OCEAN ENERGY, INC.
OUTSIDE DIRECTORS DEFERRED FEE PLAN
(As Amended and Restated Effective March 30, 1999)
1. History and Purposes of the Plan
The Ocean Energy, Inc. Outside Directors Deferred Fee Plan ("Plan") was
originally adopted on May 16, 1983 by Ocean Energy, Inc., a Texas
corporation (the "Company"), formerly known as Seagull Energy Corporation
and Seagull Pipeline Corporation, and is intended to provide a method for
attracting and retaining qualified outside directors for the Company and to
encourage them to devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its shareholders.
Effective as of March 30, 1999 (the "Effective Date"), the Company merged
the Ocean Energy, Inc. Outside Directors Fee Plan (the "OEI Plan") with and
into the Plan and amended and restated the Plan in order to reflect the
plan merger and the merger of Ocean Energy, Inc., a Delaware corporation
("OEI") with and into Seagull Energy Corporation.
2. Administration of the Plan
Except as otherwise specifically provided herein, the Plan shall be
administered by a committee (the "Committee") appointed by the Board of
Directors of the Company (the "Board") or such other committee designated
from time to time by the Board. The Committee is authorized to interpret
the Plan and may from time to time adopt such rules and regulations,
consistent with the provisions of the Plan, as it may deem advisable to
carry out the Plan. All decisions made by the Committee shall be final. All
expenses incurred in connection with the administration of the Plan shall
be borne by the Company. In certain cases arising under the Plan, action or
approval must be taken by either the full Board or by a committee of
"Non-Employee Directors" as described in Rule 16b-3 promulgated by the
Securities Exchange Commission (such board or committee being referred to
herein as the "Rule 16b-3 Committee")
3. Participation in the Plan
(a) Participation. Each outside director who was a participant in the Plan
("Participant") or the OEI Plan on the Effective Date shall remain a
Participant in this restatement of the Plan as of the Effective Date. Each
other director shall be eligible to become a Participant on date he becomes
an outside director. For purposes of this Paragraph, an "outside director"
is an individual who is a validly elected or appointed director of the
Company and who does not perform any services for the Company in a
common-law employee capacity.
(b) Deferral of Director's Fees. A Participant may elect to defer director's
fees (whether annual, periodic or special) to be earned by such Participant
for services rendered under the Plan by filing with the Committee an
election to defer receipt of all or a designated portion of such fees.
(c) Time and Manner of Making Elections. Any deferral election that may be made
by a Participant under the Plan shall be made with respect to the period
commencing on January 1 (or, if later, the date the Participant is first
elected or appointed to the Board) and ending on December 31 of each year
("Service Period") during which services are rendered by such Participant
and must be made prior to the first day of such Service Period; provided,
however, that the deferral election with respect to a Participant's initial
Service Period may be made no later than thirty days after the date the
Participant is first elected or appointed to the Board and shall be
prospective only. All deferral elections shall be made in the manner and
form prescribed by the Committee. Deferral elections made prior to the
Effective Date with respect to the Service Period that includes the
Effective Date shall remain in effect for the remainder of such Service
Period.
(d) Nature of Elections. A Participant's election to defer receipt of all or a
designated portion of his fees for a Service Period shall continue in force
and effect for future Service Periods unless modified or revoked by such
Participant. Any such modification or revocation shall be effective only as
of the first day of a Service Period and must be made prior to the first
day of such Service Period. A modification or revocation of an existing
deferral election shall be made in the manner and form prescribed by the
Committee. Any deferral election (whether in the nature of an initial
election, an unrevised continuing election or a revised continuing
election) with respect to a Service Period shall be irrevocable as of the
first day of such Service Period or, if later, the day following the last
day upon which an election may be made with respect to a Service Period.
