Document:

Fifth Amendment

 EXHIBIT 10.1 
  

  
  
 FIFTH AMENDMENT TO CREDIT AGREEMENT 
  
 BETWEEN 
  
 CONTANGO OIL AND GAS COMPANY 
  
 AND 
  
 GUARANTY BANK,
FSB 
 AS LENDER 
  
 Effective as of June 1, 2003 
  

	 	

  
 REDUCING REVOLVING LINE OF CREDIT OF UP TO $50,000,000 
 REDUCING REVOLVING TERM LOAN OF $2,500,000 
  

	 	

  
  
  

 TABLE OF CONTENTS 
  

	 	  	 	  	PAGE

	 ARTICLE I
	  	DEFINITIONS	  	1
	 1.01
	  	Terms Defined Above	  	1
	 1.02
	  	Terms Defined in Agreement	  	1
	 1.03
	  	References	  	1
	 1.04
	  	Articles and Sections	  	1
	 1.05
	  	Number and Gender	  	1
	 ARTICLE II
	  	AMENDMENTS	  	2
	 2.01
	  	Amendment of Section 1.2	  	2
	 2.02
	  	Amendment of Section 2.6	  	3
	 2.03
	  	Amendment of Section 2.9	  	4
	 2.04
	  	Amendment of Section 2.11	  	4
	 2.05
	  	Amendment of Section 6.13	  	5
	 2.06
	  	Amendment of Section 6.14	  	5
	 2.07
	  	Amendment of Section 6.16	  	5
	 2.08
	  	Addition of Exhibit I(A)	  	5
	 ARTICLE III
	  	CONDITIONS	  	5
	 3.01
	  	Receipt of Documents	  	5
	 3.02
	  	Accuracy of Representations and Warranties	  	6
	 3.03
	  	Matters Satisfactory to Lender	  	6
	 ARTICLE IV
	  	REPRESENTATIONS AND WARRANTIES	  	6
	 ARTICLE V
	  	RATIFICATION	  	6
	 ARTICLE VI
	  	MISCELLANEOUS	  	6
	 6.01
	  	Scope of Amendment	  	6
	 6.02
	  	Agreement as Amended	  	6
	 6.03
	  	Parties in Interest	  	6
	 6.04
	  	Rights of Third Parties	  	6
	 6.05
	  	ENTIRE AGREEMENT	  	7
	 6.06
	  	GOVERNING LAW	  	7
	 6.07
	  	JURISDICTION AND VENUE	  	7

  
  

 i 

 FIFTH AMENDMENT TO CREDIT AGREEMENT 
  
 This FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Fifth
Amendment”) is made and entered into effective as of June 1, 2003, between CONTANGO OIL AND GAS COMPANY, a Delaware corporation, (the “Borrower”), and GUARANTY BANK, FSB, a federal savings bank (the
“Lender”). 
  
 W I T N E S S E T H

  
 WHEREAS, the above named parties did execute and exchange
counterparts of that certain Credit Agreement dated June 29, 2001, as amended by First Amendment to Credit Agreement dated January 8, 2002, Second Amendment to Credit Agreement dated February 13, 2002, Third Amendment to Credit Agreement dated April
26, 2002, Fourth Amendment to Credit Agreement dated September 9, 2002, and Letter Amendment to Credit Agreement dated January 7, 2003 (the “Agreement”), to which reference is here made for all purposes; 
  
 WHEREAS, the parties subject to and bound by the Agreement are desirous of
amending the Agreement in the particulars hereinafter set forth; 
  
 NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties to the Agreement, as set forth therein, and the mutual covenants and agreements of the parties hereto, as set forth in this Fifth Amendment, the parties
hereto agree as follows: 
  
 ARTICLE I 
 DEFINITIONS 
  
 1.01    Terms Defined Above.    As used herein, each of the terms “Agreement,”
“Borrower,” “Fifth Amendment,” and “Lender” shall have the meaning assigned to such term hereinabove. 
  
 1.02    Terms Defined in Agreement.    As used herein, each term defined in the Agreement shall have the
meaning assigned thereto in the Agreement, unless expressly provided herein to the contrary. 
  
 1.03    References.    References in this Fifth Amendment to Article or Section numbers shall be to Articles and Sections of this Fifth Amendment, unless expressly stated
herein to the contrary. References in this Fifth Amendment to “hereby,” “herein,” hereinafter,” hereinabove,” “hereinbelow,” “hereof,” and “hereunder” shall be to this Fifth Amendment in
its entirety and not only to the particular Article or Section in which such reference appears. 
  
 1.04    Articles and Sections.    This Fifth Amendment, for convenience only, has been divided into
Articles and Sections and it is understood that the rights, powers, privileges, duties, and other legal relations of the parties hereto shall be determined from this Fifth Amendment as an entirety and without regard to such division into Articles
and Sections and without regard to headings prefixed to such Articles and Sections. 
  
 1.05    Number and Gender.    Whenever the context requires, reference herein made to the single number shall be understood to include the plural and likewise the plural
shall be understood to 
  

 1 

 include the singular. Words denoting sex shall be construed to include the masculine, feminine, and neuter, when such
construction is appropriate, and specific enumeration shall not exclude the general, but shall be construed as cumulative. Definitions of terms defined in the singular and plural shall be equally applicable to the plural or singular, as the case may
be. 
  
