Document:

Amendment No. 1 and Consent

 Exhibit 10.1 
 Execution Version 
 AMENDMENT NO. 1 AND CONSENT 

This Amendment No. 1 and Consent dated as of February 28, 2012 (this “Agreement”) is among Stone Energy
Corporation, a Delaware corporation (the “Borrower”), Stone Energy Offshore, L.L.C., a Delaware limited liability company (the “Guarantor”), the financial institutions party to the Credit Agreement
described below as Banks (the “Banks”), and Bank of America, N.A., as Agent for the Banks (the “Agent”) and as Issuing Bank (the “Issuing Bank”). 

INTRODUCTION 
 A. The Borrower, the Banks, the Issuing Bank, and the Agent have entered into the Third Amended and Restated Credit Agreement dated as of April 26, 2011 (the “Credit
Agreement”). 
 B. The Guarantor entered into that certain Amended and Restated Guaranty dated as of April 26,
2011 (the “Stone Offshore Guaranty”). 
 C. The Borrower intends to issue unsecured convertible senior
notes due 2017 pursuant to an indenture to be entered into by the Borrower, the Guarantor, and a trustee to be determined (the “2012 Notes”). 
 D. The Borrower intends to enter into the Options and Warrants (as defined in Section 3(b)). 
 E. The Guarantor wishes to reaffirm its guarantee of the Obligations as amended by this Agreement. 
 THEREFORE, in fulfillment of the foregoing, the Borrower, the Guarantor, the Agent, the Issuing Bank, and the Banks hereby agree as follows: 

Section 1. Definitions; References. Unless otherwise defined in this Agreement, each term used in this Agreement which is
defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. 
 Section 2.
Amendments. Upon the satisfaction of the conditions specified in Section 7 of this Agreement, and, unless otherwise specified, effective as of the date set forth above, the Credit Agreement is amended as follows:

 (a) A new definition of “2012 Indenture Documents” and “Amendment No. 1” shall be
added in Section 1.1 of the Credit Agreement to read in its entirety as follows: 

“2012 Indenture Documents” means the Indenture to be entered into by the Borrower, the Guarantor, and a
trustee, relating to the issuance of unsecured convertible senior notes due 2017 pursuant to documentation containing terms substantially similar to the description of notes attached as Exhibit A to the Amendment No. 1 with such changes and
deviations therefrom as the Agent shall approve (such approval not to be unreasonably withheld, conditioned or delayed), and any additional supplemental indenture that is substantially similar thereto, relating to the issuance of unsecured
convertible senior notes due 2017. 

 “Amendment No. 1” means the Amendment No. 1 and
Consent dated as of February 28, 2012 among Borrower, Stone Energy Offshore, L.L.C., a Delaware limited liability company, the financial institutions party thereto as Banks, the Agent and the Issuing Bank. 

(b) The definitions of “Permitted Notes” and “Permitted Notes Documents” shall be amended and restated
in their entirety as follows: 
 “Permitted Notes” means any unsecured Debt issued pursuant to
the 2004 Indenture Documents, the 2010 Indenture Documents, the 2012 Indenture Documents or other Approved Indenture Documents. 
 “Permitted Notes Documents” means the 2004 Indenture Documents, the 2010 Indenture Documents, the 2012 Indenture Documents and any other Approved Indenture Documents. 

(c) Section 6.2(j) of the Credit Agreement shall be amended to replace “$800,000,000” with
“$900,000,000”. 
 Section 3. Consents. 

(a) Notwithstanding anything to the contrary contained in the Credit Agreement or any other Credit Document (other than
Sections 2.2(a) and 6.2(j) of the Credit Agreement, as amended by this Agreement), the Secured Parties hereby consent to the issuance by the Borrower of the 2012 Notes and the guaranty thereof by the Guarantors, pursuant
to documentation containing terms substantially similar to the description of notes attached hereto as Exhibit A, with such changes and deviations therefrom as the Agent shall approve (such approval not to be unreasonably withheld, conditioned or
delayed); provided that if the Borrower elects, upon the conversion of any 2012 Notes, (x) to settle such converted 2012 Notes with cash in lieu of Equity Interests, or (y) to settle such converted 2012 Notes with Equity
Interests repurchased by the Borrower with cash, such cash payment or cash repurchase may be made from the proceeds of the Options, and any cash payment or cash repurchase in excess of such proceeds shall be subject to and comply with the
requirements of clauses (i) and (ii) of Section 6.5(c) of the Credit Agreement relating to prepayments, redemptions, or defeasances of Debt. In furtherance of the foregoing consent, it is understood and agreed by the Secured
Parties, that the 2012 Notes will be priced at market terms at the time of issuance thereof. 
 (b)
Notwithstanding anything to the contrary contained in the Credit Agreement or any other Credit Document, the Secured Parties hereby consent to the execution and delivery by the Borrower of, and performance by the Borrower of all its obligations and
exercise of its rights under, one or more bond hedge call options entered into in connection with the issuance of the 2012 Notes (the “Options”) and separate warrant transactions (the “Warrants”) pursuant to
documentation in form and substance substantially similar to the documentation provided to the Agent prior to the date of this Agreement, with such changes and 

  
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deviations therefrom as Agent shall approve, such approval not to be unreasonably withheld, conditioned or delayed; provided that the premiums paid by the Borrower in respect of the
Options on the closing date for the initial issuance of the 2012 Notes shall not exceed the premiums received by the Borrower for the Warrants on the Premium Payment Date (as defined in the documentation relating to such Warrants) by more than
$50,000,000. For the avoidance of doubt, (i) the execution, delivery and performance of the Options and the Warrants including the repurchase of shares to satisfy obligations under the Warrant shall not constitute Restricted Payments, provided
that any repurchase of shares to satisfy obligations under the Warrants shall be subject to and comply with the requirements of clauses (i) and (ii) of Section 6.5(c) of the Credit Agreement and (ii) neither the Options
nor the Warrants shall constitute “Debt.” 
 Section 4. Reaffirmation of Liens. 

(a) Each of the Borrower and the Guarantor (i) is party to certain Security Documents securing and supporting the
Borrower’s and Guarantor’s obligations under the Credit Documents, (ii) represents and warrants that it has no defenses to the enforcement of the Security Documents and that according to their terms the Security Documents will
continue in full force and effect to secure the Borrower’s and Guarantor’s obligations under the Credit Documents, as the same may be amended, supplemented, or otherwise modified, and (iii) acknowledges, represents, and warrants that
the liens and security interests created by the Security Documents are valid and subsisting and create an Acceptable Security Interest in the Collateral to secure the Borrower’s and Guarantor’s obligations under the Credit Documents, as
the same may be amended, supplemented, or otherwise modified. 
 (b) The delivery of this Agreement does not
indicate or establish a requirement that any Guaranty or Security Document requires the Borrower’s or any Guarantor’s approval of amendments to the Credit Agreement. 
 Section 5. Representations and Warranties. Each of the Borrower and the Guarantor represents and warrants to the Agent and the Banks that: 

(a) the representations and warranties set forth in the Credit Agreement and in the other Credit Documents are true and
correct in all material respects as of the date of this Agreement (except to the extent such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct in all material
respects as of such earlier date); provided that such materiality qualifier shall not apply if such representation or warranty is already subject to a materiality qualifier in the Credit Agreement or such other Credit Document;

 (b) (i) the execution, delivery, and performance of this Agreement are within the corporate or limited
liability company power, as appropriate, and authority of the Borrower and Guarantor and have been duly authorized by appropriate proceedings and (ii) this Agreement constitutes a legal, valid, and binding obligation of the Borrower and
Guarantor, enforceable against the Borrower and Guarantor in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general
principles of equity; and 

  
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 (c) as of the effectiveness of this Agreement and after giving effect
thereto, no Default or Event of Default has occurred and is continuing. 
 Section 6. Reaffirmation of Guaranty. The
Guarantor hereby ratifies, confirms, and acknowledges that its obligations under the Stone Offshore Guaranty are in full force and effect and that the Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment,
when due, whether at stated maturity or earlier by acceleration or otherwise, of all of the Obligations (subject to the terms of the Stone Offshore Guaranty), as such Obligations may have been amended by this Agreement. The Guarantor hereby
acknowledges that its execution and delivery of this Agreement do not indicate or establish an approval or consent requirement by the Guarantor under the Stone Offshore Guaranty in connection with the execution and delivery of amendments,
modifications or waivers to the Credit Agreement, the Notes or any of the other Credit Documents. 
 Section 7.
Effectiveness. This Agreement shall become effective as of the date hereof, and the Credit Agreement shall be amended as provided herein, upon the occurrence of all of the following: (a) the Majority Banks’, the Borrower’s, and
the Guarantor’s duly and validly executing originals of this Agreement and delivery thereof to the Agent, (b) the representations and warranties in this Agreement being true and correct in all material respects before and after giving
effect to this Agreement, and (c) the Borrower’s having paid all costs, expenses, and fees which have been invoiced and are payable pursuant to Section 9.4 of the Credit Agreement or any other written agreement.

 Section 8. Post-Closing Obligation. No later than the date of issuance of the 2012 Notes, or such later date as
shall be agreed to by the Agent in its sole discretion, the Borrower shall deliver to the Agent a favorable opinion of Vinson & Elkins LLP, counsel to the Credit Parties, regarding the absence of a conflict under the 2012 Indenture
Documents with the Credit Documents in form and substance satisfactory to the Agent. Failure to deliver such opinion shall be an Event of Default as of the date specified in the foregoing sentence without giving effect to any grace period.

 Section 9. Effect on Credit Documents. Except as amended herein, the Credit Agreement and the Credit Documents
remain in full force and effect as originally executed, and nothing herein shall act as a waiver of any of the Agent’s or Banks’ rights under the Credit Documents, as amended. This Agreement is a Credit Document for the purposes of the
provisions of the other Credit Documents. Without limiting the foregoing, any breach of representations, warranties, and covenants under this Agreement may be a Default or Event of Default under other Credit Documents. 

Section 10. Choice of Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the
State of New York. 
 Section 11. Counterparts. This Agreement may be signed in any number of counterparts, each of
which shall be an original. 
 [The remainder of this page has been left blank intentionally.] 

  
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 THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT,
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

EXECUTED as of the date first set forth above. 

 

			
	BORROWER:
	
	STONE ENERGY CORPORATION
		
	By:	 	/s/ David H. Welch
	Name:	 	David H. Welch
	Title:	 	President and Chief Executive Officer
		
	By:	 	/s/ Kenneth H. Beer
	Name:	 	Kenneth H. Beer
	Title:	 	Senior Vice President and
Chief Financial Officer

  

			
	GUARANTOR:
	
	STONE ENERGY OFFSHORE, L.L.C.
		
	By:	 	/s/ David H. Welch
	Name:	 	David H. Welch
	Title:	 	President and Chief Executive Officer
		
	By:	 	/s/ Kenneth H. Beer
	Name:	 	Kenneth H. Beer
	Title:	 	Senior Vice President and
Chief Financial Officer

  

			
	AGENT AND ISSUING BANK:
	
	BANK OF AMERICA, N.A., as Agent and Issuing Bank
		
	By:	 	/s/ Ronald E. McKaig
	Name:	 	Ronald E. McKaig
	Title:	 	Managing Director
	
	BANKS:
	
	BANK OF AMERICA, N.A.
		
	By:	 	/s/ Ronald E. McKaig
	Name:	 	Ronald E. McKaig
	Title:	 	Managing Director

  
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	NATIXIS
		
	By:	 	/s/ Liana Tchernysheva
	Name:	 	Liana Tchernysheva
	Title:	 	Managing Director
		
	By:	 	/s/ Donovan C. Broussard
	Name:	 	Donovan C. Broussard
	Title:	 	Managing Director

  
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	THE BANK OF NOVA SCOTIA
		
	By:	 	/s/ Marc Graham
	Name:	 	Marc Graham
	Title:	 	Director

  
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	CAPITAL ONE, NATIONAL ASSOCIATION
		
	By:	 	/s/ Nancy G. Moragas
	Name:	 	Nancy G. Moragas
	Title:	 	Sr. Vice President

  
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	TORONTO DOMINION (NEW YORK) LLC
		
	By:	 	/s/ Bebi Yasin
	Name:	 	Bebi Yasin
	Title:	 	Authorized Signatory

  
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	BARCLAYS BANK PLC
		
	By:	 	/s/ Vanessa A. Kurbatskiy
	Name:	 	Vanessa A. Kurbatskiy
	Title:	 	Vice President

  
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	U.S. BANK NATIONAL ASSOCIATION
		
	By:	 	/s/ Daria Mahoney
	Name:	 	Daria Mahoney
	Title:	 	Vice President

  
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	IBERIABANK
		
	By:	 	/s/ Cameron D. Jones
	Name:	 	Cameron D. Jones
	Title:	 	Vice President

  
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 EXHIBIT A 
 DESCRIPTION OF NOTES 

 DESCRIPTION OF THE NOTES 

The Notes will be issued under an indenture to entered into between Stone Energy Corporation, as issuer, and The Bank of New York Mellon
Trust Company, N.A., as trustee, in a transaction not registered under the Securities Act. 
 The following description is only
a summary of the material provisions of the Notes and the indenture. We urge you to read the indenture in its entirety because it, and not this description, define your rights as a holder of the Notes. You may request copies of this document as set
forth under the caption “Where You Can Find More Information.” 
 When we refer to “Stone Energy
Corporation,” “Stone Energy,” “we,” “our” or “us” in this section, we refer only to Stone Energy Corporation and not its subsidiaries (unless the context otherwise requires). In addition, all references
to interest in this offering memorandum include additional interest, if any, payable pursuant to the provisions set forth below under the heading “—No Registration Rights; Additional Interest,” and additional interest, if any, payable
at our election as the sole remedy relating to the failure to comply with our reporting obligations pursuant to the provisions set forth below under the heading “—Events of Default; Notice and Waiver.” 

