Exhibit 10.2
STONE ENERGY CORPORATION
EXECUTIVE CHANGE OF CONTROL
AND SEVERANCE PLAN
(as
amended and restated)
The STONE ENERGY CORPORATION
EXECUTIVE CHANGE OF CONTROL AND 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 the Company’s Executives in the event
of a Change of Control (as defined below) and upon certain
terminations of employment of the Company and replaces in full the
Company’s present Executive 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 of an Executive in
effect immediately prior to the Change of Control or on his
termination of employment, whichever is greater.
“Board” shall
mean the Board of Directors of the Company or its successor.
“Cause” shall
mean any termination of an Executive’s employment by reason
of the Executive’s: (1) willful and continued failure to
perform substantially the Executive’s duties (other than any
such failure resulting from the Executive’s incapacity due to
physical or mental illness) after written notice of such failure
has been given to the Executive specifying in detail such failure
or (2) the willful engaging by the Executive in conduct that
is demonstrably and materially injurious to the Company and its
affiliates taken as a whole, monetarily or otherwise. For purposes
of clauses (1) and (2) of this definition, no act or
failure to act, on behalf of the Executive’s part shall be
deemed “willful” unless done, or omitted to be done, by
the Executive not in good faith and without reasonable belief that
the Executive’s act, or failure to act, was in the best
interest of the Company.
“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 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 of 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.
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“Good Reason” for
termination by the Executive of the Executive’s employment
shall mean the occurrence (without the Executive’s express
written consent) on or within twelve (12) months after any
Change of Control of any one of the following acts by the
Company:
(A) a
material reduction in the Executive’s annual base salary as
in effect on the date of the Change of Control or as the same may
be increased from time to time thereafter except for
across-the-board salary reductions similarly affecting all senior
executives of the Company and all senior executives of any person
in control of the Company;
(B) a
material diminution in the authority, duties or responsibilities of
the Executive as in effect immediately prior to the Change of
Control; or
(C) a
requirement that the Executive transfer to a work location that is
more than fifty (50) miles from such Executive’s
principal work location immediately prior to the Change of
Control.
The
Executive’s right to terminate the Executive’s
employment for Good Reason shall not be affected by the
Executive’s incapacity due to physical or mental illness.
Subject to the provisions of Involuntary Termination below, the
Executive’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to
act constituting Good Reason hereunder.
“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.
“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.
“Executive” shall
mean any individual who, on or immediately prior to a Change of
Control or at the time of his Involuntary Termination, if earlier,
is a president, executive vice president, senior vice president or
vice president of an Employer, other than any individual who
(i) is covered under the Company’s Executive Change of
Control Severance Policy or (ii) has entered into a separate
written employment, severance or change of control agreement with
the Company and has become entitled to receive severance benefits
thereunder as a result of his termination of employment.
“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
Executive) for its similarly situated active employees.
“Involuntary
Termination” shall mean any termination of the
Executive’s employment by the Employer other than for Cause
or a termination by the Executive on or following a Change of
Control, but not later than 12 months after the Change of
Control, for a Good Reason. In order for a termination by the
Executive to be for a Good Reason, the Executive must first give
written notice to the Company in writing of the Good Reason event
within 30 days of the
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initial
existence of the Good Reason event, and the Company shall then have
30 days from its receipt of such notice to remedy the event
and if the Company fails to timely remedy the event, the Executive
may terminate his employment for Good Reason in the seven day
period following the Company’s failure to remedy the event.
Such Involuntary Termination by the Executive for a Good Reason
shall be deemed to be within 12 months after the Change of
Control if the initial existence of the Good Reason event occurred
within 12 months after the Change of Control.
“Release” shall
mean a general release, substantially in the form attached hereto,
from the Executive that releases the Company and its affiliates
from employment related claims.
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.
II.
CHANGE OF CONTROL AND SEVERANCE BENEFITS
2.1 Change of Control
Benefits. Immediately prior to or upon a Change of
Control,
(a) the
Company shall cause each of the unexercised
“in-the-money” stock options granted to an Executive
pursuant to any of the Company’s stock option plans or stock
incentive plans to be fully vested and shall cancel each such stock
option immediately prior to the Change of Control for cash equal to
the excess, if any, of the product of the number of the
Company’s shares issuable upon exercise of such stock options
times 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,
(b) all
then remaining vesting restrictions with respect to any of the
Company’s restricted stock awards issued or issuable to an
Executive 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,
(c) the
Company will contribute to its 401(k) plan (the “Plan”)
a matching amount for the participants equal to $1.00 for every
$2.00 contributed as a 401(k) contribution (other than a 401(k)
catch-up contribution) by the participants in the 401(k) Plan for
the period from January 1 in the calendar year of the Change of
Control through the effective date of the Change of Control, less
any matching amounts previously contributed to the 401(k) Plan for
such period, if any. Such matching contribution shall be credited
to the 401(k) Plan participants’ accounts according to the
terms of the 401(k) Plan, up to a total maximum matching
contribution for an individual participant’s account that
does not exceed the limit authorized by the Internal Revenue Code
for such contribution, and
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(d) the
Company will pay the Executive a pro rata share of the bonus
opportunity up to the date of the Change of Control at the then
projected year end rate of payout, in an amount, if any, as
determined by the Compensation Committee in its sole
discretion.
If, for purposes of Section 409A
of the Internal Revenue Code, it is determined that the Executive
has a “vested right” prior to the Change of Control to
one or more of the above benefits, then
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