Document:

Exhibit 10.30

 

SEVERANCE AGREEMENT

 

dated as of April 1, 2010,

 

between

 

COBALT INTERNATIONAL ENERGY, INC.,
  (the Company)

 

and

 

Michael D. Drennon
  (Employee)

 

 

 

TABLE OF CONTENTS

 

 

	
 
    	
PAGE
    
	
 
    	
 
    
	
ARTICLE 1
    	
 
    
	
DEFINITIONS
    	
 
    
	
 
    	
 
    
	
Section 1.01.
    	
 
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 2
    	
 
    
	
EFFECTIVENESS;   TERM OF AGREEMENT
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2.01.
    	
 
    	
Effectiveness;   Term of Agreement
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 3
    	
 
    
	
CERTAIN   EMPLOYEE REPRESENTATIONS AND AGREEMENTS; EQUITY GRANT.
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.01.
    	
 
    	
Services
    	
7
    
	
Section 3.02. 
    	
 
    	
Life   Insurance
    	
7
    
	
Section 3.03.   
    	
 
    	
Equity   Grant
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 4
    	
 
    
	
CONFIDENTIAL   INFORMATION, INVENTIONS, BUSINESS
    	
 
    
	
OPPORTUNITIES   AND GOODWILL
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.01. 
    	
 
    	
Confidential   Information, Inventions, Business Opportunities and Goodwill
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
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
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 6
    	
 
    
	
SEVERANCE   BENEFITS
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 6.01.
    	
 
    	
Death,   Disability, Termination for Cause or Resignation Without Good Reason
    	
10
    
	
Section 6.02.
    	
 
    	
Involuntary   Termination
    	
10
    
	
Section 6.03.
    	
 
    	
Death,   Disability or Involuntary Termination After Agreement Termination Date
    	
11
    

 

i

 

	
ARTICLE 7
    	
 
    
	
INTEREST   ON LATE PAYMENTS
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 7.01.
    	
 
    	
Interest   on Late Payments
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 8
    	
 
    
	
CERTAIN   ADDITIONAL PAYMENTS BY THE COMPANY
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 8.01.
    	
 
    	
 Gross-up Payment
    	
12
    
	
Section 8.02.
    	
 
    	
Disposition   of Claims
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 9
    	
 
    
	
COMPETITION
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.01.
    	
 
    	
Competition
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 10
    	
 
    
	
NONDISCLOSURE   OF CONFIDENTIAL AND PROPRIETARY INFORMATION
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.01. 
    	
 
    	
Nondisclosure   of Confidential and Proprietary Information
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 11
    	
 
    
	
INVENTIONS
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 11.01.
    	
 
    	
Inventions
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 12
    	
 
    
	
INJUNCTIVE   RELIEF
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 12.01.
    	
 
    	
Injunctive   Relief
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 13
    	
 
    
	
NON-DISPARAGEMENT
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 13.01.
    	
 
    	
Non-disparagement
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 14
    	
 
    
	
GENERAL
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.01.
    	
 
    	
Survivorship
    	
18
    
	
Section 14.02.
    	
 
    	
Arbitration
    	
18
    
	
Section 14.03.
    	
 
    	
Payment   Obligations Absolute
    	
19
    
	
Section 14.04.
    	
 
    	
Successors
    	
19
    
	
Section 14.05.
    	
 
    	
Severability
    	
19
    
	
Section 14.06.
    	
 
    	
Non-alienation
    	
19
    
	
Section 14.07.
    	
 
    	
Notices
    	
20
    

 

ii

 

	
Section 14.08.
    	
 
    	
Controlling   Law and Waiver of Jury Trial
    	
20
    
	
Section 14.09.
    	
 
    	
Release   and Delayed Payment Restriction
    	
20
    
	
Section 14.10.
    	
 
    	
Full   Settlement
    	
21
    
	
Section 14.11.
    	
 
    	
Unfunded   Obligation
    	
21
    
	
Section 14.12.
    	
 
    	
Not a   Contract of Employment
    	
21
    
	
Section 14.13.
    	
 
    	
Withholding   of Taxes and Other Employee Deductions
    	
21
    
	
Section 14.14.
    	
 
    	
Number   and Gender
    	
21
    
	
Section 14.15.
    	
 
    	
Entire   Agreement
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
Exhibits
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Exhibit A
    	
 
    	
Form of   Restricted Stock Award Agreement (B Interests)
    	
 
    
	
Exhibit B
    	
 
    	
Form of Restricted   Stock Award Agreement (D Interests)
    	
 
    
	
Exhibit C
    	
 
    	
Form of   Release
    	
 
    

 

iii

 

SEVERANCE AGREEMENT

 

This SEVERANCE AGREEMENT (this “Agreement”) dated as of April 1, 2010, is made by and between COBALT INTERNATIONAL ENERGY, INC., a Delaware corporation (the “Company”), and Michael D. Drennon (“Employee”).

 

RECITAL

 

WHEREAS, the Company desires to employ Employee, and Employee desires to accept such employment, on the terms and conditions set forth in this Agreement.

 

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 Effective Date.

 

“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 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

 

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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 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

 

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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 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

 

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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.

 

“Effective Date” shall mean the date of this Agreement.

 

“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 to a location that is more than 75 miles from both Houston, Texas and Luanda, Angola.

 

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 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

 

5

 

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.

 

“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.

 

“LTIP” shall mean the Company’s Long Term Incentive Plan, as may be amended from time to time.

 

“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.

 

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

 

“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

 

6

 

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.

 

“Restricted Stock” shall mean the shares of restricted stock granted to Employee on the Effective Date, as set forth in Section 3.03.

 

“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 50% of Annualized Base Salary

 

ARTICLE 2
  EFFECTIVENESS; TERM OF AGREEMENT

 

Section 2.01.  Effectiveness; Term of Agreement.  This Agreement shall become effective upon the Effective Date.  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.

 

ARTICLE 3
  CERTAIN EMPLOYEE REPRESENTATIONS AND AGREEMENTS; 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.  Life Insurance.  This Agreement constitutes written notice to Employee that (a) the Company or an Affiliate may insure Employee’s life, (b)

 

7

 

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 3.02, and shall have no interest in any such policy.

 

Section 3.03.  Equity Grant.  On the Effective Date, Employee shall receive 25,000 restricted shares of the Company’s common stock subject to the terms and conditions of the LTIP and the form of Restricted Stock Award Agreement attached as Exhibit A to this Agreement and 25,000 restricted shares of the Company’s common stock subject to the terms and conditions of the LTIP and the form of Restricted Stock Award Agreement attached as Exhibit B 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).

 

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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 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

 

9

 

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 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;

 

10

 

(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 that 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.

 

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 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.

 

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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 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

 

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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 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

 

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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.

 

(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.

 

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(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 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,

 

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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 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

 

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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.

 

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

 

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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 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

 

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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 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.

 

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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.  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 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 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 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

 

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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 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 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

 

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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.

 

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

 

	
 
    	
EMPLOYEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Michael D.   Drennon
    
	
 
    	
Michael D. Drennon
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
COBALT INTERNATIONAL   ENERGY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Joseph H.   Bryant
    
	
 
    	
 
    	
Name:
    	
Joseph H. Bryant
    
	
 
    	
 
    	
Title:
    	
Chief Executive   Officer
    

 

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EXHIBIT A

 

COBALT INTERNATIONAL ENERGY, INC.

LONG TERM INCENTIVE PLAN

 

Form of Restricted Stock Award Agreement

Class B Restrictions

 

You have been granted restricted stock (this “Award”) on the following terms and subject to the provisions of Attachment A and the Cobalt International Energy, 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 (to the extent not vested as of   any applicable date, the “Restricted Shares”)
    
	
 
    	
 
    	
 
    
	
Grant   Date
    	
 
    	
[date]
    
	
 
    	
 
    	
 
    
	
Vesting
    	
 
    	
Subject to   Section 3 of Attachment A, the Restricted Shares shall vest 60% on   [insert date that is third anniversary of the Participant’s date of hire] and   the remaining 40% on [insert date that is fourth anniversary of the   Participant’s date of hire] (each such date, a “Scheduled   Vesting Date”) if the Participant does not experience a   Termination of Service at any time prior to the applicable Scheduled Vesting   Date (the “Service Condition”).
    

 

A-1

 

Attachment A

 

Form of 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

 

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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

 

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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 624,061 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: 713-579-9184

 

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

 

4

 

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:
    	
Samuel H.   Gillespie III
    
	
 
    	
 
    	
Title:
    	
General Counsel   and Executive Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[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 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.

 

8

 

EXHIBIT B

 

COBALT INTERNATIONAL ENERGY, INC.

LONG TERM INCENTIVE PLAN 
 Form of Restricted Stock Award Agreement

Class D Restrictions

 

You have been granted restricted stock (this “Award”) on the following terms and subject to the provisions of Attachment A and the Cobalt International Energy, 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]
    
	
 
    	
 
    	
 
    
	
Vesting
    	
 
    	
Subject to Section   3 of Attachment A, the Restricted Shares shall fully vest on December 21,   2014 (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 $13.50 (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 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
    

 

A-1

 

	
 
    	
 
    	
 
    	
 
    	
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 $13.50; 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 $13.50.

 

(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 624,061 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: 713-579-9184

 

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

 

6

 

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:
    	
Samuel H.   Gillespie III
    
	
 
    	
 
    	
Title:
    	
General Counsel   and Executive Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[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 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

 

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 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.

 

C-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]
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title: 
    	
 
    

 

C-3EXHIBIT 10.31

 

REGISTRATION RIGHTS AGREEMENT

 

by and among

 

the Persons listed on Schedule A hereto under the heading GSCP,

 

the Persons listed on Schedule A hereto under the heading C/R,

 

the Persons listed on Schedule A hereto under the heading FIRST RESERVE,

 

the Persons listed on Schedule A hereto under the heading KERN,

 

the Persons listed on Schedule A hereto under the heading MANAGEMENT

 

and

 

COBALT INTERNATIONAL ENERGY, INC.

 

Dated as of December 15, 2009

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
Certain Definitions
    	
 
    	
1
    
	
2.
    	
Registration Rights
    	
 
    	
4
    
	
 
    	
2.1.
    	
Demand Registrations
    	
 
    	
4
    
	
 
    	
2.2.
    	