Brief Description of the Notes  
 The Notes will: 
  

	 	•	 	 initially be limited to $250.0 million aggregate principal amount ($275.0 million aggregate principal amount if the initial purchasers exercise in full
their option to purchase additional Notes); 

  

	 	•	 	 bear interest at a rate of % per year, payable semi-annually in arrears, on March 1 and September 1 of each year, commencing on
September 1, 2012; 

  

	 	•	 	 be general unsecured obligations, ranking equally with all of our other unsecured senior indebtedness and senior in right of payment to any
subordinated indebtedness; 

  

	 	•	 	 be convertible by you at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, only
during certain periods or upon satisfaction of one of the conditions for conversion, as described under “—Conversion Rights,” into cash, shares of our common stock or a combination of cash and shares of our common stock, at our
election, based on an initial conversion rate of shares of our common stock per $1,000 principal amount of Notes (subject to adjustment as set forth in this offering memorandum), which represents an initial conversion price of approximately $ per
share of our common stock; 

  

	 	•	 	 not be subject to redemption at our option prior to maturity; 

 

	 	•	 	 be subject to repurchase by us at your option if a fundamental change occurs, at a cash repurchase price equal to 100% of the principal amount of the
Notes, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date, as set forth under “—Fundamental Change Put”; and 

 

	 	•	 	 be due on March 1, 2017, unless earlier converted or repurchased by us at your option. 

Neither we nor any of our subsidiaries will be subject to any financial covenants under the indenture. In addition, neither we nor any of
our subsidiaries will be restricted under the indenture from paying dividends, incurring debt or issuing or repurchasing our securities. You are not afforded protection under the indenture in the event of a highly leveraged transaction, certain
significant changes in the composition of our board or a change in control of us, except to the extent described below under “—Conversion Rights—Adjustment to Conversion Rate Upon a Make-Whole Fundamental Change” and
“—Fundamental Change Put.” 
 The Notes will not be redeemable at our option prior to their maturity. No sinking
fund is provided for the Notes, and the Notes will not be subject to defeasance. 

  
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 The Notes initially will be issued in book-entry form only in denominations of $1,000
principal amount and whole multiples thereof. Beneficial interests in the Notes will be shown on, and transfers of beneficial interests in the Notes will be effected only through, records maintained by The Depository Trust Company, or DTC, or its
nominee, and any such interests may not be exchanged for certificated Notes except in limited circumstances. For information regarding conversion, registration of transfer and exchange of global Notes held in DTC, see “—Form, Denomination
and Registration—Global Notes, Book-Entry Form.” 
 If certificated Notes are issued, you may present them for
conversion, registration of transfer and exchange, without service charge, at our office or agency in New York City, which will initially be the office or agency of the trustee in New York City. 

A holder of the Notes may not sell or otherwise transfer the Notes or any shares of our common stock issuable upon conversion of the
Notes except in compliance with the provisions set forth below under “—No Registration Rights; Additional Interest” and “Transfer Restrictions.” 
 Additional Notes 
 We may, without the consent of the holders of the Notes,
increase the aggregate principal amount of the Notes by issuing additional Notes in the future on the same terms and conditions, except for any differences in the issue price and interest accrued prior to the issue date of the additional Notes;
provided that if any such additional Notes are not fungible with the Notes initially offered hereby for U.S. federal income tax purposes, such additional Notes will have a separate CUSIP number. The Notes offered by this offering memorandum
and any additional Notes would rank equally and ratably and would be treated as a single class for all purposes under the indenture. No additional Notes may be issued if any event of default has occurred and is continuing with respect to the Notes.

 Payment at Maturity 
 On the maturity date, each holder will be entitled to receive on such date $1,000 in cash for each $1,000 in principal amount of Notes, together with any accrued and unpaid interest to, but excluding, the
maturity date. With respect to global Notes, principal and any interest will be paid to DTC in immediately available funds. With respect to any certificated Notes, principal and any interest will be payable at our office or agency in New York City,
which initially will be the office or agency of the trustee in New York City. 
 Interest 

The Notes will bear interest at a rate of % per year. Interest will accrue from the date of original issuance of the Notes or from the
most recent date to which interest has been paid or duly provided for. We will pay interest semi-annually, in arrears on March 1 and September 1 of each year, commencing on September 1, 2012, to holders of record at the close of
business on the preceding February 15 and August 15, respectively. However, there are two exceptions to the preceding sentence: 
  

	 	•	 	 we will not pay in cash accrued interest (excluding any additional interest) on any Notes when they are converted, except as described under
“—Conversion Rights;” and 

  

	 	•	 	 on the interest payment date that falls on the maturity date, we will pay any accrued and unpaid interest to the person to whom we pay the principal
amount (rather than the record holder on the corresponding record date). 

 We will pay interest on:

  

	 	•	 	 global Notes to DTC in immediately available funds; 

  
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	 	•	 	 any certificated Notes having a principal amount of less than $2,000,000, by check mailed to the holders of those Notes; and

  

	 	•	 	 any certificated Notes having a principal amount of $2,000,000 or more, by wire transfer in immediately available funds at the election of the holders
of these Notes duly delivered to the trustee at least five business days prior to the relevant interest payment date. 

Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. If a payment date is not a business day, payment will be
made on the next succeeding business day, and no additional interest will accrue thereon. The term “business day” means any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York or banks in the State of
Texas are authorized or required by law or executive order to close or be closed. 
 To the extent lawful, payments of principal
or interest (including additional interest, if any) on the Notes that are not made when due will accrue interest at the then applicable interest rate on the Notes from the required payment date. 

Ranking 
 The Notes will
be our senior unsecured obligations and will rank equal in right of payment with all of our existing and future senior unsecured indebtedness. The Notes will be effectively subordinated to our secured indebtedness to the extent of the value of the
related collateral and structurally subordinated to indebtedness and other liabilities of our subsidiaries. In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure secured debt will be available to pay
obligations on the Notes only after all indebtedness under such secured debt has been repaid in full from the proceeds of such assets. We advise you that there may not be sufficient assets remaining to pay amounts due on any or all the Notes then
outstanding. 
 As of December 31, 2011, our total consolidated indebtedness was $620 million, of which approximately $45
million was secured indebtedness of ours and all of which was guaranteed by Stone Offshore. After giving effect to the issuance of the Notes (assuming no exercise of the initial purchasers’ option to purchase additional Notes) and the use of
proceeds therefrom, our total consolidated indebtedness would have been $              million. 
 Conversion Rights 
 Holders may convert all or part of their Notes, in
integral multiples of $1,000, based on an initial conversion rate of shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $ per share of our common stock), only during certain
periods or upon the satisfaction of certain conditions as described below. The conversion rate will be subject to adjustment as described below. As described under “—Conversion Procedures—Settlement Upon Conversion,” upon
conversion, we will satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. You will have the right to convert Notes
only under the following circumstances: 
  

	 	(1)	prior to December 1, 2016, on any date during any calendar quarter beginning after June 30, 2012 (and only during such calendar quarter) if the closing sale
price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous calendar quarter;

  

	 	(2)	prior to December 1, 2016, if we distribute to all or substantially all holders of our common stock rights, options or warrants entitling them to purchase, for a
period of 45 calendar days or less from the declaration date for such distribution, shares of our common stock at a price per share less than the average closing sale price of our common stock for the ten consecutive trading days immediately
preceding, but excluding, the declaration date for such distribution, as described below in more detail under “—Conversion Upon Specified Corporate Transactions;” 

  
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	 	(3)	prior to December 1, 2016, if we distribute to all or substantially all holders of our common stock cash, other assets, securities or rights to purchase our
securities, which distribution has a per share value exceeding 10% of the closing sale price of our common stock on the trading day immediately preceding the declaration date for such distribution, or if we engage in certain corporate transactions
as described herein, each as described below in more detail under “—Conversion Upon Specified Corporate Transactions;” 

  

	 	(4)	prior to December 1, 2016, during the five consecutive business-day period following any five consecutive trading-day period in which the trading price per $1,000
principal amount of Notes for each trading day during such five trading-day period was less than 98% of the closing sale price of our common stock for each trading day during such five trading-day period multiplied by the then current conversion
rate, as described in more detail below under “—Conversion Upon Satisfaction of Trading Price Condition;” or 

  

	 	(5)	on or after December 1, 2016, and prior to close of business on the second scheduled trading day immediately preceding the maturity date, without regard to the
foregoing conditions. 

 The “closing sale price” of any share of our common stock on any trading day
means the closing sale price of such security (or if no closing sale price is reported, the average of the closing bid and closing ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask
prices) on such day as reported in composite transactions for the principal U.S. securities exchange on which our common stock is traded or, if our common stock is not listed on a U.S. national or regional securities exchange, as reported by OTC
Markets Group Inc. In the absence of such a quotation, the closing sale price will be determined by a nationally recognized securities dealer retained by us for that purpose. The closing sale price will be determined without reference to extended or
after hours trading. The “conversion price” on any day will equal $1,000, divided by the conversion rate in effect on that day. 
 “Trading day” means a day on which (i) trading in our common stock (or other security for which a closing sale price must be determined) generally occurs on The New York Stock Exchange or,
if our common stock (or such other security) is not then listed on The New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which our common stock (or such other security) is then listed or, if our common
stock (or such other security) is not then listed on a U.S. national or regional securities exchange, on the principal other market on which our common stock (or such other security) is then traded, and (ii) a closing sale price for our common
stock (or closing sale price for such other security) is available on such securities exchange or market. If our common stock (or such other security) is not so listed or traded, “trading day” means a “business day.” 

Except as provided in the next paragraph, upon conversion, you will not receive any separate cash payment of accrued and unpaid interest
(excluding any additional interest) on the Notes. Accrued and unpaid interest (excluding any additional interest) and accrued tax original issue discount, if any, to the conversion date is deemed to be paid in full with the payment or delivery, as
the case may be, of the cash, shares of our common stock or a combination thereof, as the case may be, upon conversion, rather than cancelled, extinguished or forfeited. With respect to any conversion of the Notes into a combination of cash and
shares of our common stock, accrued and unpaid interest will be deemed to be paid first out of the cash paid upon such conversion. 
 If you convert after the close of business on the record date for an interest payment but prior to the open of business on the corresponding interest payment date, the record holder on the relevant record
date will receive on the corresponding interest payment date the full amount of interest accrued and unpaid on your Notes, notwithstanding your conversion of those Notes prior to the interest payment date. However, except as provided in the next
sentence, if you surrender your Notes for conversion after the close of business on a regular record date but prior to the open of business on the corresponding interest payment date, at the time you surrender your Notes for conversion, you must pay
us an amount equal to the interest that has accrued and will be paid on the Notes being converted on the corresponding interest payment date. You are not required to make such payment: 

 

	 	•	 	 if you convert your Notes following the close of business on the regular record date immediately preceding the maturity date;

  
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	 	•	 	 if you convert your Notes in connection with a fundamental change and we have specified a fundamental change repurchase date that is after a regular
record date and on or prior to the corresponding interest payment date; or 

  

	 	•	 	 to the extent of any overdue interest, if overdue interest exists at the time of conversion with respect to your Notes. 

Except as described under “—Conversion Rate Adjustments,” we will not make any payment or other adjustment for dividends
on any common stock issued upon conversion of the Notes. 
 Conversion Upon Satisfaction of Sale Price Condition

 Prior to December 1, 2016, you may surrender your Notes for conversion on any date during any calendar quarter
beginning after June 30, 2012 (and only during such calendar quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading
days ending on the last trading day of the previous calendar quarter. 
 Conversion Upon Specified Corporate Transactions

 Prior to December 1, 2016, you will have the right to convert your Notes if we: 

 

	 	•	 	 distribute to all or substantially all holders of our common stock rights, options or warrants entitling them to purchase, for a period of 45 calendar
days or less from the declaration date for such distribution, shares of our common stock at a price per share less than the average closing sale price of our common stock for the ten consecutive trading days immediately preceding, but excluding, the
declaration date for such distribution; or 

  

	 	•	 	 make a distribution to all or substantially all holders of our common stock cash, other assets, securities or rights to purchase our securities (other
than pursuant to a rights plan), which distribution has a per share value exceeding 10% of the closing sale price of our common stock on the trading day immediately preceding the declaration date for such distribution. 

We will notify holders at least 30 business days (or 10 business days if we elect physical settlement for related conversions as
described under “—Conversion Procedures—Settlement Upon Conversion”) prior to the ex-date for any such distribution. Once we have given such notice, you may surrender your Notes for conversion at any time until the earlier of
close of business on the business day preceding the relevant ex-date or any public announcement by us that such distribution will not take place. You may not convert any of your Notes based on this conversion contingency if you will otherwise
participate in the distribution, without converting your Notes, at the same time and on the same terms as holders of our common stock as if you held a number of shares of our common stock per $1,000 principal amount of Notes equal to the applicable
conversion rate, as a result of holding the Notes. 
 You will also have the right to convert your Notes if a fundamental change
occurs. We will, to the extent practicable, notify holders at least 30 business days prior to the anticipated effective date for any such transaction. In such event, you will have the right to convert your Notes at any time beginning 30 business
days prior to the date we notify holders as being the anticipated effective date of the transaction until the close of business on the business day immediately preceding the relevant fundamental change repurchase date. 

  
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 If you have submitted any or all of your Notes for repurchase in connection with a
fundamental change, unless you have withdrawn such Notes in a timely fashion, your conversion rights on the Notes so subject to repurchase will expire at the close of business on the business day preceding the fundamental change repurchase date,
unless we default in the payment of the repurchase price. If you have submitted any Notes for repurchase, such Notes may be converted only if you properly submit a withdrawal notice, and if the Notes submitted are evidenced by a global Note, you
comply with appropriate DTC procedures. 
 Conversion Upon Satisfaction of Trading Price Condition 

Prior to December 1, 2016, you may surrender your Notes for conversion during the five business-day period following any five
consecutive trading-day period in which the “trading price” per $1,000 principal amount of Notes, as determined following a request by a holder of Notes in accordance with the procedures described below, for each trading day of such five
trading-day period was less than 98% of the product of the closing sale price of our common stock for each trading day during such five trading-day period and the then current conversion rate. 

