Exhibit 10.1
STONE ENERGY CORPORATION
EXECUTIVE CHANGE OF CONTROL
AND SEVERANCE PLAN
     The STONE ENERGY CORPORATION EXECUTIVE CHANGE OF CONTROL AND SEVERANCE PLAN
(the “Plan”) is hereby adopted effective as of November 16, 2006 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

 

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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) within twelve (12) months after any Change of Control of any one of the
following acts by the Company, or failures by the Company to act:
(A) a 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
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) the failure by the Company to continue in effect any compensation plan in
which the Executive participates immediately prior to the Change of Control
which is material to the Executive’s total compensation, including but not
limited to the Company’s Annual Incentive Compensation Plan and its Amended and
Restated Stock Incentive Plan or any substitute plans adopted prior to the
Change of Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or
unless the Company eliminates the compensation plan for all participants, or the
failure by the Company to continue the Executive’s participation therein (or in
such substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amount or timing of payment of benefits provided and the
level of the Executive’s participation relative to other participants, as
existed immediately prior to the Change of Control;
(C) the failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by the Executive under any of
the Company’s pension, savings, life insurance, medical, health and accident, or
disability plans in which the Executive was participating immediately prior to
the Change of Control (except for across-the-board changes similarly affecting
all senior Executives of the Company and all senior Executives of any Person in
control of the Company), the taking of any other action by the Company which
would directly or indirectly materially reduce any of such benefits or deprive
the Executive of any material fringe benefit or perquisite enjoyed by the
Executive at the time of the Change of Control, or the failure by the Company to
provide the Executive with the number of paid vacation days to which the
Executive is entitled on the basis of years of service with the Company in
accordance with the Company’s normal vacation policy in effect at the time of
the Change of Control;
(D) the failure by the Company or, in the event of a merger or acquisition that
constitutes a Change of Control, by the controlling entity following such Change
of Control, if not the Company, to name the Executive an officer of the parent
company within ninety (90) days after the date of the Change of Control and
continuing as such thereafter; or
(E) 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.

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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. 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 with the Employer that is for the convenience of the Employer, as
determined by the Compensation Committee of the Board, in its sole discretion;
however, a termination (other than for Cause) that occurs on or following a
Change of Control, but not later than 12 months after the Change of Control, or
that results from a resignation by an Executive for a Good Reason shall be
deemed for purposes hereof a “termination for the convenience of the 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.
     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. 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
          (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.
     2.2 Severance Payments. Subject to the provisions of Sections 2.3, 2.5 and
4.14 hereof, if an Executive incurs an Involuntary Termination, upon his Release
becoming irrevocable, the Executive shall be entitled to the following severance
benefits:
          (a) if such Involuntary Termination is prior to a Change of Control, a
lump sum cash payment, within 30 days of such termination, equal to his Annual
Pay;
          (b) a pro rata share, within 30 days of such termination, of the
Executive’s bonus opportunity up to the date of his termination at the then
projected year end rate of payout, in an amount, if any, as determined by the
Compensation Committee in its sole discretion (but reduce by any amount paid to
the Executive for such bonus year pursuant to Section 2.1(d));
          (c) the continuation of the Health Benefit Coverages for himself and,
where applicable, his eligible dependents for the remainder, if any, of the
six-month period following the date of the Change of Control, at a cost to the
Executive that is equal to the cost for an active