Piggyback Registrations
    	
 
    	
7
    
	
 
    	
2.3.
    	
Allocation of Securities Included in Registration Statement   or Offering
    	
 
    	
9
    
	
 
    	
2.4.
    	
Registration Procedures
    	
 
    	
11
    
	
 
    	
2.5.
    	
Registration Expenses
    	
 
    	
17
    
	
 
    	
2.6.
    	
Certain Limitations on Registration Rights
    	
 
    	
17
    
	
 
    	
2.7.
    	
Limitations on Sale or Distribution of Other Securities
    	
 
    	
18
    
	
 
    	
2.8.
    	
No Required Sale
    	
 
    	
18
    
	
 
    	
2.9.
    	
Indemnification
    	
 
    	
18
    
	
3.
    	
Underwritten Offerings
    	
 
    	
22
    
	
 
    	
3.1.
    	
Requested Underwritten Offerings
    	
 
    	
22
    
	
 
    	
3.2.
    	
Piggyback Underwritten Offerings
    	
 
    	
23
    
	
4.
    	
General
    	
 
    	
23
    
	
 
    	
4.1.
    	
Adjustments Affecting Registrable Securities
    	
 
    	
23
    
	
 
    	
4.2.
    	
Rule 144 and Rule 144A
    	
 
    	
24
    
	
 
    	
4.3.
    	
Amendments and Waivers
    	
 
    	
24
    
	
 
    	
4.4.
    	
Notices
    	
 
    	
24
    
	
 
    	
4.5.
    	
Successors and Assigns
    	
 
    	
25
    
	
 
    	
4.6.
    	
Limitations on Subsequent Registration Rights
    	
 
    	
26
    
	
 
    	
4.7.
    	
Goldman, Sachs & Co. and its Affiliates
    	
 
    	
26
    
	
 
    	
4.8.
    	
Entire Agreement
    	
 
    	
26
    
	
 
    	
4.9.
    	
Governing Law; Waiver of Jury Trial; Jurisdiction
    	
 
    	
26
    
	
 
    	
4.10.
    	
Interpretation; Construction
    	
 
    	
27
    
	
 
    	
4.11.
    	
Counterparts
    	
 
    	
27
    
	
 
    	
4.12.
    	
Severability
    	
 
    	
27
    
	
 
    	
4.13.
    	
Specific Performance
    	
 
    	
27
    
	
 
    	
4.14.
    	
Further Assurances
    	
 
    	
27
    

 

 

This REGISTRATION RIGHTS AGREEMENT is made as of December 15, 2009, by and among Cobalt International Energy, Inc., a Delaware corporation (“Cobalt” or the “Company”), the Persons listed on Schedule A hereto under the heading GSCP (each a “GSCP Entity” and collectively, “GSCP”), the Persons listed on Schedule A hereto under the heading C/R (each a “C/R Entity” and collectively, “C/R”), the Persons listed on Schedule A hereto under the heading First Reserve (each a “First Reserve Entity” and collectively, “First Reserve”), the Persons listed on Schedule A hereto under the heading KERN (each a “KERN Entity” and collectively, “KERN”) and the Persons listed on Schedule A hereto under the heading Management (“Management”).

 

1.             Certain Definitions.  As used herein, the following terms shall have the following meanings:

 

“Additional Piggyback Rights” has the meaning set forth in Section 2.2(c).

 

“Affiliate” means, with respect to any Person, any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise; provided, however, that, for purposes hereof, neither the Company nor any Person controlled by the Company shall be deemed to be an Affiliate of any Holder.

 

“Agreement” means this Registration Rights Agreement, as this agreement may be amended, modified, supplemented or restated from time to time after the date hereof.

 

“Assign” means to directly or indirectly sell, transfer, assign, distribute, exchange, pledge, hypothecate, mortgage, grant a security interest in, encumber or otherwise dispose of Registrable Securities, whether voluntarily or by operation of law, including by way of a merger.  “Assignor,” “Assignee,” “Assigning” and “Assignment” have meanings corresponding to the foregoing.

 

“automatic shelf registration statement” has the meaning set forth in Section 2.4.

 

“Board” means the Board of Directors of the Company.

 

“Business Day” shall mean any day ending at 11:59 p.m. (Eastern Time) other than a Saturday or Sunday or a day on which banks are required or authorized to close in the City of New York.

 

“Claims” has the meaning set forth in Section 2.9(a).

 

“Common Equity” means the common stock of the Company and any and all securities of any kind whatsoever of the Company which may be issued after the date hereof in respect of, or in exchange for, such shares of common stock of the Company pursuant to a merger, consolidation, stock split, stock dividend or recapitalization of the Company or otherwise.

 

“Common Equity Equivalents” means all options, warrants and other securities convertible into, or exchangeable or exercisable for (at any time or upon the occurrence of any 

 

 

event or contingency and without regard to any vesting or other conditions to which such securities may be subject) shares of Common Equity or other equity securities of the Company (including, without limitation, any note or debt security convertible into or exchangeable for Common Equity or other equity securities of the Company).

 

“Company” means Cobalt International Energy, Inc., any Subsidiary of Cobalt International Energy, Inc. and any successor to Cobalt International Energy, Inc.

 

“C/R” has the meaning set forth in the preamble.

 

“C/R Entity” has the meaning set forth in the preamble and any subsequent Holder who is Assigned all, but not less than all, of such C/R Entity’s Registrable Securities in a single transaction in accordance with Section 4.5.

 

“Demand Exercise Notice” has the meaning set forth in Section 2.1(a).

 

“Demand Registration” has the meaning set forth in Section 2.1(a).

 

“Demand Registration Request” has the meaning set forth in Section 2.1(a).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Expenses” means any and all fees and expenses incident to the Company’s performance of or compliance with Article 2, including, without limitation:  (i) SEC, stock exchange or FINRA registration and filing fees and all listing fees and fees with respect to the inclusion of securities on the New York Stock Exchange or on any other securities market on which the Common Equity is listed or quoted, (ii) fees and expenses of compliance with state securities or “blue sky” laws and in connection with the preparation of a “blue sky” survey, including, without limitation, reasonable fees and expenses of outside “blue sky” counsel, (iii) printing and copying expenses, (iv) messenger and delivery expenses, (v) expenses incurred in connection with any road show, (vi) fees and disbursements of counsel for the Company, (vii) with respect to each registration, the fees and disbursements of one counsel for the Participating Holder(s) (selected by the Majority Participating Holders), (viii) fees and disbursements of all independent public accountants (including the expenses of any audit and/or “cold comfort” letter and updates thereof) and fees and expenses of other Persons, including special experts, retained by the Company, (ix) fees and expenses payable to a Qualified Independent Underwriter, (x) any other fees and disbursements of underwriters, if any, customarily paid by issuers or sellers of securities and (xi) expenses for securities law liability insurance and, if any, rating agency fees.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“First Reserve” has the meaning set forth in the preamble.

 

“First Reserve Entity” has the meaning set forth in the preamble and any subsequent Holder who is Assigned all, but not less than all, of such First Reserve Entity’s Registrable Securities in a single transaction in accordance with Section 4.5.

 

“GSCP” has the meaning set forth in the preamble.

 

2

 

“GSCP Entity” has the meaning set forth in the preamble and any subsequent Holder who is Assigned all, but not less than all, of such GSCP Entity’s Registrable Securities in a single transaction in accordance with Section 4.5.

 

“Holder” or “Holders” means the GSCP Entities, the First Reserve Entities, the C/R Entities, the KERN Entities, Management or any transferee of Registrable Securities to whom any Person who is a party to this Agreement shall Assign any rights hereunder in accordance with Section 4.5.

 

“Initiating Holder(s)” has the meaning set forth in Section 2.1(a).

 

“IPO” means the first underwritten public offering of the common stock of the Company to the general public pursuant to a registration statement filed with the SEC.

 

“KERN” has the meaning set forth in the preamble.

 

“KERN Entity” has the meaning set forth in the preamble and any subsequent Holder who is Assigned all, but not less than all, of such KERN Entity’s Registrable Securities in a single transaction in accordance with Section 4.5.

 

“Litigation” means any action, proceeding or investigation in any court or before any governmental authority.

 

“Lock-Up Agreement” means any agreement between the Company, or any of its Affiliates, and any member of Management that provides for restrictions on the transfer of Registrable Securities held by such member of Management.

 

“Majority Participating Holders” means Participating Holders holding more than 50% of the Registrable Securities proposed to be included in any registration or offering of Registrable Securities by such Participating Holders pursuant to Section 2.1 or Section 2.2.

 

“Management” has the meaning set forth in the preamble.

 

“Manager” has the meaning set forth in Section 2.1(c).

 

“NASD” means the National Association of Securities Dealers, Inc.

 

“Participating Holders” means all Holders of Registrable Securities which are proposed to be included in any registration or offering of Registrable Securities pursuant to Section 2.1 or Section 2.2.

 

“Partner Distribution” has the meaning set forth in Section 2.1(b)(ii).

 

“Person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, governmental entity or agency or other entity of any kind or nature.

 

“Piggyback Shares” has the meaning set forth in Section 2.3(a)(iv).

 

3

 

“Qualified Independent Underwriter” means a “qualified independent underwriter” within the meaning of NASD Conduct Rule 2720.

 

“Registrable Securities” means (a) any shares of Common Equity held by the Holders at any time (including those held as a result of the conversion or exercise of Common Equity Equivalents) and (b) any shares of Common Equity issued or issuable, directly or indirectly in exchange for or with respect to the Common Equity referenced in clause (a) above by way of stock dividend, stock split or combination of shares or in connection with a reclassification, recapitalization, merger, share exchange, consolidation or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (A) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, or (B) such securities shall have been sold (other than in a privately negotiated sale) in compliance with the requirements of Rule 144 under the Securities Act, as such Rule 144 may be amended (or any successor provision thereto).

 

“Rule 144” and “Rule 144A” have the meaning set forth in Section 4.2.

 

“SEC” means the Securities and Exchange Commission.

 

“Section 2.3(a) Sale Number” has the meaning set forth in Section 2.3(a).

 

“Section 2.3(b) Sale Number” has the meaning set forth in Section 2.3(b).

