Energy Partners Ltd. Schedule 13D

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M3oyiMGNwfkVhAtQZS56gm3VcQZORfngXLl52z6qjwiCMTQ44oT48yfcOcvnixfB ptjsHP6nddobaNlf/jrJLw== 0000950162-06-000744.txt : 20060630 0000950162-06-000744.hdr.sgml : 20060630 20060630163952 ACCESSION NUMBER: 0000950162-06-000744 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20060630 DATE AS OF CHANGE: 20060630 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: STONE ENERGY CORP CENTRAL INDEX KEY: 0000904080 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 721235413 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-60825 FILM NUMBER: 06938255 BUSINESS ADDRESS: STREET 1: 625 E KALISTE SALOOM RD CITY: LAFAYETTE STATE: LA ZIP: 70508 BUSINESS PHONE: 3182370410 MAIL ADDRESS: STREET 1: 625 E KALISTLE SALOOM RD CITY: LAFAYETTE STATE: LA ZIP: 70508 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ENERGY PARTNERS LTD CENTRAL INDEX KEY: 0000750199 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 721409562 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 201 ST CHARLES AVENUE CITY: NEW ORLEANS STATE: LA ZIP: 70170 BUSINESS PHONE: 5045691875 MAIL ADDRESS: STREET 1: 201 ST CHARLES AVENUE CITY: NEW ORLEANS STATE: LA ZIP: 70170 SC 13D 1 epl13d_063006.htm ENERGY PARTNERS LTD. SCHEDULE 13D - 06/30/06 Energy Partners Ltd. Schedule 13D - 06/30/06

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. )*

STONE ENERGY CORPORATION

(Name of Issuer)

Common Stock, par value $.01 per share

(Title of Class of Securities)

861642106

(CUSIP Number)

John H. Peper

Executive Vice President, General

Counsel and Corporate Secretary

Energy Partners, Ltd.

201 St. Charles Avenue, Suite 3400

New Orleans, Louisiana 70170

Tel. No.: (504) 569-1875

Copies to:

John Schuster, Esq.

Cahill Gordon & Reindel llp

80 Pine Street

New York, New York 10005

(212) 701-3000

(Name, Address and Telephone Number of Person Authorized toReceive Notices and Communications)

June 22, 2006

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g) check the following box o.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

1.	NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY).

Energy Partners, Ltd. 72-1409562

2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) o

60; (b) x

3.	SEC USE ONLY

4.	SOURCE OF FUNDS

See Item 3, below.

5.	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o

6.	CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

7.	SOLE VOTING POWER

100

8.	SHARED VOTING POWER

2,026,015¹

9.	SOLE DISPOSITIVE POWER

100

10.	SHARED DISPOSITIVE POWER

2,026,015¹

11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

2,026,115¹

12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) o

¹ ^{EPL
expressly disclaims beneficial ownership of
any shares of Stone common stock covered by the Voting
Agreement.}

13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

7.3²

14.	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

² ^{EPL
expressly disclaims beneficial ownership of any shares of Stone common stock
covered by the Voting Agreement.}

ITEM 1. Security and Issuer

This statement relates to the common stock, par value $.01 per share of Stone Energy Corporation, a Delaware corporation (the “Issuer” or “Stone”). The Issuer has its principal executive offices at 625 E. Kaliste Saloom Road, Lafayette, Louisiana 70508.

ITEM 2. Identity and Background

(a) - (c) This statement on Schedule 13D is being filed by Energy Partners, Ltd., a Delaware corporation (“EPL”). The address of the principal office and business of EPL is 201 St. Charles Avenue, Suite 3400, New Orleans, Louisiana 70170. EPL is an independent oil and natural gas exploration and production company based in New Orleans, Louisiana. The name, business address, present principal occupation or employment and citizenship of each director and executive officer of EPL is set forth on Schedule A hereto and is incorporated by referenced herein.

(d) - (e) During the last five years, neither EPL nor, to the best of its knowledge, any of the persons listed on Schedule A hereto have been (i) convicted in a criminal proceeding, (excluding traffic violations or similar misdemeanors) or (ii) a party to any civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) The citizenship of each of the persons specified in Instruction C of Schedule 13D is set forth on Schedule A hereto and is incorporated herein by reference.

