Exhibit 10.2
 

 
SWIFT ENERGY COMPANY
 
CHANGE OF CONTROL SEVERANCE PLAN
 
November 4, 2008
 
INTRODUCTION
 
The Board of Directors of Swift Energy Company (the “Company”) recognizes that,
as is the case with many publicly held corporations, there exists the
possibility of a Change of Control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of employees of the
Company and its Subsidiaries to the detriment of the Company and its
shareholders.
 
The Board considers the avoidance of such loss and distraction to be essential
to protecting and enhancing the best interests of the Company and its
shareholders. The Board recognizes that the oil and gas industry is currently
facing shortages qualified personnel making it difficult to attract and retain
highly qualified employees unless a certain degree of security can be offered to
such individuals against organizational and personnel changes which could result
from a Change of Control (as defined below) of the Company.
 
The Board recognizes that its employees and employees of Subsidiaries that
become Employers (as defined below) will be involved in evaluating or
negotiating any offers, proposals or other transactions which could result in a
Change of Control of the Company and believes that it is in the best interest of
the Company and its shareholders for such employees to be in a position, free
from personal financial and employment considerations, to assess objectively and
pursue aggressively the interests of the Company and its shareholders in making
these evaluations and carrying on such negotiation.
 
In addition, the Board believes that it is consistent with the employment
practices and policies of the Company and its Subsidiaries and in the best
interests of the Company and its shareholders to treat fairly its employees
whose employment terminates in connection with or due to a Change of Control.
 
Accordingly, the Board has determined that appropriate steps should be taken to
assure the Company and its Subsidiaries that have adopted this Plan of the
continued employment and attention and dedication to duty of their employees and
to seek to ensure the availability of their continued service, notwithstanding
the possibility, threat or occurrence of a Change of Control.
 
In order to fulfill the above purposes, the Board hereby adopts the Swift Energy
Company Change of Control Severance Plan (the “Plan”) as of the Effective Date.
 
ARTICLE I
 
ESTABLISHMENT OF PLAN
 
As of the Effective Date, the Company hereby establishes a separation
compensation plan known as the Swift Energy Company Change of Control Severance
Plan, as set forth in this document.
 
1

--------------------------------------------------------------------------------

ARTICLE II
 
DEFINITIONS
 
As used herein the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise.
 
2.1 Affiliate. Any entity which controls, is controlled by, or is under common
control with the Company.
 
2.2 Base Salary.  The annual base salary which was paid to each Employee
immediately prior to the announcement of a Change of Control.
 
2.3 Board. The Board of Directors of Swift Energy Company.
 
2.4 Bonus. The highest annual cash bonus that the Participant was paid in the 36
months immediately preceding the Change of Control.
 
2.5 Cause. For purposes of this Plan only, the Employer shall have “Cause,” to
terminate a Participant for the Participant’s (i) failure to substantially
perform his or her duties with the Employer (other than a failure resulting from
the Participant’s incapacity due to physical or mental illness), (ii) conviction
(or plea of nolo contendere) for any felony or any other crime which involves
moral turpitude; (iii) gross negligence or willful misconduct in the performance
of the Participant’s duties, or (iv) breach or violation of any material policy
of the Employer or its affiliate; provided, however, that determination of
whether one or more of the elements of “Cause” has been met under this Plan
shall be in the reasonable discretion of the Employer, and, provided further,
that with respect to Participants who are parties to employment agreements with
an Employer, the foregoing definition shall not apply and as to such
Participants “Cause” shall have the meaning set forth in any such employment
agreement to which they are parties.
 
2.6 Change of Control. A Change of Control shall be deemed to have occurred upon
the occurrence of any one (or more) of the following events, other than a
transaction with another person controlled by the Company or its officers or
directors, or a benefit plan or trust established by the Company for its
employees:
 
(a) Any person including a group as defined in Rule 13d-5 under the Securities
Exchange Act of 1934, as amended (“Exchange Act”), becomes the beneficial owner
or shares of the Company with respect to which 40% or more of the total number
of votes for the election of the Board may be cast;
 
(b) As a result of, or in connection with, any cash tender offer, exchange
offer, merger or other business combination, sale of assets or contested
election, or combination of the above, persons who were directors of the Company
immediately prior to such event shall cease to constitute a majority of the
Board;
 
(c) The shareholders of the Company shall approve an agreement providing either
for a transaction in which the Company will cease to be an independent publicly
owned corporation or for a sale or other disposition of all or substantially all
the assets of the Company; or
 
(d) A tender offer or exchange offer is made for shares of the Company’s common
stock (other than one made by the Company), and shares of common stock are
acquired thereunder.
 
2

--------------------------------------------------------------------------------

Notwithstanding the foregoing provisions of this Section 2.6, if a Participant’s
employment with the Employer is terminated by the Employer other than for
“Cause” prior to the date on which a Change of Control occurs but after such
Change of Control is announced, and in any case, within two years of the
occurrence of such Change of Control, then for all purposes hereof, such
termination shall be deemed to have occurred due to a Change of Control.
 
