Exhibit 10.3
STONE ENERGY CORPORATION
EMPLOYEE CHANGE OF CONTROL
SEVERANCE PLAN
(as
amended and restated)
The STONE ENERGY CORPORATION
EMPLOYEE CHANGE OF CONTROL SEVERANCE PLAN (the
“Plan”) is hereby amended and restated, effective as of
December 7, 2007, pursuant to the authorization of the Board
of Directors of STONE ENERGY CORPORATION (the
“Company”). The Plan has been established to provide
financial security to Covered Employees in the event of a Change of
Control of the Company and replaces in full the Company’s
present Employee Change of Control Severance Policy.
I
.
DEFINITIONS AND CONSTRUCTION
1.1 Definitions
. Where the following words and phrases appear in the Plan,
they shall have the respective meanings set forth below, unless
their context clearly indicates to the contrary.
“Annual Pay”
shall mean the annual rate of base compensation or annualized rate
of base wages of a Covered Employee in effect immediately prior to
the Change of Control.
“Board” shall
mean the Board of Directors of the Company or its successor.
“Cause” shall
mean any termination of a Covered Employee’s employment by
reason of the Covered Employee’s: (1) willful and
continued failure to perform substantially the Covered
Employee’s duties (other than any such failure resulting from
the Covered Employee’s incapacity due to physical or mental
illness) after written notice of such failure has been given to the
Covered Employee specifying in detail such failure and the Covered
Employee has had a reasonable period (not to exceed 30 days)
to correct such failure; (2) conviction (or plea of nolo
contendere) for any felony or any other crime which involves moral
turpitude; (3) gross negligence or willful misconduct in the
performance of the Covered Employee’s duties; provided,
however, that no act or failure to act on the part of the Covered
Employee shall be considered “gross negligence” or
“willful misconduct” if done or omitted to be done by
the Covered Employee in good faith and in the reasonable belief
that such act or failure to act was in the best interest of the
Employer or its affiliate; (4) breach or violation of any
material provision of any material policy of the Employer or its
affiliate, which, if capable of being remedied, remains unremedied
by the Covered Employee for more than 10 days after written
notice thereof is given to the Covered Employee by the Employer or
its affiliate; or (5) dishonesty, theft, fraud, embezzlement
or misappropriation against the Employer or its affiliate.
“Change in
Duties” shall mean the occurrence, on or within six
months after the date upon which a Change of Control occurs, of any
one or more of the following:
(1) a material diminution in the
authority, duties or responsibilities of a Covered Employee from
those applicable to him immediately prior to the date on which the
Change of Control occurs;
(2) a material reduction in a
Covered Employee’s rate of Annual Pay; or
(3) a change in the location of
a Covered Employee’s principal place of employment by more
than 50 miles from the location where he was principally employed
immediately prior to the date on which the Change of Control
occurs, unless such relocation is agreed to in writing by the
Covered Employee; provided, however, that a relocation scheduled
prior to the date of the Change of Control shall not constitute a
Change in Duties.
“Change of
Control” shall be deemed to have occurred for purposes of
this policy if the event set forth in any one of the following
paragraphs shall have occurred:
(A) any
person (a “person or entity”) is or becomes the
Beneficial Owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company)
representing twenty percent (20%) or more of the combined voting
power of the Company’s then outstanding securities, excluding
any person who becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph (C) below;
or
(B) the
following individuals cease for any reason to constitute a majority
of the number of directors then serving: individuals, who, on the
date hereof, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election
of directors of the Company) whose appointment or election by the
Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or recommended;
or
(C) there
is consummated a scheme of arrangement, merger or consolidation of
the Company or any direct or indirect subsidiary of the Company
with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior to such scheme of
arrangement, merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
any subsidiary of the Company, at least sixty-five percent (65%) of
the combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (ii) a scheme of
arrangement, merger or consolidation effected to
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implement a
recapitalization of the Company (or similar transaction) in which
no person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such person any securities
acquired directly from the Company or its affiliates other than in
connection with the acquisition by the Company of its affiliates of
a business) representing twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding
securities; or
(D) the
stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially
all of the Company’s assets, other than a sale or disposition
by the Company of all or substantially all of the Company’s
assets to an entity, at least sixty-five percent (65%) of the
combined voting power of the voting securities of which are owned
by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to
such sale.
Notwithstanding the foregoing, a
“Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series
of integrated transactions immediately following which the record
holders of the common stock of the Company immediately prior to
such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which
owns all or substantially all of the assets of the Company
immediately following such transaction or series of
transactions.
“Committee” shall
mean the Compensation Committee of the Board, or, if no
Compensation Committee exists, the Board. The Committee may
delegate all or part of its authority as it may choose to the Vice
President of Human Resources of the Company.