4. Crediting of Deferred Fees to Plan Accounts
(a) Establishment of Plan Accounts. The Committee shall establish a memorandum
bookkeeping account or accounts (the "Plan Accounts") for each Participant
in the Plan. As of the Effective Date, a Participant's Required Deferral
Account and Elective Deferral Account shall be combined into a single Plan
Account. The Committee shall credit to each Participant's Plan Accounts the
Participant's deferred fees as of the date such fees are earned by the
Participant.
(b) Crediting of Interest Equivalents. As of the last day of each calendar
quarter in which a Participant has a balance credited to his Plan Accounts,
the Committee shall, subject to the other provisions of this Section 4,
credit to each Participant's Plan Accounts, as additional deferred fees, a
dollar amount equal to simple interest on the amounts credited to each such
Account (excluding any amounts being credited during such quarter) computed
at the sum of:
(1) the prime rate published in The Wall Street Journal on the last
business day of such calendar quarter, plus
(2) a rate based upon the number of complete years that Participant has
served on the Board (including service on the board of directors of
any predecessor of the Company or OEI), in accordance with the
following schedule:
Number of Years Additional Rate of Interest
Less than 5 0% 5 but less than 10 1% 10 or more 2%
(c) Alternative Investment in Stock Units.
(1) In lieu of having his Plan Accounts credited with interest equivalents
pursuant to Paragraph (b) above, a Participant may elect from time to
time in accordance with the provisions of Paragraphs (d) and (e) below
to have all or a portion of the value of such Plan Accounts determined
as if it had been credited with a number of shares of stock (the
"Phantom Stock") equal to the number of shares of common stock of the
Company, par value $.10 per share, that could have been purchased with
such portion of his Accounts on the date of such election, or for
amounts that are subsequently credited to the Participant's Plan
Accounts, on the date so credited, at a price per share equal to the
average of the closing prices of the common stock of the Company on
the twenty trading days preceding such date.
(2) As of the last day of each calendar quarter and as of any other date
that the Committee shall determine, the Committee shall redetermine
the value of each Participant's Plan Accounts that are credited with
Phantom Stock based upon the increase or decrease in the value of the
common stock of the Company during such quarter. For the purpose of
such redetermination, one share of Phantom Stock shall be deemed to be
the equivalent of one share of common stock of the Company. Further,
the portion of each Participant's Plan Accounts that are credited with
such Phantom Stock shall be credited with the amount of any cash
dividends paid with respect to the common stock of the Company during
such quarter in accordance with Paragraph (c)(1) above.
(3) If, and whenever, the Company shall effect a subdivision or
consolidation of the common stock of the Company or the payment of a
stock dividend on the common stock of the Company (i) in the event of
an increase in the number of outstanding shares of the common stock of
the Company, the number of shares of Phantom Stock credited to each
Participant's Plan Accounts shall be proportionately increased and
(ii) in the event of an reduction in the number of outstanding shares
of the common stock of the Company, the number of shares of Phantom
Stock credited to each Participant's Plan Accounts shall be
proportionately reduced.
(d) Crediting Election. In accordance with procedures established by the
Committee, prior to the first day of any calendar quarter in which a
Participant has a balance credited to his Plan Accounts, but in no event
within six months of any election pursuant to Paragraph (e) below, a
Participant may elect to have all or a portion of the amounts in his Plan
Accounts deemed invested in Phantom Stock pursuant to Paragraph (c) above
for all of such quarter. Any such election shall be effective until revoked
by the Participant as provided in Paragraph (e) below. If a Participant
fails to make any election under this Paragraph, his Plan Accounts shall be
credited with interest equivalents pursuant to Paragraph (b) above.
(e) Revocation of Election. In accordance with procedures established by the
Committee, prior to the first day of any calendar quarter in which a
Participant has a balance credited to his Plan Accounts, but in no event
within six months of any election pursuant to Paragraph (d) above, a
Participant may revoke an election made pursuant to Paragraph (d) above
with respect to all or a portion of his Plan Accounts, effective as of the
first day of such quarter. The value, as determined as of the last day of
the quarter immediately preceding the effective date of such election
pursuant to Paragraph (c) above, of the portion of his Plan Accounts that
is affected by such revocation shall, as of such first day, be credited
with interest equivalents pursuant to Paragraph (b) above.
