter of
securities shall not be deemed to be the beneficial owner of, or to
beneficially own, any securities acquired through such person’s participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.

 

“Cobalt Equity Payment”
means the issuance of an equity interest in Cobalt to Employee, the accelerated
vesting of any such equity interest or any 

 

4

 

other benefit conferred to Employee in
connection with any such equity interest that, in any such case, could
potentially be subject to the Excise Tax.

 

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

 

“Date of Termination of
Employment” shall mean (i) if Employee’s employment with the
Company is terminated by his death, the date of Employee’s death, or (ii) if
Employee’s employment with the Company is terminated for any reason whatsoever
other than Employee’s death, the earlier of the date indicated in the Notice of
Termination of Employment or the date specified by the Company pursuant to Section 5.02.

 

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

 

“Excise Tax”
shall have the meaning assigned to such term in Section 8.01.

 

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

 

Notwithstanding the preceding provisions of this
definition or any other provision in this Agreement to the contrary, any
assertion by Employee of a termination of employment for “Good Reason”
shall not be effective unless all of the following conditions are satisfied: (A) the
condition described in clauses (i) or 

 

5

 

(ii) of this definition giving rise to
Employee’s termination of employment must have arisen without Employee’s
consent; (B) Employee must provide written notice to the Company of such
condition in accordance with Section 14.07 within 45 days of the initial
existence of the condition; (C) the condition specified in such notice
must remain uncorrected for 30 days after receipt of such notice by the
Company; and (D) the date of Employee’s termination of employment must
occur within 90 days after the initial existence of the condition specified in
such notice.

 

“Gross-up Payment”
shall have the meaning assigned to such term in Section 8.01.

 

“Inventions”
shall have the meaning assigned to such term in Section 11.01.

 

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

 

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

 

“Non-Compete Period”
shall have the meaning assigned to such term in Section 9.01(b).

 

“Notice of Termination of
Employment” shall have the meaning assigned to such term in Section 5.02.

 

“Parachute Value”
of a Payment shall mean the present value as of the date of the change in
ownership or effective control for purposes of Section 280G of the Code of
the portion of such Payment that constitutes a “parachute
payment” under Section 280G(b)(2) of the Code, as
determined for purposes of determining whether and to what extent the Excise
Tax will apply to such Payment.

 

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

 

“Payment” shall
have the meaning assigned to such term in Section 8.01.

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

“Severance Amount” shall mean (i) if Employee incurs an
Involuntary Termination prior to a Change in Control or on or after the second
anniversary of the Change in Control (to the extent applicable), 50% of
Annualized Base Salary and (ii) if Employee incurs an Involuntary
Termination on the date of the Change in Control or prior to the second
anniversary of the Change in Control, 50% of Annualized Base Salary

 

7

 

ARTICLE
2

EFFECTIVENESS; TERM OF AGREEMENT; PRIOR SEVERANCE AGREEMENT

 

Section 2.01.  Effectiveness; Term of Agreement; Prior
Severance Agreement.  This Agreement
shall become effective upon the closing of the IPO.  Subject to an earlier termination of Employee’s
employment with the Company pursuant to Article 5, this Agreement shall
terminate and be of no further force or effect on the Agreement Termination
Date.  Upon the effectiveness of this
Agreement, the Prior Severance Agreement shall terminate and be of no further
force or effect.  If the IPO does not
close by March 31, 2010, this Agreement shall be void ab initio
and the Prior Severance Agreement shall remain in full force and effect in
accordance with its terms as of such date.

 

ARTICLE
3

CERTAIN EMPLOYEE REPRESENTATIONS AND AGREEMENTS; IPO EQUITY GRANT.

 

Section 3.01.  Services. 
Employee agrees that he will render services to the Company (as well as
any subsidiary thereof or successor thereto) during the period of his
employment to the best of his ability, in a prudent and businesslike manner and
consistent with the standards expected by the Company of an Employee-level
employee.  Employee also agrees that he
will devote substantially the same time, efforts and dedication to his duties
as heretofore devoted.

 

Section 3.02.  Accredited Investor Representations.  Employee hereby represents
to the Company that the representations set forth in Annex I to this Agreement (i) are
true and correct as of the date of this Agreement and (ii) shall be true
and correct as of the date of the closing of the IPO.

 

Section 3.03.  Transfer Restrictions.  Employee hereby represents
to the Company that he has read and understands, and agrees to be bound by, the
transfer restrictions set forth in Annex II to this Agreement.

 

Section 3.04.  Life Insurance.  This Agreement constitutes
written notice to Employee that (a) the Company or an Affiliate may insure
Employee’s life, (b) the Company or an Affiliate shall have the right to
determine the amount of insurance and the type of policies, and (c) the
Company or an Affiliate will be the beneficiaries of any proceeds payable under
such policies upon the death of Employee. 
Employee hereby irrevocably consents to being insured under the policies
described in the preceding sentence and to the coverage under such policies
continuing after the termination of this Agreement and/or Employee’s
termination of employment with the Company and its Affiliates.  Employee agrees and acknowledges that Employee
shall not have the right to designate the beneficiary or beneficiaries of the
death benefit payable pursuant to such policies, and neither Employee nor any
other person claiming through Employee shall have 

 

8

 

any interest in such policies.  Employee shall (i) furnish any and all
information reasonably requested by the Company, any Affiliate or the insurer
to facilitate the issuance of the life insurance policy or policies described
in this paragraph or any adjustment to any such policy, and (ii) take such
physical examinations as the Company, any Affiliate or the insurer deems
necessary.  Employee shall incur no
financial obligation by executing any required document pursuant to this Section 3.04,
and shall have no interest in any such policy.

 

Section 3.05.  IPO Equity Grant.  Immediately prior to the
Effective Time (as defined in the Reorganization Agreement), Employee received
10,250 units of Class C Interests (as defined in the Partnership
Agreement), which will at the Effective Time convert to restricted shares of
the Company’s common stock subject to the terms and conditions of the Company
Long Term Incentive Plan and the form of Restricted Stock Award Agreement
attached as Exhibit A to this Agreement.

 

ARTICLE
4

CONFIDENTIAL INFORMATION, INVENTIONS, BUSINESS

OPPORTUNITIES AND GOODWILL

 

Section 4.01.  Confidential Information, Inventions,
Business Opportunities and Goodwill.  The Company
shall (a) disclose to Employee, and place Employee in a position to have
access to or develop, confidential or proprietary information and Inventions of
the Company (or its Affiliates); (b) entrust Employee with business
opportunities of the Company (or its Affiliates); and (c) place Employee
in a position to develop business good will on behalf of the Company (or its
Affiliates).

 

ARTICLE
5

TERMINATION OF EMPLOYMENT AND NOTICE OF TERMINATION OF EMPLOYMENT

 

Section 5.01.  Termination of Employment.  Employee’s employment with
the Company may be terminated by the Company or Employee under the following circumstances:
(a) Employee’s death; (b) Employee’s Disability; (c) termination
by the Company for Cause; (d) termination by the Company without Cause; (e) resignation
by Employee for Good Reason; or (f) resignation by Employee without Good
Reason.  For all purposes of this
Agreement, Employee shall be considered to have terminated employment with the
Company when Employee incurs a Separation from Service.

 

Section 5.02.  Notice of Termination of Employment.  Any termination of
Employee’s employment by the Company or by Employee (other than termination 

 

9

 

by reason of Employee’s death) shall be
communicated by a written notice to the other party hereto indicating the
specific termination provision in the first sentence of Section 5.01
relied upon, setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee’s employment under the
provision so indicated, and specifying a Date of Termination of Employment which,
if submitted by Employee, shall be at least 30 days following the date of such
notice (a “Notice of Termination of Employment”);
provided, however,
that in the case of any Notice of Termination of Employment submitted by
Employee, the Company may, in its sole discretion, advance the Date of
Termination of Employment to any date following the Company’s receipt of the
Notice of Termination of Employment (and, if the Date of Termination of
Employment is so advanced, it shall not change the basis for Employee’s
termination nor be construed or interpreted as a termination of Employee’s
employment by the Company for any reason whatsoever).  A Notice of Termination of Employment
submitted by the Company may provide for a Date of Termination of Employment on
the date Employee receives the Notice of Termination of Employment, or any date
thereafter elected by the Company in its sole discretion.  The failure by Employee or the Company to set
forth in the Notice of Termination of Employment any fact or circumstance which
contributes to a showing of Cause or Good Reason shall not waive any right of
Employee or the Company hereunder or preclude Employee or the Company from
asserting such fact or circumstance in enforcing Employee’s or the Company’s
rights hereunder.