 ARTICLE II 
 AMENDMENTS 
  
 The Borrower and the Lender hereby amend the Agreement in the following particulars: 
  
 2.01    Amendment of Section 1.2.    Section 1.2 of the Agreement is hereby
amended as follows: 
  
 The following definitions are added and/or
amended to read as follows: 
  
 “Commitment Termination
Date” shall mean June 29, 2006. 
  
 “Final
Maturity Date” shall mean June 29, 2006. 
  
 “Floating Rate” shall mean an interest rate per annum equal to the Base Rate from time to time in effect plus one-fourth percent (1/4%) for the revolving line of credit and plus one percent (1%) for the Reducing Revolving
Term Loan, but in no event exceeding the Highest Lawful Rate. 
  
 “LIBOR Base Rate” shall mean with respect to any Euro-Dollar Amount, the rate per annum (expressed as a percentage) determined by Lender to be equal to the sum of (a) the quotient of the LIBOR Rate for the applicable
Euro-Dollar Amount and the applicable Interest Period, divided by (1 minus the applicable Reserve Requirement), rounded up to the nearest 1/100 of 1%, plus (b) the applicable Assessments, plus (c) two percent (2%) for the revolving line of credit
and (d) four percent (4%) for the Reducing Revolving Term Loan. 
  
 “Notes” shall mean the Note in the form attached as Exhibit I and the Reducing Revolving Term Note in the form attached as Exhibit I(A). 
  
 “Obligations” shall mean, without duplication, (a) all Indebtedness evidenced by the Note and the Reducing
Revolving Term Note, (b) the obligation of the Borrower for the payment of Commitment Fees, Facility Fees, and Engineering Fees, (c) all obligations and liabilities whether now existing or hereafter arising of the Borrower to the Lender in
connection with any Commodity Hedge Agreement or Rate Management Transaction, and (d) all other obligations and liabilities of the Borrower to the Lender, now existing or hereafter incurred, under, arising out of or in connection with any Loan
Document, and to the extent that any of the foregoing includes or refers to the payment of amounts deemed or constituting interest, only so much thereof as shall have accrued, been earned and which remains unpaid at each relevant time of
determination. 
  

 2 

 “Reducing Revolving Term Loan” shall mean the Reducing Revolving Term Loan described in
Section 2.1A. 
  
 “Reducing Revolving Term Loan Available
Commitment” shall mean on the date of this Fifth Amendment, the sum of $2,500,000. Such amount shall reduce by $430,000 per month beginning July 1, 2003. 
  
 “Reducing Revolving Term Loan Balance” shall mean, at any time, the outstanding principal balance of the
Reducing Revolving Term Note at such time. 
  
 “Reducing
Revolving Term Note” shall mean the promissory note of the Borrower payable to the Lender in the amount of $2,500,000 in the form attached hereto as Exhibit I(A) with all blanks in such form completed appropriately, together with all
renewals, extensions for any period, increases, and rearrangements thereof. 
  
 2.02    Addition of Section 2.1A.    Section 2.1A shall be added to the Agreement to read as follows: 
  
 “A.    Reducing Revolving Term Loan 
  
 (a)    The Reducing Revolving Term
Loan shall be in the total amount of $2,500,000, with interest at the LIBOR Base Rate payable as set forth in the Agreement or the Floating Rate payable monthly by the Borrower to the Lender beginning on the first day of the month following the
month in which borrowings were made under this facility, and continuing on the first day of each calendar month thereafter until the Reducing Revolving Term Loan Balance is zero and/or until December 31, 2003, when all sums owing under this facility
are due and payable. 
  
 (b)    The Borrower may only borrow under the Reducing Revolving Term Loan up to the amount of the Reducing Revolving Term Loan Available Commitment. Principal payments of the greater of $430,000 per month or an amount
necessary to reduce the Reducing Revolving Term Loan Balance to the Reducing Revolving Term Loan Available Commitment will be required should the amount of borrowings equal to or exceed the Reducing Revolving Term Loan Available Commitment.

  
 (c)    Upon the terms
and conditions (including, without limitation, the right of the Lender to decline to make any Loan so long as any Default or Event of Default exists) and relying on the representations and warranties contained in this Agreement, the Lender agrees,
during the Commitment Period, to make Loans, in immediately available funds at the Applicable Lending Office or the Principal Office, to or for the benefit of the Borrower in an aggregate principal amount not to exceed at any time outstanding the
Reducing Revolving Term Loan Available Commitment then in effect. Loans shall be made from time to time on any Business Day designated by the Borrower following receipt by the Lender of a Borrowing Request. 
  

 3 

 (d)    Subject to the terms of this Agreement, during the
Commitment Period, the Borrower may borrow, repay, and reborrow up to the amount of the Reducing Revolving Term Loan Available Commitment in effect at that time, and convert Loans of one type or with one Interest Period into Loans of another type or
with a different Interest Period. Except for prepayments made pursuant to Section 2.10, each borrowing, conversion, and prepayment of principal of Loans shall be in an amount at least equal to $100,000. Each borrowing, prepayment, or conversion of
or into a Loan of a different type or, in the case of a LIBO Rate Loan, having a different Interest Period, shall be deemed a separate borrowing, conversion, and prepayment for purposes of the foregoing, one for each type of Loan or Interest Period.
Anything in this Agreement to the contrary notwithstanding, the aggregate principal amount of LIBO Rate Loans having the same Interest Period shall be at least equal to $100,000; and if any LIBO Rate Loan would otherwise be in a lesser principal
amount for any period, such Loan shall be a Floating Rate Loan during such period. 
  