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employee for similar coverage. The Executive may choose to continue some or all
of such Health Benefit Coverages. If at any time on or after an Executive’s
Involuntary Termination any health benefit plan in which he has elected to
continue his coverage either is terminated or ceases to provide coverage to him
or his covered beneficiaries for any reason, including, without limitation, by
its terms or the terms of an insurance contract providing the benefits of such
plan or, with respect to a group health plan, such plan no longer being subject
to the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”), then Health
Benefit Coverages shall mean an economically equivalent cash payment for
coverage equivalent to the coverage that is provided (or if the plan has been
terminated, that would have been provided but for such termination) for
similarly situated active employees, plus, where applicable, a gross-up payment
to the Executive to reflect the loss of tax benefits associated with his “lost”
employer-provided health plan coverage benefit(s). The subsidized COBRA Health
Benefit Coverage(s) provided hereunder shall immediately end upon the
Executive’s obtainment of new employment and eligibility for welfare benefit
plan coverage(s) similar to that being continued (with the Executive being
obligated hereunder to promptly report such eligibility to the Employer);
          (d) the Executive will be eligible to receive outplacement services,
the duration and costs for which shall be determined by the then prevailing
practice of the Company’s Human Resources Department concerning outplacement
services, but in no event shall such benefits exceed a cost to the Company of 5%
of the Annual Pay of the Executive;
          (e) if such Involuntary Termination is on or after a Change of
Control, a lump sum cash payment, within 30 days of such termination, equal to
the product of 2.99 and the Executive’s Annual Pay; and
          (f) a lump sum amount, within 30 days of such termination, equal to
the earned, but unpaid, portion of the Executive’s Annual Pay as of the date of
his Involuntary Termination.
     2.3 Release and Full Settlement. Anything to the contrary herein
notwithstanding, as a condition to the receipt of any severance payments or
benefits under Section 2.2 (a) through (e) above, an Executive whose employment
has been subject to an Involuntary Termination shall first execute a Release, in
substantially the form attached hereto as Attachment 1, releasing the Committee,
the Plan fiduciaries, the Employer, and the Employer’s parent corporation,
subsidiaries, affiliates, shareholders, partners, officers, directors, employees
and agents from any and all claims and from any and all causes of action of any
kind or character including, but not limited to, all claims or causes of action
arising out of such Executive’s employment with the Employer or the termination
of such employment, but excluding all claims to benefits and payments the
Executive may have under any compensation or benefit plan, program or
arrangement, including this Plan. The performance of the Employer’s obligations
hereunder and the receipt of any benefits provided hereunder by such Executive
shall constitute full settlement of all such claims and causes of action.
     2.4 No Mitigation. An Executive shall not be required to mitigate the
amount of any payment or benefit provided for in this Article II by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Article II be reduced by any compensation or benefit earned
by the Executive as the result of employment by another

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employer or by retirement benefits, except as provided in Section 2.2(c) with
respect to Health Benefit Coverage and in Section 2.5 with respect to the
coordination of severance benefits hereunder with other agreements providing
severance benefits. Subject to the foregoing, the benefits under the Plan are in
addition to any other benefits to which an Executive is otherwise entitled.
     2.5 Coordination with Other Arrangements. Any Executive who is a party to
an individual employment or severance agreement or covered by another similar
Change of Control or severance plan (“Other Plan”) of the Employer and who
becomes eligible for severance payments and benefits as provided in Section 2.2
of this Plan, shall receive such severance payments and benefits as provided
under Section 2.2 of this Plan, but such payments and benefits shall be “offset”
or reduced by any severance payments or benefits provided to such Covered
Employer under any such Other Plan.
     2.6 Parachute Taxes. Notwithstanding anything in this Plan to the contrary,
in the event any payment or benefit to an Executive pursuant to this Plan, when
aggregated with any other payments or benefits to or on behalf of such Executive
outside of this Plan, would constitute an “excess parachute payment”, within the
meaning of Section 280G of the Internal Revenue Code, the payments and/or
benefits (as selected by the Company) to such Executive shall be reduced in
whole or in part so that no part of the payments or benefits received under this
Plan by such Executive will constitute “excess parachute payments”; however,
such reduction(s) shall be made only if by reason of such reduction(s) the
Executive’s net after-tax benefit (as determined in good faith by the Company),
after all such reduction(s), will exceed the Executive’s net after-tax benefit
if such reduction(s) were not made.
III
ADMINISTRATION OF PLAN
     3.1 Committee’s Powers and Duties. The Company shall be the named fiduciary
and shall have full power to administer the Plan in all of its details, subject
to applicable requirements of law. The duties of the Company shall be performed
by the Committee. It shall be a principal duty of the Committee to see that the
Plan is carried out, in accordance with its terms, for the exclusive benefit of
persons entitled to participate in the Plan. For this purpose, the Committee’s
powers shall include, but not be limited to, the following authority, in
addition to all other powers provided by this Plan:
          (a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan;
          (b) to interpret the Plan and all facts with respect to a claim for
payment or benefits, its interpretation thereof to be final and conclusive on
all persons claiming payment or benefits under the Plan;
          (c) to decide all questions concerning the Plan and the eligibility of
any person to participate in the Plan;
          (d) to make a determination as to the right of any person to a payment
or benefit under the Plan (including, without limitation, to determine whether
and when there has