 

Section 5.03.  Deemed Resignations.  Unless otherwise agreed to
in writing by the Company and Employee prior to the termination of Employee’s
employment, any termination of Employee’s employment shall constitute an
automatic resignation of Employee: (i) as an officer of the Company and
each Affiliate; (ii) as a member of the Board (if applicable); (iii) from
the board of directors or similar governing body of any Affiliate; and (iv) from
the board of directors or similar governing body of any corporation, limited
liability entity or other entity in which the Company or any Affiliate holds an
equity interest and with respect to which board or similar governing body
Employee serves as the Company’s or such Affiliate’s designee or other
representative.

 

ARTICLE
6

SEVERANCE BENEFITS

 

Section 6.01.  Death, Disability, Termination for Cause or
Resignation Without Good Reason.  If Employee’s
employment with the Company is terminated by the Company for Cause or by
Employee without Good Reason, or if such employment terminates by reason of
Employee’s death or Disability, then, upon such termination, Employee (or
Employee’s estate) shall be entitled to 

 

10

 

receive the Accrued Obligations (other than
in the case of a termination by the Company for Cause, any bonus or incentive
compensation that under the applicable plan requires Employee to be employed on
the date of payment).  If Employee’s
employment with the Company terminates by reason of death or Disability, then
the Company shall also pay to Employee (or Employee’s estate or legal
representatives, as applicable) on the Pro Rata Bonus Payment Date an amount in
cash equal to the Pro Rata Bonus.

 

Section 6.02.  Involuntary Termination.  If Employee’s employment
with the Company shall be subject to an Involuntary Termination, Employee shall
be entitled to receive the Accrued Obligations and, subject to the provisions
of Section 14.09, the Company will, as additional compensation for
services rendered to the Company (including its Affiliates), pay to Employee
the following amounts and take the following actions after the last day of
Employee’s employment with the Company:

 

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

 

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

 

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

 

(d)   during the portion, if any, of the 18-month period
following the date of Employee’s termination of employment with the Company
that Employee elects to continue coverage for Employee and Employee’s eligible
dependents 

 

11

 

under the Company’s group
health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, and/or Sections 601 through 608 of the Employee Retirement Income
Security Act of 1974, as amended, the Company shall promptly reimburse Employee
on a monthly basis for the difference, if any, between (i) the amount
Employee pays to effect and continue such coverage and (ii) the amount
charged to a similarly situated active employee of the Company for similar
coverage.

 

Notwithstanding the foregoing, if Employee is
entitled to receive severance payments under Section 6.02 (a) or (b),
as applicable, and under Section 6.02(c), the aggregate amount payable pursuant
to Sections 6.02 (a) or (b), as applicable, and Section 6.02(c) (the
“Aggregate Severance Amount”) shall be
reduced (but not below zero) by the fair market value, as of the Employee’s
Date of Termination of Employment, of the Restricted Stock held by Employee
that has then vested, or that may vest at any time after the Employee’s Date of
Termination of Employment (the “Carried Amount”).  If the Carried Amount exceeds the Aggregate
Severance Amount prior to the commencement of payment of any of the severance
benefits described in Section 6.02(a) or (b), as applicable, and Section 6.02(c),
then Executive shall not be entitled to receive any payments pursuant to 6.02(a) or
(b), as applicable, or Section 6.02(c). 
If the Carried Amount does not exceed the Aggregate Severance Amount
prior to the commencement of payment of any of the severance benefits described
in Sections 6.02(a) or (b), as applicable, and Section 6.02(c), then
the reduction shall be effected as follows: first, the payment provided for in Section 6.02(c) shall
be reduced by the Carried Amount if the Carried Amount or any portion thereof
has been paid prior to the payment date provided for in Section 6.02(c),
and if necessary, payments of the amounts provided for in Section 6.02(a) or
(b), as applicable, shall be reduced pro rata by any additional Carried
Amount.   If at any time after the
commencement of payment of the severance benefits described in Section 6.02(a) or
(b), as applicable, and Section 6.02(c), the Carried Amount not yet applied
as a reduction in the severance benefits exceeds the remaining severance
benefits to be paid, the Company shall cease to make any further payments in
respect of either severance benefit, but no amount previously paid to Executive
pursuant to Section 6.02(a) or (b), as applicable, and Section 6.02(c) shall
be repaid to the Company.

 

Section 6.03.  Death, Disability or Involuntary Termination
After Agreement Termination Date.  If, after the
Agreement Termination Date but prior to the payment date of the annual bonus
for the calendar year in which the Agreement Termination Date occurs,
Employee’s employment with the Company terminates by reason of the Employee’s
death or by reason of what would have otherwise qualified as Disability or
Involuntary Termination under this Agreement if this Agreement was still in
effect at the time of such termination of employment, the Company shall pay to
Employee (or Employee’s estate or legal 

 

12

 

representatives, as applicable), subject to
the provisions of Section 14.09, on the Pro Rata Bonus Payment Date an
amount in cash equal to the Pro Rata Bonus.

 

ARTICLE
7

INTEREST ON LATE PAYMENTS

 

Section 7.01.  Interest on Late Payments. If any payment
provided for in Section 6.02(a), (b) or (c) or Section 6.03
is not made when due, then the Company shall pay to Employee interest on the
amount payable from the date that such payment should have been made under such
Section until such payment is made, which interest shall be calculated at
5% plus the prime rate of interest announced by JPMorgan Chase Bank (or any
successor thereto) at its principal office in New York, and shall change when
and as any such change in such prime rate shall be announced by such bank.

 

ARTICLE
8

CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY

 

Section 8.01.  Gross-up Payment.  Notwithstanding anything to
the contrary in this Agreement (but subject to the remaining provisions of this
Section 8.01), in the event that any payment, benefit or distribution by
the Company to or for the benefit of Employee, whether paid, payable, provided,
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall pay to Employee an
additional payment (a “Gross-up Payment”)
in an amount such that after payment by Employee of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed on any Gross-up Payment, Employee retains an amount of the Gross-up
Payment equal to the Excise Tax imposed upon all Payments except for the Cobalt
Equity Payments.  Notwithstanding the
provisions of the preceding sentence, if it shall be determined that Employee
is entitled to the Gross-up Payment, but that the Parachute Value of all
Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-up
Payment shall be made to Employee and the amounts payable under Article 6
shall be reduced so that the Parachute Value of all Payments, in the aggregate,
equals the Safe Harbor Amount.  The reduction
of the amounts payable under Article 6, if applicable, shall be made by
reducing Payments payable hereunder (including reducing a Payment to zero) in
the order in which such Payments would be made (beginning with such Payment
that would be made first in time and continuing, to the extent necessary,
through to such Payment that would be made last in time).  For 

 

13

 

purposes of reducing the Payments to the Safe
Harbor Amount, only amounts payable under Article 6 (and no other
Payments) shall be reduced.  If the
reduction of the amount payable under Article 6 would not result in a
reduction of the Parachute Value of all Payments to the Safe Harbor Amount,
then no amounts payable under Article 6 shall be reduced pursuant to this Section 8.01.  The Company’s obligation to make a Gross-up
Payment under this Section 8.01 shall not be conditioned upon Employee’s
termination of employment.  The Gross-up
Payment attributable to a particular Payment shall be made at the time such
Payment is made; provided, however, that in no
event shall the Gross-up Payment be made later than the end of Employee’s
taxable year next following Employee’s taxable year in which Employee remits
the related taxes.  The Company and
Employee shall make an initial determination as to whether a Gross-up Payment
is required and the amount of any such Gross-up Payment.