 

“Section 2.3(c) Sale Number” has the meaning set forth in Section 2.3(c).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Stockholders Agreement” means the Stockholders Agreement, dated as of the date hereof, 2009, by and among the Company and the other parties thereto.

 

“Sponsors” means the GSCP Entities, the First Reserve Entities, the C/R Entities, and the KERN Entities.

 

“Subsidiary” means any direct or indirect subsidiary of the Company on the date hereof and any direct or indirect subsidiary of the Company organized or acquired after the date hereof, including Cobalt International Energy, L.P.

 

“Valid Business Reason” has the meaning set forth in Section 2.1(a)(v).

 

“WKSI” has the meaning set forth in Section 2.4.

 

2.             Registration Rights.

 

2.1.         Demand Registrations.

 

(a)           If the Company shall receive from any of C/R, GSCP, First Reserve, or KERN, at any time after six (6) months after the closing of the IPO, a written request that the Company file 

 

4

 

a registration statement with respect to Registrable Securities (a “Demand Registration Request,” and the registration so requested is referred to herein as a “Demand Registration,” and the sender(s) of such request or any similar request pursuant to this Agreement shall be known as the “Initiating Holder(s)”), then the Company shall, within five (5) days of the receipt thereof, give written notice (the “Demand Exercise Notice”) of such request to all Holders, and subject to the limitations of this Section 2.1, use its reasonable best efforts to effect, as soon as practicable, the registration under the 1933 Act (including, without limitation, by means of a shelf registration pursuant to Rule 415 thereunder if so requested and if the Company is then eligible to use such a registration) of all Registrable Securities that the Holders request to be registered.  The Company shall not be obligated to take any action to effect any Demand Registration:

 

(i)            after it has effected a total of twelve (12) Demand Registrations pursuant to this Section 2.1, and such registrations have been declared or ordered effective.  None of C/R acting individually, GSCP acting individually, First Reserve acting individually or KERN acting individually may make more than three (3) Demand Registration Requests, which registrations have been declared or ordered effective;

 

(ii)           within three (3) months after a Demand Registration pursuant to this Section 2.1 that has been declared or ordered effective;

 

(iii)          during the period starting with the date fifteen (15) days prior to its good faith estimate of the date of filing of, and ending on a date ninety (90) days after the effective date of, a Company initiated registration (other than a registration relating solely to the sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan or to a Commission Rule 145 transaction), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

 

(iv)          where the anticipated offering price, net of any underwriting discounts or commissions, is equal to or less than $25,000,000;

 

(v)           if the Company shall furnish to such Holders a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board, any registration of Registrable Securities should not be made or continued (or sales under a shelf registration statement should be suspended) because (i) such registration (or continued sales under a shelf registration statement) would materially interfere with a material financing, acquisition, corporate reorganization or merger or other material transaction or event involving the Company or any of its subsidiaries or (ii) the Company is in possession of material non-public information, the disclosure of which has been determined by the Board to not be in the Company’s best interests (in either case, a “Valid Business Reason”), then (x) the Company may postpone filing a registration statement relating to a Demand Registration Request or suspend sales under an existing shelf registration statement until five (5) Business Days after such Valid Business Reason no longer exists, but in no event for more than sixty (60) days after the date the Board determines a Valid Business Reason exists and (y) in case a registration statement has been filed relating to a Demand Registration Request, if the Valid Business Reason has not resulted from actions taken by the Company, the Company may cause such registration statement to be withdrawn and its effectiveness terminated or may postpone amending or supplementing such registration statement until five (5) Business Days after such Valid Business Reason no 

 

5

 

longer exists, but in no event for more than sixty (60) days after the date the Board determines a Valid Business Reason exists; and the Company shall give written notice to the Participating Holders of its determination to postpone or withdraw a registration statement or suspend sales under a shelf registration statement and of the fact that the Valid Business Reason for such postponement, withdrawal or suspension no longer exists, in each case, promptly after the occurrence thereof; provided, however, that the Company shall not defer its obligation in this manner more than once in any twelve (12) month period; or

 

(vi)          in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

 

If the Company shall give any notice of postponement, withdrawal or suspension of any registration statement pursuant to clause 2.1(a)(v), the Company shall not, during the period of postponement, withdrawal or suspension, register any Common Equity, other than pursuant to a registration statement on Form S-4 or S-8 (or an equivalent registration form then in effect).  Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company that the Company has determined to withdraw any registration statement pursuant to clause (iii) above, such Holder will discontinue its disposition of Registrable Securities pursuant to such registration statement and, if so directed by the Company, will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Holder’s possession of the prospectus covering such Registrable Securities that was in effect at the time of receipt of such notice.  If the Company shall have withdrawn or prematurely terminated a registration statement filed pursuant to a Demand Registration (whether pursuant to clause 2.1(a)(v) or as a result of any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court), the Company shall not be considered to have effected an effective registration for the purposes of this Agreement until the Company shall have filed a new registration statement covering the Registrable Securities covered by the withdrawn registration statement and such registration statement shall have been declared effective and shall not have been withdrawn.  If the Company shall give any notice of withdrawal or postponement of a registration statement, the Company shall, not later than five (5) Business Days after the Valid Business Reason that caused such withdrawal or postponement no longer exists (but in no event later than sixty (60) days after the date of the postponement or withdrawal), use its reasonable best efforts to effect the registration under the Securities Act of the Registrable Securities covered by the withdrawn or postponed registration statement in accordance with Section 2.1 (unless the Initiating Holders shall have withdrawn such request, in which case the Company shall not be considered to have effected an effective registration for the purposes of this Agreement), and such registration shall not be withdrawn or postponed pursuant to clause 2.1(a)(v).

 

(b)

 

(i)            The Company, subject to Sections 2.3 and 2.6, shall include in a Demand Registration (x) the Registrable Securities of the Initiating Holders and (y) the Registrable Securities of any other Holder of Registrable Securities, which shall have made a written request to the Company for inclusion in such registration pursuant to Section 2.2 (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such 

 

6

 

Participating Holder) within thirty (30) days after the receipt of the Demand Exercise Notice (or fifteen (15) days if, at the request of the Initiating Holders, the Company states in such written notice or gives telephonic notice to all Holders, with written confirmation to follow promptly thereafter, that such registration will be on a Form S-3).

 

(ii)           The Company shall, as expeditiously as possible, but subject to the limitations set forth in this Section 2.1, use its reasonable best efforts to (x) effect such registration under the Securities Act (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act if so requested and if the Company is then eligible to use such a registration) of the Registrable Securities which the Company has been so requested to register, for distribution in accordance with such intended method of distribution, including a distribution to, and resale by, the members or partners of a Holder (a “Partner Distribution”) and (y) if requested by the Majority Participating Holders, obtain acceleration of the effective date of the registration statement relating to such registration.

 

(iii)          Notwithstanding anything contained herein to the contrary, the Company shall, at the request of any Holder seeking to effect a Partner Distribution, file any prospectus supplement or post-effective amendments and otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by such Holder if such disclosure or language was not included in the initial registration statement, or revise such disclosure or language if deemed necessary or advisable by such Holder, including filing a prospectus supplement naming the Holders, partners, members and shareholders to the extent required by law, to effect such Partner Distribution.

 

(c)           In connection with any Demand Registration, the Majority Participating Holders shall have the right to designate the lead managing underwriter (any lead managing underwriter for the purposes of this Agreement, the “Manager”) in connection with such registration and each other managing underwriter for such registration, in each case subject to consent of the Company, not be unreasonably withheld.

 

(d)           If so requested by the Initiating Holder(s), the Company (together with all Holders proposing to distribute their securities through such underwriting) shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company in its sole discretion.

 

(e)           Any Holder that intends to sell Registrable Securities by means of a shelf registration pursuant to Rule 415 thereunder, shall give the Company 2 (two) days notice of any such sale.

 

2.2.         Piggyback Registrations.

 

(a)           If, at any time or from time to time the Company will register or commence an offering of any of its securities for its own account or otherwise (other than pursuant to registrations on Form S-4 or Form S-8 or any similar successor forms thereto) (including but not limited to the registrations or offerings pursuant to Section 2.1), the Company will:

 

(i)            promptly give to each Holder written notice thereof (in any event within five (5) Business Days); and

 

7

 

(ii)           include in such registration and in any underwriting involved therein (if any), all the Registrable Securities specified in a written request or requests, made within twenty (20) days after mailing or personal delivery of such written notice from the Company, by any of the Holders, except as set forth in Sections 2.2(b) and 2.2(f), with the securities which the Company at the time proposes to register or sell to permit the sale or other disposition by the Holders (in accordance with the intended method of distribution thereof) of the Registrable Securities to be so registered or sold, including, if necessary, by filing with the SEC a post-effective amendment or a supplement to the registration statement filed by the Company or the prospectus related thereto.  There is no limitation on the number of such piggyback registrations pursuant to the preceding sentence which the Company is obligated to effect.  No registration of Registrable Securities effected under this Section 2.2(a) shall relieve the Company of its obligations to effect Demand Registrations under Section 2.1 hereof.

 

(b)           If the registration in this Section 2.2 involves an underwritten offering, the right of any Holder to include its Registrable Securities in a registration or offering pursuant to this Section 2.2 shall be conditioned upon such Holder’s participation in the underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein.  All Holders proposing to distribute their Registrable Securities through such underwriting shall (together with the Company) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company.

 

(c)           The Company, subject to Sections 2.3 and 2.6, may elect to include in any registration statement and offering pursuant to demand registration rights by any Person, (i) authorized but unissued shares of Common Equity or shares of Common Equity held by the Company as treasury shares and (ii) any other shares of Common Equity which are requested to be included in such registration pursuant to the exercise of piggyback registration rights granted by the Company after the date hereof and which are not inconsistent with the rights granted in, or otherwise conflict with the terms of, this Agreement (“Additional Piggyback Rights”); provided, however, that such inclusion shall be permitted only to the extent that it is pursuant to, and subject to, the terms of the underwriting agreement or arrangements, if any, entered into by the Initiating Holders.