The “trading price” per $1,000 principal amount of Notes on any date of determination means the average of the secondary market
bid quotations per $1,000 principal amount of Notes obtained by us for $5,000,000 principal amount of the Notes at approximately 3:30 p.m., New York City time, on such determination date from two independent nationally recognized securities dealers
we select, which may include one or more of the initial purchasers; provided that if at least two such bids cannot reasonably be obtained by us, but one such bid can reasonably be obtained by us, this one bid will be used. If we cannot
reasonably obtain at least one bid for $5,000,000 principal amount of the Notes from a nationally recognized securities dealer or, in our reasonable judgment, the bid quotations are not indicative of the secondary market value of the Notes, then,
for purposes of this conversion contingency only, the trading price per $1,000 principal amount of Notes will be deemed to be less than 98% of the applicable conversion rate of the Notes multiplied by the closing sale price of our common stock on
such determination date. 
 We will determine the trading price per $1,000 principal amount of Notes. We will have no obligation
to make that determination unless a holder of Notes requests that we do so and provides reasonable evidence that the then current trading price of the Notes is less than the minimum trading price threshold. If a holder provides such request, we
will, within two business days thereafter, determine the trading price per $1,000 principal amount of Notes for each trading day until the minimum trading price threshold is exceeded. If we do not so obtain bids when required, the trading price per
$1,000 principal amount of Notes will be deemed to be less than 98% of the product of the closing sale price of our common stock and the applicable conversion rate on each trading day such failure occurs. 

Conversion on or after December 1, 2016 
 On or after December 1, 2016, and prior to the close of business on the second scheduled trading day immediately preceding the maturity date, you may surrender your Notes for conversion at any time
without regard to the foregoing conditions. 
 Conversion Procedures 

Procedures to be Followed by a Holder 
 If you hold a beneficial interest in a global Note, to convert you must deliver to DTC the appropriate instruction form for conversion pursuant to DTC’s conversion program and, if required, pay funds
equal to interest payable on the next interest payment date to which you are not entitled and, if required, pay all transfer or similar taxes, if any, described below. 

  
 33 

 If you hold a certificated Note, to convert you must: 

 

	 	•	 	 complete and manually sign the conversion notice on the back of the Notes or a facsimile of the conversion notice; 

 

	 	•	 	 deliver the completed conversion notice and the Notes to be converted to the conversion agent; 

 

	 	•	 	 if required, furnish appropriate endorsements and transfer documents; 

 

	 	•	 	 if required, pay funds equal to interest payable on the next interest payment date to which you are not entitled; and 

 

	 	•	 	 if required, pay all transfer or similar taxes, if any, described below. 

The conversion date will be the business day on which you have satisfied all of the foregoing requirements. The Notes will be deemed to
have been converted immediately prior to the close of business on the conversion date; provided, however, that the person in whose name any shares of our common stock shall be issuable upon such conversion will become the holder of
record of such shares as of the close of business on the conversion date, in the case of physical settlement (as defined below), or the last trading day of the relevant conversion period, in the case of combination settlement (as defined below).

 You will not be required to pay any transfer or similar taxes due upon conversion other than any tax or duty that may be
payable relating to any transfer involved in the issuance or delivery of common stock, if any, due upon conversion in a name other than that of the converting holder. Certificates representing common stock will be issued and delivered only after all
applicable transfer or similar taxes, if any, payable by you have been paid in full. 
 Settlement Upon Conversion

 Upon conversion, we will pay or deliver, as the case may be, to converting holders in respect of each $1,000 principal
amount of Notes being converted a “conversion settlement amount” in either solely cash (“cash settlement”), solely shares of our common stock (other than cash in lieu of any fractional shares) (“physical settlement”) or
a combination of cash and shares of our common stock (“combination settlement”) as described below. We refer to each of these settlement methods as a “settlement method.” 

All conversions occurring on or after December 1, 2016 will be settled using the same settlement method. Except for any conversions
that occur on or after December 1, 2016, we will use the same settlement method for all conversions occurring on the same conversion date, but we will not have any obligation to use the same settlement method with respect to conversions that
occur on different conversion dates. That is, we may choose for Notes converted on one conversion date to settle conversions in physical settlement, and choose for Notes converted on another conversion date cash settlement or combination settlement.

 If we elect a settlement method, we will inform holders so converting through the trustee of the settlement method we have
selected no later than the close of business on the scheduled trading day immediately following the related conversion date (or in the case of any conversions occurring on or after December 1, 2016, no later than the close of business on the
scheduled trading day immediately preceding December 1, 2016). If we do not timely elect a settlement method, we will no longer have the right to elect cash settlement or physical settlement and we will be deemed to have elected combination
settlement in respect of our conversion obligation, as described below, and the specified dollar amount (as defined below) per $1,000 principal amount of Notes will be equal to $1,000. If we elect combination settlement, but we do not concurrently
notify converting holders of the specified dollar amount per $1,000 principal amount of Notes, such specified dollar amount will be deemed to be $1,000. It is our current intent and policy to settle conversions through combination settlement with a
specified dollar amount of at least $1,000. 

  
 34 

 The type and amount of consideration due upon conversion will be computed as follows:

  

	 	•	 	 if we elect physical settlement, we will deliver to converting holders in respect of each $1,000 principal amount of Notes being converted a number of
shares of our common stock equal to the conversion rate (and cash in lieu of any fractional share as described below); 

  

	 	•	 	 if we elect cash settlement, we will pay to converting holders in respect of each $1,000 principal amount of Notes being converted cash in an amount
equal to the sum of the daily conversion values for each of the 25 consecutive trading days in the relevant conversion period; and 

  

	 	•	 	 if we elect (or are deemed to have elected) combination settlement, we will pay or deliver, as the case may be, to converting holders in respect of
each $1,000 principal amount of Notes being converted a conversion settlement amount equal to the sum of the daily settlement amounts for each of the 25 consecutive trading days in the relevant conversion period (and cash in lieu of any fractional
share as described below). 

 The “conversion period” means the 25 consecutive trading-day period:

  

	 	•	 	 with respect to conversion notices received on or after December 1, 2016, beginning on, and including, the 27th scheduled trading day immediately
preceding the maturity date; and 

  

	 	•	 	 in all other cases, beginning on, and including, the third trading day following our receipt of your conversion notice. 

The “daily settlement amount,” for each $1,000 principal amount of Notes, for each of the 25 consecutive trading days in the
relevant conversion period, shall consist of: 
  

	 	•	 	 cash equal to the lesser of (1) the maximum cash amount per $1,000 principal amount of Notes being converted to be received upon conversion as
specified in the notice specifying our chosen settlement method (the “specified dollar amount”), if any, divided by 25 (such quotient the “daily measurement value”) and (2) the daily conversion value; and

  

	 	•	 	 to the extent the daily conversion value exceeds the daily measurement value, a number of shares of our common stock equal to (1) the difference
between the daily conversion value and the daily measurement value, divided by (2) the volume-weighted average price of our common stock on such trading day. 

The “daily conversion value” for any trading day in the applicable conversion period equals 1/25th of: 

 

	 	•	 	 the conversion rate in effect on that trading day, multiplied by 

 

	 	•	 	 the volume-weighted average price of our common stock on that trading day. 

 For the purposes of determining amounts due upon conversion only, “trading day” means a day on which (i) there is no “market disruption event” and (ii) trading in our common
stock generally occurs on The New York Stock Exchange or, if our common stock is not then listed on The New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which our common stock is then listed or, if our
common stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which our common stock is then listed or admitted for trading. If our common stock is not so listed or admitted for trading,
“trading day” means a “business day.” 
 “Scheduled trading day” means a day that is scheduled to
be a trading day on the principal U.S. national or regional securities exchange or market on which our common stock is listed or admitted for trading. If our common stock is not so listed or admitted for trading, “scheduled trading day”
means a “business day.” 

  
 35 

 “Market disruption event” means (i) a failure by the primary U.S. national or
regional securities exchange or market on which our common stock is listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any
scheduled trading day for our common stock for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the
relevant stock exchange or otherwise) in our common stock or in any options, contracts or futures contracts relating to our common stock. 
 The “volume-weighted average price” or “VWAP” per share of our common stock on any trading day means such price as displayed on Bloomberg (or any successor service) page SGY
<EQUITY> AQR in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such trading day; or, if such price is not available, the volume-weighted average price means the market value per share of our common stock on such day
as determined by a nationally recognized independent investment banking firm retained for this purpose by us. The “volume-weighted average price” or “VWAP” will be determined without regard to after hours trading or any other
trading outside of the regular trading session trading hours. 
 Except as described under “—Adjustment to Conversion
Rate Upon a Make-Whole Fundamental Change” and “—Change in the Conversion Rights Upon Certain Reclassifications, Business Combinations, Asset Sales and Corporate Events”, if cash settlement or combination settlement is
applicable, we will pay and/or deliver the consideration due upon conversion on the third business day immediately following the final trading day of the related conversion period (as defined above). If physical settlement is applicable, we will
deliver the consideration due upon conversion on the third business day immediately following the related conversion date; provided that with respect to any conversion date occurring after February 15, 2017, settlement will occur on the
maturity date. 
 We will not issue fractional shares of our common stock upon conversion of the Notes. Instead, we will pay
cash in lieu of any fractional share based on the closing sale price of our common stock on the relevant conversion date, in the case of physical settlement, or on the final trading day of the relevant conversion period, in the case of combination
settlement. 
 Conversion Rate Adjustments 
 We will adjust the conversion rate for the following events: 
 (1) If we issue
shares of our common stock as a dividend or distribution on shares of our common stock, or if we effect a share split or share combination, the conversion rate will be adjusted based on the following formula: 

 

					
	 CR1 = CR0 × 
	  	OS1
	  	
		  	OS0	  	

 where, 
  

			
	 CR1 =
	 	the conversion rate in effect immediately after the open of business on the ex-date for such dividend or distribution or the effective date of such share split or combination, as
the case may be;
		
	 CR0 =
	 	the conversion rate in effect immediately prior to the open of business on the ex-date for such dividend or distribution or the effective date of such share split or combination,
as the case may be;
		
	 OS0 =
	 	the number of shares of our common stock outstanding immediately prior to the open of business on the ex-date for such dividend or distribution or the effective date of such
share split or combination, as the case may be; and
		
	 OS1 =
	 	the number of shares of our common stock that would be outstanding immediately after, and solely as a result of, such dividend, distribution, share split or combination, as the
case may be.

 Any adjustment made under this clause (1) shall become effective immediately after the open of
business on the ex-date for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this

  
 36 

 
clause (1) is declared but not so paid or made, the conversion rate shall be immediately readjusted, effective as of the date our board of directors or a committee thereof determines not to
pay such dividend or distribution, to the conversion rate that would then be in effect if such dividend or distribution had not been declared. 
 (2) If we distribute to all or substantially all holders of our common stock any rights, options or warrants entitling them to purchase, for a period of 45 calendar days or less from the declaration date
for such distribution, shares of our common stock at a price per share less than the average closing sale price of our common stock for the ten consecutive trading days immediately preceding, but excluding, the declaration date for such
distribution, the conversion rate will be increased based on the following formula: 
  

					
	 CR1 = CR0 × 
	  	OS0 + X	  	
		  	OS0 + Y	  	

 where, 
  

			
	 CR1 =
	 	the conversion rate in effect immediately after the open of business on the ex-date for such distribution;
		
	 CR0 =
	 	the conversion rate in effect immediately prior to the open of business on the ex-date for such distribution;
		
	 OS0 =
	 	the number of shares of our common stock outstanding immediately prior to the open of business on the ex-date for such distribution;
		
	 X =
	 	the total number of shares of our common stock issuable pursuant to such rights, options or warrants; and
		
	 Y =
	 	the number of shares of our common stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the average closing sale price of
our common stock for the ten consecutive trading days immediately preceding, but excluding, the declaration date for such distribution.

 Any increase made under this clause (2) will be made successively whenever any such rights, options
or warrants are distributed and shall become effective immediately after the open of business on the ex-date for such distribution. To the extent that shares of our common stock are not delivered after the expiration of such rights, options or
warrants, the conversion rate shall be decreased to the conversion rate that would then be in effect had the increase with respect to the distribution of such rights, options or warrants been made on the basis of delivery of only the number of
shares of our common stock actually delivered. If such rights, options or warrants are not so distributed, the conversion rate shall be decreased to the conversion rate that would then be in effect if such ex-date for such distribution had not
occurred. 
 For the purpose of this clause (2) and for the purpose of the first bullet point under “—Conversion
Upon Specified Corporate Transactions,” in determining whether any rights, options or warrants entitle the holders to purchase shares of our common stock at a price per share less than such average closing sale price for the ten consecutive
trading days immediately preceding, but excluding, the declaration date for such distribution, and in determining the aggregate offering price of such shares of our common stock, there shall be taken into account any consideration received by us for
such rights, options or warrants and any amount payable upon exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by our board of directors or a committee thereof. 

(3) If we distribute shares of our capital stock, evidences of our indebtedness, or other of our securities, assets or property to all or
substantially all holders of our common stock, excluding: 
  

	 	•	 	 dividends or distributions as to which adjustment is required to be effected in clause (1) or (2) above; 

 

	 	•	 	 rights issued to all holders of our common stock pursuant to a rights plan, where such rights are not presently exercisable, trade with our common
stock and the plan provides that holders of Notes will receive such rights along with any common stock received upon conversion of Notes; 

  
 37 

	 	•	 	 dividends or distributions paid exclusively in cash, as to which an adjustment is required to be effected in clause (4) below; and

  

	 	•	 	 spin-offs described below in the fourth paragraph of this clause (3); then 

the conversion rate will be increased based on the following formula: 

 

					
	CR1 = CR0
× 	  	SP0
	  	
		  	SP0 – FMV	  	

 where, 
  

			
	 CR1 =
	 	the conversion rate in effect immediately after the open of business on the ex-date for such distribution;
		
	 CR0 =
	 	the conversion rate in effect immediately prior to the open of business on the ex-date for such distribution;
		
	 SP0 =
	 	the average closing sale price of our common stock for the ten consecutive trading days immediately preceding, but excluding, the ex-date for such distribution;
and
		
	 FMV =
	 	the fair market value (as determined by our board of directors or a committee thereof) of the shares of capital stock, evidences of indebtedness, securities, assets or property
distributed with respect to each outstanding share of our common stock immediately prior to the open of business on the ex-date for such distribution.

 Any increase made under the portion of this clause (3) above will become effective immediately after
the open of business on the ex-date for such distribution. If such distribution is not so paid or made, the conversion rate shall be decreased to be the conversion rate that would then be in effect if such distribution had not been declared.

 Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than “SP0” (as defined
above), or if the difference between “SP0” and “FMV” is less than $1.00, in lieu of the foregoing increase, each holder of a Note shall receive, in respect of each $1,000 principal amount thereof, at the same time and upon the
same terms as holders of our common stock without having to convert its Notes, the amount and kind of our capital stock, evidences of our indebtedness or other of our securities, assets or property that such holder would have received as if such
holder owned a number of shares of common stock equal to the conversion rate in effect on the ex-date for the distribution. 

  
 38 

 With respect to an adjustment pursuant to this clause (3) where there has been a
payment of a dividend or other distribution on our common stock in shares of capital stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit of ours that will be, upon distribution, listed on
a U.S. national or regional securities exchange, which is referred to in this offering memorandum as a “spin-off,” the conversion rate will be increased based on the following formula: 

 

					
	 CR1 = CR0 × 
	  	FMV + MP0	  	
		  	MP0	  	

 where, 
  

			
	 CR1 =
	 	the conversion rate in effect immediately after the open of business on the ex-date for the spin-off;
		
	 CR0 =
	 	the conversion rate in effect immediately prior to the open of business on the ex-date for the spinoff;
		
	 FMV =
	 	the average closing sale price of the capital stock or similar equity interest distributed to holders of our common stock applicable to one share of our common stock for the ten
consecutive trading days immediately following the ex-date for such spin-off (such period, the “valuation period”); and
		
	 MP0 =
	 	the average of the closing sale prices of our common stock over the valuation period.

 Any adjustment to the conversion rate under the preceding paragraph of this clause (3) will be made
immediately after the close of business on the last day of the valuation period, but will be given effect as of the open of business on the ex-date for the spin-off. Because we will make the adjustment to the conversion rate at the end of the
valuation period with retroactive effect, we will delay the settlement of any Notes, in the case of cash settlement or combination settlement, where the final day of the related conversion period occurs during the valuation period. In such event, we
will pay or deliver, as the case may be, any cash and shares of our common stock due upon conversion (based on the adjusted conversion rate as described above) on the third business day immediately following the last trading day of the valuation
period. 
 (4) If we pay any cash dividends or distributions exclusively in cash to all or substantially all holders of our
common stock (other than dividends or distributions made in connection with our liquidation, dissolution or winding-up), the conversion rate will be increased based on the following formula: 

 

					
	 CR1 = CR0 × 
	  	SP0
	  	
		  	SP0 – C	  	

 where, 
  

			
	 CR1 =
	 	the conversion rate in effect immediately after the open of business on the ex-date for such dividend or distribution;
		
	 CR0 =
	 	the conversion rate in effect immediately prior to the open of business on the ex-date for such dividend or distribution;
		
	 SP0 =
	 	the average closing sale price of our common stock for the ten consecutive trading days immediately preceding, but excluding, the ex-date for such dividend or distribution;
and
		
	 C =
	 	the amount in cash per share we distribute to holders of our common stock.

 Any increase made under this clause (4) shall become effective immediately after the open of
business on the ex-date for such dividend or distribution. If such dividend or distribution is not so paid, the conversion rate shall be decreased, effective as of the date our board of directors or a committee thereof determines not to make or pay
such dividend or distribution, to be the conversion rate that would then be in effect if such dividend or distribution had not been declared. 

  
 39 

 Notwithstanding the foregoing, if “C” (as defined above) is
equal to or greater than “SP0” (as defined above),
or if the difference between “SP0” and
“C” is less than $1.00, in lieu of the foregoing increase, each holder of a Note shall receive, in respect of each $1,000 principal amount thereof, at the same time and upon the same terms as holders of shares of our common stock without
having to convert its Notes, the amount of cash that such holder would have received as if such holder owned a number of shares of our common stock equal to the conversion rate on the ex-date for such cash dividend or distribution. 

(5) If we or any of our subsidiaries makes a payment in respect of a tender offer or exchange offer for our common stock, to the extent
that the cash and value of any other consideration included in the payment per share of our common stock exceeds the closing sale price of our common stock on the trading day next succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer, the conversion rate will be increased based on the following formula: 
  

					
	 CR1 = CR0 × 
	  	AC + (SP1 × OS1)	  	
		  	OS0 ×
SP1	  	

 where, 
  

			
	 CR1 =
	 	the conversion rate in effect immediately after the close of business on the trading day immediately following the day such tender offer or exchange offer
expires;
		
	 CR0 =
	 	the conversion rate in effect immediately prior to the close of business on the trading day immediately following the day such tender offer or exchange offer
expires;
		
	 AC =
	 	the aggregate value of all cash and any other consideration (as determined by our board of directors or a committee thereof) paid or payable for shares purchased in such tender
or exchange offer;
		
	 SP1 =
	 	the average closing sale price of our common stock for the ten consecutive trading days next succeeding the date such tender or exchange offer expires (the “averaging
period”);
		
	 OS1 =
	 	the number of shares of our common stock outstanding immediately after the close of business on the date such tender or exchange offer expires (adjusted to give effect to the
purchase or exchange of all shares accepted for purchase in such tender offer or exchange offer); and
		
	 OS0 =
	 	the number of shares of our common stock outstanding immediately prior to the close of business on the date such tender or exchange offer expires (prior to giving effect to such
tender offer or exchange offer).

 Any adjustment to the conversion rate under this clause (5) will be made immediately after the close
of business on the last day of the averaging period, but will be given effect as of the open of business on the trading day next succeeding the date such tender offer or exchange offer expires. Because we will make the adjustment to the conversion
rate at the end of the averaging period with retroactive effect, we will delay the settlement of any Notes, in the case of cash settlement or combination settlement, where the final day of the related conversion period occurs during the averaging
period. In such event, we will pay or deliver, as the case may be, any cash and shares of our common stock due upon conversion (based on the adjusted conversion rate as described above) on the third business day immediately following the last day of
the averaging period. 
 Notwithstanding the above, certain listing standards of the New York Stock Exchange may limit the
amount by which we may increase the conversion rate pursuant to the events described in this section and as described in the section captioned “—Adjustment to Conversion Rate Upon a Make-Whole Fundamental Change.” These standards
generally require us to obtain the approval of our stockholders before entering into certain transactions that potentially result in the issuance of 20% or more of our common stock outstanding at the time the Notes are issued unless we obtain
stockholder approval of issuances in excess of such limitations. In accordance with these listing standards, these restrictions will apply at any time when the Notes are outstanding, regardless of whether we then have a class of securities listed on
the New York Stock Exchange. Accordingly, in the event of an 

  
 40 

 
increase in the conversion rate above that which would result in the Notes, in the aggregate, becoming convertible into shares in excess of such limitations, we will, at our option, either obtain
stockholder approval of such issuances or deliver cash in lieu of any shares otherwise deliverable upon conversions in excess of such limitations based on the closing sale price of our common stock on the relevant conversion date, in the case of
physical settlement, or on the volume-weighted average price of our common stock on each trading day of the relevant conversion period in respect of which, in lieu of delivering shares of our common stock, we deliver cash pursuant to this paragraph,
in the case of combination settlement. 
 To the extent that any stockholders’ rights plan (i.e., a poison pill) adopted by
us is in effect upon conversion of the Notes, you will receive, in addition to any common stock due upon conversion, the rights under the applicable rights agreement. However, if, prior to any conversion, the rights have separated from the shares of
our common stock in accordance with the provisions of the applicable stockholders’ rights plan, the conversion rate will be adjusted at the time of separation as if we distributed to all holders of our common stock, shares of our capital stock,
evidences of indebtedness, securities, assets or property as described in clause (3) above, subject to readjustment in the event of the expiration, termination or redemption of such rights. 

We will not make any adjustments to the conversion rate if you participate (other than in the case of a share split or share
combination), without having to convert your Notes, at the same time and upon the same terms as holders of our common stock and as a result of holding the Notes, in any of the transactions described above as if you held a number of shares of common
stock equal to the applicable conversion rate, multiplied by the principal amount (expressed in thousands) of Notes held by you. 
 Except as stated above, we will not adjust the conversion rate for the issuance of our common stock or any securities convertible into or exchangeable for our common stock or carrying the right to
purchase any of the foregoing. 
 “Ex-date” means the first date on which the shares of our common stock trade on the
applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from us or, if applicable, from the seller of our common stock on such exchange or market (in the form of
due bills or otherwise) as determined by such exchange or market, and “effective date” means the first date on which the shares of our common stock trade on the applicable exchange or in the applicable market, regular way, reflecting the
relevant share split or share combination, as applicable. 
 Notwithstanding the foregoing, if a conversion rate adjustment
becomes effective on any ex-date as described above, and a holder that has converted its Notes on or after such ex-date and on or prior to the related record date would be treated as the record holder of shares of our common stock as of the related
conversion date as described under “—Conversion Procedures—Settlement Upon Conversion” based on an adjusted conversion rate for such ex-date, then, notwithstanding the foregoing conversion rate adjustment provisions, the
conversion rate adjustment relating to such ex-date will not be made for such converting holder. Instead, such holder will be treated as if such holder were the record owner of the shares of our common stock on an unadjusted basis and participate in
the related dividend, distribution or other event giving rise to such adjustment. 
 If a taxable distribution to holders of our
common stock or other transaction occurs that results in any adjustment of the conversion rate (including an adjustment at our option), you may, in certain circumstances, be deemed to have received a distribution subject to U.S. income tax as a
dividend. In certain other circumstances, the absence of an adjustment may result in a taxable dividend to the holders of our common stock. See “Certain United States Federal Income and Estate Tax Considerations.” 

We will not be required to make an adjustment to the conversion rate unless the adjustment would require a change of at least 1% to the
conversion rate. However, we will carry forward any adjustment that is less than 1% of the conversion rate, we will take such carried-forward adjustments into account in any subsequent adjustment, and we will make such carried forward adjustments,
regardless of whether the aggregate adjustment is less than 

  
 41 

 
1%, (a) annually on the anniversary of the first date of original issuance of the Notes and otherwise (b)(1) upon conversion of any Notes, (2) with respect to any converted Notes, on
each trading day in any relevant conversion period and (3) immediately prior to any fundamental change repurchase date. 

We are permitted to increase the conversion rate of the Notes by any amount for a period of at least 20 business days if our board of
directors or a committee thereof determines that such increase would be in our best interest. We may also (but are not required to) increase the conversion rate to avoid or diminish income tax to holders of our common stock or rights to purchase
shares of our common stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event. 
 If we adjust the conversion rate pursuant to the above provisions, we will deliver a notice to the trustee and record holders of the Notes containing the relevant information. 

Change in the Conversion Rights Upon Certain Reclassifications, Business Combinations, Asset Sales and Corporate Events

 In the case of: 
  

	 	•	 	 any recapitalization, reclassification or change of our common stock (other than changes resulting from a subdivision or combination),

  

	 	•	 	 any consolidation, merger or combination involving us, 

 

	 	•	 	 any sale, lease or other transfer to a third party of the consolidated assets of us and our subsidiaries substantially as an entirety, or

  

	 	•	 	 any statutory share exchange, 

 in each case, as a result of which our common stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof), then, at and
after the effective time of the transaction, the right to convert each $1,000 principal amount of Notes will be changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other
property or assets (including cash or any combination thereof) that a holder of a number of shares of common stock equal to the conversion rate immediately prior to such transaction would have owned or been entitled to receive (the “reference
property”) upon such transaction. However, at and after the effective time of the transaction (i) we will continue to have the right to determine the form of consideration to be paid or delivered, as the case may be, upon conversion of the
Notes as set forth under “—Conversion Procedures—Settlement Upon Conversion” above and (ii)(x) any amount otherwise payable in cash upon conversion of the Notes as set forth under “—Conversion Procedures—Settlement
Upon Conversion” above will continue to be payable in cash, (y) the number of shares of our common stock, if any, otherwise deliverable upon conversion of the Notes as set forth under “—Conversion Procedures—Settlement Upon
Conversion” above will instead be deliverable in the amount and type of reference property that a holder of that number of shares of our common stock would have received in such transaction and (z) the volume-weighted average price will be
calculated based on the value (determined in a reasonable manner selected in good faith by the Company) of a unit of reference property that a holder of one share of our common stock would have received in such transaction. If the transaction causes
our common stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the reference property into which the Notes will become
convertible will be deemed to be the kind and amount of consideration actually received by holders of a majority of our common stock that voted for such an election (if electing between two types of consideration) or holders of a plurality of our
common stock that voted for such an election (if electing between more than two types of consideration), as the case may be. If the holders of our common stock receive only cash in such transaction, then for all conversions that occur after the
effective date of such transaction (i) the consideration due upon conversion of each $1,000 principal amount of Notes shall be solely cash in an amount equal to the conversion rate in effect on the conversion date (as may be increased by any
additional shares as described under “—Adjustment to Conversion Rate Upon a Make-Whole Fundamental Change”), multiplied by the price paid per share of common stock in such transaction and (ii) we will satisfy our
conversion obligation by paying cash to converting holders on the third business day immediately following the conversion date. We will agree in the indenture not to become a party to any such transaction unless its terms are consistent with the
foregoing. 

  
 42 

 Adjustments ofPrices 

Whenever any provision of the indenture requires us to calculate the closing sale prices, the volume-weighted average price, the daily
conversion values or the daily settlement amounts over, or based on, a span of multiple days (including a conversion period, valuation period or averaging period), we will make appropriate adjustments to each to account for any adjustment to the
conversion rate that becomes effective, or any event requiring an adjustment to the conversion rate where the ex-date of the event occurs, at any time during the period when the closing sale prices, the volume-weighted average prices, the daily
conversion values or the daily settlement amounts are to be calculated. 
 Adjustment to Conversion Rate Upon a Make-Whole
Fundamental Change 
 If and only to the extent you elect to convert your Notes in connection with a fundamental change
described in clause (1), (2) (without giving effect to the proviso in such clause (2)) or (4) under the definition of a fundamental change described below under “—Fundamental Change Put,” which we refer to as a
“make-whole fundamental change,” we will increase the conversion rate as described below. The number of additional shares by which the conversion is increased (the “additional shares”) will be determined by reference to the table
below, based on the date on which the make-whole fundamental change becomes effective (the “effective date”) and the price (the “stock price”) paid (or deemed paid) per share for our common stock in such make-whole fundamental
change. If holders of our common stock receive only cash in any transaction described in clause (2) of the definition of fundamental change, the price paid per share will be the cash amount paid per share. Otherwise, the price paid per share
will be equal to the average of the closing sale prices of our common stock on the five trading days prior to, but excluding, the effective date of such make-whole fundamental change. We will notify holders of the anticipated effective date of any
make-whole fundamental change at least 10 business days prior to such anticipated effective date, to the extent practicable. 