 (e)    The Loans shall be made and maintained at the Applicable Lending Office or the Principal Office and shall be
evidenced by the Reducing Revolving Term Note. 
  
 2.03    Amendment of Section 2.6.    Section 2.6(a) of the Agreement is amended to read as follows: 
  
 “2.6    Borrowing Base Determinations.    (a) The Borrowing Base as of June 1, 2003, is acknowledged
by the Borrower and the Lender to be $24,500,000. Commencing on July 1, 2003, and continuing thereafter on the first day of each calendar month through the next Borrowing Base, the amount of the Borrowing Base shall be reduced by $670,000.”

  
 2.04    Amendment of Section
2.9.    Section 2.9 of the Agreement is hereby amended to read as follows: 
  
 “2.9    Commitment Fee.    In addition to interest on the Notes as provided herein and all other fees
payable hereunder and to compensate the Lender for maintaining funds available, the Borrower shall pay to the Lender, in immediately available funds, on the first day of July, 2003, and on the first day of each third calendar month thereafter during
the Commitment Period, a fee in the amount of 0.375% per annum, for the revolving line of credit and 0.50% per annum for the Reducing Revolving Term Loan calculated on the basis of a year of 360 and actual days elapsed (including the first day but
excluding the last day), on the average daily amount of the Available Commitment during the preceding quarterly period.” 
  
 2.05    Amendment of Section 2.11.    Section 2.11 of the Agreement is hereby amended to read as follows:

  

 4 

 “2.11    Facility Fee.    In addition to interest on
the Notes as provided herein and all other fees payable hereunder and to compensate the Lender for the costs of the extension of credit hereunder, the Borrower shall pay to the Lender on the execution of this Fifth Amendment, in immediately
available funds, a facility fee in the amount of 0.75% of any future increase in the Borrowing Base and a facility fee in the amount of $50,000 in consideration for the Revolving Term Loan.” 
  
 2.06    Amendment of Section
6.13.    Section 6.13 of the Agreement is hereby amended to read as follows: 
  
 “6.13   Debt Coverage Ratio.    Permit, as of the close of any fiscal quarter, the ratio of (a) quarterly
EBITDAX to (b) Debt Service to be less than 1.75 to 1.0.” 
  
 2.07    Amendment of Section 6.14.    Section 6.14 of the Agreement is hereby amended to read as follows: 
  
 “6.14   Funded Debt Ratio.    Permit, as of the close of any fiscal quarter,
the ratio of (a) Total Funded Debt to (b) annualized quarterly EBITDAX to be more than 1.75 to 1.00.” 
  
 2.08    Amendment of Section 6.16.    Section 6.16 of the Agreement is hereby amended to read as follows:

  
 “6.16   General and Administrative
Expenses.    Permit, as of the close of any fiscal year, general and administrative expenses to exceed $2,500,000.” 
  
 2.09    Addition of Exhibit I(A).    Exhibit I(A), i.e. the Form of Reducing Revolving Term Note, shall be
as set forth on Exhibit I(A) to this Fifth Amendment. 
  
 ARTICLE III 
 CONDITIONS 
  
 The obligation of the Lender to amend the Agreement as provided herein is subject to the fulfillment of the following
conditions precedent: 
  
 3.01    Receipt
of Documents.    The Lender shall have received, reviewed, and approved the following documents and other items, appropriately executed when necessary and in form and substance satisfactory to the Lender: 
  
 (a)    multiple counterparts of this
Fifth Amendment as requested by the Lender; 
  
 (b)    Reducing Revolving Term Note; 
  
 (c)    payment of a fee in the amount of $122,500 by the Borrower to the Lender in consideration of Lender’s extending the maturity date for the revolving line of credit; 
  

 5 

 (d)    payment by the Borrower to the Lender of a Facility Fee in
the amount of $50,000 in consideration for the Reducing Revolving Term Loan; 
  
 (e)    payment by the Borrower to the Lender an Engineering Fee in the amount of $5,000; and 
  
 (f)    such other agreements,
documents, items, instruments, opinions, certificates, waivers, consents, and evidence as the Lender may reasonably request. 
  
 3.02    Accuracy of Representations and Warranties.    The representations and warranties contained in
Article IV of the Agreement and this Fifth Amendment shall be true and correct. 
  
 3.03    Matters Satisfactory to Lender.    All matters incident to the consummation of the transactions contemplated hereby shall be satisfactory to the Lender.

  
 ARTICLE IV 
 REPRESENTATIONS AND WARRANTIES 
  
 The Borrower hereby expressly re-makes, in favor of the Lender, all of the representations and warranties set forth in Article IV of the Agreement, and
represents and warrants that all such representations and warranties remain true and unbreached. 
  
 ARTICLE V 
 RATIFICATION 
  
 Each of the parties hereto does hereby adopt, ratify, and confirm the
Agreement and the other Loan Documents, in all things in accordance with the terms and provisions thereof, as amended by this Fifth Amendment. 
  