Notwithstanding the foregoing provisions of this Section 2.6, in the event a
benefit provided upon the occurrence of a Change of Control is subject to
Section 409A of the Code, then to the extent necessary to comply with the
requirements of Section 409A of the Code, the definition of “Change of Control”
for purposes of such benefit shall be the definition provided for under Section
409A of the Code and the regulations or other guidance issued thereunder.
 
2.7 Code. The Internal Revenue Code of 1986, as amended from time to time.
 
2.8 Company. Swift Energy Company and any successor to Swift Energy Company.
 
2.9 Confidential Information. The unique and proprietary business and technical
information, including but not limited to inventions, trade secrets, patents,
proprietary and confidential data (including engineering, geophysical,
geological and computer program data) and Employee’s knowledge of the Company,
its Affiliates, Subsidiaries, joint venture partners, industry partners,
customers and contractors, including any proprietary, confidential or non-public
information about the Company, its business, projections or business plans which
is conceived or obtained by Employee in the course of his or her employment.
Notwithstanding anything else contained in the Plan, the term “Confidential
Information” shall not be deemed to include any general knowledge, skills or
experience acquired by Employee or any knowledge or information known to the
public in general.
 
2.10 Continuing Director. The term “Continuing Director” means any individual
who is a member of the Board on the date hereof or was nominated for election as
a director by, or whose nomination as a director was approved by, the Board with
the affirmative vote of a majority of the directors described in the first
clause of this definition, unless any such individual’s initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person or entity other
than the Board.
 
2.11 Date of Termination. The date on which a Participant ceases to be an
Employee of an Employer as a result of a Separation from Service as determined
in accordance with the provisions of Section 409A of the Code and the Internal
Revenue Service and Treasury guidance thereunder.
 
2.12 Disability. A Participant shall be disabled for purposes of this Plan if
the Participant meets the criteria for permanent disability (as total
disability, permanent disability, or the same or similar concepts) under the
Company’s long-term disability plan in effect from time to time, or if the
Company has no long-term disability plan in effect at the time of Employee’s
disability event, total and/or permanent disability shall have the meaning
provided in Section 22(e)(3) of the Code.
 
2.13 Effective Date. November 4, 2008.
 
2.14 Employee.  Any employee of an Employer, regardless of position, who is
normally scheduled to work 30 or more hours per week for such Employer and who
has been employed by an Employer for at least six months at the Date of
Termination as a result of a Separation from Service without Cause or for Good
Reason; provided, however, that the term “Employee” will apply to persons who
have been employed by an Employer for less than six months if a majority of the
Continuing Directors determines that such person should be designated as an
Employee.
 
3

--------------------------------------------------------------------------------

2.15 Employee Participant. Any Employee of an Employer, other than a Managerial
Participant or Officer, who is designated as an Employee Participant pursuant to
Section 3.1 below.
 
2.16 Employer. The Company and any Subsidiary that participates in the Plan
pursuant to Article V hereof.
 
2.17 ERISA. The Employee Retirement Income Security Act of 1974, as amended from
time to time.
 
2.18 Good Reason. Good Reason means, with respect to any Participant, the
occurrence, without such Participant’s written consent, of any one of the
following after the announcement of a Change of Control but within two years
after a Change of Control transaction, or otherwise in connection with a Change
of Control transaction:
 
(a) any reduction in the Participant’s annual Base Salary, as in effect during
the 120-day period immediately preceding the Change of Control (or as such
amount may be increased from time to time);
 
(b) the Employer requiring the Participant (without the consent of the
Participant) to be based at any place outside a 50 mile radius of his or her
prior place of employment immediately prior to a Change of Control, except for
reasonably required travel on the Employer’s business which is not materially
greater than such travel requirements prior to the Change of Control, or, in the
event the Participant consents to any relocation beyond such 50-mile radius, the
failure of the Employer to pay (or reimburse the Participant) for reasonable
moving expenses incurred by him or her relating to a change of his or her
principal residence in connection with such relocation (other than costs
incurred in the sale of his or her residence);
 
(c) a substantial reduction in the Participant’s position or responsibilities as
in effect immediately prior to the Change of Control;
 
(d) any material breach by the Employer of any provision of this Plan;
 
(e) the Company or its successor makes an assignment for the benefit of the
creditors of the Company or one or more of its Subsidiaries or files a voluntary
petition under the Federal Bankruptcy Code or state solvency law on behalf of
the Company or any successor following a Change of Control; or
 
(f) any failure of any successor of the Company to assume, or agree to perform,
this Plan as contemplated in Article VI, or otherwise.
 
2.19 Managerial Participant.  Any Employee who has sufficient responsibilities
and/or a sufficiently critical role to be designated as a Managerial
Participant, such determination and designation to be made by executive
management on an annual basis in writing, as supplemented from time to time.
 
2.20 Notice of Termination. A notice which indicates the reasons relied upon as
the basis for any termination of employment and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Participant’s employment; no purported termination of employment shall be
effective without such Notice of Termination.
 
4

--------------------------------------------------------------------------------

2.21 Officer.  Any Employee identified as an officer for purposes of this Plan
by the Board, provided the Board is comprised of a majority of Continuing
Directors at the time of such identification of officers.
 
2.22 Participant. An Employee who is designated as a participant pursuant to
Section 3.1.
 
2.23 Plan. The Swift Energy Company Change of Control Severance Plan.
 
2.24 Separation Benefits. The benefits described in Article IV that are provided
to qualifying Participants under the Plan.
 