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been a termination of an Executive’s employment and the cause of such
termination and the amount of such payment or benefit);
          (e) to appoint such agents, counsel, accountants, consultants, claims
administrator and other persons as may be required to assist in administering
the Plan;
          (f) to allocate and delegate its responsibilities under the Plan and
to designate other persons to carry out any of its responsibilities under the
Plan, any such allocation, delegation or designation to be in writing;
          (g) to sue or cause suit to be brought in the name of the Plan; and
          (h) to obtain from the Employer and from Executives such information
as is necessary for the proper administration of the Plan.
     3.2 Member’s Own Participation. No member of the Committee may act or vote
in a decision of the Committee specifically relating to himself as a participant
in the Plan.
     3.3 Indemnification. The Employer shall indemnify and hold harmless each
member of the Committee against any and all expenses and liabilities arising out
of his administrative functions or fiduciary responsibilities, including any
expenses and liabilities that are caused by or result from an act or omission
constituting the negligence of such member in the performance of such functions
or responsibilities, but excluding expenses and liabilities that are caused by
or result from such member’s own gross negligence or willful misconduct.
Expenses against which such member shall be indemnified hereunder shall include,
without limitation, the amounts of any settlement or judgment, costs, counsel
fees, and related charges reasonably incurred in connection with a claim
asserted or a proceeding brought or settlement thereof.
     3.4 Compensation, Bond and Expenses. The members of the Committee shall not
receive compensation with respect to their services for the Committee. To the
extent required by applicable law, but not otherwise, Committee members shall
furnish bond or security for the performance of their duties hereunder. Any
expenses properly incurred by the Committee incident to the administration,
termination or protection of the Plan, including the cost of furnishing bond,
shall be paid by the Company.
     3.5 Claims Procedure. Any employee that the Committee determines is
entitled to a benefit under the Plan is not required to file a claim for
benefits. Any employee who is not paid a benefit and who believes that he is
entitled to a benefit or who has been paid a benefit and who believes that he is
entitled to a greater benefit may file a claim for benefits under the Plan in
writing with the Committee. In any case in which a claim for Plan benefits by an
Executive is denied or modified, the Committee shall furnish written notice to
the claimant within 90 days after receipt of such claim for Plan benefits (or
within 180 days if additional information requested by the Committee
necessitates an extension of the 90-day period and the claimant is informed of
such extension in writing within the original 90-day period), which notice
shall:
          (a) state the specific reason or reasons for the denial or
modification;

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          (b) provide specific reference to pertinent Plan provisions on which
the denial or modification is based;
          (c) provide a description of any additional material or information
necessary for the Executive or his representative to perfect the claim, and an
explanation of why such material or information is necessary; and
          (d) explain the Plan’s claim review procedure as contained herein.
In the event a claim for Plan benefits is denied or modified, if the Executive
or his representative desires to have such denial or modification reviewed, he
must, within 60 days following receipt of the notice of such denial or
modification, submit a written request for review by the Committee of its
initial decision. In connection with such request, the Executive or his
representative may review any pertinent documents upon which such denial or
modification was based and may submit issues and comments in writing. Within
60 days following such request for review the Committee shall, after providing a
full and fair review, render its final decision in writing to the Executive and
his representative, if any, stating specific reasons for such decision and
making specific references to pertinent Plan provisions upon which the decision
is based. If special circumstances require an extension of such 60-day period,
the Committee’s decision shall be rendered as soon as possible, but not later
than 120 days after receipt of the request for review. If an extension of time
for review is required, written notice of the extension shall be furnished to
the Executive and his representative, if any, prior to the commencement of the
extension period. Any legal action with respect to a claim for Plan benefits
must be filed no later than one year after the later of (1) the date the claim
is denied by the Committee or (2) if a review of such denial is requested
pursuant to the provisions above, the date of the final decision by the
Committee with respect to such request.
IV.
GENERAL PROVISIONS
     4.1 Funding. The benefits provided herein shall be unfunded and shall be
provided from the Employer’s general assets.
     4.2 Cost of Plan. Except as provided in Section 2.2(c), the entire cost of
the Plan shall be borne by the Employer and no contributions shall be required
of the Executives.
     4.3 Plan Year. The Plan shall operate on a calendar year basis with a short
plan year commencing on the effective date of the Plan.
     4.4 Other Participating Employers. The Committee may designate any entity
eligible by law to participate in this Plan as an Employer by written instrument
delivered to the Secretary of the Company and the designated Employer. Such
written instrument shall specify the effective date of such designated
participation, may incorporate specific provisions relating to the operation of
the Plan which apply to the designated Employer only and shall become, as to
such designated Employer and its employees, a part of the Plan. Each designated
Employer shall be conclusively presumed to have consented to its designation and
to have agreed to be bound by the terms of the Plan and any and all amendments
thereto upon its submission of information to