 ARTICLE VI 
 MISCELLANEOUS

  
 6.01    Scope of
Amendment.    The scope of this Fifth Amendment is expressly limited to the matters addressed herein and this Fifth Amendment shall not operate as a waiver of any past, present, or future breach, Default, or Event of Default
under the Agreement. except to the extent, if any, that any such breach, Default, or Event of Default is remedied by the effect of this Fifth Amendment. 
  
 6.02    Agreement as Amended.    All references to the Agreement in any document heretofore or hereafter
executed in connection with the transactions contemplated in the Agreement shall be deemed to refer to the Agreement as amended by this Fifth Amendment. 
  
 6.03    Parties in Interest.    All provisions of this Fifth Amendment shall be binding upon and shall
inure to the benefit of the Borrower, the Lender and their respective successors and assigns. 
  
 6.04    Rights of Third Parties.    All provisions herein are imposed solely and exclusively for the benefit of the Lender and the Borrower, and no other Person shall
have standing to require satisfaction of such provisions in accordance with their terms and any or all of such provisions may 
  

 6 

 be freely waived in whole or in part by the Lender at any time if in its sole discretion it deems it advisable to do so.

  
 6.05    ENTIRE
AGREEMENT.    THIS FIFTH AMENDMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SUPERSEDES ANY PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, BETWEEN SUCH PARTIES REGARDING THE
SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS FIFTH AMENDMENT, THE AGREEMENT, THE NOTES, THE SECURITY INSTRUMENTS, AND THE OTHER WRITTEN DOCUMENTS REFERRED TO IN THE AGREEMENT OR EXECUTED IN CONNECTION WITH OR AS SECURITY FOR THE NOTES REPRESENT,
COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. 
  
 6.06    GOVERNING
LAW.    THIS FIFTH AMENDMENT, THE AGREEMENT AND THE NOTES SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS. THE PARTIES ACKNOWLEDGE AND AGREE
THAT THIS AGREEMENT AND THE NOTES AND THE TRANSACTIONS CONTEMPLATED HEREBY BEAR A NORMAL, REASONABLE, AND SUBSTANTIAL RELATIONSHIP TO THE STATE OF TEXAS. 
  
 6.07    JURISDICTION AND VENUE.    ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY
OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM THIS FIFTH AMENDMENT, THE AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED IN COURTS HAVING SITUS IN HARRIS COUNTY, TEXAS. EACH OF THE BORROWER AND THE LENDER HEREBY SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE BORROWER OR THE LENDER IN
ACCORDANCE WITH THIS SECTION. 
  

 7 

 IN WITNESS WHEREOF, this Fifth Amendment to Credit Agreement is executed effective the date first
hereinabove written. 
  

	BORROWER
	
	CONTANGO OIL AND GAS COMPANY
		
	 By:
	 	 /s/    WILLIAM H. GIBBONS        

	 	 	 William H. Gibbons
 Vice President and Treasurer

  

 8 

	LENDER
	
	GUARANTY BANK, FSB
		
	 By:
	 	 /s/      RICHARD E. MENCHACA
      

	 	 	 Richard E. Menchaca
 Senior Vice President

  
  

 9 

 EXHIBIT I(A) 
  
 [FORM OF REDUCING REVOLVING TERM NOTE] 
 REDUCING REVOLVING TERM 
 PROMISSORY NOTE 
  

	 $2,500,000
	 	Houston, Texas	 	June 1, 2003

  
 FOR VALUE RECEIVED and
WITHOUT GRACE, the undersigned (“Maker”) promises to pay to the order of GUARANTY BANK, FSB (“Payee”), at its banking quarters in Houston, Harris County, Texas, the sum of TWO MILLION, FIVE HUNDRED THOUSAND
DOLLARS ($2,500,000), or so much thereof as may be advanced against this Note pursuant to the Credit Agreement dated of even date herewith by and between Maker and Payee (as amended, restated, or supplemented from time to time, the “Credit
Agreement”), together with interest at the rates and calculated as provided in the Credit Agreement. 
  
 Reference is hereby made to the Credit Agreement for matters governed thereby, including, without limitation, certain events which will entitle the holder
hereof to accelerate the maturity of all amounts due hereunder. Capitalized terms used but not defined in this Note shall have the meanings assigned to such terms in the Credit Agreement. 
  
 This Note is issued pursuant to, is the “Note” under, and is payable as provided in the Credit Agreement. Subject
to compliance with applicable provisions of the Credit Agreement, Maker may at any time pay the full amount or any part of this Note without the payment of any premium or fee, but such payment shall not, until this Note is fully paid and satisfied,
excuse the payment as it becomes due of any payment on this Note provided for in the Credit Agreement. 
  
 Without being limited thereto or thereby, this Note is secured by the Security Instruments. 
  
 THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT CHAPTER 345 OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS NOTE. 
  