2.25 Separation from Service. A Participant separates from service with the
Employer if the Participant dies, retires or otherwise has a termination of
employment with the Employer.  Whether a termination of employment has occurred
is determined based on whether the facts and circumstances indicate that the
Employer and the Participant reasonably anticipated that no further services
would be performed after a certain date or that the level of bona fide services
the Participant would perform after such date (as an employee or independent
contractor) would permanently decrease to no more than 20 percent of the average
level of bona fide services performed over the immediately preceding 36-month
period (or the full period in which the Participant provided services to the
Employer if the Participant has been providing services for less than 36
months).  A Participant will not be deemed to have experienced a Separation from
Service if such Participant is on military leave, sick leave, or other bona fide
leave of absence, to the extent such leave does not exceed a period of six
months or, if longer, such longer period of time during which a right to
re-employment is protected by either statute or contract.  If the period of
leave exceeds six months and the individual does not retain a right to
re-employment under an applicable statute or by contract, the employment
relationship is deemed to terminate on the first date immediately following such
six-month period.
 
2.26 Subsidiary. Any entity of which the Company owns, directly or indirectly,
all of such entity’s outstanding shares of capital stock or other voting
securities.
 
2.27 Year of Service. A Year of Service shall be credited to a Participant for
each full 12 months of employment with the Company or any Affiliate, Subsidiary
or predecessor to the Company. A month of service shall be credited for each
full month of employment with such entities. Service shall also be credited for
purposes of the Plan to the extent required by any agreement between the Company
and an entity acquired by or merged with or into the Company or any Affiliate or
Subsidiary of the Company.
 
ARTICLE III
 
ELIGIBILITY
 
3.1 Participants.
 
(a) This Plan applies to three classifications of Participants:  Employee
Participants, Officer Participants and Managerial Participants.  Each Employee
shall be a Participant in the Plan if either (x) he or she was an Employee on
the date of a Change of Control, or (y) after the announcement of a Change of
Control, the Employee terminated his or her employment for Good Reason before
the actual Change of Control; provided, however, that no “leased employee” shall
be a Participant For the purpose of determining who is a Participant, an
Employee who is on a leave of absence approved by the Employer in writing or
authorized by applicable state or federal law on the date of a Change of
Control, shall be a Participant in the Plan.
 
Notwithstanding any provision of the Plan to the contrary, no individual who is
designated, compensated, or otherwise classified or treated by the Employer as
an independent contractor or other non-common law employee shall be eligible to
receive benefits under the Plan. It is expressly intended that individuals not
treated as common law employees by the Employer are to be excluded from Plan
participation even if a court or administrative agency determines that such
individuals are common law employees.
 
5

--------------------------------------------------------------------------------

(b) If a Participant’s employment is transferred from an Employer to a
Subsidiary or Affiliate of the Company that is not an Employer under the Plan,
the provisions of the Plan will continue to apply to such Participant while
employed by such Subsidiary or Affiliate.
 
3.2 Duration of Participation. A Participant shall only cease to be a
Participant in the Plan as a result of an amendment or termination of the Plan
complying with Article VII of the Plan, or when he or she ceases to be an
Employee of any Employer under the Plan, unless, at the time he or she ceases to
be an Employee, such Participant is entitled to payment of a Separation Benefit
as provided in the Plan or there has been an event or occurrence constituting
Good Reason that would enable the Participant to terminate his or her employment
and receive a Separation Benefit. A Participant entitled to payment of a
Separation Benefit or any other amounts under the Plan shall remain a
Participant in the Plan until the full amount of the Separation Benefit and any
other amounts payable under the Plan have been paid to the Participant.
 
ARTICLE IV
 
SEPARATION BENEFITS
 
4.1 Terminations of Employment Which Give Rise to Separation Benefits Under This
Plan.
 
(a) A Participant shall be entitled to Separation Benefits as set forth in
Sections 4.2, 4.3 or 4.4, as applicable, if (i) at any time following the
announcement of a Change of Control transaction, or (ii) after the occurrence of
a Change of Control transaction, or (iii) otherwise in connection with a Change
of Control transaction, BUT, in all cases, prior to the second anniversary of
the Change of Control, the Participant’s employment is terminated as a result of
a Separation from Service (as determined in accordance with Section 409A of the
Code and the Internal Revenue Service and Treasury guidance thereunder) (i) by
the Participant’s Employer for any reason other than Cause, death, or Disability
or (ii) by the Participant for Good Reason within 120 days after the Participant
has knowledge of the occurrence of Good Reason; provided, however that any
purported termination of employment, either by the Employer or by the
Participant, shall be communicated by written Notice of Termination to the
other.
 