 

Section 8.02.  Disposition of Claims.  Employee shall notify the
Company immediately in writing of any claim by the Internal Revenue Service
which, if successful, would require the Company to make a Gross-up Payment (or
a Gross-up Payment in excess of that, if any, initially determined by the
Company and Employee) within five days of the receipt of such claim.  The Company shall notify Employee in writing
at least five days prior to the due date of any response required with respect
to such claim if it plans to contest the claim. 
If the Company decides to contest such claim, Employee shall cooperate
fully with the Company in such action; provided, however,
the Company shall bear and pay directly or indirectly all costs and expenses
(including additional interest and penalties) incurred in connection with such
action and shall indemnify and hold Employee harmless, on an after-tax basis,
for any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of the Company’s action.  If, as a result of the Company’s action with
respect to a claim, Employee receives a refund of any amount paid by the
Company with respect to such claim, Employee shall promptly pay such refund to
the Company.  If the Company fails to
timely notify Employee whether it will contest such claim or the Company
determines not to contest such claim, then the Company shall immediately pay to
Employee the portion of such claim, if any, which it has not previously paid to
Employee.

 

ARTICLE
9

COMPETITION

 

Section 9.01.  Competition. 
(a) Employee and the Company agree to the restrictive covenants of
this Article  9: (i) in consideration for the confidential
information provided by the Company to Employee pursuant to Section 4.01
or otherwise during the course of his employment; (ii) as part of the
consideration for the compensation and benefits to be paid to Employee by the
Company; (iii) to 

 

14

 

protect the (A) trade secrets and
confidential information of the Company disclosed or entrusted to Employee by
the Company and (B) business goodwill of the Company developed through the
efforts of Employee and/or the business opportunities disclosed or entrusted to
Employee by the Company; and (iv) as an additional incentive for the
Company to enter into this Agreement.

 

(b)   Subject to the exceptions set forth in the last
sentence of this Section 9.01(b), Employee shall not at any time while
employed by the Company and for a 6-month period following the Date of
Termination of Employment (the “Non-Compete Period”),
directly or indirectly engage in, have any equity interest in, be affiliated with,
or manage or operate any person, firm, corporation, partnership, entity or
business (whether as director, officer, employee, agent, representative,
partner, member, security holder, consultant or otherwise) that engages in any
business that competes with any Business (as defined below) of the Company in
the states within the United States (or District of Columbia, if applicable)
and in the geographic regions outside of the United States (i) in which
the Company conducts operations or (ii) with respect to which the Company
devotes more than de minimis resources in the
furtherance of the Business; provided, however, that Employee shall be permitted to acquire a
passive stock interest in such a business if the stock acquired is publicly
traded and is not more than two percent of the outstanding interest in such
business.  Notwithstanding the foregoing
or anything to the contrary in this Agreement, it shall not be a violation of
this Article 9 for Employee to (A) provide services to any person or
entity engaged in the Business if Employee is not involved, directly or
indirectly, in the management, supervision or operations of the Business
(including by reason of any individual reporting to Employee) and the gross
revenues generated by the Business do not constitute more than 33% of the
consolidated gross revenues of such person or entity and its affiliates and (B) provide
services to or otherwise be affiliated with a venture capital or private equity
firm that holds investments in entities engaged in the Business if Employee is
not involved, directly or indirectly, in the identification, evaluation,
recommendation, acquisition, management, operation, supervision or disposition
of such investments, and the gross revenues generated by such Business do not
constitute more than the 33% of the consolidated gross revenues of such firm
and its affiliates.

 

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

 

15

 

(d)        Employee and the Company
agree that the foregoing restrictions are reasonable under the circumstances,
are necessary to protect the Company’s legitimate business interests and that
any breach of such restrictions would cause irreparable injury to the Company.  Employee understands that the foregoing
restrictions may limit Employee’s ability to engage in certain businesses
anywhere in the United States and outside the United States during the
Non-Compete Period but acknowledges that he will receive sufficiently high
remuneration and other benefits from the Company to justify such
restrictions.  Further, Employee
acknowledges that his skills are such that he can be gainfully employed in
non-competitive employment, and that the agreement not to compete will not
prevent him from earning a living. 
Nevertheless, in the event the terms of this Article 9 shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too great a period of time or over too great a geographical
area or by reason of its being too extensive in any other respect, it will be
interpreted to extend only over the maximum period of time for which it may be
enforceable, over the maximum geographical area as to which it may be
enforceable, or to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.

 

(e)        Employee hereby represents
to the Company that he has read and understands, and agrees to be bound by, the
terms of this Article 9.  Employee
acknowledges that the geographic scope and duration of the covenants contained
in this Article 9 are the result of arm’s-length bargaining and are fair
and reasonable in light of (i) the nature and wide geographic scope of the
Company’s operations of, and in, the Business, (ii) Employee’s level of
control over and contact with the Company’s operations of, and in, the Business
in all jurisdictions in which it is conducted, (iii) the geographic
breadth in which the Company conducts the Business and (iv) the amount of
consideration (including confidential information and trade secrets) that
Employee is receiving from the Company.

 

(f)         As used in this Article 9,
(i) the term “Company” shall
include the Company and its subsidiaries and (ii) the term “Business” shall mean the exploration for, and the
development and production of, oil and natural gas and the acquisition of
leases and other real property in connection therewith, as such business may be
expanded or altered by the Company during the period of Employee’s employment
by the Company; provided, that any business or
endeavor shall cease to be the “Business” if
the Company is not or ceases to be engaged in such business or endeavor.

 

(g)        In consideration of the
Company’s promises herein, during the Non-Compete Period, Employee promises to
disclose to the Company any employment, consulting, or other service
relationship that Employee enters into after the termination of Employee’s
employment with the Company for any reason. 
Such disclosure shall be made within seven business days after Employee
enters into 

 

16

 

such employment, consulting or other service
relationship.  Employee expressly
consents to and authorizes the Company to disclose both the existence and terms
of this Agreement to any future employer or recipient of Employee’s services
and to take any steps the Company deems necessary to enforce this Agreement.

 

ARTICLE 10

NONDISCLOSURE OF CONFIDENTIAL AND PROPRIETARY INFORMATION

 

Section 10.01.  Nondisclosure of Confidential and Proprietary
Information.  (a) Except
in connection with the faithful performance of Employee’s duties for the
Company or pursuant to Section 10.01(c) or (e), Employee shall, in
perpetuity, maintain in confidence and shall not directly, indirectly or
otherwise, (i) use, disseminate, disclose or publish, or use for his
benefit or the benefit of any person, firm, corporation or other entity, any (A) confidential
or proprietary information or trade secrets of or relating to the Company
(including, without limitation, intellectual property in the form of patents,
trademarks and copyrights and applications therefor, ideas, inventions, works,
discoveries, improvements, information, documents, formulae, practices, processes,
methods, developments, source code, modifications, technology, techniques,
data, programs, other know-how or materials, in each case, that are
confidential and/or proprietary and owned, developed or possessed by the
Company, whether in tangible or intangible form) or (B) confidential or
proprietary information with respect to the Company’s operations, processes,
products, inventions, business practices, strategies, business plans, finances,
principals, vendors, suppliers, customers, potential customers, marketing
methods, costs, prices, contractual relationships, regulatory status, prospects
and compensation paid to employees or other terms of employment or (ii) 
deliver to any person, firm, corporation or other entity any document, record,
notebook, computer program or similar repository of or containing any such
confidential or proprietary information or trade secrets.  The parties hereby stipulate and agree that
as between them the foregoing matters are important, material and confidential
proprietary information and trade secrets and materially affect the successful
conduct of the businesses of the Company (and any successor or assignee of the
Company).

 

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

 

17

 

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

 

(d)        As used in this Article 10
and Article 11, the term “Company” shall
include the Company and its subsidiaries.

