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Cobalt Bankruptcy Program, Plan Approval Sought

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Cobalt International Energy filed with the U.S. Bankruptcy Court a motion for entry of an order authorizing the Debtors to honor certain severance programs.

The motion explains, “Upon involuntary termination, employees that are eligible to participate in the Executive Severance Program are entitled to receive a lump sum cash payment equal to a multiple of base salary plus an additional $2,000 for an applicable period ranging from 12 to 24 months depending on the employee’s job title….The Debtors also have a contractual severance obligation to the chief executive officer (the ‘CEO Severance Program,’ and together with the Executive Severance Program, the ‘Severance Programs’). Upon involuntary termination, the chief executive officer is entitled to receive a lump sum cash payment equal to a multiple of base salary and up to an additional $72,000 for continuation of healthcare.”

The Company also filed a separate motion for an order authorizing and approving the Debtors’ sales incentive plan. That motion states, “More specifically, the Sale Incentive Plan provides for variable compensation based on the total amount of value received through a sale transaction. Importantly, if the total distributable value is less than the $1.25 billion threshold, no payments will be made under the Sales Incentive Plan. Even in a scenario where, through the Debtors’ management team’s efforts, the total distributable value achieved through a sale transaction is greater than $3.0 billion, the compensation would not exceed one percent of the enterprise value.” The Court scheduled a January 11, 2017 hearing to consider both motions.

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