(b) The benefits provided in this Article IV shall be no less favorable to the
Participant, in terms of amounts and deductibles and costs to him or her, than
the coverage provided the Participant under the plans providing such benefits at
the time Notice of Termination is given. The Employer’s obligation hereunder to
provide a benefit shall terminate if the Participant obtains comparable coverage
under a subsequent employer’s benefit plan. For purposes of the preceding
sentence, benefits will not be comparable during any waiting period for
eligibility for such benefits or during any period during which there is a
preexisting condition limitation on such benefits. In the event that the
Participant’s participation in any such coverage is barred under the general
terms and provisions of the plans and programs under which such coverage is
provided, or any such coverage is discontinued or the benefits thereunder are
materially reduced, the Employer shall provide benefits to the Participant, or
ensure that such benefits are provided to the Participant, that are
substantially similar to those which the Participant was entitled to receive
under such coverage immediately prior to the Notice of Termination. At the end
of the period of coverage set forth below, the Participant shall have the option
to have assigned to him or her at no cost to the Participant and with no
apportionment of prepaid premiums, any assignable insurance owned by the
Employer and relating specifically to the Participant, and the Participant shall
be entitled to all health and similar benefits that are or would have been made
available to the Participant under law.
 
6

--------------------------------------------------------------------------------

(c) Notwithstanding any other provision of the Plan, the occurrence with respect
to a Subsidiary of any of the events described in the definition of Change of
Control set forth above or other sale, divestiture or other disposition of a
Subsidiary shall not be deemed to be a termination of employment of Employees
employed by such Subsidiary, and such Employees shall not be entitled to
benefits from any Employer under this Plan as a result of such events, or as a
result of any subsequent termination of employment.
 
4.2 Separation Benefits – Employee Participants.
 
(a) If the Participant is an Employee Participant whose employment is terminated
in circumstances entitling such Employee Participant to Separation Benefits
pursuant to Section 4.1(a), the Employer shall provide to such Employee
Participant cash payments as set forth in subsection 4.2(b) below, and shall
provide to the Employee Participant continued benefits as set forth in
subsection 4.2(c) below. For purposes of determining the benefits set forth in
subsections 4.2 (b) and 4.2 (c), if the termination of the Employee
Participant’s employment is for Good Reason based upon a reduction of the
Employee Participant’s annual Base Salary, as described in Section 2.18, a
material reduction in the Employee Participant’s annual incentive compensation
plan as provided in Section 2.18, or the failure to provide comparable employee
benefits as provided in Section 2.18, such reduction shall be ignored.
 
(b) The cash payments referred to in Section 4.2(a) shall be the following
amounts:
 
(i) Six months of then current Base Salary; plus
 
(ii) 50% of the Employee Participant’s Bonus; plus
 
(iii) A “tenure payment” equal to two percent of Base Salary for each Year of
Service, through the Date of Termination;
 
provided that the sum of the amounts paid to an Employee Participant, as set
forth in subsections 4.2(b)(i), (ii), and (iii), may not exceed an amount equal
to the total of one year of Base Salary plus Bonus.
 
(c) Benefits referred to in Section 4.2(a):
 
(i) The Company will provide the same medical and dental insurance coverage in
existence as of the date of the announcement of the Change of Control for a
period of six months following the Termination Date; and
 
(ii) With respect to the Employee Participant’s 401(k) plan, the Company will
match the Employee Participant’s contribution for that portion of the Change of
Control year represented by the number of months prior to the Change of
Control.  The percentage of the Participant Employee’s contribution which is
matched by the Company will be equal to the percentage of the Employee
Participant’s contribution matched by the Company in the prior year. Such
matching contribution shall be contributed to the 401(k) plan on behalf of the
Participant unless such contribution would cause the plan to lose its tax
qualification, in which event the matching contribution shall be paid directly
to the Participant.
 
4.3 Separation Benefits - Managerial Participant.
 
(a) If the Participant is a Managerial Participant whose employment is
terminated in circumstances entitling such Managerial Participant to Separation
Benefits pursuant to Section 4.1(a), the Company shall provide to such
Managerial Participant cash payments as set forth in subsection 4.3(b) below,
and shall provide to the Managerial Participant continued benefits as set forth
in subsection 4.3(c) below. For purposes of determining the benefits set forth
in subsections 4.3(b) and 4.3(c), if the termination of the Managerial
Participant’s employment is for Good Reason based upon a reduction of the
Managerial Participant’s annual Base Salary, as described in Section 2.18, a
material reduction in the Managerial Participant’s annual incentive compensation
plan as provided in Section 2.18, or the failure to provide comparable employee
benefits as provided in Section 2.18, such reduction shall be ignored.
 
7

--------------------------------------------------------------------------------

(b) The cash payments referred to in Section 4.3(a) shall be the following
amounts:
 
(i) One year of then current Base Salary; plus
 
(ii) Bonus; plus
 
(iii) A “tenure payment” equal to four percent of Base Salary for each Year of
Service, through the Date of Termination;
 
provided that the sum of the amounts paid to a Managerial Participant, as set
forth in subsections 4.3(b)(i), (ii), and (iii), may not exceed an amount equal
to the total of two years of Base Salary plus Bonus.
 
(c) Benefits referred to in Section 4.3(a):
 
(i) The Company will provide the same medical and dental insurance coverage in
existence as of the date of the announcement of the Change of Control for a
period of six months following the Termination Date;
 
(ii) With respect to the Managerial Participant’s 401(k) plan, the Company will
match the Managerial Participant’s contribution for that portion of the Change
of Control year represented by the number of months prior to the Change of
Control.  The percentage of the Participant Manager’s contribution which is
matched by the Company will be equal to the percentage of the Managerial
Participant’s contribution matched by the Company in the prior year.  Such
matching contribution shall be contributed to the 401(k) plan on behalf of the
Participant unless such contribution would cause the plan to lose its tax
qualification, in which event the matching contribution shall be paid directly
to the Participant; and
 
(iii) Fees to a third party for outplacement services in an amount not to exceed
$4,000.
 