ITEM 3. Source and Amount of Funds

In order to induce EPL to enter into the Agreement and Plan of Merger (the “Merger Agreement”) dated June 22, 2006, among Stone, EPL Acquisition Corp. LLC, a Delaware corporation and a wholly owned subsidiary of EPL (“Merger Sub”), and EPL, certain Stone stockholders listed on Schedule B hereto (each a “Stockholder” and collectively, the “Stockholders”) entered into a Voting Agreement (the “Voting Agreement”), dated June 22, 2006, with EPL with respect to certain shares of Stone common stock beneficially owned by the Stockholders (the “Shares”). EPL has not paid additional consideration to the Stockholders in connection with the execution and delivery of the Voting Agreement. For a description of the Voting Agreement, see “Item 4. Purpose of Transaction” below, which description is incorporated herein by reference in response to this Item 3. The Voting Agreement is filed as Exhibit 1, and the Merger Agreement is filed as Exhibit 2.

ITEM 4. Purpose of the Transaction

(a) - (b) Pursuant to the Merger Agreement, Stone will merge with and into Merger Sub (the “Merger”). The consummation of the transaction contemplated by the Merger Agreement is subject to the satisfaction or waiver of several closing conditions, including the approval of the stockholders of Stone and EPL.

EPL entered into the Voting Agreement with the Stockholders whereby each Stockholder shall, including by executing a written consent solicitation if requested by EPL, vote (or cause to be voted) the Shares: (a) in favor of the Merger, the adoption by Stone of the Merger Agreement and the approval of the terms thereof and each of the other Transactions and (b) against any transaction agreement, matter or Target Acquisition Proposal (as defined in the Merger Agreement) that would impede, interfere with, delay, postpone or attempt to discourage the Merger and the Merger Agreement. The Stockholders also agreed not to Transfer (as defined in the Voting Agreement) any Covered Security (as defined in the Voting Agreement), grant any proxy with respect to the Subject Shares (as defined in the Voting Agreement), or deposit the Subject Shares into a voting trust. These transfer restrictions do prohibit a Transfer by a Stockholder of any Covered Security to an affiliate of such Stockholder, a cashless exercise of options, or a pledge of the Pledged Shares (as defined in the Voting Agreement) in accordance with Section 1(a)(iv) of the Voting Agreement.

(d) Not Applicable

(e) Not Applicable

(f) Immediately after giving effect to the consummation of the transactions contemplated in the Merger Agreement, Stone’s current business will be operated by EPL through Merger Sub.

(g) In connection with the Merger Agreement, Stone’s Board of Directors approved an Amendment No. 3 to the Rights Agreement (“Amendment No. 3”), which amended the Rights Agreement, dated as of October 15, 1998, as amended by Amendment No. 1 to the Rights Agreement, dated as of October 28, 2000, and Amendment No. 2 to the Rights Agreement, dated as of April 23, 2006 (“Rights Agreement”), between Stone and the Rights Agent in order to, among other things, (a) provide that as a result of the execution of the Merger Agreement or the consummation of the transactions contemplated thereby, neither the Rights (as defined in the Rights Agreement) will become exercisable nor will any operative provision of the Rights Agreement apply to EPL, Merger Sub or any of their respective Affiliates or Associates (as defined in the Rights Agreement); (b) amend the definition of “Acquiring Person” in Section 1 of the Rights Agreement to provide that neither EPL, Merger Sub nor any of their

respective Affiliates or Associates (as defined in the Rights Agreement) shall be deemed to be an Acquiring Person as a result of the announcement or execution of the Merger Agreement, the acquisition of Common Shares (as defined in the Rights Agreement) of Stone, or the consummation of the merger or the other transactions contemplated thereby; (c) amend the definition of “Final Expiration Date” in Section 1 of the Rights Agreement to provide that such date means the earlier of (i) the time immediately prior to the Effective Time (as defined in the Merger Agreement) and (ii) the close of business on September 30, 2008; and (d) amend Section 3(a) of the Rights Agreement to provide that none of the announcement or execution of the Merger Agreement, the acquisition of the Common Shares of Stone pursuant to the merger, or the consummation of the merger or the other transactions contemplated thereby, shall constitute a Distribution Date (as defined in the Rights Agreement) or a Shares Acquisition Date (as defined in the Rights Agreement). Amendment No. 3 is filed as Exhibit 3.

(h) - (j) Not applicable.

Except as indicated in this statement on Schedule 13D, EPL has no specific plans or proposals that relate to or would result in any change to the matters described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

The foregoing summary of the Voting Agreement, the Merger Agreement and Amendment No. 3 is qualified in its entirety by reference to the Voting Agreement, the Merger Agreement and Amendment No. 3, which are filed as Exhibits 1, 2 and 3, respectively.