 

(d)           If, at any time after giving written notice of its intention to register or sell any equity securities and prior to the effective date of the registration statement filed in connection with such registration or sale of such equity securities, the Company shall determine for any reason not to register or sell or to delay registration or sale of such equity securities, the Company may, at its election, give written notice of such determination to all Holders of record of Registrable Securities and (i) in the case of a determination not to register or sell, shall be relieved of its obligation to register or sell any Registrable Securities in connection with such abandoned registration or sale, without prejudice, however, to the rights of Holders under Section 2.1, and (ii) in the case of a determination to delay such registration or sale of its equity securities, shall be permitted to delay the registration or sale of such Registrable Securities for the same period as the delay in registering such other equity securities.

 

(e)           Notwithstanding anything contained herein to the contrary, the Company shall, at the request of any Holder (including to effect a Partner Distribution), file any prospectus 

 

8

 

supplement or post-effective amendments and otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by such Holder if such disclosure or language was not included in the initial registration statement, or revise such disclosure or language if deemed necessary or advisable by such Holder including filing a prospectus supplement naming the Holders, partners, members and shareholders to the extent required by law.

 

(f)            Notwithstanding anything in this Agreement to the contrary, the rights of each member of Management set forth in this Agreement are subject to any Lock-Up Agreement that such member of Management has entered into with the Company.

 

2.3.          Allocation of Securities Included in Registration Statement or Offering.

 

(a)           Notwithstanding any other provision of this Agreement, in connection with an underwritten offering initiated by Demand Registration Request, if the Manager advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten (such number, the “Section 2.3(a) Sale Number”) within a price range acceptable to the Majority Participating Holders, the Initiating Holders shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the Company shall use its reasonable best efforts to include in such registration or offering, as applicable, the number of shares of Registrable Securities in the registration and underwriting as follows:

 

(i)            first, all Registrable Securities requested to be included in such registration or offering by the Holders thereof (including pursuant to the exercise of piggyback rights pursuant to Section 2.2); provided, however, that if such number of Registrable Securities exceeds the Section 2.3(a) Sale Number, the number of such Registrable Securities (not to exceed the Section 2.3(a) Sale Number) to be included in such registration shall be allocated among all such Holders requesting inclusion thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing of the registration statement or the time of the offering, as applicable;

 

(ii)           second, if by the withdrawal of Registrable Securities by a Participating Holder, a greater number of Registrable Securities held by other Holders, may be included in such registration or offering (up to the Section 2.3(a) Sale Number), then the Company shall offer to all Holders who have included Registrable Securities in the registration or offering the right to include additional Registrable Securities in the same proportions as set forth in 2.3(a)(i).

 

(iii)          third, to the extent that the number of Registrable Securities to be included pursuant to clause (i) and (ii) of this Section 2.3(a) is less than the Section 2.3(a) Sale Number, and if the underwriter so agrees, any securities that the Company proposes to register or sell, up to the Section 2.3(a) Sale Number; and

 

(iv)          fourth, to the extent that the number of securities to be included pursuant to clauses (i), (ii) and (iii) of this Section 2.3(a) is less than the Section 2.3(a) Sale Number, the remaining securities to be included in such registration or offering shall be allocated on a pro rata basis among all Persons requesting that securities be included in such registration or offering 

 

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pursuant to the exercise of Additional Piggyback Rights (“Piggyback Shares”), based on the aggregate number of Piggyback Shares then owned by each Person requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all Persons requesting inclusion, up to the Section 2.3(a) Sale Number.

 

Notwithstanding anything in this Section 2.3(a) to the contrary, no employee shareholder of the Company, other than a member of Management, will be entitled to include Registrable Securities in a registration requested pursuant to Section 2.1 to the extent the Manager of such offering shall determine in good faith that the participation of such employee shareholder would adversely affect the marketability of the securities being sold by the Initiating Holder(s) in such registration.

 

(b)           Notwithstanding any other provision of this Agreement, in a registration involving an underwritten offering on behalf of the Company, which was initiated by the Company, if the Manager determines that marketing factors require a limitation of the number of shares to be underwritten (such number, the “Section 2.3(b) Sale Number”) the Company shall so advise all Holders whose securities would otherwise be registered and underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated as follows:

 

(i)            first, all equity securities that the Company proposes to register for its own account;

 

(ii)           second, to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(b) is less than the Section 2.3(b) Sale Number, among all Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities requested for inclusion in such registration by Holders pursuant to Section 2.2 up to the Section 2.3(b) Sale Number; and;

 

(iii)          third, to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(b) is less than the Section 2.3(b) Sale Number, the remaining securities to be included in such registration shall be allocated on a pro rata basis among all Persons requesting that securities be included in such registration pursuant to the exercise of Additional Piggyback Rights, based on the aggregate number of Piggyback Shares then owned by each Person requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all Persons requesting inclusion, up to the Section 2.3(b) Sale Number.

 

(c)           If any registration pursuant to Section 2.2 involves an underwritten offering that was initially requested by any Person(s) other than a Holder to whom the Company has granted registration rights which are not inconsistent with the rights granted in, or otherwise conflict with the terms of, this Agreement and the Manager (as selected by the Company or such other Person) shall advise the Company that, in its view, the number of securities requested to be included in such registration exceeds the number (the “Section 2.3(c) Sale Number”) that can be sold in an orderly manner in such registration within a price range acceptable to the Company, the Company shall include shares in such registration as follows:

 

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(i)            first, the shares requested to be included in such registration shall be allocated on a pro rata basis among such Person(s) requesting the registration and all Holders requesting that Registrable Securities be included in such registration pursuant to the exercise of piggyback rights pursuant to Section 2.2, based on the aggregate number of securities or Registrable Securities, as applicable, then owned by each of the foregoing requesting inclusion in relation to the aggregate number of securities or Registrable Securities, as applicable, owned by all such Holders and Persons requesting inclusion, up to the Section 2.3(c) Sale Number;

 

(ii)           second, to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(c) is less than the Section 2.3(c) Sale Number, the remaining shares to be included in such registration shall be allocated on a pro rata basis among all Persons requesting that securities be included in such registration pursuant to the exercise of Additional Piggyback Rights, based on the aggregate number of Piggyback Shares then owned by each Person requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all Persons requesting inclusion, up to the Section 2.3(c) Sale Number; and

 

(iii)          third, to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(c) is less than the Section 2.3(c) Sale Number, the remaining shares to be included in such registration shall be allocated to shares the Company proposes to register for its own account, up to the Section 2.3(c) Sale Number.

 

(d)           If any Holder of Registrable Securities disapproves of the terms of the underwriting, or if, as a result of the proration provisions set forth in clauses (a), (b) or (c) of this Section 2.3, any Holder shall not be entitled to include all Registrable Securities in a registration or offering that such Holder has requested be included, such Holder may elect to withdraw such Holder’s request to include Registrable Securities in such registration or offering or may reduce the number requested to be included; provided, however, that (x) such request must be made in writing, to the Company, Manager and, if applicable, the Initiating Holder(s), prior to the execution of the underwriting agreement with respect to such registration and (y) such withdrawal or reduction shall be irrevocable and, after making such withdrawal or reduction, such Holder shall no longer have any right to include such withdrawn Registrable Securities in the registration as to which such withdrawal or reduction was made to the extent of the Registrable Securities so withdrawn or reduced.

 

2.4.          Registration Procedures.  If and whenever the Company is required by the provisions of this Agreement to use its reasonable best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, the Company shall, as expeditiously as possible (but, in any event, within sixty (60) days after a Demand Registration Request in the case of Section 2.4(a) below), in connection with the Registration of the Registrable Securities and, where applicable, a takedown off of a shelf registration statement:

 

(a)           prepare and file with the SEC a registration statement on an appropriate registration form of the SEC for the disposition of such Registrable Securities in accordance with the intended method of disposition thereof (including, without limitation, a Partner Distribution), which registration form (i) shall be selected by the Company and (ii) shall, in the case of a shelf registration, be available for the sale of the Registrable Securities by the selling Holders thereof 

 

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and such registration statement shall comply as to form in all material respects with the requirements of the applicable registration form and include all financial statements required by the SEC to be filed therewith, and the Company shall use its reasonable best efforts to cause such registration statement to become effective and remain continuously effective from the date such registration statement is declared effective until the earliest to occur (i) the first date as of which all of the Registrable Securities included in the registration statement have been sold or (ii) a period of ninety (90) days in the case of an underwritten offering effected pursuant to a registration statement other than a shelf registration statement and a period of three years in the case of a shelf registration statement (provided, however, that before filing a registration statement or prospectus or any amendments or supplements thereto, or comparable statements under securities or state “blue sky” laws of any jurisdiction, or any free writing prospectus related thereto, the Company will furnish to one counsel for the Holders participating in the planned offering (selected by the Majority Participating Holders) and to one counsel for the Manager, if any, copies of all such documents proposed to be filed (including all exhibits thereto), which documents will be subject to the reasonable review and reasonable comment of such counsel (provided that the Company shall be under no obligation to make any changes suggested by the Holders), and the Company shall not file any registration statement or amendment thereto, any prospectus or supplement thereto or any free writing prospectus related thereto to which the Majority Participating Holders or the underwriters, if any, shall reasonably object);

 

(b)           prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement continuously effective for the period set forth in Section 2.4(a) and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Registrable Securities covered by such registration statement in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement (and, in connection with any shelf registration statement, file one or more prospectus supplements covering Registrable Securities upon the request of one or more Holders wishing to offer or sell Registrable Securities whether in an underwritten offering or otherwise);

 

(c)           in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the Manager of such offering;

 

(d)           furnish, without charge, to each Participating Holder and each underwriter, if any, of the securities covered by such registration statement such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits), the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), any other prospectus filed under Rule 424 under the Securities Act and each free writing prospectus utilized in connection therewith, in each case, in conformity with the requirements of the Securities Act, and other documents, as such seller and underwriter may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such seller (the Company hereby consenting to the use in accordance with all applicable law of each such registration statement (or amendment or post-effective amendment thereto) and each such prospectus (or preliminary prospectus or supplement thereto) or free writing prospectus by each such Participating Holder and the underwriters, if any, 

 

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in connection with the offering and sale of the Registrable Securities covered by such registration statement or prospectus);

 