A conversion of the Notes by a holder will be deemed for these purposes to be “in connection with” a make-whole fundamental
change if the conversion date occurs on or following the effective date of the make-whole fundamental change but before the close of business on the business day immediately preceding the related fundamental change repurchase date (as specified in
the notice of a fundamental change described under “—Fundamental Change Put”). 
 Upon surrender of Notes for
conversion in connection with a make-whole fundamental change, we will, at our option, satisfy our conversion obligation by physical settlement, cash settlement or combination settlement, as described under “—Conversion
Procedures—Settlement Upon Conversion.” However, if the consideration received by holders of our common stock in any make-whole fundamental change described in clause (2) of the definition of fundamental change is composed entirely of
cash, for any conversion of Notes following the effective date of such make-whole fundamental change, the conversion settlement amount will be calculated based solely on the “stock price” (as defined above) for the transaction and will be
deemed to be an amount of cash per $1,000 principal amount of converted Notes equal to the conversion rate (including any adjustment as described in this section), multiplied by such stock price. In such event, we will satisfy our conversion
obligation by paying cash to converting holders on the third business day immediately following the conversion date. 
 The
number of additional shares will be adjusted in the same manner and at the same time as any adjustment to the conversion rate as described above under “—Conversion Rate Adjustments.” The stock prices set forth in the first row of the
table below (i.e., the column headers) will be simultaneously adjusted to equal the stock prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the conversion rate immediately prior to the adjustment and
the denominator of which is the conversion rate as so adjusted. 

  
 43 

 The following table sets forth the number of additional shares by which the conversion rate
shall be increased upon conversion in connection with a make-whole fundamental change: 
  

																							
	 	  	Stock Price
	 Effective Date
	  	    $    	  	    $    	  	    $    	  	    $    	  	    $    	  	    $    	  	    $    	  	    $    	  	    $    	  	    $    	  	    $    
	               , 2012
	  		  		  		  		  		  		  		  		  		  		  	
	 March 1, 2013
	  		  		  		  		  		  		  		  		  		  		  	
	 March 1, 2014
	  		  		  		  		  		  		  		  		  		  		  	
	 March 1, 2015
	  		  		  		  		  		  		  		  		  		  		  	
	 March 1, 2016
	  		  		  		  		  		  		  		  		  		  		  	
	 March 1, 2017
	  		  		  		  		  		  		  		  		  		  		  	

 The exact stock price and effective date may not be set forth on the table, in which case, if the stock
price is: 
  

	 	•	 	 between two stock prices on the table or the effective date is between two effective dates on the table, the number of additional shares will be
determined by straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the earlier and later effective dates, as applicable, based on a 360-day year; 

 

	 	•	 	 greater than $          per share (subject to adjustment in the same manner and at the same time as the stock
prices in the table above), the conversion rate will not be increased; or 

  

	 	•	 	 less than $          per share (subject to adjustment in the same manner and at the same time as the stock
prices in the table above), the conversion rate will not be increased. 

 Notwithstanding the foregoing, in no
event will the total number of shares of common stock issuable upon conversion exceed          per $1,000 principal amount of Notes, subject to adjustment in the same manner as the conversion rate. 

Our obligation to deliver additional shares as described above could be considered a penalty, in which case the enforceability thereof
would be subject to general principles of reasonableness and equitable remedies. 
 Notwithstanding the above, certain listing
standards of the New York Stock Exchange may limit the amount by which we may increase the conversion rate pursuant to a make-whole fundamental change as described in this section. These standards generally require us to obtain the approval of our
stockholders before entering into certain transactions that potentially result in the issuance of 20% or more of our common stock outstanding at the time the Notes are issued unless we obtain stockholder approval of issuances in excess of such
limitations. In accordance with these listing standards, these restrictions will apply at any time when the Notes are outstanding, regardless of whether we then have a class of securities listed on the New York Stock Exchange. Accordingly, in the
event of an increase in the conversion rate above that which would result in the Notes, in the aggregate, becoming convertible into shares in excess of such limitations, we will, at our option, either obtain stockholder approval of such issuances or
deliver cash in lieu of any shares otherwise deliverable upon conversions in excess of such limitations based on the closing sale price of our common stock on the relevant conversion date, in the case of physical settlement, or on the
volume-weighted average price of our common stock on each trading day of the relevant conversion period in respect of which, in lieu of delivering shares of our common stock, we deliver cash pursuant to this paragraph, in the case of combination
settlement. 
 Fundamental Change Put 
 If a fundamental change (as defined below) occurs at any time prior to the maturity of the Notes, you will have the right to require us to repurchase, at the repurchase price described below, all or part
of your Notes for which you have properly delivered, and not withdrawn, a written repurchase notice. The Notes submitted for repurchase must be $1,000 in principal amount or whole multiples thereof. 

  
 44 

 The fundamental change repurchase price will be payable in cash and will equal 100% of the
principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. However, if the fundamental change repurchase date is after a record date and on or prior to the
corresponding interest payment date, the full amount of interest due will be paid on the interest payment date to the holder of record on the record date, and the fundamental change repurchase price will be equal to 100% of the principal amount of
Notes to be repurchased. 
 We may be unable to repurchase your Notes for cash upon a fundamental change. Our ability to
repurchase the Notes with cash in the future may be limited by the terms of our then-existing borrowing agreements. In addition, the occurrence of a fundamental change could cause an event of default under the terms of our then-existing borrowing
agreements. We cannot assure you that we would have the financial resources, or would be able to arrange financing, to pay the repurchase price in cash. 
 A “fundamental change” will be deemed to have occurred when any of the following has occurred: 
  

	 	(1)	the consummation of any transaction (other than any transaction described in clause (2) below whether or not the proviso therein applies) the result of which is
that any “person” or “group” becomes the “beneficial owner” (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of our capital stock that is at the
time entitled to vote by the holder thereof in the election of our board of directors (or comparable body); or 

  

	 	(2)	the consummation of (A) any recapitalization, reclassification or change of our common stock (other than changes resulting from a subdivision or combination) as a
result of which our common stock is converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of us pursuant to which our common stock will be converted into cash,
securities or other property; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of us and our subsidiaries, taken as a whole, to any person or group
other than any of our subsidiaries; provided, however, that none of the transactions described in clauses (A), (B) or (C) shall constitute a fundamental change if the holders of more than 50% of our common stock immediately prior to
such transaction own, directly or indirectly, more than 50% of the common equity of the continuing or surviving or transferee entity or any direct or indirect parent thereof immediately after the consummation of such transaction; or

  

	 	(3)	the adoption of a plan relating to our liquidation or dissolution; or 

  

	 	(4)	our common stock (or other common stock or depositary shares or receipts in respect thereof underlying the Notes) ceases to be listed or quoted on any of The New York
Stock Exchange, The NASDAQ Global Select Market, The NASDAQ Global Market or any other national securities exchange or automated quotation system (or any of their respective successors). 

Notwithstanding the foregoing, any transaction or event described in clause (1) or (2) above will not constitute a fundamental
change if, in connection with such transaction or event, or as a result thereof, at least 90% of the consideration paid or exchanged for our common stock (excluding cash payments for fractional shares and cash payments made pursuant to
dissenters’ appraisal rights) consists of shares of common stock or depositary shares or receipts in respect thereof traded on any of The New York Stock Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market or any other national
securities exchange or automated quotation system (or any of their respective successors) (or will be so traded or quoted immediately following the completion of the relevant transaction) and, as a result of such transaction, the Notes become
convertible into cash, reference property comprised of such consideration or a combination of cash and such reference property as described under “—Conversion Rights—Change in the Conversion Rights Upon Certain Reclassifications,
Business Combinations, Asset Sales and Corporate Events” above. 
 The definition of “fundamental change”
includes a phrase relating to the sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of us and our subsidiaries, taken as a whole. Although there is a developing body
of case law interpreting the phrase 

  
 45 

 
“substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require us to repurchase the Notes
as a result of a sale, lease or other transfer of less than all of our assets and those of our subsidiaries, taken as a whole, to another person may be uncertain. 
 On or before the 10th calendar day after the occurrence of a fundamental change, we will provide to all record holders of the Notes on the date of the fundamental change at their addresses shown in the
register of the registrar, the trustee and the paying agent, a written notice of the occurrence of the fundamental change and the resulting repurchase right. Such notice shall state, among other things, the event causing the fundamental change and
the procedures you must follow to require us to repurchase your Notes. 
 The fundamental change repurchase date will be a date
specified by us in the notice of a fundamental change that is not less than 20 nor more than 35 calendar days after the date of such notice of a fundamental change. 
 To exercise your repurchase right, you must deliver, prior to the close of business, on the business day immediately preceding the fundamental change repurchase date, a written notice to the trustee or
paying agent of your exercise of your repurchase right (together with the Notes to be repurchased, if certificated Notes have been issued). The repurchase notice must state: 

 

	 	•	 	 if you hold a beneficial interest in a global Note, your repurchase notice must comply with appropriate DTC procedures; if you hold certificated Notes,
the certificate numbers of the Notes to be repurchased; 

  

	 	•	 	 the portion of the principal amount of the Notes to be repurchased, which must be $1,000 or whole multiples thereof; and 

 

	 	•	 	 that the Notes are to be repurchased by us pursuant to the applicable provisions of the Notes and the indenture. 

You may withdraw your repurchase notice at any time prior to the close of business on the business day immediately preceding the
fundamental change repurchase date by delivering a written notice of withdrawal to the trustee or paying agent. If a repurchase notice is given and withdrawn during that period, we will not be obligated to repurchase the Notes listed in the
repurchase notice. The withdrawal notice must state: 
  

	 	•	 	 if you hold a beneficial interest in a global Note, your withdrawal notice must comply with appropriate DTC procedures; if you hold certificated Notes,
the certificate numbers of the withdrawn Notes; 

  

	 	•	 	 the principal amount of the withdrawn Notes; and 

  

	 	•	 	 the principal amount, if any, which remains subject to the repurchase notice. 

Payment of the fundamental change repurchase price for Notes for which a repurchase notice has been delivered and not withdrawn is
conditioned upon book-entry transfer or delivery of the Notes, together with necessary endorsements, to the trustee or paying agent, as the case may be. Payment of the fundamental change repurchase price for the Notes will be made on the later of
the fundamental change repurchase date and the time of book-entry transfer or delivery of the Notes, as the case may be. 
 If
the trustee or paying agent holds on the fundamental change repurchase date cash sufficient to pay the fundamental change repurchase price of the Notes that holders have elected to require us to repurchase, then, as of the fundamental change
repurchase date: 
  

	 	•	 	 the Notes being repurchased will cease to be outstanding and interest will cease to accrue, whether or not book-entry transfer of the Notes has been
made or the Notes have been delivered to the paying agent, as the case may be; and 

  

	 	•	 	 all other rights of the holders of the repurchased Notes will terminate, other than the right to receive the fundamental change repurchase price upon
delivery or transfer of such Notes. 

  
 46 

 In connection with any repurchase, we will, to the extent applicable: 

 

	 	•	 	 comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act that may be applicable at the time of the
offer to repurchase the Notes, and any such compliance that conflicts with the requirements of the indenture will be deemed to comply with the indenture; 

 

	 	•	 	 file a Schedule TO or any other schedule required under the Exchange Act; and 

 

	 	•	 	 comply with all other federal and state securities laws in connection with our repurchase of the Notes. 

No Notes may be repurchased at your option upon a fundamental change if the principal amount of the Notes has been accelerated, and such
acceleration has not been rescinded, on or prior to the fundamental change repurchase date (except in the case of an acceleration resulting from a default by us in the payment of the fundamental change repurchase price with respect to such Notes).

 This fundamental change repurchase right could discourage a potential acquirer of Stone Energy. However, this fundamental
change repurchase feature is not the result of management’s knowledge of any specific effort to obtain control of us by means of a merger, tender offer, solicitation or otherwise, or part of a plan by management to adopt a series of
anti-takeover provisions. 
 Our obligation to repurchase the Notes upon a fundamental change would not necessarily afford you
protection in the event of a highly leveraged or other transaction involving us that may adversely affect holders. We also could, in the future, enter into certain transactions, including certain recapitalizations, that would not constitute a
fundamental change but would increase the amount of our (or our subsidiaries’) outstanding debt. The incurrence of significant amounts of additional debt could adversely affect our ability to service our then existing debt, including the Notes.

 Consolidation, Merger and Sale of Assets by Stone Energy 
 The indenture will provide that we may not, in a single transaction or a series of related transactions, consolidate with or merge with or into any other person or sell, convey, transfer or lease our
property and assets substantially as an entirety to another person, unless: 
  

	 	•	 	 either (a) we are the surviving or continuing corporation or (b) the resulting, surviving or transferee person (if other than us) is a
corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia and such person assumes, by a supplemental indenture in a form reasonably satisfactory to the trustee, all of our obligations under
the Notes and the indenture; 

  

	 	•	 	 immediately after giving effect to such transaction, no default or event of default has occurred and is continuing under the indenture; and

  

	 	•	 	 we have delivered to the trustee certain certificates and opinions of counsel if so requested by the trustee. 

In the event of any transaction described in and complying with the conditions listed in the immediately preceding paragraph in which
Stone Energy is not the continuing corporation, the successor person formed or remaining shall succeed, and be substituted for, and may exercise every right and power of, Stone Energy, and, except in the case of a lease, Stone Energy shall be
discharged from its obligations under the Notes and the indenture. 
 This covenant includes a phrase relating to the sale,
conveyance, transfer or lease of the property and assets of Stone Energy “substantially as an entirety”. There is no precise, established definition of the phrase “substantially as an entirety” under New York law, which governs
the indenture and the Notes, or under the laws of Delaware, Stone Energy’s state of incorporation. Accordingly, the ability of a holder of the Notes to require us to repurchase the Notes as a result of a sale, conveyance, transfer or lease of
less than all of the property and assets of Stone Energy may be uncertain. 