	BORROWER:
	
	CONTANGO OIL AND GAS COMPANY
	
	 By:                                      
                                        
   

	 William H. Gibbons

	 Vice President and Treasurer

  

 i<PAGE>

                                                                     Exhibit 4.6

                           COOPER CAMERON CORPORATION

                           COMPENSATION DEFERRAL PLAN

<PAGE>

                           COOPER CAMERON CORPORATION
                           COMPENSATION DEFERRAL PLAN

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
ARTICLE I -  Definitions...................................................   1
     1.1  Definitions......................................................   1
          (a)  Affiliate...................................................   1
          (b)  Base Salary.................................................   1
          (c)  Beneficiary.................................................   1
          (d)  Board.......................................................   1
          (e)  Change of Control...........................................   1
          (f)  Code........................................................   1
          (g)  Committee...................................................   1
          (h)  Company.....................................................   1
          (i)  Company Deferral............................................   2
          (j)  Deferred Compensation.......................................   2
          (k)  Effective Date..............................................   2
          (l)  Employer....................................................   2
          (m)  Incentive Award.............................................   2
          (n)  Participant.................................................   2
          (o)  Plan........................................................   2
          (p)  Plan Account................................................   2
          (q)  Unforeseeable Financial Emergency...........................   2
     1.2  Construction.....................................................   2

ARTICLE II - Eligibility for Plan Participation............................   3
     2.1  Eligible Class...................................................   3
     2.2  Eligible Employees...............................................   3
     2.3  Participation....................................................   3
          (a)  Base Salary.................................................   3
          (b)  Incentive Award.............................................   3
          (c)  Company Deferral............................................   3
     2.4  Time of Making Elections.........................................   3
     2.5  Nature of Elections..............................................   3

ARTICLE III - Crediting of Deferred Compensation to Plan Accounts..........   4
     3.1  Establishment of Plan Accounts...................................   4
     3.2  Crediting of Interest Equivalents................................   4
</TABLE>

                                       (i)

<PAGE>

<TABLE>
<S>                                                                           <C>
ARTICLE IV - Payment of Deferred Compensation Amounts......................   4
     4.1  Payment of Deferred Compensation.................................   4
     4.2  Unforeseeable Financial Emergency................................   5
     4.3  Change in Purpose................................................   5
     4.4  Change of Control................................................   5
     4.5  No Forfeiture of Deferred Compensation...........................   5
     4.6  Debiting of Plan Accounts........................................   5

ARTICLE V - Beneficiaries..................................................   5

ARTICLE VI - Administrative Provisions.....................................   6
     6.1  Powers and Responsibilities of the Board.........................   6
     6.2  Actions of the Board.............................................   6
     6.3  Expenses.........................................................   6

ARTICLE VII - Amendment and Termination....................................   6

ARTICLE VIII - Adoption by Subsidiaries....................................   7

ARTICLE IX - Miscellaneous.................................................   7
     9.1  Non-Alienation of Benefits.......................................   7
     9.2  Payment of Benefits to Others....................................   7
     9.3  Plan Non-Contractual.............................................   7
     9.4  Funding..........................................................   7
     9.5  Claims of Other Persons..........................................   7
     9.6  Severability.....................................................   8
     9.7  Governing Law....................................................   8
</TABLE>

                                      (ii)

<PAGE>

                           COOPER CAMERON CORPORATION
                           COMPENSATION DEFERRAL PLAN

     COOPER CAMERON CORPORATION (hereinafter referred to as the "Company")
hereby restates the COOPER CAMERON CORPORATION MANAGEMENT INCENTIVE COMPENSATION
DEFERRAL PLAN into the form herein and hereby renames such plan as the "COOPER
CAMERON CORPORATION COMPENSATION DEFERRAL PLAN" (hereinafter referred to as the
"Plan"), effective as of January1, 1996, to provide a method of attracting and
retaining key employees of the Employer (as defined herein) and to encourage
such key employees to remain with and devote their best efforts to the business
of the Employer, thereby advancing the interests of the Employer.

                                      (iii)

<PAGE>

                                   ARTICLE I

                                   Definitions

     1.1 Definitions. Except as otherwise required by the context, the terms
used in the Plan shall have the meaning hereinafter set forth.

(a)  Affiliate. The term "Affiliate" shall mean any member of a controlled group
of corporations (as determined under section 414(b) of the Code) of which the
Company is a member, any member of a group of trades or businesses under common
control (as determined under section 414(c) of the Code) with the Company, and
any member of an affiliated service group (as determined under section 414(m) of
the Code) of which the Company is a member.

(b)  Base Salary. The term "Base Salary" shall mean the base salary from the
Employer earned by a Participant for services rendered or labor performed during
a calendar year, which, except to the extent of participation in this Plan,
would become payable as of the Employer's payroll dates during such calendar
year.

(c)  Beneficiary. The term "Beneficiary" shall mean the person who, in
accordance with the provisions of Article V of the Plan, shall be entitled to
receive payment of the Participant's Deferred Compensation in the event the
Participant dies before his interest under the Plan has been distributed to him
in full.

(d)  Board. The term "Board" shall mean the Board of Directors of the Company.

(e)  Change of Control. The term "Change of Control" with respect to the Company
shall have the same meaning as such term has in the Cooper Cameron Corporation
Long-Term Incentive Plan.

(f)  Code. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time. Reference to a section of the Code shall include such
section and any comparable section or sections of any future legislation that
amends, supplements, or supersedes such section.

(g)  Committee. The term "Committee" shall mean (1) for the period preceding a
Change in Control, the Compensation Committee of the Board, (2) for the two-year
period following a Change in Control, the individuals who comprised the
Compensation Committee of the Board immediately prior to the Change in Control,
acting in their individual capacities, and (3) thereafter, the Committee
appointed by the Company.

(h)  Company. The term "Company" shall mean Cooper Cameron Corporation, its
corporate successors, and the surviving corporation resulting from any merger of
Cooper Cameron Corporation with any other corporation or corporations.