(e)           use its reasonable best efforts to register or qualify the Registrable Securities covered by such registration statement under such other securities or state “blue sky” laws of such jurisdictions as any sellers of Registrable Securities or any managing underwriter, if any, shall reasonably request in writing, and do any and all other acts and things which may be reasonably necessary or advisable to enable such sellers or underwriter, if any, to consummate the disposition of the Registrable Securities in such jurisdictions (including keeping such registration or qualification in effect for so long as such registration statement remains in effect), except that in no event shall the Company be required to qualify to do business as a foreign corporation in any jurisdiction where it would not, but for the requirements of this paragraph (e), be required to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction;

 

(f)            promptly notify each Participating Holder and each managing underwriter, if any: (i) when the registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto, any post-effective amendment to the registration statement or any free writing prospectus has been filed and, with respect to the registration statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC or state securities authority for amendments or supplements to the registration statement or the prospectus related thereto or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or state “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose; (v) of the existence of any fact of which the Company becomes aware which results in the registration statement or any amendment thereto, the prospectus related thereto or any supplement thereto, any document incorporated therein by reference, any free writing prospectus or the information conveyed to any purchaser at the time of sale to such purchaser containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statement therein not misleading; and (vi) if at any time the representations and warranties contemplated by any underwriting agreement, securities sale agreement, or other similar agreement, relating to the offering shall cease to be true and correct in all material respects; and, if the notification relates to an event described in clause (v), the Company shall promptly prepare and furnish to each such seller and each underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading;

 

(g)           comply (and continue to comply) with all applicable rules and regulations of the SEC (including, without limitation, maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) in accordance with the Exchange Act), and make generally available to its security holders, as soon as reasonably practicable after the effective date of the 

 

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registration statement (and in any event within forty-five (45) days, or ninety (90) days if it is a fiscal year, after the end of such twelve (12) month period described hereafter), an earnings statement (which need not be audited) covering the period of at least twelve (12) consecutive months beginning with the first day of the Company’s first calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

 

(h)           (i) (A) cause all such Registrable Securities covered by such registration statement to be listed on the principal securities exchange on which similar securities issued by the Company are then listed (if any), if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (B) if no similar securities are then so listed, to cause all such Registrable Securities to be listed on a national securities exchange and, without limiting the generality of the foregoing, take all actions that may be required by the Company as the issuer of such Registrable Securities in order to facilitate the managing underwriter’s arranging for the registration of at least two market makers as such with respect to such shares with FINRA, and (ii) comply (and continue to comply) with the requirements of any self-regulatory organization applicable to the Company, including without limitation all corporate governance requirements;

 

(i)            provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities covered by such registration statement not later than the effective date of such registration statement;

 

(j)            enter into such customary agreements (including, if applicable, an underwriting agreement) and take such other actions as the Majority Participating Holders or the underwriters shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (it being understood that the Holders of the Registrable Securities which are to be distributed by any underwriters shall be parties to any such underwriting agreement and may, at their option, require that the Company make to and for the benefit of such Holders the representations, warranties and covenants of the Company which are being made to and for the benefit of such underwriters);

 

(k)           use its reasonable best efforts (i) to obtain an opinion from the Company’s counsel and a “cold comfort” letter and updates thereof from the Company’s independent public accountants who have certified the Company’s financial statements included or incorporated by reference in such registration statement, in each case, in customary form and covering such matters as are customarily covered by such opinions and “cold comfort” letters (including, in the case of such “cold comfort” letter, events subsequent to the date of such financial statements) delivered to underwriters in underwritten public offerings, which opinion and letter shall be dated the dates such opinions and “cold comfort” letters are customarily dated and otherwise reasonably satisfactory to the underwriters, if any, and to the Majority Participating Holders, and (ii) furnish to each Holder participating in the offering and to each underwriter, if any, a copy of such opinion and letter addressed to such underwriter;

 

(l)            deliver promptly to counsel for each Participating Holder and to each managing underwriter, if any, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to the 

 

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registration statement, and, upon receipt of such confidentiality agreements as the Company may reasonably request, make reasonably available for inspection by counsel for each Participating Holder, by counsel for any underwriter, participating in any disposition to be effected pursuant to such registration statement and by any accountant or other agent retained by any Participating Holder or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees to supply all information reasonably requested by any such counsel for a Participating Holder, counsel for an underwriter, accountant or agent in connection with such registration statement;

 

(m)          use its reasonable best efforts to obtain the prompt withdrawal of any order suspending the effectiveness of the registration statement, or the prompt lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction;

 

(n)           provide a CUSIP number for all Registrable Securities, not later than the effective date of the registration statement;

 

(o)           use its best efforts to make available its employees and personnel for participation in “road shows” and other marketing efforts and otherwise provide reasonable assistance to the underwriters (taking into account the needs of the Company’s businesses and the requirements of the marketing process) in marketing the Registrable Securities in any underwritten offering;

 

(p)           prior to the filing of any document which is to be incorporated by reference into the registration statement or the prospectus (after the initial filing of such registration statement), and prior to the filing of any free writing prospectus, provide copies of such document to counsel for each Participating Holder and to each managing underwriter, if any, and make the Company’s representatives reasonably available for discussion of such document and make such changes in such document concerning the Participating Holders prior to the filing thereof as counsel for the Participating Holders or underwriters may reasonably request;

 

(q)           furnish to counsel for each Participating Holder and to each managing underwriter, without charge, at least one signed copy of the registration statement and any post-effective amendments or supplements thereto, including financial statements and schedules, all documents incorporated therein by reference, the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus), any other prospectus filed under Rule 424 under the Securities Act and all exhibits (including those incorporated by reference) and any free writing prospectus utilized in connection therewith;

 

(r)            cooperate with the Participating Holders and the managing underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement at least three (3) Business Days prior to any sale of Registrable Securities to the underwriters or, if not an underwritten offering, in accordance with the instructions of the Participating Holders at least three (3) Business Days prior to any sale of Registrable Securities and instruct any transfer agent and registrar of Registrable Securities to release any stop transfer orders in respect thereof;

 

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(s)           cooperate with any due diligence investigation by any Manager, underwriter or Participating Holder and make available such documents and records of the Company and its Subsidiaries that they reasonably request (which, in the case of the Participating Holder, may be subject to the execution by the Participating Holder of a customary confidentiality agreement in a form which is reasonably satisfactory to the Company);

 

(t)            take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, however, that to the extent that any prohibition is applicable to the Company, the Company will take such action as is necessary and feasible to make any such prohibition inapplicable;

 

(u)           use its reasonable best efforts to cause the Registrable Securities covered by the applicable registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Participating Holders or the underwriters, if any, to consummate the disposition of such Registrable Securities;

 

(v)           take all such other commercially reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities;

 

(w)          take all reasonable action to ensure that any free writing prospectus utilized in connection with any registration covered by Section 2.1 or 2.2 complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

 

(x)            in connection with any underwritten offering, if at any time the information conveyed to a purchaser at the time of sale includes any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, promptly file with the SEC such amendments or supplements to such information as may be necessary so that the statements as so amended or supplemented will not, in light of the circumstances, be misleading.

 

To the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) (a “WKSI”) at the time any Demand Registration Request is submitted to the Company, and such Demand Registration Request requests that the Company file an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “automatic shelf registration statement”) on Form S-3, the Company shall file an automatic shelf registration statement which covers those Registrable Securities which are requested to be registered.  The Company shall use its reasonable best efforts to remain a WKSI (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act)) during the period during which the Registrable Securities remain Registrable Securities.  If the Company does not pay the filing fee covering the Registrable Securities at the time the automatic shelf registration statement is filed, the Company agrees to pay such fee at such time or times as the Registrable Securities are to be sold.  If the automatic shelf registration statement has been outstanding for at least three years, at the end of the third year the Company shall refile a new automatic shelf 

 

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registration statement covering the Registrable Securities.  If at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, the Company shall use its reasonable best efforts to refile the shelf registration statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the period during which such registration statement is required to be kept effective.

 

If the Company files any shelf registration statement for the benefit of the holders of any of its securities other than the Holders, the Company agrees that it shall include in such registration statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that the Holders may be added to such shelf registration statement at a later time through the filing of a prospectus supplement rather than a post-effective amendment.

 

It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 2.1, 2.2, or 2.4 that each Participating Holder shall furnish to the Company such information regarding themselves, the Registrable Securities held by them, and the intended method of disposition of such securities as the Company may from time to time reasonably request provided that such information is necessary for the Company to consummate such registration and shall be used only in connection with such registration.

 

If any such registration statement or comparable statement under state “blue sky” laws refers to any Holder by name or otherwise as the Holder of any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such Holder and the Company, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such Holder by name or otherwise is not in the judgment of the Company, as advised by counsel, required by the Securities Act or any similar federal statute or any state “blue sky” or securities law then in force, the deletion of the reference to such Holder.

 

2.5.          Registration Expenses.  All Expenses incurred in connection with any registration, filing, qualification or compliance pursuant to Article 2 shall be borne by the Company, whether or not a registration statement becomes effective.  All underwriting discounts and all selling commissions relating to securities registered by the Holders shall be borne by the holders of such securities pro rata in accordance with the number of shares sold in the offering by such Participating Holder.

 

2.6.          Certain Limitations on Registration Rights.  In the case of any registration under Section 2.1 pursuant to an underwritten offering, or, in the case of a registration under Section 2.2, all securities to be included in such registration shall be subject to the underwriting agreement and no Person may participate in such registration or offering unless such Person (i) agrees to sell such Person’s securities on the basis provided therein and completes and executes all reasonable questionnaires, and other documents (including custody agreements and powers of attorney) which must be executed in connection therewith; provided, however, that all such 

 

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documents shall be consistent with the provisions hereof and (ii) provides such other information to the Company or the underwriter as may be necessary to register such Person’s securities.