ITEM 5. Interest in Securities of the Issuer

(a) - (b) Prior to June 22, 2006, EPL was the beneficial owner, for purposes of Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange Act”), of 100 shares of Stone common stock.

As a result of entering into the Voting Agreement, EPL may be deemed to have the power to vote, and to be the beneficial owner of, 2,026,015 shares of common stock, representing approximately 7.3% of Stone’s outstanding common stock. According to representations made by Stone in the Merger Agreement, the number of shares of common stock outstanding as of June 22, 2006 was 27,738,764 (before giving effect to common stock issuable upon exercise of options or warrants exercisable within 60 days). The foregoing beneficial ownership calculations are based upon the representations of Stone and the Stockholders in the Merger Agreement and Voting Agreement, respectively.

Notwithstanding the foregoing, however, EPL (i) is not entitled to any rights as a stockholder of Stone with respect to the Shares and (ii) has no power to vote, direct the voting of, dispose of, or direct the disposal of, any of the Shares other than the power provided

pursuant to the Voting Agreement. EPL does not own any Shares. EPL hereby disclaims beneficial ownership of the Shares, and nothing contained in this statement on Schedule 13D shall be construed as an admission that any such person is, for the purposes of Section 13(d) or 13(g) of the Exchange Act or otherwise, the beneficial owner of any Shares covered by this Schedule 13D.

(c) Except as described herein, there have been no transactions in shares of the Stone common stock by EPL, or, to the best of its knowledge, by any of the persons listed on Schedule A hereto, during the past sixty (60) days.

(d) - (e) Not applicable.

ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Other than the matters set forth herein in response to Items 3 and 4 above, EPL is not, and, to the best of EPL’s knowledge, none of the persons listed in Schedule A hereto are, a party to any contracts, arrangements, understandings or relationships (legal or otherwise) with respect to any securities of Stone, including, but not limited to, the transfer or voting of any of the securities, finder’s fees, joint ventures, loan or option agreements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies.

ITEM 7. Materials to Be Filed as Exhibits

Exhibit 1		Voting Agreement dated as of June 22, 2006 by and among Energy Partners, Ltd., Stone Energy Corporation, James H. Stone, David H. Welch, John P. Laborde, Peter K. Barker, George R. Christmas, Richard A. Pattarozzi, David R. Voelker, Raymond B. Gary, Robert A. Bernhard, B. J. Duplanits and Kay G. Priestly.

Exhibit 2		Agreement and Plan of Merger dated June 22, 2006, by and among Energy Partners, Ltd., EPL Acquisition Corp. LLC, and Stone Energy Corporation (incorporated by reference to EPL’s Current Report on Form 8-K filed on June 22, 2006).

Exhibit 3		Amendment No. 3 to the Rights Agreement, between Stone Energy Corporation and ChaseMellon Shareholder Services, L.L.C., as rights agent, amending the Rights Agreement, dated as of October 15, 1998, as amended by Amendment No. 1 to the Rights Agreement, dated as of October 28, 2000, and Amendment No. 2 to the Rights Agreement, dated as of April 23, 2006.

SCHEDULE A

INFORMATION CONCERNING EXECUTIVE OFFICERS AND DIRECTORS

OF ENERGY PARTNERS, LTD.

Set forth below is the name, title, business address and citizenship of each director and executive officer of EPL.


Name	Title	Business Address	Citizenship

Richard A. Bachmann	Chairman and Chief Executive Officer	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

John C. Bumgarner, Jr.	Director	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

Jerry D. Carlisle	Director	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

Harold D. Carter	Director	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

Enoch L. Dawkins	Director	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

Norman C. Francis	Director	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

Robert D. Gershen	Director	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

Phillip A. Gobe	Director and President, Chief Operating Officer	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.


William R. Herrin, Jr.	Director	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

William O. Hiltz	Director	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

John G. Phillips	Director	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

T. Rodney Dykes	Senior Vice President — Production	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

Javan Ottoson	Senior Vice President —Drilling	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

John H. Peper	Executive Vice President, General Counsel and Corporate Secretary	201 St. Charles Avenue, Suite 3400 New Orleans, Louisiana 70170	U.S.

SCHEDULE B

STOCKHOLDERS OF STONE ENERGY CORPORATION

Set forth below is the name and title of the Stone stockholders party to the Voting Agreement.