                                       -1-

<PAGE>

(i)  Company Deferral. The term "Company Deferral" shall mean the deferred
compensation benefits authorized in the sole discretion of the Company, on
behalf of a Participant pursuant to Section 2.3(c) of the Plan.

(j)  Deferred Compensation. The term "Deferred Compensation" shall mean, with
respect to a Participant for a calendar year, the sum of (1) the amount of Base
Salary deferred by such Participant for such calendar year, (2) the amount of an
Incentive Award deferred by such Participant for such calendar year, (3) the
amount of any Company Deferral made on behalf of such Participant for such
calendar year, and (4) the amount of interest equivalents credited on behalf of
such Participant for such calendar year, all in accordance with the provisions
of Sections 2.3 and 3.2 of the Plan.

(k)  Effective Date. The term "Effective Date" shall mean January1, 1996, as to
this restatement of the Plan.

(l)  Employer. The term "Employer" shall mean the Company, as well as any
Affiliate that may adopt the Plan in accordance with the provisions of Article
VIII of the Plan.

(m)  Incentive Award. The term "Incentive Award" shall mean compensation or
bonus earned from the Employer by a Participant during, and awarded to the
Participant for, a calendar year under the Cooper Cameron Corporation Management
Incentive Plan, which, except to the extent of participation in this Plan, would
become payable in one lump sum in the calendar year next following such calendar
year.

(n)  Participant. The term "Participant" shall mean any employee of an Employer
who is eligible to participate in the Plan and who elects to participate in the
Plan pursuant to Article II of the Plan.

(o)  Plan. The term "Plan" shall mean the Cooper Cameron Corporation
Compensation Deferral Plan as set forth herein.

(p)  Plan Account. The term "Plan Account" shall mean the account established
and maintained on behalf of a Participant under the Plan pursuant to the
provisions of Article III.

(q)  Unforeseeable Financial Emergency. An unexpected need for cash that (1)
arises from an illness, casualty loss, sudden financial reversal, or such other
unforeseeable occurrence that is caused by an event beyond the control of such
individual, (2) would result in severe financial hardship to such individual,
and (3) is not reasonably satisfiable from other resources. Cash needs arising
from foreseeable events, such as the purchase of a house or education expenses
for children, shall not be considered to be the result of an Unforeseeable
Financial Emergency.

     1.2 Construction. Except as otherwise indicated by context, masculine
terminology used herein also includes the feminine and neuter, and terms used in
the singular may also include the plural.

                                       -2-

<PAGE>

                                   ARTICLE II

                       Eligibility for Plan Participation

     2.1  Eligible Class. Key employees of the Employer (including those
employees who are eligible to receive Incentive Awards for a calendar year)
shall be within the class of employees eligible to participate in the Plan.

     2.2  Eligible Employees. Those employees within the eligible class
described in Section2.1 above who have been selected for eligibility by the
Board, from time to time, shall be eligible employees for purposes of the Plan.

     2.3  Participation. Participation in the Plan shall be as follows:

          (a) Base Salary. An eligible employee may elect to become a
Participant in the Plan with respect to the Base Salary to be earned by such
employee during a calendar year by filing with the Company an election to defer
the receipt of all or a portion of his Base Salary for that calendar year. The
election to participate in the Plan shall specify (1) the integral percentage
(from 1% to 100%) or (2) a certain dollar amount for the calendar year.

          (b) Incentive Award. An eligible employee may elect to become a
Participant in the Plan with respect to the Incentive Award to be earned by such
employee during a calendar year by filing with the Company an election to defer
the receipt of all or a portion of his Incentive Award for that calendar year.
The election to participate in the Plan shall specify (1) the integral
percentage (from 1% to 100%), (2) a certain dollar amount, or (3) the amount in
excess of a certain dollar amount for the calendar year.

          (c) Company Deferral. An eligible employee shall become a Participant
in the Plan with respect to any Company Deferrals authorized on behalf of such
employee for a calendar year. Any such Company Deferrals shall be in the sole
discretion of the Company and may apply to selected employees for selected
calendar years.

     2.4  Time of Making Elections. Any election which may be made by a
Participant under this Article II must be made not later than December31 of the
calendar year preceding the calendar year during which the Base Salary and/or
Incentive Award to which such election relates is earned. Notwithstanding the
foregoing, for any calendar year during which an employee first becomes eligible
to participate in the Plan, elections as to the Participant's Base Salary and/or
Incentive Award must be made within 30 days of such employee first becoming so
eligible and (i) with respect to such Base Salary, shall apply to the first
payroll period following such election and (ii) with respect to such Incentive
Award, shall apply to the entire Incentive Award for such calendar year;
provided, the amount of such Incentive Award is not reasonably ascertainable at
the time of such initial eligibility. All elections shall be made in the manner
and form prescribed by the Company.

     2.5  Nature of Elections. Any election which may be made by a Participant
under Article II with respect to the Participant's Base Salary and/or Incentive
Award for a calendar year

                                       -3-

<PAGE>

shall be irrevocable once made. A Participant's election for any calendar year
shall not automatically carry over to subsequent calendar years.