 

2.7.          Limitations on Sale or Distribution of Other Securities.

 

(a)           Each Holder agrees, (i) to the extent requested in writing by a managing underwriter, if any, of any registration effected pursuant to Section 2.1, not to sell, transfer or otherwise dispose of, including any sale pursuant to Rule 144 under the Securities Act, any Common Equity, or any other equity security of the Company or any security convertible into or exchangeable or exercisable for any equity security of the Company (other than as part of such underwritten public offering) during the time period reasonably requested by the managing underwriter, not to exceed ninety (90) days (and the Company hereby also so agrees (except that the Company may effect any sale or distribution of any such securities pursuant to a registration on Form S-4 (if reasonably acceptable to such managing underwriter) or Form S-8, or any successor or similar form which is (x) then in effect or (y) shall become effective upon the conversion, exchange or exercise of any then outstanding Common Equity Equivalent), to use its reasonable best efforts to cause each holder of any equity security or any security convertible into or exchangeable or exercisable for any equity security of the Company purchased from the Company at any time other than in a public offering so to agree), and (ii) to the extent requested in writing by a managing underwriter of any underwritten public offering effected by the Company for its own account, not to sell any Common Equity (other than as part of such underwritten public offering) during the time period reasonably requested by the managing underwriter, which period shall not exceed ninety (90) days.

 

(b)           The Company hereby agrees that, if it shall previously have received a request for registration pursuant to Section 2.1 or 2.2, and if such previous registration shall not have been withdrawn or abandoned, the Company shall not sell, transfer, or otherwise dispose of, any Common Equity, or any other equity security of the Company or any security convertible into or exchangeable or exercisable for any equity security of the Company (other than as part of such underwritten public offering, a registration on Form S-4 or Form S-8 or any successor or similar form which is (x) then in effect or (y) shall become effective upon the conversion, exchange or exercise of any then outstanding Common Equity Equivalent), until a period of ninety (90) days shall have elapsed from the effective date of such previous registration; and the Company shall (i) so provide in any registration rights agreements hereafter entered into with respect to any of its securities and (ii) use its reasonable best efforts to cause each holder of any equity security or any security convertible into or exchangeable or exercisable for any equity security of the Company purchased from the Company at any time other than in a public offering to so agree.

 

2.8.          No Required Sale.  Nothing in this Agreement shall be deemed to create an independent obligation on the part of any Holder to sell any Registrable Securities pursuant to any effective registration statement.

 

2.9.          Indemnification.

 

(a)           In the event of any registration and/or offering of any securities of the Company under the Securities Act pursuant to this Article 2, the Company will, and hereby agrees to, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its 

 

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directors, officers, fiduciaries, employees, stockholders, members or general and limited partners (and the directors, officers, fiduciaries, employees, stockholders, members or general and limited partners thereof), any underwriter (as defined in the Securities Act) for such Holder and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or Exchange Act, from and against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) and expenses (including reasonable fees of counsel and any amounts paid in any settlement effected with the Company’s consent, which consent shall not be unreasonably withheld or delayed) to which each such indemnified party may become subject under the Securities Act or otherwise in respect thereof (collectively, “Claims”), insofar as such Claims arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such securities were registered under the Securities Act or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary or final prospectus or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) any untrue statement or alleged untrue statement of a material fact in the information conveyed by the Company to any purchaser at the time of the sale to such purchaser, or the omission or alleged omission to state therein a material fact required to be stated therein, or (iv) any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration, and the Company will reimburse any such indemnified party for any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim as such expenses are incurred; provided, however, that the Company shall not be liable to any such indemnified party in any such case to the extent such Claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact made in such registration statement or amendment thereof or supplement thereto or in any such prospectus or any preliminary or final prospectus or free writing prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of such indemnified party specifically for use therein.  Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such seller.

 

(b)           Each Participating Holder shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 2.9) to the extent permitted by law the Company, its officers and directors, each Person controlling the Company within the meaning of the Securities Act, each underwriter (within the meaning of the 1933 Act) of the Company’s securities covered by such a registration statement, any Person who controls such underwriter, and any other Holder selling securities in such registration statement and each of its directors, officers, partners or agents or any Person who controls such Holder with respect to any untrue statement or alleged untrue statement of any material fact in, or omission or alleged omission of any material fact from, such registration statement, any preliminary or final prospectus contained therein, or any amendment or 

 

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supplement thereto, or any free writing prospectus utilized in connection therewith, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such Participating Holder, specifically for use therein and reimburse such indemnified party for any legal or other expenses reasonably incurred in connection with investigating or defending any such Claim as such expenses are incurred; provided, however, that the aggregate amount which any such Participating Holder shall be required to pay pursuant to this Section 2.9(b) and Sections 2.9(c) and (e) shall in no case be greater than the amount of the net proceeds actually received by such Participating Holder upon the sale of the Registrable Securities pursuant to the registration statement giving rise to such Claim.  The Company and each Participating Holder hereby acknowledge and agree that, unless otherwise expressly agreed to in writing by such Participating Holders to the contrary, for all purposes of this Agreement, the only information furnished or to be furnished to the Company for use in any such registration statement, preliminary or final prospectus or amendment or supplement thereto or any free writing prospectus are statements specifically relating to (a) the beneficial ownership of shares of Common Equity by such Participating Holder and its Affiliates and (b) the name and address of such Participating Holder.  Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such Holder.

 

(c)           Indemnification similar to that specified in the preceding paragraphs (a) and (b) of this Section 2.9 (with appropriate modifications) shall be given by the Company and each Participating Holder with respect to any required registration or other qualification of securities under any applicable securities and state “blue sky” laws.

 

(d)           Any Person entitled to indemnification under this Agreement shall notify promptly the indemnifying party in writing of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 2.9, but the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 2.9, except to the extent the indemnifying party is materially and actually prejudiced thereby and shall not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under this Article 2.  In case any action or proceeding is brought against an indemnified party, the indemnifying party shall be entitled to (x) participate in such action or proceeding and (y), unless, in the reasonable opinion of outside counsel to the indemnified party, a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, assume the defense thereof jointly with any other indemnifying party similarly notified, with counsel reasonably satisfactory to such indemnified party.  The indemnifying party shall promptly notify the indemnified party of its decision to assume the defense of such action or proceeding.  If, and after, the indemnified party has received such notice from the indemnifying party, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense of such action or proceeding other than reasonable costs of investigation; provided, however, that (i) if the indemnifying party fails to take reasonable steps necessary to defend diligently the action or proceeding within twenty (20) days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so; or (ii) if such indemnified party who is a defendant in any action or proceeding which is also brought against the indemnifying party 

 

20

 

reasonably shall have concluded that there may be one or more legal or equitable defenses available to such indemnified party which are not available to the indemnifying party or which may conflict with those available to another indemnified party with respect to such Claim; or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct, then, in any such case, the indemnified party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indemnified parties in each jurisdiction, except to the extent any indemnified party or parties reasonably shall have made a conclusion described in clause (ii) or (iii) above) and the indemnifying party shall be liable for any expenses therefor.  No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim), unless such settlement or compromise (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party. The indemnity obligations contained in Sections 2.9(a) and 2.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the indemnified party which consent shall not be unreasonably withheld.

 

(e)           If for any reason the foregoing indemnity is held by a court of competent jurisdiction to be unavailable to an indemnified party under Sections 2.9(a), (b) or (c), then each applicable indemnifying party shall contribute to the amount paid or payable to such indemnified party as a result of any Claim in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, with respect to such Claim as well as any other relevant equitable considerations.  The relative fault shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission.  If, however, the allocation provided in the second preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations.  The parties hereto agree that it would not be just and equitable if any contribution pursuant to this Section 2.9(e) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences of this Section 2.9(e).  The amount paid or payable in respect of any Claim shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  Notwithstanding anything in this Section 2.9(e) to the contrary, no indemnifying party (other than the Company) shall be required pursuant to this Section 2.9(e) to contribute any amount greater than the amount of the net proceeds actually received by such indemnifying party upon the sale of the Registrable Securities 

 

21

 

pursuant to the registration statement giving rise to such Claim, less the amount of any indemnification payment made by such indemnifying party pursuant to Sections 2.9(b) and (c).

 

(f)            The indemnity and contribution agreements contained herein shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made or omitted by or on behalf of any indemnified party and shall survive the transfer of the Registrable Securities by any such party and the completion of any offering of Registrable Securities in a registration statement.  In the event one or more Holders effect a Partner Distribution pursuant to a registration statement in which the name of partners, members or shareholders who receive a distribution are named in a prospectus supplement or registration statement, the partners, members or shareholders so named shall be entitled to indemnification and contribution by the Company to the same extent as a Holder hereunder.

 

(g)           The indemnification and contribution required by this Section 2.9 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred; provided, however, that the recipient thereof hereby undertakes to repay such payments if and to the extent it shall be determined by a court of competent jurisdiction that such recipient is not entitled to such payment hereunder.

 

3.             Underwritten Offerings.

 

3.1.          Requested Underwritten Offerings.  If the Initiating Holders request an underwritten offering pursuant to a registration under Section 2.1 (pursuant to a request for a registration statement to be filed in connection with a specific underwritten offering or a request for a shelf takedown in the form of an underwritten offering), the Company shall enter into a customary underwriting agreement with the underwriters.  Such underwriting agreement shall (i) be satisfactory in form and substance to the Majority Participating Holders, (ii) contain terms not inconsistent with the provisions of this Agreement and (iii) contain such representations and warranties by, and such other agreements on the part of, the Company and such other terms as are generally prevailing in agreements of that type, including, without limitation, indemnities and contribution agreements on substantially the same terms as those contained herein.  Any Participating Holder shall be a party to such underwriting agreement and may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such Participating Holder and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such Participating Holder; provided, however, that the Company shall not be required to make any representations or warranties with respect to written information specifically provided by a Participating Holder for inclusion in the registration statement.  Each such Participating Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Participating Holder, its ownership of and title to the Registrable Securities, any written information specifically provided by such Participating Holder for inclusion in the registration statement and its intended method of distribution; and any liability of such Participating Holder to any underwriter or other Person under such underwriting agreement 

 

22

 

shall be limited to the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities pursuant to the registration statement and shall be limited to liability for written information specifically provided by such Participating Holder.

 

3.2.          Piggyback Underwritten Offerings.  In the case of a registration pursuant to Section 2.2 which involves an underwritten offering, the Company shall enter into an underwriting agreement in connection therewith and all of the Participating Holders’ Registrable Securities to be included in such registration shall be subject to such underwriting agreement.  Any Participating Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such Participating Holder and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such Participating Holder; provided, however, that the Company shall not be required to make any representations or warranties with respect to written information specifically provided by a Participating Holder for inclusion in the registration statement.  Each such Participating Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Participating Holder, its ownership of and title to the Registrable Securities, any written information specifically provided by such Participating Holder for inclusion in the registration statement and its intended method of distribution; and any liability of such Participating Holder to any underwriter or other Person under such underwriting agreement shall be limited to the amount of the net proceeds received by such Participating Holder upon the sale of the Registrable Securities pursuant to the registration statement and shall be limited to liability for written information specifically provided by such Participating Holder.