4.4 Separation Benefits - Officer Participants.
 
(a) If the Participant is an Officer Participant whose employment is terminated
in circumstances entitling such Officer Participant to Separation Benefits
pursuant to Section 4.1(a), the Company shall provide to such Officer
Participant cash payments as set forth in subsection 4.4(b) below, and shall
provide to the Officer Participant continued benefits as set forth in subsection
4.4(c) below. For purposes of determining the benefits set forth in subsections
4.4(b) and 4.4(c), if the termination of the Officer Participant’s employment is
for Good Reason based upon a reduction of the Officer Participant’s annual Base
Salary, as described in Section 2.18, a material reduction in the Officer
Participant’s annual incentive compensation plan as provided in Section 2.18, or
the failure to provide comparable employee benefits as provided in Section 2.18,
such reduction shall be ignored.
 
8

--------------------------------------------------------------------------------

(b) The cash payments referred to in Section 4.4(a) shall be the following
amounts:
 
(i) Two times then current Base Salary; plus
 
(ii) Two times the Officer Participant’s Bonus.
 
(c) Benefits referred to in Section 4.4(a):
 
(i) The Company will provide the same medical and dental insurance coverage in
existence as of the date of the announcement of the Change of Control for a
period of one year following the Termination Date;
 
(ii) With respect to the Officer Participant’s 401(k) plan, the Company will
match the Officer Participant’s contribution for that portion of the Change of
Control year represented by the number of months prior to the Change of
Control.  The percentage of the Participant Officer’s contribution which is
matched by the Company will be equal to the percentage of the Officer
Participant’s contribution matched by the Company in the prior year.  Such
matching contribution shall be contributed to the 401(k) plan on behalf of the
Participant unless such contribution would cause the plan to lose its tax
qualification, in which event the matching contribution shall be paid directly
to the Participant; and
 
(iii) Fees to a third party for outplacement services in an amount not to exceed
$4,000.
 
4.5 Other Benefits Payable. To the extent not theretofore paid or provided, the
Company or Employer, as applicable, shall timely pay or provide (or cause to be
paid or provided) to a Participant entitled to the Separation Benefits, any
other amounts or benefits required to be paid or provided to the Participant or
which the Participant is eligible to receive under any plan, program, policy or
practice or contract or agreement of the Employer, provided, however, that if a
Participant is entitled to Separation Benefits under this Plan and is also
entitled to separation benefits under any other severance pay plan or policy of
the Employer, or any other agreement, including an employment agreement, the
plan, policy or agreement that provides the greatest amount of benefits will be
applicable to the Participant.
 
4.6 Certain Additional Payments by the Company.
 
(a) Anything in this Plan to the contrary notwithstanding and except as set
forth below, in the event it shall be determined that any payment or
distribution by the Employer to or for the benefit of a Participant (whether
paid or payable or distributed or distributable pursuant to the terms of this
Plan or otherwise, but determined without regard to any additional payments
required under this Section 4.6) (a “Payment”) would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Participant with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then the Participant shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by the Participant of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Participant retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
 
9

--------------------------------------------------------------------------------

(b) Subject to the provisions of Section 4.6(c), all determinations required to
be made under this Section 4.6, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by the Company (the
“Accounting Firm”) which shall provide detailed supporting calculations both to
the Company and the Participant within 15 business days of the receipt of notice
from the Participant that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Company shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 4.6, shall be paid by the Company to the
Participant within 30 days  of the date the Gross-Up Payment is determined,
unless the Participant is a “specified employee” as defined in Code Section
409A, in which event the Gross-Up Payment shall be made on the first business
day that is at least six months after the Participant’s Separation from Service,
if later.  In any event, the Gross-Up Payment shall be made no later than the
end of the Participant’s taxable year next following the taxable year in which
the related Excise Tax is remitted to the Internal Revenue Service or any other
applicable taxing authority.  Any determination by the Accounting Firm shall be
binding upon the Company and the Participant. As a result of any 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 Gross-Up
Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 4.6(c) and the Participant 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 paid by the
Company to or for the benefit of the Participant within 30 days after the
Accounting Firm’s determination of the amount of the Underpayment or such later
time as may be required to comply with Section 409A of the Code, but in no event
no later than the end of the Participant’s taxable year next following the
taxable year in which the related Excise Tax is remitted to the Internal Revenue
Service or any other applicable taxing authority.
 
(c) The Participant shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 15 days after the Participant is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Participant shall
not pay such claim prior to the expiration of the 30-day period following the
date on which it gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Participant in writing prior to the expiration of such
period that it desires to contest such claim, the Participant shall:
 
(i) give the Company any information reasonably requested by the Company
relating to such claim,
 
(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
 
(iii) cooperate with the Company in good faith in order effectively to contest
such claim, and
 
(iv) permit the Company to participate in any proceedings relating to such
claim;
 
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Participant harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.
 