 

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

 

ARTICLE 11

INVENTIONS

 

Section 11.01.  Inventions. 
All rights to discoveries, inventions, improvements and innovations
(including all data and records pertaining thereto) related to the business of
the Company, whether or not patentable, copyrightable, registrable as a
trademark, or reduced to writing, that Employee may discover, invent or
originate during the period of his employment with the Company, either alone or
with others and whether or not during working hours or by the use of the
facilities of the Company (“Inventions”),
shall be the exclusive property of the Company. 
Employee shall promptly disclose all Inventions to the Company, shall
execute at the request of the Company any assignments or other documents the
Company may deem reasonably necessary to protect or perfect its rights therein,
and shall assist the Company, upon reasonable request and at the Company’s
expense, in obtaining, defending and enforcing the Company’s rights
therein.  Employee hereby appoints the
Company as his attorney-in-fact to execute on his behalf any assignments or
other documents reasonably deemed necessary by the Company to protect or
perfect its rights to any Inventions.

 

18

 

ARTICLE 12

INJUNCTIVE RELIEF

 

Section 12.01.  Injunctive Relief.   It is recognized and acknowledged by Employee
that a breach of the covenants contained in Articles 9, 10, 11 and 13 will
cause irreparable damage to Company and its Affiliates and their goodwill, the
exact amount of which will be difficult or impossible to ascertain, and that
the remedies at law for any such breach will be inadequate.  Accordingly, Employee agrees that in the
event of a breach of any of the covenants contained in Articles 9, 10, 11 and
13, in addition to any other remedy which may be available at law or in equity,
the Company will be entitled to specific performance and injunctive relief.

 

ARTICLE 13

NON-DISPARAGEMENT

 

Section 13.01.  Non-disparagement.  During Employee’s employment
with the Company and following termination of his employment with the Company
for any reason, (a) Employee agrees not to disparage in any material
respect the Company, its subsidiaries, any of their products or practices, or
any of their directors, officers, agents, representatives, members, partners or
stockholders, (b) either orally or in writing and (c) the Company
agrees that it and its subsidiaries will (i) not make any formal
statements that disparage in any material respect Employee and (ii) use
commercially reasonable efforts to advise its directors and officers not to
disparage in any material respect Employee.

 

ARTICLE 14

GENERAL

 

Section 14.01.  Survivorship. 
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations.

 

Section 14.02.  Arbitration. 
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before an
arbitrator in Houston, Texas in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association then
in effect.  Judgment may be entered on
the arbitration award in any court having jurisdiction; provided,
however, that the Company shall be
entitled to seek a restraining order or injunction in any court of competent
jurisdiction to prevent any violation or continuation of any violation of the
provisions of Articles 9, 10, 11 or 13 of this Agreement and Employee hereby 

 

19

 

consents that such restraining order or
injunction may be granted without requiring the Company to post a bond.  Only individuals who are on the AAA register
of arbitrators shall be selected as an arbitrator.  Within 20 days of the conclusion of the
arbitration hearing, the arbitrator(s) shall prepare written findings of
fact and conclusions of law.  It is
mutually agreed that the written decision of the arbitrator(s) shall be
valid, binding, final and non-appealable; provided however, that the parties
hereto agree that the arbitrator shall not be empowered to award punitive
damages against any party to such arbitration. 
The Company shall bear all administrative fees and expenses of the
arbitration and each party shall bear its own counsel fees and expenses except
as otherwise provided in this paragraph. 
If Employee makes a claim against the Company relating to the
performance of, or the rights and obligations of, the Company arising under,
relating to or in connection with this Agreement (a “Covered
Claim by the Employee”), the arbitrators shall award Employee his
reasonable legal fees and expenses if Employee prevails on one material Covered
Claim by the Employee (as determined by the arbitrator).  If a claim is made by the Company against
Employee relating to the performance of, or the rights and obligations of,
Employee arising under, relating to or in connection with this Agreement (a “Covered Claim by the Company”), the arbitrators shall award
Employee his reasonable legal fees and expenses; provided
that if such Covered Claim by the Company relates to Employee’s performance or
obligations under Articles 9, 10, 11 or 13, the arbitrators shall award
Employee his legal fees and expenses only if the Company does not prevail on
any Covered Claim by the Company relating to any such Section (as
determined by the arbitrator).  Any
reimbursement of reasonable legal fees and expenses required under this Section 14.02
and any reimbursement of expenses included in the Accrued Obligations payable
to Employee under Article 6 shall be made not later than the close of Employee’s
taxable year following the taxable year in which Employee incurs the expense; provided, however, that,
upon Employee’s termination of employment with the Company, in no event shall
any additional reimbursement be made prior to the date that is six months after
the date of Employee’s termination of employment to the extent such payment
delay is required under Section 409A(a)(2)(B)(i) of the Code.  In no event shall any reimbursement be made
to Employee for such fees and expenses incurred after the date that is 10 years
after the date of Employee’s termination of employment with the Company.

 

Section 14.03.  Payment Obligations Absolute.  The Company’s obligation to
pay Employee the amounts and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense
or other right which the Company (including its subsidiaries) may have against
him or anyone else.  All amounts payable
by the Company shall be paid without notice or demand.  Employee shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of 

 

20

 

this Agreement, and the obtaining of any such
other employment shall in no event effect any reduction of the Company’s
obligations to make (or cause to be made) the payments and arrangements
required to be made under this Agreement.

 

Section 14.04.  Successors. 
This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, by merger or otherwise.  This Agreement shall also be binding upon and
inure to the benefit of Employee and his estate.  If Employee shall die prior to full payment
of amounts due pursuant to this Agreement, such amounts shall be payable
pursuant to the terms of this Agreement to his estate.

 

Section 14.05.  Severability. 
Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction by reason of applicable law shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

Section 14.06.  Non-alienation.  Employee shall not have any
right to pledge, hypothecate, anticipate or assign this Agreement or the rights
hereunder, except by will or the laws of descent and distribution.

 

Section 14.07.  Notices. 
Any notices or other communications provided for in this Agreement
shall be sufficient if in writing.  In
the case of Employee, such notices or communications shall be effectively
delivered if hand-delivered to Employee at his principal place of employment or
if sent by registered or certified mail to Employee at the last address he has
filed with the Company.  In the case of
the Company, such notices or communications shall be effectively delivered if
sent by registered or certified mail to the Company at its principal Employee
offices.

 

Section 14.08.  Controlling Law and Waiver of Jury
Trial.  This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Texas.  With respect to any claim or
dispute related to or arising under this Agreement, Employee and the Company
hereby consent to the exclusive jurisdiction, forum and venue of the state and
federal courts located in Harris County, Texas. 
Notwithstanding the foregoing, Section 3.03 and the transfer
restrictions set forth in Annex II shall be governed by, and construed in
accordance with, the laws of the State of Delaware.  Furthermore, with respect to any claim or
dispute related to or arising under Section 3.03 and the transfer
restrictions set forth in Annex II, Employee and the Company hereby consent to
the exclusive jurisdiction, forum and venue of the Court of Chancery of the
State of Delaware.  Each of the parties
hereto hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or related to this Agreement or the
transactions contemplated hereby.

 

21

 

Section 14.09.  Release and Delayed Payment Restriction.  (a) As a condition to
the receipt of any benefit under Article 6 hereof (except in the case of
the termination of Employee’s employment with the Company by reason of
Employee’s death or Disability and except for the Accrued Obligations),
Employee shall first execute a release in the form attached hereto as Exhibit B
(with such changes therein as the Company may reasonably require to reflect
changes in applicable law and the circumstances relating to the termination of
Employee’s employment), releasing the Company and certain other persons and
entities from certain claims and other liabilities.

 

(b)        The release described in Section 14.09(a) hereof
must be effective and irrevocable within 55 days after the date of the
termination of Employee’s employment with the Company.  Notwithstanding any provision in this
Agreement to the contrary, if the payment of any amount or benefit under this
Agreement would be subject to additional taxes and interest under Section 409A
of the Code because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B)(i) of
the Code and the regulations thereunder, then any such payment or benefit that
Employee would otherwise be entitled to during the first six months following
the date of Employee’s termination of employment shall be accumulated and paid
or provided, as applicable, on the date that is six months after the date of
Employee’s termination of employment (or if such date does not fall on a
business day of the Company, the next following business day of the Company),
or such earlier date upon which such amount can be paid or provided under Section 409A
of the Code without being subject to such additional taxes and interest.  If this Section 14.09(b) becomes
applicable such that the payment of any amount is delayed, any payments that
are so delayed shall accrue interest on a non-compounded basis, from the date
such payment would have been made had this Section 14.09(b) not
applied to the actual date of payment, at the prime rate of interest announced
by JPMorgan Chase Bank (or any successor thereto) at its principal office in
New York on the date of Employee’s termination of employment (or the first
business day following such date if such termination does not occur on a
business day) and shall be paid in a lump sum on the actual date of payment of
the delayed payment amount.  Employee
hereby agrees to be bound by the Company’s determination of its “specified employees” (as such term is defined in Section 409A
of the Code) in accordance with any of the methods permitted under the
regulations issued under Section 409A of the Code.