  
 47 

 An assumption by any person of Stone Energy’s obligations under the Notes and the
indenture might be deemed for U.S. federal income tax purposes to be an exchange of the Notes for new Notes by the holders thereof, resulting in recognition of gain or loss for such purposes and possibly other adverse tax consequences to the
holders. Holders should consult their own tax advisors regarding the tax consequences of such an assumption. 
 Events of Default; Notice and
Waiver 
 The following will be events of default under the indenture: 

 

	 	•	 	 we fail to pay any interest on the Notes when due and such failure continues for a period of 30 calendar days; 

 

	 	•	 	 we fail to pay principal of the Notes when due at maturity, or we fail to pay the fundamental change repurchase price payable in respect of any Notes
when due; 

  

	 	•	 	 we fail to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, as the case
may be, upon the conversion of any Notes and such failure continues for five days following the scheduled settlement date for such conversion; 

  

	 	•	 	 we fail to comply with the covenant set forth above under “—Consolidation, Merger and Sale of Assets by Stone Energy;

  

	 	•	 	 we fail to provide any required notice of any transaction described above under “—Conversion Rights— Conversion Upon Specified Corporate
Transactions” and such failure continues for five calendar days; 

  

	 	•	 	 we fail to provide any required notice of the anticipated effective date or actual effective date of a fundamental change on a timely basis as required
in the indenture and such failure continues for five calendar days; 

  

	 	•	 	 we fail to perform or observe any other term, covenant or agreement in the Notes or the indenture for a period of 60 calendar days after written notice
of such failure is given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the Notes then outstanding; 

 

	 	•	 	 a failure to pay when due (whether at stated maturity or otherwise) or a default that results in the acceleration of maturity, of any indebtedness for
borrowed money of Stone Energy or any of our “significant subsidiaries” (which term shall have the meaning specified in Rule 1-02(w) of Regulation S-X) in an aggregate amount in excess of $20,000,000 (or its foreign currency equivalent),
unless such indebtedness is discharged, or such acceleration is rescinded, stayed or annulled, within a period of 30 calendar days after written notice of such failure is given to us by the trustee or to us and the trustee by the holders of at least
25% in aggregate principal amount of the Notes then outstanding; 

  

	 	•	 	 a final judgment for the payment in excess of $20,000,000 (or its foreign currency equivalent), excluding any amounts covered by insurance, rendered
against us or any of our subsidiaries, which judgment is not discharged or stayed within 30 calendar days after (i) the date on which the right to appeal or petition for review thereof has expired if no such appeal or review has commenced, or
(ii) the date on which all rights to appeal or petition for review have been extinguished; or 

  

	 	•	 	 certain events involving our bankruptcy, insolvency or reorganization or the bankruptcy, insolvency or reorganization of any of our “significant
subsidiaries” (which term shall have the meaning specified in Rule 1-02(w) of Regulation S-X). 

  
 48 

 We are required to notify the trustee promptly upon becoming aware of the occurrence of any
default under the indenture known to us. The trustee is then required within 90 calendar days of becoming aware of the occurrence of any default to give to the registered holders of the Notes notice of all uncured defaults known to it. However, the
trustee may withhold notice to the holders of the Notes of any default, except defaults in payment of principal or interest on the Notes or defaults in the failure to deliver the consideration due upon conversion, if the trustee, in good faith,
determines that the withholding of such notice is in the interests of the holders. We are also required to deliver to the trustee, on or before a date not more than 120 calendar days after the end of each fiscal year, a written statement as to
compliance with the indenture, including whether or not any default has occurred. 
 If an event of default specified in the
last bullet point listed above occurs and continues with respect to us, the principal amount of the Notes and accrued and unpaid interest on the outstanding Notes will automatically become due and payable. If any other event of default occurs and is
continuing, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the principal amount of the Notes and accrued and unpaid interest on the outstanding Notes to be due and payable. Thereupon,
the trustee may, in its discretion, proceed to protect and enforce the rights of the holders of the Notes by appropriate judicial proceedings. 
 After a declaration of acceleration, but before a judgment or decree for payment of the money due has been obtained by the trustee, the holders of a majority in aggregate principal amount of the Notes
outstanding, by written notice to us and the trustee, may rescind and annul such declaration if: 
  

	 	•	 	 we have paid (or deposited with the trustee a sum sufficient to pay) (1) all overdue interest on all Notes; (2) the principal amount of any
Notes that have become due otherwise than by such declaration of acceleration; (3) to the extent that payment of such interest is lawful, interest upon overdue interest; and (4) all sums paid or advanced by the trustee under the indenture
and the reasonable compensation, expenses, disbursements and advances of the trustee, its agents and counsel; and 

  

	 	•	 	 all events of default, other than the non-payment of the principal amount and any accrued and unpaid interest that have become due solely by such
declaration of acceleration, have been cured or waived. 

 The holders of a majority in aggregate principal
amount of the outstanding Notes will have the right to direct the time, method and place of any proceedings for any remedy available to the trustee, subject to limitations specified in the indenture. 

If any portion of the amount payable on the Notes upon such acceleration thereof as described above is considered by a court to be
unearned interest (through the allocation of the value of the instrument to the embedded equity component or otherwise), the court could disallow recovery of any such portion. 
 No holder of the Notes may pursue any remedy under the indenture, except in the case of a default in the payment of principal or interest on the Notes, unless: 

 

	 	•	 	 the holder has given the trustee written notice of an event of default; 

 

	 	•	 	 the holders of at least 25% in aggregate principal amount of the outstanding Notes make a written request to the trustee to pursue the remedy, and
offer reasonable security or indemnity against any cost, liability or expense of the trustee; 

  

	 	•	 	 the trustee fails to comply with the request within 60 calendar days after receipt of the request and offer of indemnity; and

  

	 	•	 	 the trustee does not receive an inconsistent direction from the holders of a majority in aggregate principal amount of the outstanding Notes.

 Notwithstanding the foregoing, the indenture will provide, if we so elect, that the sole remedy for an
event of default relating to the failure to comply with the reporting obligations in the indenture, which are described below under the caption “—Reports,” will, at our option, for the 90 days after the occurrence of such an event of

  
 49 

 
default, consist exclusively of the right to receive additional interest on the Notes at an annual rate equal to 0.50% of the principal amount of the Notes. In the event we do not elect to pay
the additional interest upon an event of default in accordance with this paragraph, the Notes will be subject to acceleration as provided above. This additional interest will be in addition to any additional interest that may accrue as a result of a
registration default as described below under the caption “—No Registration Rights; Additional Interest” and will be payable in the same manner as additional interest accruing as a result of a registration default. The additional
interest will accrue on all outstanding Notes from and including the date on which an event of default relating to a failure to comply with the reporting obligations in the indenture first occurs to, but not including, the 90th day thereafter (or
such earlier date on which the event of default relating to the reporting obligations shall have been cured or waived). On such 90th day, if such event of default is continuing, such additional interest will cease to accrue and the Notes will be
subject to acceleration as provided above. The provisions of the indenture described in this paragraph will not affect the rights of holders of Notes in the event of the occurrence of any other event of default. 

Waiver 

The holders of a majority in aggregate principal amount of the Notes outstanding may, on behalf of the holders of all the Notes, if
certain requirements are satisfied, waive any past default or event of default under the indenture and its consequences, except: 
  

	 	•	 	 our failure to pay principal of or interest on any Notes when due; 

 

	 	•	 	 our failure to convert any Notes into cash, shares of our common stock or a combination of cash and shares of our common stock, as the case may be, as
required by the indenture; 

  

	 	•	 	 our failure to pay the fundamental change repurchase price on the fundamental change repurchase date in connection with a holder exercising its
repurchase rights; or 

  

	 	•	 	 our failure to comply with any of the provisions of the indenture that would require the consent of the holder of each outstanding Note affected.

 Modification 
 Changes Requiring Approval of Each Affected Holder 
 The indenture
(including the terms and conditions of the Notes) may not be modified or amended without the written consent or the affirmative vote of the holder of each Note affected by such change to: 

 

	 	•	 	 change the maturity date of any Notes; 

  

	 	•	 	 reduce the rate or extend the time for payment of interest on any Notes; 

 

	 	•	 	 reduce the principal amount of any Notes; 

  

	 	•	 	 reduce any amount payable upon repurchase of any Notes upon a fundamental change; 

 

	 	•	 	 impair the right of a holder to receive payment with respect to any Notes or institute suit for payment of any Notes; 

 

	 	•	 	 change the currency in which any Note is payable; 

  

	 	•	 	 change our obligation to repurchase any Notes upon a fundamental change in a manner adverse to the holders; 

 

	 	•	 	 affect the right of a holder to convert any Notes into cash, shares of our common stock or a combination of cash and shares of our common stock, as the
case may be, or reduce the number of shares of our common stock or amount of property, including cash, receivable upon conversion pursuant to the terms of the indenture; or 

 

	 	•	 	 reduce the percentage of the Notes required for consent to any modification or waiver of the indenture. 

  
 50 

 Changes Requiring Majority Approval 

The indenture (including the terms and conditions of the Notes) may be modified or amended, except as described above, with the consent or
affirmative vote of the holders of a majority in aggregate principal amount of the Notes then outstanding. 
 Changes
Requiring No Approval 
 The indenture (including the terms and conditions of the Notes) may be modified or amended by us and
the trustee, without the consent of the holder of any Notes, to, among other things: 
  

	 	•	 	 provide for conversion rights of holders of the Notes and our repurchase obligations in connection with a fundamental change and/or in the event of any
events described under “—Conversion Rights—Change in the Conversion Rights Upon Certain Reclassifications, Business Combinations, Asset Sales and Corporate Events”; 

 

	 	•	 	 secure the Notes; 

  

	 	•	 	 provide for the assumption of our obligations to the holders of the Notes in the event of a merger or consolidation, or sale, conveyance, transfer or
lease of our property and assets substantially as an entirety; 

  

	 	•	 	 surrender any right or power conferred upon us; 

  

	 	•	 	 add to our covenants for the benefit of the holders of the Notes; 

 

	 	•	 	 cure any ambiguity or correct or supplement any inconsistent or otherwise defective provision contained in the indenture; provided that such
modification or amendment does not adversely affect the interests of the holders of the Notes in any material respect; provided, further, that any amendment made solely to conform the provisions of the indenture to the description of
the Notes contained in this offering memorandum, as supplemented by the related pricing term sheet, will be deemed not to adversely affect the interests of the holders of the Notes; 

 

	 	•	 	 make any provision with respect to matters or questions arising under the indenture that we may deem necessary or desirable and that shall not be
inconsistent with provisions of the indenture; provided that such change or modification does not adversely affect the interests of the holders of the Notes in any material respect; 

 

	 	•	 	 increase the conversion rate; 

  

	 	•	 	 add guarantees of obligations under the Notes; and 

  

	 	•	 	 provide for a successor trustee. 

 Other 
 The consent of the holders of Notes is not necessary under the
indenture to approve the particular form of any proposed modification or amendment. It is sufficient if such consent approves the substance of the proposed modification or amendment. After a modification or amendment under the indenture becomes
effective, we are required to provide to the holders a notice briefly describing such modification or amendment. However, the failure to give such notice to all the holders, or any defect in the notice, will not impair or affect the validity of the
modification or amendment. 
 Notes Not Entitled to Consent 

Any Notes held by us or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with
us shall be disregarded, to the extent known by a responsible officer of the trustee, (from both the numerator and the denominator) for purposes of determining whether the holders of the requisite aggregate principal amount of the outstanding Notes
have consented to a modification, amendment or waiver of the terms of the indenture. 

  
 51 

 Repurchase and Cancellation 
 We may, to the extent permitted by law, repurchase any Notes in the open market or by tender offer at any price or by private agreement. Any Notes repurchased by us may be surrendered to the trustee for
cancellation, but may not be reissued or resold by us. Any Notes surrendered for cancellation to the trustee may not be reissued or resold and will be promptly cancelled. 
 Rule 144A Information 
 We will, so long as any of the Notes or any shares
of our common stock issuable upon conversion thereof will, at such time, constitute “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, promptly provide to the trustee and we will, upon written request,
provide to any holder, beneficial owner or prospective purchaser of such Notes or any shares of our common stock issuable upon conversion of such Notes the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to
facilitate the resale of such Notes or shares of our common stock pursuant to Rule 144A under the Securities Act (“Rule 144A”). 

Reports 
 We shall
deliver to the trustee, within 15 days after we are required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules
and regulations prescribe) that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The filing of these reports with the SEC through its EDGAR database within the time periods for filing the same under the
Exchange Act (taking into account any applicable grace periods provided thereunder) will satisfy our obligation to furnish those reports to the trustee. 
 Delivery of these reports, information and documents to the trustee is for informational purposes only and the trustee’s receipt of them will not constitute constructive notice of any information
contained therein or determinable from information contained therein, including Stone Energy’s compliance with any of its covenants in this Indenture (as to which the trustee is entitled to rely exclusively on an officers’ certificate).

 Information Concerning the Trustee and Common Stock Transfer Agent and Registrar 

We have appointed The Bank of New York Mellon Trust Company, N.A., the trustee under the indenture, as paying agent, conversion agent,
Notes registrar and custodian for the Notes. The trustee or its affiliates may also provide other services to us in the ordinary course of their business. The indenture contains certain limitations on the rights of the trustee, if it or any of its
affiliates is then our creditor, to obtain payment of claims in certain cases or to realize on certain property received on any claim as security or otherwise. The trustee and its affiliates will be permitted to engage in other transactions with us.
However, if the trustee or any affiliate continues to have any conflicting interest and a default occurs with respect to the Notes, the trustee must eliminate such conflict or resign. The Bank of New York Mellon Trust Company, N.A. acts as trustee
for certain of our outstanding debt securities. 
 Computershare Trust Company, N.A., is the transfer agent and registrar for
our common stock. 
 Governing Law 
 The Notes and the indenture shall be governed by, and construed in accordance with, the laws of the State of New York. 
 No Stockholder Rights for Holders of Notes 
 Holders of Notes, as such, will
not have any rights as stockholders of Stone Energy (including, without limitation, voting rights and rights to receive any dividends or other distributions on our common stock). 

