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AMENDMENT NO. 1 TO
SEVERANCE COMPENSATION
AGREEMENT
THIS
AMENDMENT is entered into
as of December 31, 2008 by and between Fred L. Callon (“
Executive ”) and Callon Petroleum Company (the
“ Company ”).
WITNESSETH THAT
:
WHEREAS, Executive and the Company have previously
entered into the Severance Compensation Agreement dated April 15,
2008 (the “ Agreement ”); and
WHEREAS, Executive and the Company desire to amend the
Agreement for compliance with Section 409A of the Internal Revenue
Code of 1986, as amended (the “ Code
”).
NOW,
THEREFORE, effective as
of December 31, 2008, the Agreement is amended as
follows:
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Section 3.5 of
the Agreement is hereby deleted in its entirety and replaced with
the following:
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3.5
Date of Termination. “Date of Termination” shall
mean: (i) if this Agreement is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that
Executive shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period); or (ii)
if Executive’s employment is terminated pursuant to Section
3.3 or if Executive’s employment is terminated for any other
reason, the date Executive incurs a “separation from
service” (as such term is defined in final Treasury
Regulations issued under Code Section 409A and any other guidance
issued thereunder).
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The last
paragraph of Section 4.2(b) of the Agreement is hereby deleted in
its entirety and replaced with the following:
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If the
Accounting Firm determines that no Excise Tax is payable by
Executive, it shall furnish Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal
income tax return. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
a Gross-Up Payment which will not have been made by Callon should
have been made (“ Underpayment ”),
consistent with the calculations required to be made hereunder. In
the event that Callon exhausts its remedies pursuant to Section
4.2(c) and Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall
be promptly paid by Callon to or for the benefit of Executive, but
in no event later than the end of Executive’s taxable year
next following Executive’s taxable year in which he remits
the related taxes.
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Section 5.1(a)
of the Agreement is hereby
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