 

Section 14.10.  Full Settlement.  If Employee is entitled to
and receives the benefits provided hereunder, performance of the obligations of
the Company hereunder will constitute full settlement of all claims that
Employee might otherwise assert against the Company on account of his
termination of employment.

 

Section 14.11.  Unfunded Obligation.  The obligation to pay
amounts under this Agreement is an unfunded obligation of the Company, and no
such obligation 

 

22

 

shall create a trust or be deemed to be
secured by any pledge or encumbrance on any property of the Company.

 

Section 14.12.  Not a Contract of Employment.  This Agreement shall not be
deemed to constitute a contract of employment and shall in no way change the
at-will nature of Employee’s employment. 
Employee and the Company thus recognize and agree that subject to the
notice provisions of Section 5.02, (a) the Company may terminate
Employee’s employment at any time, for any reason or no reason at all; and (b) Employee
may terminate his employment at any time, for any reason or no reason at all.

 

Section 14.13.  Withholding of Taxes and Other Employee
Deductions.  The Company may
withhold from any benefits and payments made pursuant to this Agreement
(whether actually or constructively made to Employee or treated as included in
Employee’s income under Section 409A of the Code) all federal, state,
city, foreign and other applicable taxes and withholdings as may be required
pursuant to any law or governmental regulation or ruling and all other
customary deductions made with respect to the Company’s employees generally.

 

Section 14.14.  Number and Gender.  Wherever appropriate herein,
words used in the singular shall include the plural and the plural shall
include the singular.  The masculine
gender where appearing herein shall be deemed to include the feminine gender.

 

Section 14.15.  Entire Agreement.  This Agreement, including
the Annexes and Exhibits attached hereto, constitutes the entire agreement of
the parties with regard to the subject matter hereof and supersedes any and all
prior understandings, agreements or correspondence between the parties.  Any modification of this Agreement will be
effective only if it is in writing and signed by the party to be charged.

 

23

 

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

 

	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ SAMUEL H. GILLESPIE

  
	
   

  	
  Samuel H. Gillespie

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COBALT
  INTERNATIONAL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH H. BRYANT

  
	
   

  	
   

  	
  Name:

  	
  Joseph
  H. Bryant

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer and Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COBALT
  INTERNATIONAL ENERGY, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH H. BRYANT

  
	
   

  	
   

  	
  Name:

  	
  Joseph
  H. Bryant

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer and Chairman of the Board

  

 

24

 

ANNEX
I

 

ACCREDITED INVESTOR
REPRESENTATIONS

 

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

 

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

 

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

 

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

 

1

 

ANNEX
II

 

TRANSFER RESTRICTIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

Notwithstanding the foregoing, Employee may
Transfer:

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

3

 

EXHIBIT
A

 

FORM OF RESTRICTED
STOCK AWARD AGREEMENT — 

CLASS C INTERESTS

 

COBALT
INTERNATIONAL ENERGY, INC.

LONG TERM INCENTIVE PLAN

 

Restricted Stock Award Agreement

IPO Award — Class C Interests

 

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

 

	
  Participant

  	
   

  	
  [Full name]

  
	
   

  	
   

  	
   

  
	
  Number of Shares Underlying Award

  	
   

  	
  [·] Shares (the “Restricted Shares”)

  
	
   

  	
   

  	
   

  
	
  Grant Date

  	
   

  	
  [Date of closing of IPO]

  
	
   

  	
   

  	
   

  
	
  Vesting

  	
   

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

  

 

(1) For
Class C Interests currently outstanding.

 

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

 

A-1

 

Attachment A

 

Restricted Stock Award Agreement

Terms and Conditions

 

Grant to:  [Full name]

 

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

 

Section 2.  Issuance
of Shares.

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

Section 3.  Vesting of
Restricted Shares.

 

(a)           Termination of Service.

 

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

 

(ii)           Any
Other Termination of Service.  In the event of the Participant’s Termination
of Service at any time for any reason (other than due to the Participant’s
death or Disability), the Restricted Shares shall be forfeited in their
entirety as of the date of such termination without any payment to the
Participant.  Notwithstanding the
foregoing, if the restrictions contained in the Lock Up Agreement entered into
by the Participant with respect to Shares or Restricted Shares issued to the
Participant in connection with the initial public offering of Shares (the “IPO”) expired on or prior to the date of such termination,
the Restricted Shares shall fully vest; provided that
such vested Shares may not be 

 

3

 

Transferred
(as defined below) until the Scheduled Vesting Date and shall be subject to
forfeiture if the Participant materially breaches the non-competition agreement
entered into by the Participant as of the date hereof and attached hereto as
Attachment C.  “Transfer”
means (a) offer, sell, pledge or hypothecate any legal or beneficial
interest, including the grant of an option or other right, or otherwise
transfer or enter into an agreement to do so or (b) enter into any hedge,
swap or any other agreement that transfers, in whole or in part, any of the
economic consequences of ownership (whether such transaction is settled by
delivery of cash, shares or otherwise).

 

Notwithstanding
the foregoing, in the event of the Participant’s Termination of Service other
than by the Company for Cause, the Committee may, in its sole discretion,
accelerate the vesting or waive any term or condition (including the Service
Condition) of this Agreement, subject to such terms and conditions as the
Committee deems appropriate, with respect to all or a portion of the Restricted
Shares.

 

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

 

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

 

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

 

4

 

Section 4.  Miscellaneous
Provisions.

 

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

 

if
to the Company, to:

 

Cobalt
International Energy, Inc.

Two
Post Oak Central

1980
Post Oak Blvd., Suite 1200

Attention:
[General Counsel]

Facsimile:
[number]

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

(j)            Jurisdiction.  The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby (whether brought by any party or any of its affiliates or
against any party or any of its affiliates) shall be brought in the Delaware
Chancery Court or, if such court shall not have jurisdiction, any federal court
located in the State of Delaware or other Delaware state court, and each of the
parties hereby irrevocably consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.  Process in any such suit, action
or proceeding may be served 

 

6

 

on
each party anywhere in the world, whether within or without the jurisdiction of
any such court.  Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 4(a) shall be deemed effective service of process on such
party.

 

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

 

7

 

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

 

 

	
   

  	
  COBALT
  INTERNATIONAL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name
  of Participant]

  

 

8

 

Attachment
B

 

SECTION 83(b) ELECTION

 

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

 

	
  (1)

  	
  The
  taxpayer performing the services is:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Address:

  
	
   

  	
  Social
  Security Number:

  
	
   

  	
   

  
	
  (2)

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

  
	
   

  	
   

  
	
  (3)

  	
  The
  Restricted Shares were transferred on
                     .

  
	
   

  	
   

  
	
  (4)

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

  
	
   

  	
   

  
	
  (5)

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

  
	
   

  	
   

  
	
  (6)

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

  
	
   

  	
   

  
	
  (7)

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

  
	
   

  	
   

  
	
  (8)

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

  
	
   

  	
   

  
	
  (9)

  	
  This
  statement is executed on
                     .

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Spouse
  (if any)

  	
   

  	
  Taxpayer

  

 

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

 

9

 

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

 

10

 

Attachment C

 

NON-COMPETITION AGREEMENT

 

This
NON-COMPETITION AGREEMENT (this “Agreement”)
dated as of [·],
20    , is made by and between COBALT INTERNATIONAL ENERGY,
INC., a Delaware corporation (together with its subsidiaries, the “Company”), and [·] (“Employee”).