                                   ARTICLE III

               Crediting of Deferred Compensation to Plan Accounts

     3.1 Establishment of Plan Accounts. The Company shall establish a Plan
Account for each Participant in the Plan, and the Company shall credit to the
Participant's Plan Account the Participant's Deferred Compensation for each
calendar year. Deferred Compensation pursuant to Section 2.3(a) shall be
credited as such Base Salary is deferred as of the end of each payroll period
within such calendar year. Deferred Compensation pursuant to Section 2.3(b)
shall be credited as of the date such Incentive Award would have been payable in
the calendar year following such calendar year. Deferred Compensation pursuant
to Section 2.3(c) shall be credited as of the date determined by the Company
during such calendar year.

     3.2 Crediting of Interest Equivalents. As of the last day of each calendar
year, Deferred Compensation credited to a Participant's Plan Account shall be
credited with interest equivalents, as additional Deferred Compensation, in an
amount equal to simple interest, at a rate of interest equal to the average of
the Chase Manhattan Bank Average Quarterly Prime Rates for such calendar year.
Such interest equivalents shall be credited (i) on the amount of Deferred
Compensation (including any interest equivalents previously credited pursuant to
this Section 3.2) credited as of the last day of the calendar year preceding
such calendar year, (ii) on 50% of the Deferred Compensation credited during
such calendar year pursuant to Section 2.3(a), and (iii) on the Deferred
Compensation credited during such calendar year pursuant to Sections 2.3(b) and
2.3(c) multiplied by a fraction, the numerator of which is the number of days
between the date(s) such Deferred Compensation was credited during such calendar
year and the end of such calendar year and the denominator of which is 365.

                                   ARTICLE IV

                    Payment of Deferred Compensation Amounts

     4.1 Payment of Deferred Compensation. Payment of the Deferred Compensation
of a Participant for all calendar years shall be made following such
Participant's termination of employment with the Employer, with the time and
manner of such payment to be determined in the sole discretion of the
Compensation Committee of the Board. The time of commencement of payment shall
be as of such termination, as of a specified age following such termination, or
as of a specified date following such termination. The manner of such payment
shall be a lump sum or installments for a five-, ten-, or fifteen-year period,
or a combination thereof. In making its determination as to time and manner of
payment, the Committee may consider the age, family status, health, financial
status, or such other factors as it deems relevant respecting the Participant.
The Participant may, but shall not be required to, express his preference to the
Committee as to the time and manner of payment of his Deferred Compensation, but
the Committee shall be under no obligation to follow such preference. All
Deferred Compensation shall be paid in cash. In the event the Participant is to
receive Deferred Compensation in installments, the amount of each such
installment shall be equal to a fraction of the amount of the Deferred
Compensation remaining to be

                                       -4-

<PAGE>

paid with respect to such Deferred Compensation, the numerator of which is one
and the denominator of which is the number of installments of such Deferred
Compensation remaining to be paid. The installments of the Deferred Compensation
remaining to be paid shall continue to be credited with interest equivalents as
provided in Section 3.2.

     4.2 Unforeseeable Financial Emergency. Plan provisions to the contrary
notwithstanding, in the event of an Unforeseeable Financial Emergency of the
Participant or his Beneficiary, as determined in the sole discretion of the
Committee, payment of Deferred Compensation shall be accelerated by being made
in one lump sum as soon as practicable following the Committee's determination
of such Unforeseeable Financial Emergency. The amount of such Deferred
Compensation so accelerated shall be the amount the Committee determines as
necessary to meet the needs created by the Unforeseeable Financial Emergency.

     4.3 Change in Purpose. Plan provisions to the contrary notwithstanding, in
the event of a major tax law change or other reason, as determined in the sole
discretion of the Committee, which makes the continued deferral of payment of
Deferred Compensation undesirable, payment of all of the Participants' Deferred
Compensation shall be accelerated by being made in one lump sum as soon as
practicable following the Committee's determination to discontinue deferrals.

     4.4 Change of Control. Plan provisions to the contrary notwithstanding, if
there is a Change of Control, the Committee may, in its sole discretion, fix a
date, on or prior to the effective date of such Change of Control, as of which
all remaining Deferred Compensation then credited to Participants' Plan Accounts
may be paid in one lump sum or in installments, as determined in the sole
discretion of the Committee.

     4.5 No Forfeiture of Deferred Compensation. All Deferred Compensation
credited to a Participant's Plan Account shall, in all cases, be nonforfeitable.

     4.6 Debiting of Plan Accounts. Once an amount of Deferred Compensation has
been paid, such amount shall be debited from the Participant's Plan Account and
shall cease to exist.

                                    ARTICLE V

                                  Beneficiaries

     A Participant, by written instrument filed with the Company in such manner
and form as the Company may prescribe, may designate one or more beneficiaries
to receive payment of the Participant's Deferred Compensation in the event the
Participant dies before his interest under the Plan is distributed to him in
full. Any such beneficiary designation may be changed from time to time prior to
the death of the Participant. In the absence of a beneficiary designation on
file with the Company at the time of the Participant's death, the Deferred
Compensation remaining to be paid to the Participant shall be paid as it becomes
due under the Plan to the executors or administrator of the Participant's
estate.