  
 52 

 Notices 
 Except as otherwise provided in the indenture, notices to holders of the Notes will be given by mail to the addresses of holders of the Notes as they appear in the Notes register, or, with respect to
global Notes, to DTC in accordance with its rules and procedures. 
 No Personal Liability of Directors, Officers, Employees and Stockholders

 No director, officer, employee, incorporator, stockholder or partner of Stone Energy, as such, will have any liability for
any obligations of Stone Energy under the Notes or the indenture for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes, by accepting a Note, waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes. 
 Calculations in Respect of the Notes 

Except as otherwise provided herein, we will be responsible for making all calculations called for under the Notes. These calculations
include, but are not limited to, determinations of the closing sale price or volume-weighted average price of our common stock, daily settlement amounts, daily conversion values, accrued interest payable on the Notes and the conversion rate and
conversion price. We or our agents will make all these calculations in good faith and, absent manifest error, such calculations will be final and binding on holders of the Notes. We will provide a schedule of these calculations to each of the
trustee and the conversion agent, and each of the trustee and the conversion agent is entitled to rely upon the accuracy of our calculations without independent verification. The trustee will forward these calculations to any holder of the Notes
upon the request of that holder. 
 Form, Denomination and Registration 

The Notes will be issued: 
  

	 	•	 	 in fully registered form; 

  

	 	•	 	 without interest coupons; and 

  

	 	•	 	 in denominations of $1,000 principal amount and integral multiples of $1,000. 

Global Notes, Book-Entry Form 
 The Notes will be evidenced by one or more global Notes. We will deposit the global Notes with DTC and register the global Notes in the name of Cede & Co., as DTC’s nominee. Except as set
forth below, a global Note may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee. 
 Beneficial interests in a global Note may be held through organizations that are participants in DTC (called “participants”). Transfers between participants will be effected in the ordinary way
in accordance with DTC rules and will be settled in clearing house funds. The laws of some states require that certain persons take physical delivery of securities in definitive form. As a result, the ability to transfer beneficial interests in the
global Notes to such persons may be limited. 
 Beneficial interests in a global Note held by DTC may be held only through
participants or certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a participant, either directly or indirectly (called “indirect participants”). So long as
Cede & Co., as the nominee of DTC, is the registered owner of a global Note, Cede & Co. for all purposes will be considered the sole holder of such global Note. Except as provided below, owners of beneficial interests in a global
Note will: 
  

	 	•	 	 not be entitled to have certificates registered in their names; 

 

	 	•	 	 not receive physical delivery of certificates in definitive registered form; and 

 

	 	•	 	 not be considered holders of the global Note. 

  
 53 

 We will pay principal of and interest on, and the fundamental change repurchase price of, a
global Note to Cede & Co., as the registered owner of the global Note, by wire transfer of immediately available funds on the maturity date, each interest payment date or fundamental change repurchase date, as the case may be. Neither we,
the trustee nor any paying agent will be responsible or liable: 
  

	 	•	 	 for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in a global Note; or

  

	 	•	 	 for maintaining, supervising or reviewing any records relating to the beneficial ownership interests. 

DTC has advised us that it will take any action permitted to be taken by a holder of the Notes, including the presentation of the Notes
for conversion, only at the direction of one or more participants to whose account with DTC interests in the global Notes are credited, and only in respect of the principal amount of the Notes represented by the global Notes as to which the
participant or participants has or have given such direction. 
 DTC has advised us that it is: 

 

	 	•	 	 a limited purpose trust company organized under the laws of the State of New York, and a member of the Federal Reserve System;

  

	 	•	 	 a “clearing corporation” within the meaning of the Uniform Commercial Code; and 

 

	 	•	 	 a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. 

DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes to the accounts of its participants. Participants include securities brokers, dealers, banks, trust companies and clearing corporations and other organizations. Some of the participants or their
representatives, together with other entities, own DTC. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either
directly or indirectly. 
 DTC has agreed to the foregoing procedures to facilitate transfers of interests in a global Note
among participants. However, DTC is under no obligation to perform or continue to perform these procedures and may discontinue these procedures at any time. Notes in physical, fully-registered certificated form will be issued and delivered to each
person that DTC identifies as a beneficial owner of the related Notes only if (i) DTC notifies us at any time that it is unwilling or unable to continue as depositary for the global Notes and a successor depositary is not appointed within 60
days; (ii) DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 60 days; or (iii) an event of default with respect to the Notes has occurred and is continuing and DTC
requests that the Notes be issued in physical, certificated form. 
 Neither we, the trustee, registrar, paying agent nor
conversion agent will have any responsibility or liability for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. 

Restrictions on Transfer, Legends 
 The Notes and any shares of common stock that are issued upon conversion will be subject to certain restrictions on transfer, as described below under “Transfer Restrictions.” The Notes and
share certificates will bear a legend regarding such transfer restrictions. 
 No Registration Rights; Additional Interest 

We will not file a shelf registration statement for the resale of the Notes or any shares of common stock issuable upon conversion of the
Notes. As a result, you may only resell your Notes or such common stock pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. 

  
 54 

 Under Rule 144 as currently in effect, a person who acquired Notes from us or our affiliate
and who has beneficially owned Notes or shares of our common stock issued upon conversion of the Notes for at least one year is entitled to sell such Notes or shares of our common stock without registration, but only if such person is not deemed to
have been our affiliate at the time of, or at any time during three months preceding, the sale. Furthermore, under Rule 144, a person who acquired Notes from us or our affiliate and who has beneficially owned Notes or shares of our common stock
issued upon conversion of the Notes for at least six months is entitled to sell such Notes or shares of our common stock without registration, so long as (i) such person is not deemed to have been our affiliate at the time of, or at any time
during three months preceding, the sale and (ii) we have filed all required reports under Section 13 or 15(d) of the Exchange Act, as applicable, during the twelve months preceding such sale (other than current reports on Form 8-K). If we
are not current in filing our Exchange Act reports, a person who acquires from us or our affiliate Notes or shares of our common stock issued upon conversion of the Notes could be required to hold such Notes or shares of our common stock for up to
one year following such acquisition. If we are not current in filing our Exchange Act reports, a person who is our affiliate and who owns Notes or shares of our common stock issued upon conversion of the Notes could be required to hold such Notes or
shares of our common stock indefinitely. 
 If, at any time during the six-month period beginning on, and including, the date
that is six months after the last date of original issuance of the Notes, we fail to timely file any document or report that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, as applicable (after giving
effect to all applicable grace periods thereunder and other than reports on Form 8-K), or the Notes are not otherwise freely tradable by holders other than our affiliates or persons that were our affiliates during the immediately preceding three
months as a result of restrictions pursuant to U.S. securities law or the terms of the indenture or the Notes, we will pay additional interest on the Notes. Additional interest will accrue on the Notes at the rate of 0.50% per annum of the
principal amount of Notes outstanding for each day during such period for which our failure to file has occurred and is continuing. 
 Further, if, and for so long as, the restrictive legend on the Notes has not been removed or otherwise made inapplicable or the Notes are not freely tradable by holders other than our affiliates or
persons that were our affiliates during the immediately preceding three months (without restrictions pursuant to U.S. securities law or the terms of the indenture or the Notes) as of the 366th day after the last date of original issuance of the
Notes, we will pay additional interest on the Notes at a rate equal to 0.50% per annum of the principal amount of Notes outstanding until the Notes are freely tradable as described above. We will agree to use our reasonable best efforts to get
the Notes assigned an unrestricted CUSIP as of the 366th day after the last date of original issuance of the Notes. 
 We cannot
assure you that we will be able to remove the restrictive legend from the Notes or from any shares of our common stock issued upon conversion of the Notes. 
 Any Note or common stock issued upon the conversion or exchange of a Note that is repurchased or owned by any affiliate of us may not be resold by such affiliate unless registered under the Securities Act
or resold pursuant to an exemption from the registration requirements of the Securities Act in a transaction that results in such Note or common stock, as the case may be, no longer being a “restricted security” (as defined in Rule 144).
We will cause any Note that is repurchased or owned by us to be surrendered to the trustee for cancellation as described under “—Repurchase and Cancellation” above. 

The Notes will be issued with a restricted CUSIP number. 
 Additional interest pursuant to the foregoing provisions will be payable in arrears on each interest payment date following accrual in the same manner as regular interest on the Notes and will be in
addition to any additional interest that may accrue at our election as the sole remedy relating to the failure to comply with our reporting obligations as described under “—Events of Default; Notice and Waiver.” 

  
 55Fuel Tech, Inc. Form of Revised Restricted Stock Unit Agreement

 Exhibit 4.9 
 RESTRICTED STOCK UNIT AGREEMENT 
 This Restricted Stock Unit
Agreement (the “Agreement”) is hereby entered into effective as of             , 2012 (the “Award Date”), by and between Fuel Tech, Inc. (the “Company”), and
                     (the “Participant”). Any term capitalized but not defined in this Agreement will have the meaning set forth in the
Fuel Tech, Inc. Incentive Plan, as amended (the “Plan”). 
 1. Award of Restricted Stock Units. In accordance
with the terms of the Plan and subject to the terms and conditions of this Agreement, the Company hereby awards the Participant                     
Restricted Stock Units (“RSUs”), effective as of the Award Date. Each vested RSU entitles the Participant to receive one share of the Company’s common stock (a “Share”) on the Participant’s Distribution Date (as defined
below). The value of the Share on the Participant’s Distribution Date will be the Fair Market Value Per Share. 
 2.
Vesting of RSUs. All RSUs awarded to the Participant will vest according to the following schedule: 
 (a)
one-third of the RSUs awarded shall vest on the first anniversary of the Award Date, provided that Participant’s status as a Participant under this Agreement has not terminated before that date; 

(b) an additional one-third of the RSUs awarded shall vest on the second anniversary of the Award Date, provided that
Participant’s status as a Participant under this Agreement has not terminated before that date; and 
 (c) a
final one-third of the RSUs awarded shall vest on the third anniversary of the Award Date, provided that Participant’s status as a Participant under this Agreement has not terminated before that date. 

Notwithstanding the foregoing, the Participant’s outstanding, unvested RSUs shall immediately vest upon a Change of Control of the Company in
accordance with the Plan. If the Participant’s status as a Participant under this Agreement terminates before the lapse of vesting restrictions on the RSUs because the Participant dies or becomes Totally Disabled, then effective the earlier
date of either such event, as applicable, all then unvested RSUs shall be forfeited. 
 3. Termination of Status as
Participant. Upon the termination of Participant’s status as a Participant under this Agreement (e.g., termination of employment with the Company), 

(a) The Participant will forfeit any RSUs that have not vested under Section 2 above; and 

(b) The Company will distribute to the Participant Shares equal to the number of RSUs already vested regardless of whether
or not the Participant had elected to defer under Section 4 below. 
 Notwithstanding anything in this Agreement to the
contrary, if the Participant’s status as a Participant under this Agreement (e.g., termination of employment with the Company) terminates for Cause (as defined below), the Participant shall forfeit all RSUs that have not vested under
Section 2 above and all RSUs that the Participant has elected to defer under Section 4 below. 
 4. Deferral of
Award. The Participant may elect to defer the receipt of Shares beyond the vesting date of the underlying RSUs shown in Section 2 above. Any deferral period must be expressed as a number of whole years, not less than five (5) or more
than ten (10), beginning on the Award Date. If a 

 
Participant elects a deferral period but thereafter Participant’s status as a Participant terminates after the RSU vests but before the elected deferral period expires, then, subject to the
forfeiture provisions of Sections 3 and 8, share distribution for the Participant’s vested RSUs will occur within thirty (30) days after the date the Participant’s status as such terminates. This deferral period will apply only to
deferral elections made on the Company’s then-current Deferral Election Form. Any such deferral election shall apply to receipt of all Shares underlying the entire Award; for example, a deferral period of seven (7) years would result in
the Participant receiving Shares underlying the entire Award seven (7) years from the Award Date regardless of the fact that the RSUs may have vested at differing times. 
 5. Distribution of Shares. As soon as practicable after the Participant’s Distribution Date, the Company may either (i) issue to the Participant or the Participant’s personal
representative a Share certificate or (ii) deposit Shares with an online broker or other service provider contracted by the Company for such purpose, subject to Section 8 below and compliance to the satisfaction of the Committee with all
requirements under applicable laws or regulations in connection with such issuance and with the requirements hereof and of the Plan. The Company will pay to the Participant in cash an amount in lieu of any fractional RSU, based on the Fair Market
Value Per Share of the Shares. Until such time as Shares have been issued to the Participant under this Section, the Participant shall not have any rights as a holder of the Shares underlying this Award including but not limited to voting rights or
dividends, if and when the Company declares same. RSUs represent only hypothetical Shares and, therefore, the Participant is not entitled to any of the rights or benefits generally accorded to stockholders with respect thereto. 

6. Changes in Capital or Corporate Structure. In the event of any change in the outstanding shares of common stock of the Company
by reason of a recapitalization, reclassification, reorganization, stock split, reverse stock split, combination of shares, stock dividend or similar transaction, the Committee or Board, as applicable, shall proportionately adjust, in a manner
deemed equitable by the Committee or Board, as applicable, in its sole discretion, the number of RSUs held by the Participant under this Agreement, in accordance with the Plan. 

7. Nontransferability. RSUs awarded under this Agreement, and any rights and privileges pertaining thereto, may not be
transferred, assigned, pledged or hypothecated in any manner, by operation of law or otherwise, other than by will or by the laws of descent and distribution, and shall not be subject to execution, attachment or similar process. 

8. Non-Competition and Non-Solicitation Restrictive Covenants. In order to protect the Confidential Information (as defined
below), customer relationships, and other legitimate business interests of the Company, during the Participant’s status as such under this Agreement and for twelve (12) months following the termination of his or her status as a Participant
under this Agreement (e.g., termination of employment with the Company), the Participant will not, directly or indirectly, as an employee, agent, member, director, partner, consultant or contractor or in any other individual or representative
capacity: (a) solicit any Protected Individual (as defined below) for other employment or engagement, induce or attempt to induce any Protected Individual to terminate his or her employment, hire or engage any Protected Individual, or otherwise
interfere or attempt to interfere in any way in the relationship between the Company and such Protected Individual; or (b) solicit or provide competitive products or services to any Customer (as defined below) or Prospective Customer (as
defined below) or otherwise interfere or attempt to interfere in any way in the relationship between the Company and any Customer or Prospective Customer. Because the Company’s business is global in scope, the Participant understands and agrees
that these restrictions apply worldwide. 
 The Participant agrees that in the event of a breach or threatened breach of any of
the covenants contained in this Section 8, in addition to any other penalties or restrictions that may apply under any employment agreement, state law, or otherwise, the Participant shall forfeit, upon written notice to such

  
 - 2 -

 
effect from the Company: (i) any and all RSUs awarded granted to him or her under the Plan and this Agreement, including vested RSUs or Shares; (ii) any Shares acquired under this
Award, and (iii) any profit the Participant has realized on the vesting or sale of any Shares acquired under this Award, which Participant may be required to repay to the Company). The forfeiture provisions of this Section 8 shall continue
to apply, in accordance with their terms, after the provisions of any employment or other agreement between the Company and the Participant have lapsed. The Participant consents and agrees that if the Participant violates or threatens to violate any
provisions of this Section 8, the Company or its successors in interest shall be entitled, in addition to any other remedies that they may have, including money damages, to an injunction to be issued by a court of competent jurisdiction
restraining the Participant from committing or continuing any violation of this Section 8. In the event that the Participant is found to have breached any provision set forth in this Section 8 or elsewhere in this Agreement, the time
period provided for in that provision shall be deemed tolled (i.e., it will not begin to run) for so long as the Participant was in violation of that provision. 
 9. Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns.