Name		Title

James H. Stone		Chairman of the Board; Director

David H Welch		President and Chief Executive Officer; Director

John P. Laborde		Director

Peter K. Barker		Director

George R. Christmas		Director

Richard A. Pattarozzi		Director

David R. Voelker		Director

Raymond B. Gary		Director

Robert A. Bernhard		Director

B. J. Duplanits		Director

Kay G. Priestly		Director

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: June 30, 2006

ENERGY PARTNERS, LTD.

By: /s/ John H. Peper

John H. Peper

Executive Vice President, General

Counsel and Corporate Secretary

EXHIBIT INDEX

Exhibit 1		Voting Agreement dated as of June 22, 2006 by and among Energy Partners, Ltd., Stone Energy Corporation, James H. Stone, David H. Welch, John P. Laborde, Peter K. Barker, George R. Christmas, Richard A. Pattarozzi, David R. Voelker, Raymond B. Gary, Robert A. Bernhard, B. J. Duplanits and Kay G. Priestly.

Exhibit 2		Agreement and Plan of Merger dated June 22, 2006, by and among Energy Partners, Ltd., EPL Acquisition Corp. LLC, and Stone Energy Corporation (incorporated by reference to EPL’s Current Report on Form 8-K filed on June 22, 2006).

Exhibit 3		Amendment No. 3 to the Rights Agreement, between Stone Energy Corporation and ChaseMellon Shareholder Services, L.L.C., as rights agent, amending the Rights Agreement, dated as of October 15, 1998, as amended by Amendment No. 1 to the Rights Agreement, dated as of October 28, 2000, and Amendment No. 2 to the Rights Agreement, dated as of April 23, 2006.

EX-1 2 ex_1.htm EXHIBIT 1 Unassociated Document

Exhibit 1

VOTING AGREEMENT (Parent)

VOTING AGREEMENT (this “Agreement”) dated as of June 22, 2006, by and among Energy Partners, Ltd., a Delaware corporation (“Parent”), Stone Energy Corporation, a Delaware corporation (“Target”), James H. Stone, David H. Welch, Peter K. Barker, Robert A. Bernhard, George R. Christmas, B.J. Duplantis, Raymond B. Gary, John P. Laborde, Richard A Pattarozzi, Kay G. Priestly, and David R. Voelker (each of Messrs. Stone, Welch, Barker, Bernhard, Christmas, Duplantis, Gary, Laborde, Pattarozzi and Voelker, and Ms. Priestly, a “Stockholder” and collectively, the “Stockholders”).

WHEREAS, each Stockholder desires that Target, Parent and EPL Acquisition Corp. LLC, a Delaware limited liability company and wholly-owned subsidiary of Parent (“Merger Sub”), enter into an Agreement and Plan of Merger dated the date hereof (the “Merger Agreement”; undefined capitalized terms herein are defined in the Merger Agreement) providing for the merger of Merger Sub with and into Target upon the terms and subject to the conditions set forth in the Merger Agreement (the “Merger”);

WHEREAS, each Stockholder is executing this Agreement as an inducement to Parent to enter into and execute the Merger Agreement; and

WHEREAS, concurrently with the execution and delivery of this Agreement, Target is entering into a voting agreement with certain Parent stockholders under which such parties have, among other things, agreed to support the Merger upon the terms and conditions set forth therein.

NOW, THEREFORE, in consideration of the execution and delivery by Target of the Merger Agreement and the mutual covenants, conditions and agreements contained herein and therein, the parties agree as follows:

1. Representations and Warranties.

(a) Each Stockholder severally represents and warrants to Parent as follows:

(i) Such Stockholder is the record and beneficial owner of that number of shares of capital stock of Target set forth opposite such Stockholder’s name on Schedule A (together with any other shares of other capital stock of Target acquired after the date hereof, including through the exercise of any stock options, warrants or similar instruments, being collectively referred to herein as the “Subject Shares”) and the other securities exercisable or exchangeable for such capital stock listed on Schedule A (the “Other Securities” and, together with the Subject Shares, the “Covered Securities”). The Subject Shares constitute the only shares, with respect to which such Stockholder is the record or beneficial owner, of capital stock of Target or options, warrants or other rights (whether or not contingent) to acquire such shares of capital stock of Target that are or may be entitled to vote on the Merger or the Merger Agreement at any meeting of Target’s Stockholders called to vote upon the Merger or the Merger Agreement. Such Stockholder has the sole right to vote and Transfer (as defined herein) the Covered Securities set forth opposite its name on Schedule A, and none of such Covered Securities is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting or the Transfer of the Subject Shares, except (A) as provided by