(f) Invalid Elections. An election pursuant to Paragraph (d) or Paragraph (e)
above that is attempted within six months of an election made pursuant to
the other Paragraph in violation of the prohibitions of such Paragraphs
shall have no force or effect and shall be null and void.
5. Payment of Deferred Fees
(a) Payment Election Generally. A Participant shall elect, subject to the
provisions of Paragraphs (b), (c) and (d) below, the time (which may not be
prior to the latest of (i) the date on which he ceases to be a member of
the Board, (ii) the date on which he ceases to be a member of the Senior
Advisory Council to the Board or (iii) the date that is at least six months
from the date of the Participant's last election, if any, pursuant to
Section 4(d) above) and the mode (which may either be a lump sum payment or
monthly, quarterly, or annual installment payments over a specified term
certain) for payment of amounts credited to his Plan Accounts during a
Service Period (and the income credited thereto). A Participant may revise
his election regarding the time and mode of payment of amounts credited to
his Plan Accounts only if, and at such time as, such revised election is
approved by a Rule 16b-3 Committee; provided, however, that such revised
election shall not be effective until the later of (A) the January 1
following the date such revised election is approved or (B) the date that
is six months after the date such revised election is approved. In the
absence of direction by a Participant regarding the time or mode of payment
of amounts credited to his Plan Accounts during a Service Period (and the
income credited thereto), such amounts shall be distributed in monthly
installments over a period of ten years, beginning on the first day of the
first month after the later of (i) the date on which he ceases to be a
member of the Board or (ii) the date on which he ceases to be a member of
the Senior Advisory Council to the Board.
(b) Payment Upon Death. In the event of a Participant's death, the balance of
such Participant's Plan Accounts, computed as of the date of his death,
shall be paid in one lump sum to his designated beneficiary within the
first four months following the date of such Participant's death. A
Participant, by written instrument filed with the Committee in such manner
and form as it may prescribe, may designate one or more beneficiaries to
receive payment of the amounts credited to his Plan Accounts in the event
of his death. Any such beneficiary designation may be changed from time to
time prior to the death of the Participant. In the absence of a beneficiary
designation on file with the Committee at the time of a Participant's
death, the executor or administrator of the Participant's estate shall be
deemed to be his designated beneficiary.
(c) Payment Upon Plan Termination. In the event the Plan is terminated by the
Company, the balance of each Participant's Plan Accounts, computed as of
the day immediately following the six-month anniversary of the date of such
Plan termination, shall be paid to such Participant in one lump sum as soon
as practicable after such date.
(d) Payment Upon Change of Control. With respect to any Participant that ceases
to be a director of the Company (or any successor) as a result of or in
connection with a change of control that is not approved, recommended and
supported by at least two-thirds of the directors that were also directors
prior to the occurrence of any such change of control in actions taken
prior to, and with respect to, such change of control, such Participant's
Plan Accounts, computed as of the later of the date such Participant ceases
to be a director of the Company or the date of such change of control,
shall be paid to such Participant in one lump sum as soon as practicable,
but no later than thirty days following such date. For purposes of the
Plan, "change of control" shall be deemed to have occurred if (i) any
person (other than Participant or the Company) including a "group" as
determined in accordance with Section 13(d)(3) of the Securities Exchange
Act of 1934, becomes the beneficial owner of shares of the Company having
40% or more of the total number of votes that may be cast for the election
of directors; or (ii) as a result of, or in connection with, any cash
tender or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were directors before the
Transaction shall cease to constitute a majority of the Board or any
successor thereto. The determinations of whether a change of control has
occurred, whether such change of control was not approved, recommended or
supported by the Directors in actions taken prior to, and with respect to,
such change of control and whether any Participant ceased to be a director
of the Company as a result of or in connection with such change of control
shall be made by the Committee as existing at least six months prior to the
occurrence of such change of control and its determination shall be final.