 

RECITALS

 

WHEREAS,
pursuant to a restricted stock award agreement (the “Restricted
Stock Award Agreement”), dated as of the date hereof, and the
Company’s Long Term Incentive Plan (the “LTIP”), the
Company has granted to Employee [·] Restricted
Shares (as defined in the Restricted Stock Award Agreement); and

 

WHEREAS,
the Company and Employee agree to the restrictions set forth in this Agreement
for the consideration set forth in Section 1(a) and for the Company’s
agreement to vest the Restricted Shares upon Employee’s Termination of Service
(as defined in the LTIP) pursuant to Section 3(a)(ii) of the
Restricted Stock Award Agreement (from the date of such termination through the
Scheduled Vesting Date, such Restricted Shares are referred to as the “Non-Competition Shares”).

 

Unless
defined in this Agreement, capitalized terms will have the meanings assigned to
them in the Restricted Stock Award Agreement.

 

AGREEMENT

 

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

 

Section 1.  Non-Competition
and Non-Solicitation.

 

(a)        Employee and the Company
agree to the restrictive covenants contained in this Agreement:  (i) in consideration for the
confidential information provided by the Company to Employee during the course
of his or her employment with the Company; (ii) as part of the
consideration for the Restricted Shares issued to Employee in connection with
the IPO; (iii) to protect the (A) trade secrets and confidential
information of the Company disclosed or entrusted to Employee by the Company
and (B) business goodwill of the Company developed through the efforts of
Employee and/or the business opportunities 

 

11

 

disclosed or entrusted to
Employee by the Company; and (iv) as an additional incentive for the
Company to enter into the Restricted Stock Award Agreement.

 

(b)        Subject to the exceptions
set forth in the last sentence of this Section 1(b), Employee shall not at
any time during the period (the “Restricted Period”)
commencing on the date of his or her Termination of Service and ending on the
Scheduled Vesting Date, directly or indirectly engage in, have any equity
interest in, be affiliated with, or manage or operate any person, firm,
corporation, partnership, entity or business (whether as director, officer,
employee, agent, representative, partner, member, security holder, consultant
or otherwise) that engages in any business that competes with any Business (as defined
below) of the Company in the states within the United States (or District of
Columbia, if applicable) and in the geographic regions outside of the United
States (i) in which the Company conducts operations or (ii) with
respect to which the Company devotes more than de minimis
resources in the furtherance of the Business; provided,
however, that Employee shall be permitted to acquire a passive stock
interest in such a business if the stock acquired is publicly traded and is not
more than two percent of the outstanding interest in such business.  Notwithstanding the foregoing or anything to
the contrary in this Agreement, it shall not be a violation of this Section 1
for Employee to (i) provide services to any person or entity engaged in
the Business if Employee is not involved, directly or indirectly, in the
management, supervision or operations of the Business (including by reason of
any individual reporting to Employee) and the gross revenues generated by the
Business do not constitute more than 33% of the consolidated gross revenues of
such person or entity and its affiliates and (ii) provide services to or
otherwise be affiliated with a venture capital or private equity firm that
holds investments in entities engaged in the Business if Employee is not
involved, directly or indirectly, in the identification, evaluation,
recommendation, acquisition, management, operation, supervision or disposition
of such investments, and the gross revenues generated by such Business do not
constitute more than the 33% of the consolidated gross revenues of such firm
and its affiliates.  “Business” means the exploration for, and the development and
production of, oil and natural gas and the acquisition of leases and other real
property in connection therewith, as such business may be expanded or altered
by the Company during the period of Employee’s employment with the Company; provided that any business or endeavor shall cease to be the
“Business” if the Company is not or ceases to be engaged in such business or
endeavor.

 

(c)           During the
Restricted Period, Employee shall not, directly or indirectly, recruit or
otherwise solicit or induce any employee of the Company, except on behalf of
the Company, to (i) terminate his or her employment with the Company or (ii) establish
any relationship with Employee or any of his or her affiliates for any business
purpose competitive with the Business of the Company, provided,
however, that a general solicitation of the public for employment
shall 

 

12

 

not constitute a solicitation hereunder so
long as such general solicitation is not designed to target any employee of the
Company.

 

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

 

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

 

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

 

13

 

Section 2.  Nondisclosure
of Confidential and Proprietary Information.

 

(a)           Except in connection with the faithful performance
of Employee’s duties for the Company or pursuant to Section 2(c) or
(d), Employee shall, in perpetuity, maintain in confidence and shall not
directly, indirectly or otherwise, (i) use, disseminate, disclose or
publish, or use for his benefit or the benefit of any person, firm, corporation
or other entity, any (A) confidential or proprietary information or trade
secrets of or relating to the Company (including, without limitation,
intellectual property in the form of patents, trademarks and copyrights and
applications therefor, ideas, inventions, works, discoveries, improvements,
information, documents, formulae, practices, processes, methods, developments,
source code, modifications, technology, techniques, data, programs, other
know-how or materials, in each case, that are confidential and/or proprietary
and owned, developed or possessed by the Company, whether in tangible or
intangible form) or (B) confidential or proprietary information with
respect to the Company’s operations, processes, products, inventions, business
practices, strategies, business plans, finances, principals, vendors, suppliers,
customers, potential customers, marketing methods, costs, prices, contractual
relationships, regulatory status, prospects and compensation paid to employees
or other terms of employment or (ii) deliver to any person, firm,
corporation or other entity any document, record, notebook, computer program or
similar repository of or containing any such confidential or proprietary
information or trade secrets.  The
parties hereby stipulate and agree that as between them the foregoing matters
are important, material and confidential proprietary information and trade
secrets and materially affect the successful conduct of the businesses of the
Company (and any successor or assignee of the Company).

 

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

 

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

 

14

 

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

 

Section 3. 
Inventions.  All rights to discoveries, inventions,
improvements and innovations (including all data and records pertaining
thereto) related to the business of the Company, whether or not patentable,
copyrightable, registrable as a trademark, or reduced to writing, that Employee
may discover, invent or originate during the period of his or her employment
with the Company, either alone or with others and whether or not during working
hours or by the use of the facilities of the Company (“Inventions”),
shall be the exclusive property of the Company. 
Employee shall promptly disclose all Inventions to the Company, shall
execute at the request of the Company any assignments or other documents the
Company may deem reasonably necessary to protect or perfect its rights therein,
and shall assist the Company, upon reasonable request and at the Company’s
expense, in obtaining, defending and enforcing the Company’s rights
therein.  Employee hereby appoints the
Company as his or her attorney-in-fact to execute on his or her behalf any
assignments or other documents reasonably deemed necessary by the Company to
protect or perfect its rights to any Inventions.

 

Section 4. 
Non-Disparagement.  During Employee’s employment with the Company
and following termination of his or her employment with the Company for any
reason, (i) Employee agrees not to disparage in any material respect the
Company any of its products or practices, or any of its directors, officers,
agents, representatives, members, partners or stockholders, either orally or in
writing, and (ii) the Company agrees that it will (x) not make any
formal statements that disparage in any material respect Employee and (y) use
commercially reasonable efforts to advise its directors and officers not to
disparage in any material respect Employee.

 

Section 5. 
Remedy for Breach.  In the event of Employee’s material breach of
the restrictions contained in this Agreement, the Non-Competition Shares (other
than any such shares that prior to such material breach were transferred
pursuant to Section 6) shall be forfeited in their entirety without any
payment to Employee; it being understood
that the Company shall have no other remedy in the event of Employee’s breach
of such restrictions.

 

15

 

Section 6. 
Withholding and Taxes.  The Company shall permit Employee to satisfy
any withholding obligation that becomes due with respect to the vesting of the
Non-Competition Shares (or any dividend or distribution thereon) in connection
with Employee’s Termination of Service, if applicable, by transferring to the
Company pursuant to such procedures as the Company may require, effective as of
the date on which such withholding obligation arises, a number of the
Non-Competition Shares having an aggregate fair market value as of such date
that is equal to the minimum amount required to be withheld.  The Company shall remit to the Internal Revenue
Service and appropriate state and local revenue agencies, for the credit of
Employee, an amount of cash withholding equal to the fair market value of such
number of the Non-Competition Shares so transferred to the Company.  In addition, to the extent that the amount of
the income taxes arising from such vesting of the Non-Competition Shares (or
any dividend or distribution thereon) exceeds the amount withheld upon such
vesting, Employee shall be permitted to transfer a number of the
Non-Competition Shares having an aggregate fair market value as of the date of
such transfer equal to such excess.