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the Committee required by the terms of or with respect to the Plan; provided,
however, that the terms of the Plan may be modified so as to increase the
obligations of an Employer only with the consent of such Employer, which consent
shall be conclusively presumed to have been given by such Employer upon its
submission of any information to the Committee required by the terms of or with
respect to the Plan.
     4.5 Amendment and Termination. The Plan may be terminated or amended from
time to time at the discretion of the Board; provided, however, that
notwithstanding the foregoing, the Plan may not be amended or terminated during
its term to adversely affect the benefits or potential rights to benefits
(contingent or otherwise) of any Executive then covered under the Plan. For
purposes of this Section, a change in the designation of participating Employers
by the Committee pursuant to Section 4.4 shall be deemed to be an amendment to
the Plan. The initial term of the Plan shall begin on November 16, 2006 and
shall continue through December 31, 2007. The Plan shall automatically terminate
on January 1, 2008 unless, on or before November 30, 2007, the Board, in its
sole discretion to be evidenced by resolution in the minutes of the Board,
extends the term of the Plan for the calendar year beginning on January 1, 2008.
The Board, in its sole discretion, may continue the Plan in effect beyond
December 31, 2008 by similarly extending the term of the Plan for successive
calendar years, one year at a time, to be evidenced by resolution(s) in the
minutes of the Board. Notwithstanding the foregoing, however, in the event of a
Change of Control during the existence of the Plan, the term of the Plan shall
automatically be extended for twelve (12) months following the date of such
Change of Control. The Employer’s obligation to make all payments and provide
benefits that have become payable as a result of an Involuntary Termination
occurring during the term shall survive any termination of the Plan.
     4.6 Not Contract of Employment. The adoption and maintenance of the Plan
shall not be deemed to be a contract of employment between the Employer and any
person or to be consideration for the employment of any person. Nothing herein
contained shall be deemed to give any person the right to be retained in the
employ of the Employer or to restrict the right of the Employer to discharge any
person at any time nor shall the Plan be deemed to give the Employer the right
to require any person to remain in the employ of the Employer or to restrict any
person’s right to terminate his employment at any time.
     4.7 Severability. Any provision in the Plan that is prohibited or
unenforceable in any jurisdiction by reason of applicable law shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
     4.8 Nonalienation. Executives shall not have any right to pledge,
hypothecate, anticipate or assign benefits or rights under the Plan, except by
will or the laws of descent and distribution.
     4.9 Effect of Plan. Except with respect to individuals that are not
Executives, this Plan is intended to supersede all prior oral or written
policies of the Employer and all prior oral or written communications to
Executives with respect to the subject matter hereof, and all such prior
policies or communications are hereby null and void and of no further force and
effect.

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Further, this Plan shall be binding upon the Employer and any successor of the
Employer, by merger or otherwise, and shall inure to the benefit of and be
enforceable by the Employer’s Executives.
     4.10 Taxes. The Employer or its successor may withhold from any amounts
payable to an Executive under the Plan such federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
     4.11 Governing Law. The Plan shall be interpreted and construed in
accordance with the laws of the State of Louisiana without regard to conflict of
laws principles, except to the extent preempted by federal law.
     4.12 Section 409A. Notwithstanding anything in this Plan to the contrary,
if any payment or benefit under this Plan would result in the imposition of an
additional tax under Section 409A of the Internal Revenue Code and related
regulations and United States Department of the Treasury pronouncements, that
provision of this Plan will be reformed to avoid imposition of the applicable
tax. If the Executive is a “specified employee,” as defined in Section 409A of
the Internal Revenue Code (the “Code”) with respect to the Employer or an
affiliate, severance payments pursuant to Section 2.2 of this Plan shall be paid
in a lump sum (without interest) on the date which is six months after the date
of the Executive’s “separation from service,” as defined in Section 409A of the
Code and the regulations thereunder, or, if earlier, the date of the Executive’s
death in a lump sum.
     EXECUTED on November 16, 2006.
STONE ENERGY CORPORATION
By: /s/ David H. Welch
Name: David H. Welch
Title: President and Chief Executive Officer

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