this Agreement (it being understood that any pledge of the Pledged Shares (as defined below) shall not be a breach of this representation) and (B) those arising under applicable securities laws. Such Stockholder has all requisite power and authority, and, if such Stockholder is a natural person, the legal capacity, to enter into this Agreement and to perform its obligations hereunder. To the extent that such Stockholder is an entity and not an individual, such Stockholder is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. The execution and delivery of this Agreement by such Stockholder and the performance by such Stockholder of its obligations hereunder have been duly authorized by all necessary action on the part of such Stockholder. This Agreement has been duly executed and delivered by, and constitutes a valid and binding agreement of, such Stockholder, enforceable against such Stockholder in accordance with its terms, except as enforcement may be limited by the Enforceability Exceptions.

(ii) Neither the execution and delivery of this Agreement nor the performance by such Stockholder of its obligations hereunder will result in a violation of, or a default under, or conflict with, (A) if such Stockholder is an entity, any provision of its certificate of incorporation, bylaws, partnership agreement, limited liability company agreement or similar organizational documents, (B) any contract, trust, commitment, agreement, understanding, arrangement or restriction of any kind (other than as may relate to the Pledged Shares but subject to the proviso set forth in (iv) below) to which such Stockholder is a party or bound or to which the Covered Securities are subject, except, in the case of clause (B), as would not prevent, delay or otherwise materially impair such Stockholder’s ability to perform its obligations hereunder. Execution, delivery and performance of this Agreement by such Stockholder will not violate, or require any consent, approval or notice under, any provision of any judgment, order, decree, statute, law, rule or regulation applicable to such Stockholder or the Covered Securities, except (x) for any reports under Sections 13(d) and 16 of the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby or (y) as would not reasonably be expected to prevent, delay or otherwise materially impair such Stockholder’s ability to perform its obligations hereunder.

(iii) If the Stockholder is married and the Covered Securities of the Stockholder constitute community property or spousal approval is otherwise required for this Agreement to be legal, valid and binding, then, to the extent so required, this Agreement has been duly authorized, executed and delivered by, and constitutes a valid and binding agreement of, the Stockholder’s spouse, enforceable against such spouse in accordance with its terms, subject to the Enforceability Exceptions.

(iv) The Covered Securities and the certificates representing such Covered Securities are held by such Stockholder, or by a nominee or custodian for the benefit of such Stockholder, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever, except for (A) any such encumbrances arising hereunder, or (B) any such encumbrances arising pursuant to the pledge of any Covered Securities by such Stockholder to a financial institution or a brokerage firm (the “Pledged Shares”); provided, however, that such Stockholder represents that any such arrangement regarding

such Pledged Shares shall not prevent, delay or otherwise materially impair such Stockholder’s ability to execute and deliver this Agreement or perform its obligations hereunder and such Stockholder shall use his reasonable efforts to obtain an acknowledgment by the pledgee of the terms of this Agreement and such pledgee’s agreement to vote the Pledged Shares (if and to the extent the voting power of the Pledged Shares is being or to be exercised by pledgee) in accordance with Section 2.

(v) No broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission based upon arrangements made by or on behalf of such Stockholder in connection with its entering into this Agreement.

(vi) Such Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon such Stockholder’s execution and delivery of this Agreement.

(b) Parent represents and warrants to each Stockholder and Target that the execution and delivery of this Agreement by Parent and the consummation by Parent of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Parent.

(c) Target represents and warrants to each Stockholder and Parent that the execution and delivery of this Agreement by Target and the consummation by Target of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Target.

2. Voting Agreements. During the Term (as defined below) of this Agreement, at any meeting of stockholders of Target or at any adjournment thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent) is sought, each Stockholder shall, including by executing a written consent solicitation if requested by Parent, vote (or cause to be voted) the Subject Shares: (a) in favor of the Merger, the adoption by Target of the Merger Agreement and the approval of the terms thereof and each of the other Transactions and (b) against any transaction, agreement, matter or Target Acquisition Proposal that would impede, interfere with, delay, postpone or attempt to discourage the Merger and the Merger Agreement.

3. Irrevocable Proxy. Each Stockholder hereby appoints Parent as its proxy to vote all of such Stockholder’s Subject Shares at any meeting of stockholders of Target (including any adjournments and postponements thereof) on the matters described in Section 2, and to execute and deliver any written consents to fulfill such Stockholder’s obligations under this Agreement. This proxy is coupled with an interest and is irrevocable until the end of the Term.