 

4.             General.

 

4.1.          Adjustments Affecting Registrable Securities.  The Company agrees that it shall not effect or permit to occur any combination or subdivision of shares of Common Equity which would adversely affect the ability of any Holder of any Registrable Securities to include such Registrable Securities in any registration or offering contemplated by this Agreement or the marketability of such Registrable Securities in any such registration or offering.  The Company agrees that it will take all reasonable steps necessary to effect a subdivision of shares of Common Equity if in the reasonable judgment of (a) the Majority Participating Holders or (b) the managing underwriter for the offering in respect of such Demand Registration Request, such subdivision would enhance the marketability of the Registrable Securities.  Each Holder agrees to vote all of its shares of capital stock in a manner, and to take all other actions necessary, to permit the Company to carry out the intent of the preceding sentence including, without limitation, voting in favor of an amendment to the Company’s organizational documents in order to increase the number of authorized shares of capital stock of the Company.  In any event, the provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Registrable Securities, to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, share exchange, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, Registrable Securities and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof.

 

23

 

4.2.          Rule 144 and Rule 144A.  If the Company shall have filed a registration statement pursuant to the requirements of Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act in respect of the Common Equity or Common Equity Equivalents, the Company covenants that (i) so long as it remains subject to the reporting provisions of the Exchange Act, it will timely file the reports required to be filed by it under the Securities Act or the Exchange Act (including, but not limited to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 under the Securities Act, as such Rule may be amended (“Rule 144”)) or, if the Company is not required to file such reports, it will, upon the request of any Holder, make publicly available other information so long as necessary to permit sales by such Holder under Rule 144, Rule 144A under the Securities Act, as such Rule may be amended (“Rule 144A”), or any similar rules or regulations hereafter adopted by the SEC, and (ii) it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (A) Rule 144, (B) Rule 144A or (C) any similar rule or regulation hereafter adopted by the SEC.  Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

 

4.3.          Amendments and Waivers.  Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Sponsors holding a majority of the Registrable Securities then held by all Sponsors; provided that any amendment or waiver that results in a non-pro rata material adverse effect on the rights of Management vis-à-vis the rights of the Sponsors under this Agreement will require the written consent of Management holding a majority of the Registrable Securities then held by all Management.  Any amendment or waiver effected in accordance with this Section 4.3 shall be binding upon each Holder and the Company.  Any waiver of any breach or default by any other party of any of the terms of this Agreement effected in accordance with this Section 4.3 shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived.  No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by any party to assert its or his or her rights hereunder on any occasion or series of occasions.

 

4.4.          Notices.  Unless otherwise specified herein, all notices, consents, approvals, reports, designations, requests, waivers, elections and other communications authorized or required to be given pursuant to this Agreement shall be in writing and shall be given, made or delivered (and shall be deemed to have been duly given, made or delivered upon receipt) by personal hand-delivery, by facsimile transmission, by electronic mail, by mailing the same in a sealed envelope, registered first-class mail, postage prepaid, return receipt requested, or by air courier guaranteeing overnight delivery, addressed to the Company at the address set forth below 

 

24

 

or to the applicable Holder at the address indicated on Schedule A hereto (or at such other address for a Holder as shall be specified by like notice):

 

(i)                                     If to the Company, to:

 

Cobalt International Energy, Inc.

Two Post Oak Central

1980 Post Oak Blvd., Suite 1200

Houston, TX 77056

Attention: Joseph H. Bryant

Facsimile No.: (713) 579-9184

E-mail: joe.bryant@cobaltintl.com

 

with copies to:

 

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Attention:         Christopher Mayer

  Richard D. Truesdell, Jr.

Facsimile No.: (212) 701-5338

(212) 701-5674

E-mail: chris.mayer@davispolk.com

richard.truesdell@davispolk.com

 

4.5.          Successors and Assigns.  A Holder may Assign his rights in this Agreement without the Company’s consent to an Assignee of Registrable Securities which (i) is with respect to any Holder, the spouse, parent, sibling, child, step-child or grandchild of such Holder, or the spouse thereof and any trust, limited liability company, limited partnership, private foundation or other estate planning vehicle for such Holder or for the benefit of any of the foregoing or other persons pursuant to the laws of descent and distribution, or (ii) is a legatee, executor or other fiduciary pursuant to a last will and testament of the Holder or pursuant to the terms of any trust which take effect upon the death of the Holder.  Furthermore, any Holder may Assign its rights in this Agreement without the Company’s prior written consent to any party; provided that such Assignment occurs in connection with the transfer of all, but not less than all, of such Holder’s Registrable Securities in a single transaction (to the extent such transfer is otherwise permissible).  Any Assignment shall be conditioned upon prior written notice to the Company or identifying the name and address of such Assignee and any other material information as to the identity of such Assignee as may be reasonably requested, and Schedule A hereto shall be updated to reflect such Assignment.  Notwithstanding anything to the contrary contained in this Section 4.5, any Holder may elect to transfer all or a portion of its Registrable Securities to any third party (to the extent such transfer is otherwise permissible) without Assigning its rights hereunder with respect thereto, provided that in any such event all rights under this Agreement with respect to the Registrable Securities so transferred shall cease and terminate.  This Agreement may not be Assigned by the Company, without the prior written consent of the Sponsors holding a majority of the Registrable Securities held by all Sponsors.

 

25

 

4.6.          Limitations on Subsequent Registration Rights.  From and after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public, the Company may, without the prior written consent of the Holders, enter into any agreement with any holder or prospective holder of any securities of the Company which provides such holder or prospective holder of securities of the Company comparable, but not more favorable or conflicting, information and registration rights granted to the Holders hereby.

 

4.7.          Goldman, Sachs & Co. and Affiliates.  Notwithstanding anything in this Agreement, none of the provisions of this Agreement shall in any way limit Goldman, Sachs & Co. or any of its Affiliates (other than any GSCP Entity as expressly set forth in this Agreement) from engaging in any brokerage, investment advisory, financial advisory, anti-raid advisory, principaling, merger advisory, financing, asset management, trading, market making, arbitrage, investment activity and other similar activities conducted in the ordinary course of their business.

 

4.8.          Entire Agreement.  This Agreement, the Stockholders Agreement and the other agreements referenced herein and therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and supersede any prior agreement or understanding among them with respect to the matters referred to herein.

 

4.9.          Governing Law; Waiver of Jury Trial; Jurisdiction.

 

(a)           Governing Law.  This Agreement is governed by and will be construed in accordance with the laws of the State of New York, excluding any conflict-of-laws rule or principle (whether of New York or any other jurisdiction) that might refer the governance or the construction of this Agreement to the law of another jurisdiction.

 

(b)           Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. The Company or any Holder may file an original counterpart or a copy of this Section 4.9(b) with any court as written evidence of the consent of any of the parties hereto to the waiver of their rights to trial by jury.

 

(c)           Jurisdiction.  Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of the courts of the State of New York located in the county and city of New York in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the courts of the State of New York located in the county and city of New York and (iv) to the fullest extent permitted by law, consents to service being made through the notice procedures set forth in Section 4.4.  Each party hereto hereby agrees that, to the fullest extent permitted by law, service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 4.4 shall be effective service of process for any suit or proceeding in connection with this Agreement or the transactions contemplated hereby

 

26

 

4.10.        Interpretation; Construction.

 

(a)           The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.  Where a reference in this Agreement is made to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

(b)           The parties have participated jointly in negotiating and drafting this Agreement.  In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

4.11.        Counterparts.  This Agreement may be executed in any number of separate counterparts each of which when so executed shall be deemed to be an original and all of which together shall constitute one and the same agreement.

 

4.12.        Severability.  In the event that any provision of this Agreement shall be invalid, illegal or unenforceable, such provision shall be construed by limiting it so as to be valid, legal and enforceable to the maximum extent provided by law and the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

 

4.13.        Specific Performance.  It is hereby agreed and acknowledged that it will be impossible to measure the money damages that would be suffered if the parties fail to comply with any of the obligations imposed on them by this Agreement and that, in the event of any such failure, an aggrieved party will be irreparably damaged and will not have an adequate remedy at law.  Each party hereto shall, therefore, be entitled (in addition to any other remedy to which such party may be entitled at law or in equity) to injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

 

4.14.        Further Assurances.  Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

27

 

	
 
    	
COMPANY
    
	
 
    	
 
    
	
 
    	
COBALT   INTERNATIONAL ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joseph H. Bryant
    

 

[Signature page to the Registration Rights Agreement]

 

 

	
 
    	
SPONSORS:
    
	
 
    	
 
    
	
 
    	
C/R   COBALT INVESTMENT PARTNERSHIP, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
CARLYLE/RIVERSTONE
    
	
 
    	
 
    	
ENERGY PARTNERS II, L.P.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
C/R   ENERGY GP II, LLC,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Pierre F. Lapeyre, Jr
    
	
 
    	
 
    	
Name:
    	
Pierre   F. Lapeyre, Jr.
    
	
 
    	
 
    	
Title: 
    	
Authorized   Person
    
	
 
    	
 
    	
 
    
	
 
    	
C/R   ENERGY COINVESTMENT II, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
CARLYLE/RIVERSTONE
    
	
 
    	
 
    	
ENERGY PARTNERS II, L.P.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
C/R   ENERGY GP II, LLC,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Pierre F. Lapeyre, Jr
    
	
 
    	
 
    	
Name:
    	
Pierre   F. Lapeyre, Jr.
    
	
 
    	
 
    	
Title: 
    	
Authorized   Person
    
	
 
    	
 
    	
 
    
	
 
    	
RIVERSTONE   ENERGY COINVESTMENT III, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
RIVERSTONE   COINVESTMENT GP, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
RIVERSTONE   HOLDINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Pierre F. Lapeyre, Jr
    
	
 
    	
 
    	
Name:
    	
Pierre   F. Lapeyre, Jr.
    