(e) Conversion of Plan Accounts for Purposes of Payment.
(1) If a Participant has elected to receive payment of his Plan Accounts
in a lump sum pursuant to Paragraph (a) above, the value of his Plan
Accounts shall be determined as of the last day of the month preceding
the time that he has elected to receive such payment and an amount
equal to such value shall be paid to the Participant. To the extent
such Participant has elected to have his Plan Accounts credited based
on Phantom Stock pursuant to Paragraph 4(d), the value of his Plan
Accounts shall be based upon the average of the closing prices of
common stock of the Company on the twenty trading days preceding such
date.
(2) If a Participant has elected to receive payment of his Plan Accounts
in any mode other than lump sum pursuant to Paragraph (a) above, to
the extent his Plan Accounts are being credited with Interest
Equivalents pursuant to Paragraph 4(b), the value of his Plan Accounts
shall be determined as of the last day of the month preceding the date
of any such payment and each subsequent interval thereafter, and an
amount equal to the value of such Plan Accounts multiplied by a
fraction, the numerator of which is one and the denominator of which
is the remaining number of payments that the Participant elected,
shall be paid as of each interval such Participant elected; provided,
however, that any such amounts remaining credited to such
Participant's Plan Accounts shall continue to be credited with
Interest Equivalents pursuant to Paragraph 4(b), except that the
Interest Equivalents so credited shall be paid directly to the
Participant. If a Participant has elected to receive payment of his
Plan Accounts in a mode other than a lump sum pursuant to Paragraph
(a) above, to the extent his Plan Accounts are credited based on
Phantom Stock pursuant to Paragraph 4(d), the number of shares of
Phantom Stock credited to his Plan Accounts shall be determined as of
the last day of the month preceding the date of any such payment and
each subsequent interval thereafter, and such number shall be
multiplied by a fraction, the numerator of which is one and the
denominator of which is the remaining number of payments that the
Participant elected, and an amount equal to the value of the resulting
number of shares of Phantom Stock, based upon the average of the
closing prices of common stock of the Company on the twenty trading
days preceding such date, shall be paid to such Participant.
(3) If Paragraphs (b), (c) or (d) above apply, the value of a
Participant's Plan Accounts shall be determined as of the date
specified in the applicable Paragraph and an amount equal to such
value shall be paid to the Participant or his designated beneficiary;
provided, however, that if the Participant has elected to have his
Plan Accounts credited based on Phantom Stock pursuant to Paragraph
4(d), the value of his Plan Accounts shall be based upon the average
of the closing prices of common stock of the Company on the twenty
trading days preceding such date.
(f) Form of Payment. All payments under the Plan shall be solely in the form of
cash. Without limiting the generality of the foregoing, nothing in the Plan
shall be construed as giving any Participant any rights as a holder of
common stock or any other equity security of the Company as a result of
such Participant's participation in this Plan or his election to credit his
Plan Accounts with Phantom Stock.
(g) Debiting of Plan Accounts. Once an amount has been paid to a Participant or
his beneficiary, such amount or the Phantom Stock equivalent thereof shall
be debited from the Participant's Plan Accounts.
(h) Six-Month Payment Delay. Notwithstanding any of the foregoing provisions of
this Section 5 to the contrary, no payments to a Participant under this
Plan shall be made or commenced prior to the expiration of six months from
the making of any election pursuant to Paragraph 4(d) above, unless such
payments are made on account of the death, disability, retirement or
termination of employment of the Participant within the meaning of Rule
16b-3 promulgated by the Securities Exchange Commission.