 

Section 7. 
WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

16

 

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

 

	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COBALT
  INTERNATIONAL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

17

 

EXHIBIT
B

 

FORM OF RELEASE

 

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

 

B-1

 

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

 

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

 

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

 

B-2

 

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

 

	
   

  	
   

  	
   

  
	
  [Name]

  	
   

  	
  [Employee]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cobalt
  International Energy, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  [Name]

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
  Name:

  

 

B-3Exhibit
10.3

 

EMPLOYMENT
AGREEMENT

 

dated as of October 23,
2009,

 

between

 

COBALT
INTERNATIONAL ENERGY, INC.,

(the
Company)

 

and

 

Rodney L. Gray,

(Employee)

 

 

TABLE OF
CONTENTS

 

	
   

  	
  PAGE

  
	
   

  	
   

  
	
  ARTICLE 1

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  Section 1.01.
  Definitions

  	
  1

  
	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
  EFFECTIVENESS;
  TERM OF AGREEMENT; TERMINATION OF SEVERANCE AGREEMENT

  	
   

  
	
   

  	
   

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

  	
  8

  
	
   

  	
   

  
	
  ARTICLE 3

  	
   

  
	
  POSITIONS AND
  DUTIES

  	
   

  
	
   

  	
   

  
	
  Section 3.01.
  Employment; Positions

  	
  8

  
	
  Section 3.02.
  Duties and Services

  	
  8

  
	
  Section 3.03.
  Other Interests

  	
  8

  
	
   

  	
   

  
	
  ARTICLE 4

  	
   

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

  	
   

  
	
   

  	
   

  
	
  Section 4.01.
  Accredited Investor Representations

  	
  9

  
	
  Section 4.02.
  Transfer Restrictions

  	
  9

  
	
  Section 4.03.
  Life Insurance

  	
  9

  
	
  Section 4.04.
  IPO Equity Grants

  	
  9

  
	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
  CONFIDENTIAL
  INFORMATION, INVENTIONS,

  	
   

  
	
  BUSINESS
  OPPORTUNITIES AND GOODWILL

  	
   

  
	
   

  	
   

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

  	
  10

  
	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
  COMPENSATION AND
  BENEFITS

  	
   

  
	
   

  	
   

  
	
  Section 6.01.
  Base Salary

  	
  10

  
	
  Section 6.02.
  Bonuses

  	
  10

  
	
  Section 6.03.
  Other Benefits

  	
  11

  
	
  Section 6.04.
  Expenses

  	
  11

  

 

 

	
  Section 6.05.
  Vacation and Sick Leave

  	
  11

  
	
  Section 6.06.
  Offices

  	
  11

  
	
   

  	
   

  
	
  ARTICLE 7

  	
   

  
	
  TERMINATION OF
  EMPLOYMENT AND NOTICE OF TERMINATION OF EMPLOYMENT

  	
   

  
	
   

  	
   

  
	
  Section 7.01.
  Termination of Employment

  	
  12

  
	
  Section 7.02.
  Notice of Termination of Employment

  	
  12

  
	
  Section 7.03.
  Deemed Resignations

  	
  12

  
	
   

  	
   

  
	
  ARTICLE 8

  	
   

  
	
  SEVERANCE
  BENEFITS

  	
   

  
	
   

  	
   

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

  	
  13

  
	
  Section 8.02.
  Involuntary Termination

  	
  13

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

  	
  15

  
	
   

  	
   

  
	
  ARTICLE 9

  	
   

  
	
  INTEREST ON LATE
  PAYMENTS

  	
   

  
	
   

  	
   

  
	
  Section 9.01.
  Interest on Late Payments

  	
  15

  
	
   

  	
   

  
	
  ARTICLE 10

  	
   

  
	
  CERTAIN
  ADDITIONAL PAYMENTS BY THE COMPANY

  	
   

  
	
   

  	
   

  
	
  Section 10.01.
  Gross-up Payment

  	
  15

  
	
  Section 10.02.
  Disposition of Claims

  	
  16

  
	
   

  	
   

  
	
  ARTICLE 11

  	
   

  
	
  COMPETITION

  	
   

  
	
   

  	
   

  
	
  Section 11.01.
  Competition

  	
  17

  
	
   

  	
   

  
	
  ARTICLE 12

  	
   

  
	
  NONDISCLOSURE OF
  CONFIDENTIAL AND PROPRIETARY INFORMATION

  	
   

  
	
   

  	
   

  
	
  Section 12.01.
  Nondisclosure of Confidential and Proprietary Information

  	
  19

  
	
   

  	
   

  
	
  ARTICLE 13

  	
   

  
	
  INVENTIONS

  	
   

  
	
   

  	
   

  
	
  Section 13.01.
  Inventions

  	
  20

  

 

ii

 

	
  ARTICLE 14

  	
   

  
	
  INJUNCTIVE
  RELIEF

  	
   

  
	
   

  	
   

  
	
  Section 14.01.
  Injunctive Relief

  	
  21

  
	
   

  	
   

  
	
  ARTICLE 15

  	
   

  
	
  NON-DISPARAGEMENT

  	
   

  
	
   

  	
   

  
	
  Section 15.01.
  Non-Disparagement

  	
  21

  
	
   

  	
   

  
	
  ARTICLE 16

  	
   

  
	
  GENERAL

  	
   

  
	
   

  	
   

  
	
  Section 16.01.
  Survivorship

  	
  22

  
	
  Section 16.02.
  Arbitration

  	
  22

  
	
  Section 16.03.
  Payment Obligations Absolute

  	
  23

  
	
  Section 16.04.
  Successors

  	
  23

  
	
  Section 16.05.
  Severability

  	
  23

  
	
  Section 16.06.
  Non-alienation

  	
  23

  
	
  Section 16.07.
  Notices

  	
  23

  
	
  Section 16.08.
  Controlling Law and Waiver of Jury Trial

  	
  24

  
	
  Section 16.09.
  Release and Delayed Payment Restriction

  	
  24

  
	
  Section 16.10.
  Full Settlement

  	
  25

  
	
  Section 16.11.
  Unfunded Obligation

  	
  25

  
	
  Section 16.12.
  No Right to Continued Employment

  	
  25

  
	
  Section 16.13.
  Withholding of Taxes and Other Employee Deductions

  	
  25

  
	
  Section 16.14.
  Number and Gender

  	
  25

  
	
  Section 16.15.
  Entire Agreement

  	
  25

  

 

	
  Annexes and Exhibits

  
	
   

  
	
  Annex I

  	
  Accredited Investor Representations

  
	
  Annex II

  	
  Transfer Restrictions

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of Restricted Stock Award Agreement —
  Class C Interests

  
	
  Exhibit B

  	
  Form of Restricted Stock Award Agreement —
  Class D Interests

  
	
  Exhibit C

  	
  Form of Release

  

 

iii

 

EMPLOYMENT AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

AGREEMENT

 

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

 

ARTICLE 1

DEFINITIONS

 

Section 1.01.  Definitions.