                                   ARTICLE VI

                                       -5-

<PAGE>

                            Administrative Provisions

     6.1 Powers and Responsibilities of the Board. The Board shall have full
power and authority to interpret, construe, and administer the Plan and its
interpretations and constructions hereof, and actions hereunder, including the
timing, form, amount, or recipient of any payment to be made hereunder, shall be
binding and conclusive on all persons for all purposes. In exercising such
powers, authorities, and responsibilities, the Board shall at all times exercise
good faith and refrain from arbitrary action. The Board may delegate any of its
powers, authorities, or responsibilities for the operation and administration of
the Plan to a person or committee other than itself and may employ such
attorneys, agents, or accountants as it may deem necessary or advisable to
assist it in carrying out its duties hereunder. The Board has, to the extent
provided herein, delegated certain of such powers and responsibilities to the
Committee.

     6.2 Actions of the Board. Any act authorized, permitted, or required to be
taken by the Board under the Plan, which has not been delegated in accordance
with the provisions of Section6.1, may be taken by a majority of the members of
the Board, either by vote at a meeting, or in writing without a meeting. All
notices, advice, directions, certifications, approvals, and instructions
required or authorized to be given by the Company under the Plan shall be in
writing and signed by either (i) a majority of the members of the Board, or by
such member or members as may be designated in writing, signed by all the
members thereof, as having authority to execute such documents on its behalf, or
(ii) a person or committee who becomes authorized to act for the Board in
accordance with the provisions of Section6.1. Any action which is taken by the
Board under the Plan shall be final, conclusive, and binding upon the Company,
all persons who have a claim or interest under the Plan, and all third parties
dealing with the Company or Board.

     6.3 Expenses. Any expenses properly incurred incident to the
administration, termination, or protection of the Plan, including the cost of
furnishing any bond or security, shall be paid by the Company.

                                   ARTICLE VII

                            Amendment and Termination

     The Company reserves the right to amend or terminate the Plan at any time
by action of the Board; provided, however, that (i) no such action shall
adversely affect the rights of any Participant with respect to Deferred
Compensation thereto credited to such Participant's Plan Account, unless an
equivalent benefit is provided under another plan or program sponsored by an
Employer, and (ii) no change may be made in the Committee's power and
responsibility to determine the time and manner of payment of Deferred
Compensation pursuant to Section 4.1 following a Change in Control.

                                  ARTICLE VIII

                            Adoption by Subsidiaries

                                       -6-

<PAGE>

     Any Subsidiary of the Company which is not an Employer may, with the
consent of the Company, adopt the Plan and become an Employer hereunder by
causing an appropriate written instrument evidencing such adoption to be
executed pursuant to the authority of its Board of Directors and filed with the
Company.

                                   ARTICLE IX

                                  Miscellaneous

     9.1 Non-Alienation of Benefits. No benefit under the Plan shall at any time
be subject in any manner to alienation or encumbrance. If any Participant or
Beneficiary shall attempt to, or shall alienate or in any way encumber his
benefits under the Plan, or any part thereof, or if by reason of his bankruptcy
or other event happening at any time, any such benefits would otherwise be
received by anyone else or would not be enjoyed by him, his interest in all such
benefits shall automatically terminate and the same shall be held or applied to
or for the benefit of such person, his spouse, children, or other dependents as
the Company may select

     9.2 Payment of Benefits to Others. If any Participant or Beneficiary to
whom a benefit is payable is unable to care for his affairs because of illness
or accident, any payment due (unless prior claim therefor shall have been made
by a duly qualified guardian or other legal representative) may be paid to the
spouse, parent, brother, or sister, or any other individual deemed by the
Company to be maintaining or responsible for the maintenance of such person. Any
payment made in accordance with the provisions of this Section 9.2 shall be a
complete discharge of any liability of the Plan with respect to the benefit so
paid.

     9.3 Plan Non-Contractual. Nothing herein contained shall be construed as a
commitment or agreement on the part of any person employed by an Employer to
continue his employment with an Employer, and nothing herein contained shall be
construed as a commitment on the part of an Employer to continue the employment
or the annual rate of compensation of any such person for any period, and all
Participants shall remain subject to discharge to the same extent as if the Plan
had never been established.

     9.4 Funding. In order to provide a source of payment for its obligations
under the Plan, the Company may establish a trust fund. Subject to the
provisions of the trust agreement governing such trust fund, the obligation of
an Employer under the Plan to provide a Participant or a Beneficiary with a
benefit constitutes the unsecured promise of such Employer to make payments as
provided herein, and no person shall have an interest in, or a lien or prior
claim upon, any property of the Employer.

     9.5 Claims of Other Persons. The provisions of the Plan shall in no event
be construed as giving any person, firm, or corporation any legal or equitable
right as against an Employer, its officers, employees, or directors, except any
such rights as are specifically provided for in the Plan or are hereafter
credited in accordance with the terms and provisions of the Plan.

                                       -7-

<PAGE>

     9.6 Severability. The invalidity or unenforceability of any particular
provision of the Plan shall not affect any other provision hereof, and the Plan
shall be construed in all respects as if such invalid or unenforceable
provisions were omitted herefrom.

     9.7 Governing Law. The provisions of the Plan shall be governed and
construed in accordance with the laws of the State of Texas.

     EXECUTED at Houston, Texas this 3rd day of September, 1998.

                                             COOPER CAMERON CORPORATION

                                             By:  /s/ Franklin Myers
                                                 -------------------------------
                                                 Name:  Franklin Myers
                                                 Title: Sr. V.P.

                                       -8-

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