“Covered
Employee” shall mean any individual who, immediately
prior to the Change of Control, is a regular employee of the
Employer who is normally scheduled to work 30 or more hours per
week, other than any individual who (i) is an Officer or
(ii) is, or is treated by the Company as being, a consultant,
independent contractor or part-time employee.
“Employer” shall
mean the Company and each eligible entity designated as an Employer
in accordance with the provisions of Section 4.4 of the
Plan.
“ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
“Health Benefit
Coverages” shall mean coverage under each group health
plan sponsored or contributed to by the Employer (or following the
Change of Control, by an affiliate of the Employer that employs the
Covered Employee) for its similarly situated active
employees.
“Involuntary
Termination” shall mean any termination of the Covered
Employee’s employment with the Employer that occurs on or
following a Change of Control but not later than six months after
the Change of Control, and which:
(1) is a termination of the
Covered Employee by the Employer other than for Cause; or
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(2) is a resignation by the
Covered Employee due to a Change in Duties;
provided, however, that the term ‘Involuntary
Termination’ shall not include: (i) a termination by
the Employer for Cause; (ii) any termination as a result of a
Covered Employee’s death or disability under circumstances
entitling him to benefits under the long-term disability plan of
the Employer; or (iii) any termination as a result of a
Covered Employee declining to accept an offer of comparable
employment from a successor employer. For purposes of clause (iii),
comparable employment shall mean employment that would not result
in a Change in Duties for the Covered Employee. For a resignation
to be “due to a Change in Duties,” the Covered Employee
must first notify the Employer in writing of the Change of Duties
event within 30 days of the initial existence of the Change of
Duties event, and the Employer shall then have 30 days from
its receipt of such notice to remedy the event and if the Employer
fails to timely remedy the event, the Covered Employee may
terminate his employment “due to a Change in Duties” in
the seven day period following the Employer’s failure to
remedy the event. Such Involuntary Termination by the Covered
Employee due to a Change of Duties shall be deemed to be within six
months after the Change of Control if the initial existence of the
Change in Duties occurred within six months after the Change of
Control.
“Officer” shall
mean an employee of an Employer who holds the title of chief
executive officer, president, chief financial officer, vice
president, senior vice president or executive vice president of an
Employer.
“Release” shall
mean a general release, substantially in the form attached hereto,
from the Eligible Employee that releases the Company and its
affiliates from employment related claims.
“Week’s of
Pay” shall mean 1/52 of the Covered Employee’s
Annual Pay.
“Year of Service”
shall mean the Covered Employee’s period of continuous
employment (in days) with the Employer and its affiliates as of the
date of Involuntary Termination, including predecessors and
successors, divided by 365, and disregarding any resulting
fractional years.
1.2 Number and
Gender . Wherever appropriate herein, words used in
the singular shall be considered to include the plural and the
plural to include the singular. The masculine gender, where
appearing in this Plan, shall be deemed to include the feminine
gender.
1.3 Headings
. The headings of Articles and Sections herein are included
solely for convenience and if there is any conflict between such
headings and the text of the Plan, the text will control.
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II
.
CHANGE OF CONTROL AND SEVERANCE BENEFITS
2.1 Change of Control
Benefits . On or immediately prior to a Change of
Control,
(a) each
Covered Employee will receive a lump sum cash payment equal to the
product of (i) the number of “restricted shares”
of Company stock that the employee would have received under the
Company’s stock plan but did not receive for his or her
targeted long-term stock incentive award, if any, for the calendar
year in which the Change of Control occurs times (ii) the
price per share of the Company’s common stock utilized in
effecting the Change of Control, provided that such amount shall be
prorated by multiplying such amount by the number of full months
that have elapsed from January 1 of that calendar year to the
effective date of the Change of Control and then dividing the
result by twelve (12);
(b) the
Company shall cause each unexercised “in-the-money”
stock option granted to a Covered Employee pursuant to any of the
Company’s stock option plans or stock incentive plans to be
cancelled for cash equal to the excess, if any, of the product of
(i) the number of shares of Company stock issuable upon
exercise of such stock options and (ii) the cash consideration
to be determined by the Board in connection with the Change of
Control over the aggregate exercise price of such stock
options;
(c) all
then remaining vesting restrictions with respect to any of the
Company’s restricted stock awards issued or issuable to a
Covered Employee pursuant to any of the Company’s stock
incentive plans shall expire and the restricted shares shall be
treated as the Company’s common shares; and
(d) the
Company will contribute to its 401(k) plan (the “401(k)
Plan”) a matching amount for the participants equal to $1.00
for every $2.00 cont
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