 

“Accrued Obligations”
shall mean Employee’s base salary through the Date of Termination of Employment
not theretofore paid, any expenses owed to Employee under the Company’s expense
reimbursement policy as in effect from time to time, any accrued vacation pay
owed to Employee pursuant to the Company’s vacation policy as in effect from time
to time, any earned but unpaid annual performance bonus with respect to a
calendar year that has ended on or before the

 

 

Date of Termination of Employment (it being
understood that a bonus will not be considered to have been unearned merely
because Employee has not remained employed through the payment date so long as
Employee has remained employed through the end of the calendar year that has
ended on or before the Date of Termination of Employment), any amount accrued
and arising from Employee’s participation in, or benefits accrued under, any
employee benefit plans, programs or arrangements maintained by the Company
which amounts shall be payable in accordance with the terms and conditions of
such employee benefit plans, programs or arrangements, and such other or
additional benefits as may be, or become, due to Employee under the applicable
terms of applicable plans, programs, agreements, corporate governance documents
and other arrangements of the Company and its subsidiaries.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

ARTICLE 2

EFFECTIVENESS; TERM OF AGREEMENT; TERMINATION OF SEVERANCE AGREEMENT

 

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

 

ARTICLE 3

POSITIONS AND DUTIES

 

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

 

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

 

Section 3.03.  Other Interests.  Employee agrees, during the
period of Employee’s employment by the Company, to devote substantially all of 

 

8

 

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

 

ARTICLE 4

CERTAIN EMPLOYEE REPRESENTATIONS AND AGREEMENTS; IPO EQUITY GRANTS

 

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

 

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

 

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

 

Section 4.04.  IPO Equity Grants.  Immediately prior to the
Effective Time, Employee received 2,000 units of Class D Interests (as
defined in the Partnership Agreement), which will at the Effective Time convert
to restricted shares of the Company’s common stock subject to the terms and
conditions of the Company 

 

9

 

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

 

ARTICLE 5

CONFIDENTIAL INFORMATION, INVENTIONS,

BUSINESS OPPORTUNITIES AND GOODWILL

 

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

 

ARTICLE 6

COMPENSATION AND BENEFITS

 

Section 6.01.  Base Salary. 
During the term of this Agreement, Employee shall receive a minimum,
annualized base salary of $500,000 (the “Base Salary”).  Employee’s Base Salary shall be reviewed
periodically by the Board (or a committee thereof) and, in the sole discretion
of the Board (or a committee thereof), the Base Salary may be increased (but
not decreased) effective as of any date determined by the Board (or a committee
thereof).  Employee’s Base Salary shall
be paid in equal installments in accordance with the Company’s standard policy
regarding payment of compensation to Employees but no less frequently than
monthly.

 

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

 

10

 

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

 

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

 

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

 

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

 

11

 

ARTICLE 7

TERMINATION OF EMPLOYMENT AND NOTICE OF TERMINATION OF EMPLOYMENT

 

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

 

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

 

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

 

12

 

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

 

ARTICLE 8

SEVERANCE BENEFITS

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

14

 

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

 

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

 

ARTICLE 9

INTEREST ON LATE PAYMENTS

 

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

 

ARTICLE 10

CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY

 

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

 

15

 

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

 

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

 

16

 

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

 

ARTICLE 11

COMPETITION.

 

Section 11.01.  Competition.

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

ARTICLE 12

NONDISCLOSURE OF CONFIDENTIAL AND PROPRIETARY INFORMATION

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 13

INVENTIONS

 

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

 

20

 

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

 

ARTICLE 14

INJUNCTIVE RELIEF

 

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

 

ARTICLE 15

NON-DISPARAGEMENT

 

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

 

21

 

ARTICLE 16

GENERAL

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

Section 16.09.  Release and Delayed Payment Restriction.

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  RODNEY L. GRAY

  
	
   

  	
   

  	
  Name:

  	
  Rodney L. Gray

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer and Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COBALT
  INTERNATIONAL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH H. BRYANT

  
	
   

  	
   

  	
  Name:

  	
  Joseph
  H. Bryant

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer and Chairman of the Board

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COBALT
  INTERNATIONAL ENERGY, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH H. BRYANT

  
	
   

  	
   

  	
  Name:

  	
  Joseph
  H. Bryant

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer and Chairman of the Board

  

 

26

 

ANNEX I

 

ACCREDITED INVESTOR REPRESENTATIONS

 

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

 

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

 

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

 

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

 

I-1

 

ANNEX II

 

TRANSFER RESTRICTIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

II-1

 

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

 

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

 

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

 

Notwithstanding the foregoing, Employee may Transfer:

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

3

 

EXHIBIT
A

 

FORM OF RESTRICTED STOCK AWARD AGREEMENT —
CLASS C

INTERESTS

 

COBALT
INTERNATIONAL ENERGY, INC.

LONG
TERM INCENTIVE PLAN

 

Restricted
Stock Award Agreement

 

Award — Class C
Interests

 

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

 

	
  Participant

  	
  [Full name]

  
	
   

  	
   

  
	
  Number of Shares Underlying
  Award

  	
  [·] Shares (the “Restricted Shares”)

  
	
   

  	
   

  
	
  Grant Date

  	
  [Date of closing of IPO]

  
	
   

  	
   

  
	
  Vesting

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

  

 

(1) For Class C Interests currently
outstanding.

 

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

 

A-1

 

Attachment
A

 

Restricted
Stock Award Agreement

Terms
and Conditions

 

Grant
to:  [Full name]

 

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

 

Section 2. 
Issuance of Shares.

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

Section 3. 
Vesting of Restricted Shares.

 

(a)           Termination of Service.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

Section 4. 
Miscellaneous Provisions.

 

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

 

if to the Company, to:

 

Cobalt International Energy, Inc.

Two Post Oak Central

1980 Post Oak Blvd., Suite 1200

Attention: [General Counsel]

Facsimile: [number]

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

 

	
   

  	
  COBALT INTERNATIONAL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name of Participant]

  

 

7

 

Attachment
B

 

SECTION 83(b) ELECTION

 

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

 

	
  (1)

  	
  The taxpayer performing the services is:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Address:

  
	
   

  	
  Social Security Number:

  
	
   

  	
   

  
	
  (2)

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

  
	
   

  	
   

  
	
  (3)

  	
  The Restricted Shares were transferred on.

  
	
   

  	
   

  
	
  (4)

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

  
	
   

  	
   

  
	
  (5)

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

  
	
   

  	
   

  
	
  (6)

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

  
	
   

  	
   

  
	
  (7)

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

  
	
   

  	
   

  
	
  (8)

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

  
	
   

  	
   

  
	
  (9)

  	
  This statement is executed on.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Spouse (if any)

  	
   

  	
  Taxpayer

  
	
   

  	
   

  
	
   

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

  

 

 

8

 

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

 

9

 

EXHIBIT B

 

FORM OF
RESTRICTED STOCK AWARD AGREEMENT — CLASS D

INTERESTS

 

COBALT INTERNATIONAL ENERGY, INC.

LONG TERM INCENTIVE PLAN

Restricted Stock Award Agreement

IPO
Award — Class D Interests

 

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

 

	
  Participant

  	
  [Full name]

  
	
   

  	
   

  
	
  Number of Shares

  Underlying Award

  	
  [·] Shares (the “Restricted
  Shares”)

  
	
   

  	
   

  
	
  Grant Date

  	
  [Date of closing of IPO]

  
	
   

  	
   

  
	
  Vesting

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  

 

B-1

 

	
   

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

  

 

2

 

Attachment A

 

Restricted Stock Award Agreement

Terms and Conditions

 

Grant to:  [Full name]

 

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

 

Section 2.  Issuance
of Shares.

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

Section 3.  Vesting of Restricted
Shares.

 

(a)                                  Termination
of Service.

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

Section 4.  Miscellaneous
Provisions.

 

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

 

if
to the Company, to:

 

Cobalt
International Energy, Inc.

Two
Post Oak Central

1980
Post Oak Blvd., Suite 1200

Attention:
[General Counsel]

Facsimile:
[number]

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

8

 

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

 

	
   

  	
  COBALT
  INTERNATIONAL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name
  of Participant]

  

 

9

 

Attachment B

 

SECTION 83(b) ELECTION

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (1)

  	
   

  	
  The
  taxpayer performing the services is:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Social
  Security Number:

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  The
  Restricted Shares were transferred on                              .

  
	
   

  	
   

  	
   

  
	
  (4)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (5)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (6)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (7)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (8)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (9)

  	
   

  	
  This
  statement is executed on                                  .

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   Spouse
  (if any)

  	
   

  	
  Taxpayer

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

10

 

	
   

  	
   

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

  

 

11

 

EXHIBIT C

 

FORM OF RELEASE

 

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

 

C-1

 

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

 

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

 

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

 

C-2

 

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

 

	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  [Employee]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cobalt
  International Energy, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
					

 

C-3

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