10

--------------------------------------------------------------------------------

(v) Without limiting the foregoing provisions of this Section 4.6(c), the
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Participant to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Participant agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that
if the Company directs the Participant to pay such claim and sue for a refund,
the Company shall advance the amount of such payment to the Participant, on an
interest-free basis and shall indemnify and hold the Participant harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Participant with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Participant shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
 
(d) If, after the receipt by the Participant of an amount advanced by the
Company pursuant to Section 4.6(c), the Participant becomes entitled to receive
any refund with respect to such claim, the Participant shall (subject to the
Company’s complying with the requirements of Section 4.6(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the
Participant of an amount advanced by the Company pursuant to Section 4.6(c), a
determination is made that the Participant shall not be entitled to any refund
with respect to such claim and the Company does not notify the Participant in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
 
(e) All payments to Participants in accordance with the provisions of this Plan
shall be subject to applicable withholding of local, state, federal and foreign
taxes, as determined in the sole discretion of the Company.
 
4.7 Mitigation or Set-off of Amounts Payable Hereunder. The Participant shall
not be required to mitigate the amount of any payment provided for in this
Article IV by seeking other employment or otherwise, and except as otherwise
provided in Section 4.1(b), nor shall the amount of any payment provided for in
this Article IV be reduced by any compensation earned by the Participant as the
result of employment by another employer after a Change of Control. The
Employer’s obligations hereunder also shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Employer may have against the Participant.
 
4.8 Time and Form of Payment. In order to comply with Section 409A of the Code,
the amounts described in Sections 4.2(b), 4.3(b) and 4.4(b) shall be paid in a
lump sum in cash no later than the 30th day following the Date of
Termination.  If the Participant is a “specified employee” as defined in Code
Section 409A and regulations thereunder, such amounts shall instead be paid on
the first business day that is at least six months after the Date of
Termination.
 
11

--------------------------------------------------------------------------------

Any taxable welfare benefits provided pursuant to this Article IV that are not
“disability pay” or “death benefits” within the meaning of Treasury Regulation
Section 1.409A-1(a)(5) (collectively, the “Applicable Benefits”) shall be
subject to the following requirements in order to comply with Section 409A of
the Code.  The amount of any Applicable Benefit provided during one taxable year
shall not affect the amount of the Applicable Benefit provided in any other
taxable year, except that with respect to any Applicable Benefit that consists
of the reimbursement of expenses referred to in Section 105(b) of the Code, a
limitation may be imposed on the amount of such reimbursements over some or all
of the applicable severance period, as described in Treasury Regulation Section
1.409A-3(i)(iv)(B).  To the extent that any Applicable Benefit consists of the
reimbursement of eligible expenses, such reimbursement must be made on or before
the last day of the calendar year following the calendar year in which the
expense was incurred.  No Applicable Benefit may be liquidated or exchanged for
another benefit.  If the Participant is a “specified employee” as defined in
Code Section 409A, then during the period of six months immediately following
the Participant’s Separation from Service, the Participant shall be obligated to
pay the Company the full cost for any Applicable Benefits that do not constitute
health benefits of the type required to be provided under the health
continuation coverage requirements of Section 4980B of the Code, and the Company
shall reimburse the Participant for any such payments on the first business day
that is more than six months after the Participant’s Separation from Service.
 
ARTICLE V
 
EMPLOYERS
 
Any Subsidiary of the Company may become an Employer under the Plan if approved
by the Company and such Subsidiary. Pursuant to Section 3.1, the provisions of
the Plan shall be fully applicable to the Employees of any such Subsidiary that
becomes an Employer.
 
ARTICLE VI
 
SUCCESSOR TO COMPANY
 
This Plan shall bind any successor of the Company, its assets or its businesses
(whether direct or indirect, by purchase, merger, consolidation or otherwise),
in the same manner and to the same extent that the Company would be obligated
under this Plan if no succession had taken place.
 
In the case of any transaction in which a successor would not by the foregoing
provision or by operation of law be bound by this Plan, the Company shall
require such successor expressly and unconditionally to assume and agree to
perform the Company’s obligations under this Plan, in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place. The term “Company,” as used in this Plan, shall mean the
Company as hereinbefore defined and any successor or assignee to the business or
assets which by reason hereof becomes bound by this Plan.
 
ARTICLE VII
 
DURATION, AMENDMENT AND TERMINATION
 
7.1 Duration. If a Change of Control occurs while this Plan is in effect, this
Plan shall continue in full force and effect for two years following such Change
of Control, and shall then automatically terminate, provided, however, that all
Participants who become entitled to any payments or benefits hereunder shall
continue to receive such payments or benefits notwithstanding any termination of
the Plan.
 
12

--------------------------------------------------------------------------------

7.2 Amendment or Termination. The Continuing Directors may amend or terminate
this Plan for any reason prior to the announcement of a Change of Control. In
the event of a Change of Control, this Plan shall automatically terminate on the
second anniversary of the date of the Change of Control, but may not be amended
or terminated by either the Board or the Continuing Directors between the date
of the announcement of a Change of Control and the second anniversary of the
Change of Control.
 