	
 
    	
 
    	
Title: 
    	
Authorized Person
    

 

[Signature page to the Registration Rights Agreement]

 

 

	
 
    	
CARLYLE   ENERGY COINVESTMENT III, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
CARLYLE   ENERGY COINVESTMENT III GP, L.L.C.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
TCG   HOLDINGS, L.L.C.
    
	
 
    	
 
    	
its sole member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Daniel A. D’Aniello
    
	
 
    	
 
    	
Name:   
    	
Daniel   A. D’Aniello
    
	
 
    	
 
    	
Title:   
    	
Managing   Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
C/R   ENERGY III COBALT PARTNERSHIP, L.P.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
CARLYLE/RIVERSTONE   ENERGY
    
	
 
    	
 
    	
PARTNERS III, L.P.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
C/R   ENERGY GP III, LLC,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Pierre F. Lapeyre, Jr
    
	
 
    	
 
    	
Name:   
    	
Pierre   F. Lapeyre, Jr.
    
	
 
    	
 
    	
Title:   
    	
Authorized   Person
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
CARLYLE/RIVERSTONE GLOBAL ENERGY   AND POWER FUND III, L.P.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
CARLYLE/RIVERSTONE
    
	
 
    	
 
    	
ENERGY PARTNERS III, L.P.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
C/R   ENERGY GP III, LLC,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Pierre F. Lapeyre, Jr
    
	
 
    	
 
    	
Name:   
    	
Pierre   F. Lapeyre, Jr.
    
	
 
    	
 
    	
Title:   
    	
Authorized   Person
    

 

[Signature page to the Registration Rights Agreement]

 

 

	
 
    	
GSCP   V COBALT HOLDINGS, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GS   CAPITAL PARTNERS V FUND, L.P.,
    
	
 
    	
 
    	
its sole member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GSCP   V ADVISORS, L.L.C.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kenneth Pontarelli
    
	
 
    	
 
    	
Name:   
    	
Kenneth   Pontarelli
    
	
 
    	
 
    	
Title:   
    	
Managing   Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
GSCP V OFFSHORE COBALT HOLDINGS,   LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GSCP   V OFFSHORE COBALT
    
	
 
    	
 
    	
HOLDINGS, L.P.,
    
	
 
    	
 
    	
its sole member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GS   CAPITAL PARTNERS V OFFSHORE FUND, L.P.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GSCP   V OFFSHORE ADVISORS, L.L.C.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kenneth Pontarelli
    
	
 
    	
 
    	
Name:   
    	
Kenneth   Pontarelli
    
	
 
    	
 
    	
Title:   
    	
Managing   Director
    

 

[Signature page to the Registration Rights Agreement]

 

 

	
 
    	
GS   CAPITAL PARTNERS V INSTITUTIONAL, L.P.,
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GS   ADVISORS V, L.L.C.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kenneth Pontarelli
    
	
 
    	
 
    	
Name:   
    	
Kenneth   Pontarelli
    
	
 
    	
 
    	
Title:   
    	
Managing   Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
GSCP   V GMBH COBALT HOLDINGS, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GSCP   V GmbH Cobalt Holdings, L.P.,
    
	
 
    	
 
    	
its sole member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GSCP   V GmbH Cobalt Holdings,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kenneth Pontarelli
    
	
 
    	
 
    	
Name:   
    	
Kenneth   Pontarelli
    
	
 
    	
 
    	
Title:   
    	
Managing   Director
    

 

[Signature page to the Registration Rights Agreement]

 

 

	
 
    	
GSCP   VI COBALT HOLDINGS, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GS   CAPITAL PARTNERS VI FUND, L.P.,
    
	
 
    	
 
    	
its sole member
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GSCP   VI ADVISORS, L.L.C.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kenneth Pontarelli
    
	
 
    	
 
    	
Name:   
    	
Kenneth   Pontarelli
    
	
 
    	
 
    	
Title:   
    	
Managing   Director
    
	
 
    	
 
    
	
 
    	
GSCP   VI OFFSHORE COBALT HOLDINGS, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GSCP   VI OFFSHORE COBALT
    
	
 
    	
 
    	
HOLDINGS, L.P.,
    
	
 
    	
 
    	
its sole member
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GS   CAPITAL PARTNERS VI OFFSHORE FUND, L.P.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GSCP   VI OFFSHORE ADVISORS, L.L.C.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kenneth Pontarelli
    
	
 
    	
 
    	
Name:   
    	
Kenneth   Pontarelli
    
	
 
    	
 
    	
Title:   
    	
Managing   Director
    

 

[Signature page to the Registration Rights Agreement]

 

 

	
 
    	
 
    	
GS   CAPITAL PARTNERS VI PARALLEL, L.P.,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
GS   ADVISORS VI, L.L.C.,
    
	
 
    	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    

 

	
 
    	
 
    	
By:
    	
/s/ Kenneth Pontarelli
    
	
 
    	
 
    	
 
    	
Name:  Kenneth Pontarelli
    
	
 
    	
 
    	
 
    	
Title:  Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
GSCP   VI GMBH COBALT HOLDINGS, LLC
    

 

	
 
    	
 
    	
By:
    	
GSCP   VI GmbH Cobalt Holdings, L.P.,
    
	
 
    	
 
    	
 
    	
its sole member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
GSCP   VI GmbH Cobalt Holdings,
    
	
 
    	
 
    	
 
    	
its general partner
    

 

 

	
 
    	
 
    	
By:
    	
/s/ Kenneth Pontarelli
    
	
 
    	
 
    	
 
    	
Name:  Kenneth Pontarelli
    
	
 
    	
 
    	
 
    	
Title:  Managing Director
    

 

 

[Signature page to the Registration Rights Agreement]

 

 

	
 
    	
 
    	
KERN   COBALT CO-INVEST PARTNERS AP LP
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
KERN   Cobalt Group Management, Ltd.,
    
	
 
    	
 
    	
 
    	
its general partner
    

 

 

	
 
    	
 
    	
By:
    	
/s/ Jeffrey van Steenbergen
    
	
 
    	
 
    	
Name:  Jeffrey van Steenbergen
    
	
 
    	
 
    	
Title:  Director
    

 

 

[Signature page to the Registration Rights Agreement]

 

 

	
 
    	
 
    	
FIRST   RESERVE FUND XI, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
First   Reserve GP XI, L.P.,
    
	
 
    	
 
    	
 
    	
its general partner
    

 

	
 
    	
 
    	
By:
    	
First   Reserve GP XI, Inc.,
    
	
 
    	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    

 

	
 
    	
 
    	
By:
    	
/s/   Kenneth W. Moore
    
	
 
    	
 
    	
Name:    Kenneth W. Moore
    
	
 
    	
 
    	
Title:    Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
FR XI   ONSHORE AIV L.P.
    

 

	
 
    	
 
    	
By:
    	
First   Reserve GP XI, L.P.,
    
	
 
    	
 
    	
 
    	
its manager
    

 

	
 
    	
 
    	
By:
    	
First   Reserve GP XI, Inc.,
    
	
 
    	
 
    	
 
    	
its general partner
    

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Kenneth W. Moore
    
	
 
    	
 
    	
Name:  Kenneth W. Moore
    
	
 
    	
 
    	
Title:    Managing Director
    

 

 

[Signature page to the Registration Rights Agreement]

 

 

	
 
    	
 
    	
MANAGEMENT:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Joseph H. Bryant
    
	
 
    	
 
    	
Joseph   H. Bryant
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Samuel H. Gillespie, III
    
	
 
    	
 
    	
Samuel   H. Gillespie, III
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   James W. Farnsworth
    
	
 
    	
 
    	
James   W. Farnsworth
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   James H. Painter
    
	
 
    	
 
    	
James   H. Painter
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Van P. Whitfield
    
	
 
    	
 
    	
Van   P. Whitfield
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Richard A. Smith
    
	
 
    	
 
    	
Richard   A. Smith
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   John P. Wilkirson
    
	
 
    	
 
    	
John   P. Wilkirson
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Rodney L. Gray
    
	
 
    	
 
    	
Rodney L. Gray
    

 

 

[Signature page to the Registration Rights Agreement]

 

 

Schedule A

 

GSCP

 

	
GSCP   V Cobalt Holdings, LLC
    	
85   Broad St, 10th Floor

New   York, NY 10004

Attn:   Ken Pontarelli
    
	
GSCP   V Offshore Cobalt Holdings, LLC
    
	
GS   Capital Partners V Institutional, L.P.
    
	
GSCP   V GmbH Cobalt Holdings, LLC
    
	
GSCP   VI Cobalt Holdings, LLC
    
	
GSCP   VI Offshore Cobalt Holdings, LLC
    
	
GS   Capital Partners VI Parallel, L.P.
    
	
GSCP   VI GmbH Cobalt Holdings, LLC
    

 

C/R

 

	
Riverstone   Energy Coinvestment III, L.P.
    	
c/o   Riverstone Holdings LLC

712   Fifth Avenue, 51st Floor

New York, NY 10019

Attn:   Greg Beard
    
	
Carlyle   Energy Coinvestment III, L.P.
    
	
C/R   Energy III Cobalt Partnership, L.P.
    
	
Carlyle/Riverstone   Global Energy and Power Fund III, L.P.
    
	
C/R   Energy Coinvestment II, L.P.
    
	
C/R   Cobalt Investment Partnership, L.P.
    

 

First Reserve

 

	
First   Reserve Fund XI, L.P.
    	
c/o First Reserve   Corporation

One   Lafayette Place
    
	
FR   XI Onshore AIV L.P.
    	
Greenwich, CT 06830

Attn:   Alan G. Schwartz
    

 

KERN

 

	
KERN   Cobalt Co-Invest Partners AP LP
    	
100   Doll Block

116-8th Avenue

Calagary,   Alberta, Canada T26 0K4

Attn:   Jeff van Steenbergen
    

 

Management

 

	
Joseph   H. Bryant
    	
c/o Cobalt International   Energy, L.P.

Two Post Oak Central

1980 Post Oak Blvd., Suite 1200

Houston,   TX 77056
    
	
Samuel   H. Gillespie, III
    
	
James   W. Farnsworth
    
	
James   H. Painter
    
	
Van   P. Whitfield
    
	
Richard   A. Smith
    
	
John   P. Wilkirson
    
	
Rodney   L. Gray
    

 

A-1

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