6. Distributions for Unforseeable Emergency
In the event the Rule 16b-3 Committee, in its sole discretion, determines
that a Participant has an unforseeable emergency, the Rule 16b-3 Committee
may direct that such portion of the amounts credited to a Participant's
Plan Accounts as it determines is reasonably needed to satisfy such
unforseeable emergency be paid to the Participant in one lump sum payment
as soon as practicable following the Rule 16b-3 Committee's determination
of the existence and extent of such unforseeable emergency. For purposes of
this Paragraph 6, a unforseeable emergency shall mean severe financial
hardship to a Participant that arises from a sudden and unexpected illness
or accident of the Participant or of a dependent of a Participant, loss of
the Participant's property due to casualty, or similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of such Participant. Further, no payment may be made pursuant to
this Paragraph 6 to the extent such severe financial hardship may be
relieved (i) through reimbursement or compensation by insurance or
otherwise, (ii) by liquidation of the Participant's assets, to the extent
the liquidation of such assets would not itself cause severe financial
hardship, or (iii) by cessation of deferrals under the Plan. For purposes
of this Paragraph 6, the purchase of a house or education expenses for
children, shall not be considered to be unforseeable emergencies. The
decision of the Rule 16b-3 Committee regarding the existence or
nonexistence of an unforseeable emergency of a Participant shall be final
and binding. The Rule 16b-3 Committee shall have the authority to require a
Participant to provide such proof as it deems necessary to establish the
existence and nature of the Participant's unforseeable emergency. The
foregoing notwithstanding, a Participant who is a member of the Rule 16b-3
Committee shall not participate in the deliberations or decision of the
Rule16b-3 Committee regarding a hardship distribution to such Participant.
7. Prohibition Against Assignment or Encumbrance
No right, title, interest or benefit hereunder shall ever be liable for or
charged with any of the torts or obligations of a Participant or a person
claiming under a Participant, or be subject to seizure by any creditor of a
Participant or any person claiming under a Participant. No Participant or
any person claiming under a Participant shall have the power to anticipate
or dispose of any right, title, interest or benefit hereunder in any manner
until same shall have been actually distributed free and clear of the terms
of the Plan.
8. Nature of the Plan
The Plan and any election agreements executed thereunder constitute an
unfunded, unsecured liability of the Company to make payments in accordance
with the provisions hereof, and neither a Participant nor any person
claiming under the Participant shall have any security or other interest in
any specific assets of the Company by virtue of this Plan. Neither the
establishment of the Plan, the crediting of amounts to Plan Accounts nor
the setting aside of any funds shall be deemed to create a trust. The
Company at its election may fund the payment of benefits under the Plan by
setting aside and investing, in an account on the Company's books, such
funds as the Company may from time to time determine. Legal and equitable
title to any funds so set aside shall remain in the Company, and no
Participant shall have any security or other interest in such funds. Any
funds so set aside shall remain subject to the claims of the creditors of
the Company, present and future.
9. Amendment and Termination of Plan
The Company shall have the right to alter or amend the Plan or any part
thereof from time to time, except the Company shall not make any alteration
or amendment that would impair the rights of a Participant with respect to
amounts theretofore credited to that Participant's Plan Accounts. The
Company may terminate the Plan at any time. If not sooner terminated under
the provisions of this paragraph, the Plan shall terminate as of the date
on which all amounts theretofore credited to Plan Accounts have been paid.
10. No Tax Guarantee
Neither the Plan nor any representation made in connection with it shall be
construed to be an assurance or guarantee of a deferral of income for
income tax purposes of any amount to be paid pursuant to the Plan.
11. Number and Gender
Wherever appropriate herein, words used in the singular shall be considered
to include the plural, and words used in the plural shall be considered to
include the singular. The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender.
12. Laws Governing
The Plan and any documents executed in connection therewith shall be
construed in accordance with and governed by the laws of the State of
Texas.
OCEAN ENERGY, INC.
By: ______________________
Name: ______________________
Title: ______________________
VEHOU02:138559.1