7.3 Procedure for Extension, Amendment or Termination. Any extension, amendment
or termination of this Plan by the Continuing Directors in accordance with the
foregoing shall be made by action of the Continuing Directors in accordance with
the Company’s charter and by-laws and applicable law.
 
ARTICLE VIII
 
PLAN ADMINISTRATION
 
8.1 Named Fiduciary; Administration. The Company is the named fiduciary of the
Plan, and shall administer the Plan, acting through the Company’s officer with
responsibility over Human Resources, who shall be the Plan Administrator. The
Plan Administrator shall review and determine all claims for benefits under this
Plan.
 
8.2 Claim Procedure.
 
(a) If an Employee or former Employee or his or her authorized representative
(referred to in this Article VIII as a “claimant”) makes a written request
alleging a right to receive benefits under this Plan or alleging a right to
receive an adjustment in benefits being paid under the Plan, the Company shall
treat it as a claim for benefits.
 
(b) All claims and inquiries concerning benefits under the Plan must be
submitted to the Plan Administrator in writing and be addressed as follows:
 
Plan Administrator
 
Swift Energy Company Change of Control Severance Plan
Swift Energy Company
16825 Northchase Dr, Suite 400
Houston, Texas 77060
 
The Plan Administrator shall have full and complete discretionary authority to
administer, to construe, and to interpret the Plan, to decide all questions of
eligibility, to determine the amount, manner and time of payment, and to make
all other determinations deemed necessary or advisable for the Plan. The Plan
Administrator shall initially deny or approve all claims for benefits under the
Plan. The claimant may submit written comments, documents, records or any other
information relating to the claim. Furthermore, the claimant shall be provided,
upon request and free of charge, reasonable access to, and copies of, all
documents, records and other information relevant to the claim for benefits.
 
(c) Claims Denial. If any claim for benefits is denied in whole or in part, the
Plan Administrator shall notify the claimant in writing of such denial and shall
advise the claimant of his right to a review thereof.  Such written notice shall
set forth, in a manner calculated to be understood by the claimant, specific
reasons for such denial, specific references to the Plan provisions on which
such denial is based, a description of any information or material necessary for
the claimant to perfect his claim, an explanation of why such material is
necessary and an explanation of the Plan’s review procedure, and the time limits
applicable to such procedures.  Furthermore, the notification shall include a
statement of the claimant’s right to bring a civil action under Section 502(a)
of ERISA following an adverse benefit determination on review. Such written
notice shall be given to the claimant within a reasonable period of time, which
normally shall not exceed 90 days, after the claim is received by the Plan
Administrator.
 
13

--------------------------------------------------------------------------------

(d) Appeals.  From and after the date of the announcement of a Change of
Control, there shall be an Appeals Committee for the purpose of appealing claims
under this Plan.  Subsequent to the announcement of a Change of Control but
before the actual occurrence of such Change of Control, the Appeals Committee
shall comprise three individuals employed by the Company who serve as officers
or managers and who are designated by the Chairman and Chief Executive Officer
of the Company as members of the Appeals Committee.  After the occurrence of a
Change of Control, the Appeals Committee shall comprise at least three
individuals who (x) served as officers or managers of Swift Energy Company prior
to the Change of Control, (y) remain employed by the Company or its successor
after the Change of Control, and (z) are designated by the Chairman and Chief
Executive Officer of the Company serving as such immediately prior to the
announcement of a Change of Control, regardless of whether he is still employed
by the Company or its successor at the time of appointment of the members of the
Appeals Committee.  After a Change of Control, any claimant whose claim for
benefits is denied in whole or in part may appeal, or his duly authorized
representative may appeal on the claimant’s behalf, such denial by submitting to
the Appeals Committee a request for a review of the claim within 60 days after
receiving written notice of such denial from the Plan Administrator. The Appeals
Committee shall give the claimant upon request, and free of charge, reasonable
access to, and copies of, all documents, records and other information relevant
to the claim of the claimant, in preparing his request for review. The request
for review must be in writing and be addressed as follows:
 
Appeals Committee
 
Swift Energy Company Change of Control Severance Plan
Swift Energy Company
16825 Northchase Dr, Suite 400
Houston, Texas 77060
 
The request for review shall set forth all of the grounds upon which it is
based, all facts in support thereof, and any other matters which the claimant
deems pertinent. The Appeals Committee may require the claimant to submit such
additional facts, documents, or other materials as the Appeals Committee may
deem necessary or appropriate in making its review.
 
(e) Review of Appeals. The Appeals Committee shall act upon each request for
review within 60 days after receipt thereof. The review on appeal shall consider
all comments, documents, records and other information submitted by the claimant
relating to the claim without regard to whether this information was submitted
or considered in the initial benefit determination. The Appeals Committee shall
have full and complete discretionary authority, in its review of any claims
denied by the Plan Administrator, to administer, to construe, and to interpret
the Plan, to decide all questions of eligibility, to determine the amount,
manner and time of payment, and to make all other determinations deemed
necessary or advisable for the Plan.
 