 10. Tax Consequences and Withholding. Nothing contained herein shall be construed as a promise, guarantee, or other
representation by the Company of any particular tax effect nor shall the Company be liable for any taxes, penalties, or other amounts incurred by the Participant. The Company may withhold from any Shares that it is required to deliver under this
Agreement the number of Shares sufficient to satisfy applicable withholding requirements under any applicable federal, state, local or foreign law, rule or regulation if any. The Participant acknowledges that he/she has had sufficient opportunity to
review with his/her own tax advisors the federal, state, local, and foreign tax consequences of the transactions contemplated by the Award Agreement. The Participant acknowledges he/she must rely solely on such advisors and not on any statement or
representations of the Company or any of its agents. The Participant understands that he/she (and not the Company) shall be responsible for any tax liability that may arise as a result of the transactions contemplated by the Agreement. 

11. No Limitation on the Company’s Rights. The granting of RSUs shall not in any way affect the Company’s right or power
to make adjustments, reclassifications or changes in its capital or business structure or to merge, consolidate, reincorporate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

12. Plan and Agreement Not a Contract of Employment or Service. Neither the Plan nor this Agreement is a contract of
employment or service, and no terms of the Participant’s employment or service will be affected in any way by the Plan, this Agreement or related instruments, except to the extent specifically expressed therein. Neither the Plan nor this
Agreement will be construed as conferring any legal rights to the Participant to continue in service with the Company or any subsidiary or affiliate thereof. 
 13. Entire Agreement and Amendment. This Agreement is the entire Agreement between the parties to it, and all prior oral and written representations are merged in this Agreement. This Agreement may
be amended, modified or terminated only by written agreement between the Participant and the Company, provided, that the Company may amend this Agreement without further action by the Participant if such amendment is deemed by the Company to be
advisable or necessary to comply with Code Section 409A. The headings in this Agreement are inserted for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent, or intent of this
Agreement or any provision hereof. Each party has cooperated in the preparation of this Agreement. As a result, this Agreement shall not be construed against any party on the basis that the party was the draftsperson. 

  
 - 3 -

 14. Notices. Notices given pursuant to this Agreement shall be in writing and shall
be deemed received when personally delivered, or on the date of written confirmation of receipt by (i) overnight carrier, (ii) facsimile, (iii) registered or certified mail, return receipt requested, addressee only, postage prepaid,
or (iv) such other method of delivery that provides a written confirmation of delivery. Notice to the Company shall be directed to: 
 Fuel Tech, Inc. 
 27601 Bella Vista Parkway 

Warrenville, Illinois 60555 
 Attention: General Counsel 
 The Company may change the person and/or address to which the
Participant must give notice under this Section 14 by giving the Participant written notice of such change, in accordance with the procedures described above. Notices to or with respect to the Participant will be directed to the Participant, or
to the Participant’s executors, personal representatives or distributees, if the Participant is deceased, or the assignees of the Participant, at the Participant’s most recent home address on the records of the Company. 

15. Compliance with Laws. No certificate for Shares distributable pursuant to the Plan or this Agreement shall be issued and
delivered unless the issuance of such certificate complies with all applicable legal requirements including, without limitation, compliance with the provisions of applicable state securities laws, the Securities Act of 1933, as amended from time to
time or any successor statute, the Exchange Act and the requirements of the exchanges on which Shares may, at the time, be listed, and the provisions of any foreign securities laws or the rules of foreign securities exchanges, where applicable.

 16. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provision of the Agreement
shall in no way be construed to be a waiver of such provision or of any other provision hereof. 
 17. Incorporation of the
Plan. The Plan, as it exists on the date of the Agreement and as amended from time to time, is hereby incorporated by reference and made a part hereof, and the Award and the Agreement shall be subject to all terms and conditions of the Plan. In
the event of any conflict between the provisions of the Agreement and the provisions of the Plan, the terms of the Plan shall control, except as expressly stated otherwise. 
 18. Governing Law. The laws of the State of New York shall govern the validity, interpretation, construction, and performance of this Agreement, without regard to the conflict of laws principles
thereof. 
 19. Code Section 409A. It is intended that this Agreement and the Plan be designed and operated within
the requirements of Code Section 409A (including any applicable exemptions) and, in the event of any inconsistency between any provision of the Plan or Agreement and Section 409A, the provisions of Section 409A shall control. Any
provision in the Plan or Agreement that is determined to violate the requirements of Section 409A shall be void and without effect. Any provision that is required by Section 409A to appear in the Plan or Agreement that is not expressly set
forth therein shall be deemed to be set forth therein, and the Plan shall be administered in all respects as if such provision was expressly set forth herein. Any reference in the Plan or Agreement to Section 409A or a Treasury Regulation
Section shall be deemed to include any similar or successor provisions thereto. 
 (a) Each Award is intended to
be exempt from Code Section 409A under the short-term deferral exception set forth in Code Section or, in the alternative, to comply with the requirements of Section 409A. 

  
 - 4 -

 (b) Notwithstanding anything in the Plan or Agreement to the contrary, if
the Participant should become subject to the 6-month delay rule of Treasury Regulation Section 1.409A-1(c)(3)(v), then to the extent that an Award is subject to Section 409A and the Participant is a Specified Employee (as defined below) as
of the date of Separation from Service (as defined below), distributions with respect to any RSUs that have been deferred may not be made before the date that is six (6) months after the date of Separation from Service or, if earlier, the date
of the Participant’s death. 
 20. Counterparts. This Agreement may be executed in one or more counterparts, all of
which together shall constitute but one Agreement. 
 21. Definitions. Where used in this Agreement, the following
capitalized terms shall have the following meanings: 
 (a) “Cause” shall have the meaning set forth in
any employment, consulting, or other written agreement between the Participant and the Company. In addition, if there is no employment, consulting, or other written agreement between the Company and the Participant or if such agreement does not
define “Cause” to the extent provided for below then for purposes of this Agreement, “Cause” both thereunder and under this Agreement shall mean, as determined by the Committee in its sole judgment, conviction of the Participant
under, or a plea of guilty by the participant to any state or federal felony charge (or the equivalent thereof outside of the United States); any instance of fraud, embezzlement, self-dealing, insider trading or similar malfeasance with respect to
the Company or its affiliates regardless of amount; substance or alcohol abuse; or other conduct for which dismissal has been identified in the Company’s Code of Business Ethics and Conduct or the applicable Employee Handbook of the Company or
its affiliates, or any successor manual, as a potential disciplinary measure. 
 In addition, the
Participant’s employment or service shall be deemed to have terminated for Cause if, after the Participant’s employment or service has terminated, facts and circumstances are discovered that would have justified a termination for Cause.
For purposes of this Plan, no act or failure to act on the Participant’s part shall be considered “willful” unless it is done, or omitted to be done, by him or her in bad faith or without reasonable belief that his or her action or
omission was in the best interests of the Company. 
 (b) “Confidential Information” means any
information (whether or not specifically labeled or identified as “confidential”), in any form or medium, that is disclosed to, developed, or learned by the Participant during his/her status as a Participant, that relates to the business,
services, techniques, know-how, processes, methods, formulations, investments, finances, operations, plans, research or development of the Company, and that is not generally known outside of the Company. Confidential Information includes, but is not
limited to: the identity and information concerning the needs and preferences of current, former, and prospective customers; performance, compensation, and other personnel data concerning employees of the Company; business plans and strategies;
plans for recruiting and hiring new personnel; trade secrets; and pricing strategies and policies. Confidential Information does not include the general skills, knowledge, and experience gained during the Participant’s status as a Participant
and common to others in the industry or information that is or becomes publicly available without any breach by the Participant of this Agreement. The Participant agrees that at all times both during this Agreement and after his/her status as a
Participant under this Agreement terminates, the Participant will not, without the Company’s express written permission, use Confidential Information for the Participant’s own benefit or the benefit of any other person or entity or
disclose Confidential Information to any person other than (i) in the case of disclosures made while the Participant maintained his/her status as such hereunder, to persons to whom disclosure

  
 - 5 -

 
is required in connection with the performance of Participant’s duties for the Company or (ii) any disclosure requested by a court or regulatory authority with jurisdiction over the
subject matter, in which event Participant agrees promptly to notify the Company in advance of and cooperate with the Company in any efforts to suppress or limit such disclosure. 

(c) “Customer” means any Person (as defined below) who or which is or was a customer of the Company and with
whom the Participant had business contact during his or her tenure as a Participant hereunder or about whom the Participant received Confidential Information; provided that a former customer will only be considered a “Customer” for twelve
(12) months after the last date on which the Company provided products or services (including, without limitation, marketing services, as determined by the Company in its sole discretion) to such Person. 

(d) “Distribution Date” means the date on which the Shares represented by vested RSUs shall be deemed to be
distributed to the Participant, which is the date on which an RSU vests; provided that, the Distribution Date for a Participant who elects to defer the distribution of his or her Shares will be the earlier of (i) the date the Participant’s
status as a Participant under this Agreement terminates or (ii) the end of the deferral period specified by the Participant. 
 (e) “Person” means an individual or any type of business entity. 
 (f) “Prospective Customer” means any Person, other than a Customer, toward whom or which the Company directed specific and material business development efforts, such as, but not limited to, a
detailed proposal or bid, and with whom the Participant had business contact during his or her tenure as a Participant hereunder or about whom the Participant received Confidential Information; provided that such Person will only be considered a
“Prospective Customer” for twelve (12) months after the last date on which such efforts were undertaken by the Company. 
 (g) “Protected Individual” means an individual who is or was an employee, consultant or advisor of the Company and with whom the Participant had business contact at any time during the
Participant’s employment or other retention by the Company or about whom the Participant received Confidential Information ; provided that such a former employee, consultant or advisor will only be considered a “Protected Individual”
for six (6) months after the last date he or she was employed by or provided services to the Company. 
 (h)
“Restricted Stock Unit” or “RSU” means a notional account established pursuant to an Award granted to a Participant under this Agreement, which is (i) valued solely by reference to Shares, (ii) subject to restrictions
specified in the Agreement, and (iii) payable only in Shares. 
 (i) “Separation from Service”
shall have the meaning given in Code Section 409A, and references to termination of employment shall be deemed to refer to a Separation from Service. In accordance with Treasury Regulation §1.409A-1(h)(1)(ii) (or any similar or successor
provisions), a Separation from Service shall be deemed to occur, without limitation, if the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform after a certain date (whether as an
employee or as an independent contractor) will permanently decrease to less than fifty percent (50%) of the average level of bona fide services provided in the immediately preceding thirty-six (36) months. All references in this Agreement
to “termination of employment” or “employment termination” or “termination of status as a Participant under this Agreement” shall be deemed to refer to a Separation from Service. 

  
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 (j) “Specified Employee” has the meaning given to that term in
Code Section 409A and Treasury Regulation §1.409A-1(i) (or any similar or successor provisions). 

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date
first above written. 
  

							
		 		 	FUEL TECH, INC.
				
	  
	 		 	By:	 	  

	PARTICIPANT	 		 		 	
		 		 	Its:	 	  

  
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 RESTRICTED STOCK UNIT AGREEMENT 

DEFERRAL ELECTION FORM 
 This Restricted stock Unit (“RSU”) Award Agreement Deferral Election Form (“Deferral Election Form”) is entered into by and between Fuel Tech, Inc. (the “Company”) and
                     (the “Participant”), who received an Award of RSUs under the Fuel Tech, Inc. Incentive Plan, as amended (the
“Plan”) and a Restricted Stock Unit Agreement (the “Agreement”), which Agreement was legally effective [insert date of RSU Agreement]. The provisions of the Plan and the Agreement are incorporated herein by reference in
their entirety and supersede any conflicting provisions contained in this Deferral Election Form. Neither this Deferral Election Form nor the Plan or the Agreement shall be construed as giving Participant any right to continue to be employed by or
perform services for the Company or any subsidiary or affiliate thereof. 
  

	1.	Deferral of Restricted stock Units  

 Any deferral period must be expressed as a number of whole years, not less than five (5) or more than ten (10), beginning on the Award Date. 
 Deferral election must be made within thirty (30) days of the Award Date. 
 Any
such deferral must apply to receipt of all Shares underlying the entire Award; for example, a deferral period of seven (7) years would result in the Participant receiving Shares underlying the entire Award seven (7) years from the
Award Date regardless of the fact that the RSUs may have vested at differing times. 
 If no deferral period is specified on the Deferral
Election Form or if the Company does not receive from Participant, her/his signed and dated Deferral Election Form within the required election period, Shares will be issued as described in the Agreement as soon as practicable upon vesting of the
RSUs. 
  

	 	 ̈	No deferral. I wish to receive Shares upon vesting of each installment of RSUs. 

 

	 	 ̈	I wish to defer receipt of all Shares until          years (minimum of 5) after the Award Date.

  

	2.	Deferral Election Effective Date, Revision of Election During Election Period  

This Deferral Election Form must be received by the Company no later than thirty (30) days after the Award Date set forth in the
Agreement, i.e.,                     , and will become irrevocable on such date. The Participant may revise this Deferral Election with respect to
the deferral period no later than such due date, by contacting the Vice President, Corporate Controller of the Company in writing in accordance with the Notice provision set forth in Section 14 of the Agreement. 

 

			
	  

	PARTICIPANT
		
	Date:

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