(f) Decision on Appeals. The Appeals Committee shall give written notice of its
decision to the claimant. If the Appeals Committee confirms the denial of the
application for benefits in whole or in part, such notice shall set forth, in a
manner calculated to be understood by the claimant, the specific reasons for
such denial, and specific references to the Plan provisions on which the
decision is based. The notice shall also contain a statement that the claimant
is entitled to receive upon request, and free of charge, reasonable access to,
and copies of, all documents, records and other information relevant to the
claimant’s claim for benefits. Information is relevant to a claim if it was
relied upon in making the benefit determination or was submitted, considered or
generated in the course of making the benefit determination, whether it was
relied upon or not. The notice shall also contain a statement of the claimant’s
right to bring an action under ERISA Section 502 (a). If the Appeals Committee
has not rendered a decision on a request for review within 60 days after receipt
of the request for review, the claimant’s claim shall be deemed to have been
approved. The Appeals Committee’s decision shall be final and not subject to
further review within the Company. There are no voluntary appeals procedures
after review by the Appeals Committee.
 
14

--------------------------------------------------------------------------------

(g) Time of Approved Payment. In the event that either the Plan Administrator or
the Appeals Committee determines that the claimant is entitled to the payment of
all or any portion of the benefits claimed, such payment shall be made to the
claimant in accordance with Section 4.8 or within 30 days of the date of such
determination or such later time as may be required to comply with Section 409A
of the Code.
 
(h) Determination of Time Periods. If the day on which any of the foregoing time
periods is to end is a Saturday, Sunday or holiday recognized by the Company,
the period shall extend until the next following business day.
 
8.3 Arbitration. In the event that a Participant wishes to pursue any further
claim for benefits under this Plan following the completion of the appeal
process described in Section 8.2, the Participant must participate in
arbitration in Houston, Texas, before a single arbitrator in accordance with the
arbitration rules and procedures of the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes (the “Arbitration Process”);
provided, however, that the arbitration will not be binding on the claimant and
the claimant may seek legal or equitable remedies in court after the arbitrator
has made a determination as to the claimant’s claim, if the claimant does not
accept the arbitrator’s determination. The Arbitration Process shall be
commenced by filing a demand for arbitration in accordance with the Arbitration
Process within 18 months after the final notice of denial of the Participant’s
appeal in accordance with Section 8.2. The arbitrator shall decide all issues
relating to arbitrability and the arbitrator shall also decide all issues with
respect to the payment of the costs of such arbitration, including attorneys’
fees and the arbitrator’s fees. Completion of the claims procedures described in
this document will be a condition precedent to the commencement of any
arbitration in connection with a claim for benefits under the Plan by a claimant
or by any other person or entity claiming rights individually or through a
claimant; provided, however, that the Committee may, in its sole discretion,
waive compliance with such claims procedures as a condition precedent to any
such action.
 
8.4 Exhaustion of Administrative Remedies. Completion of the claims and appeals
procedures described in Sections 8.2 and 8.3 of this Plan, including
arbitration, will be a condition precedent to the commencement of any legal or
equitable action in connection with a claim for benefits under the Plan by a
claimant or by any other person or entity claiming rights individually or
through a claimant; provided, however, that the Appeals Committee may, in its
sole discretion, waive compliance with such claims procedures as a condition
precedent to any such action.
 
ARTICLE IX
 
MISCELLANEOUS
 
9.1 Employment Status. This Plan does not constitute a contract of employment or
impose on the Participant or the Participant’s Employer any obligation for the
Participant to remain an Employee or change the status of the Participant’s
employment or the policies of such Employer regarding termination of employment.
 
9.2 Confidential Information. During and after termination of employment by the
Company, Employee agrees to maintain in a fiduciary capacity for the benefit of
the Company the Confidential and agrees  (i) to prevent the disclosure to any
third party of all such Confidential Information; (ii) not to use for Employee’s
own benefit or for the benefit of another business any of the Company’s
Confidential Information, and (iii) not to aid others in the use of such
Confidential Information in competition with the Company or its Affiliates or
Subsidiaries.  These obligations shall exist during and after any termination of
employment by the Company; provided, however, that in no event shall an asserted
violation of the provisions of this Section 9.2 constitute a basis for deferring
or withholding any amounts otherwise payable under this Plan.
 
15

--------------------------------------------------------------------------------

9.3 Unfunded Plan Status. All payments pursuant to the Plan shall be made from
the general funds of the Company and no special or separate fund shall be
established or other segregation of assets made to assure payment. No
Participant or other person shall have under any circumstances any interest in
any particular property or assets of the Company as a result of participating in
the Plan. Notwithstanding the foregoing, the Company may (but shall not be
obligated to) create one or more grantor trusts, the assets of which are subject
to the claims of the Company’s creditors, to assist it in accumulating funds to
pay its obligations under the Plan.
 
9.4 Validity and Severability. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
 
9.5 Governing Law. The validity, interpretation, construction and performance of
the Plan shall in all respects be governed by the laws of Texas, without
reference to principles of conflict of law, except to the extent pre-empted by
Federal law.
 
IN WITNESS WHEREOF, this Swift Energy Company Change of Control Severance Plan
has been adopted Board of Directors of the Company as of the 28th day of
October, 2008, to be effective as of the Effective Date set forth herein.
 

 
SWIFT ENERGY COMPANY
 

 
By:___s/b Terry E. Swift_____________________
Terry E. Swift
Chairman of the Board of Directors and
 Chief Executive Officer
 

 

 

 
 
16

--------------------------------------------------------------------------------