4. Revocation of Other Proxies. To the extent inconsistent with the other provisions of this Agreement or the Merger Agreement, each Stockholder hereby revokes any and all previous proxies with respect to such Stockholder’s Subject Shares.

5. Other Covenants. Each Stockholder severally agrees with, and covenants to, Parent during the Term of this Agreement as follows:

(a) Such Stockholder shall not after the date hereof (i) sell, transfer, pledge, assign or otherwise dispose of (including by gift) (collectively, “Transfer”), or consent to any Transfer of, any Covered Securities or any interest therein, except pursuant to the Merger, (ii) enter into any contract, option or other agreement with respect to any Transfer of any or all of the Covered Securities or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to the Subject Shares or (iv) deposit the Subject Shares into a voting trust or enter into a voting agreement or voting arrangement with respect to the Subject Shares; provided, that any such Stockholder may Transfer any of the Covered Securities to an affiliate of such Stockholder (provided such affiliates evidences in a writing reasonably satisfactory to the other parties hereto such affiliate’s agreement to the terms hereof) or any other Stockholder who is on the date hereof or hereafter becomes a party to this Agreement; provided, further, that the restrictions in this Section 5 shall not be deemed violated by any Transfer of Covered Securities pursuant to a cashless exercise of stock options or warrants; and provided, further, that a pledge of Pledged Shares made in accordance with Section 1(a)(iv) shall not be deemed to be a violation of the restrictions in this Section 5.

(b) Such Stockholder shall not take any action prohibited by Section 7.2 of the Merger Agreement.

6. Certain Events. This Agreement and the obligations hereunder shall attach to each Stockholder’s Covered Securities and shall be binding upon any Person to which legal or beneficial ownership of such Shares shall pass, whether by operation of law or otherwise, including such Stockholder’s heirs, guardians, administrators or successors. In the event of any stock split, stock dividend, merger, reorganization, recapitalization or other change in the capital structure of Target affecting the Covered Securities or the acquisition of additional shares of Covered Securities or other voting securities of Target by any Stockholder, the number of Covered Securities listed on Schedule A beside the name of such Stockholder shall be adjusted appropriately and this Agreement and the obligations hereunder shall attach to any additional Covered Securities or other voting securities of Target issued to or acquired by such Stockholder.

7. Stop Transfer. Target shall not register the transfer of any certificate representing any Covered Securities, unless such transfer is made to Parent or otherwise in compliance with this Agreement.

8. Stockholder Capacity. No person executing this Agreement (or an affiliate thereof) who is or becomes during the Term a director of Target makes any agreement or understanding herein in his or her capacity as such director. Each Stockholder signs solely in his or her capacity as the record and beneficial owner of, or the trustee of a trust whose beneficiaries are the beneficial owners of, such Stockholder’s Covered Securities.

9. Further Assurances. Each Stockholder shall, upon request of Parent, execute and deliver any additional documents and take such further actions as may reasonably be deemed by Parent to be necessary or desirable to carry out the provisions hereof.

10. Termination. This Agreement, and all rights and obligations of the parties hereunder, shall terminate upon (and shall only be effective from the date hereof until) the first to occur of (a) the Effective Time of the Merger, or (b) the date upon which the Merger Agreement

is terminated in accordance with its terms (such period from the date hereof until such termination is referred to herein as the “Term”); provided, however, that (x) Section 11 shall survive any termination of this Agreement and (y) termination of this Agreement pursuant to clause (b) above shall not relieve any party hereto from liability for any willful and knowing breach hereof prior to such termination.

11. Miscellaneous.

(a) .All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or Target, to the appropriate address set forth in Section 11.1 of the Merger Agreement; and (ii) if to a Stockholder, to the appropriate address set forth on Schedule A.

(b) Each Party submits to the jurisdiction of any state or federal court sitting in the State of Delaware in any dispute or action arising out of or relating to this Agreement and agrees that all claims in respect of such dispute or action may be heard and determined in any such court. Each Party also agrees not to bring any dispute or action arising out of or relating to this Agreement in any other court. Each Party agrees that a final judgment in any dispute or action so brought will be conclusive and may be enforced by action on the judgment or in any other manner provided at law (common, statutory or other) or in equity. Each Party waives any defense of inconvenient forum to the maintenance of any dispute or action so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto.

(c) Each Party appoints RLF Service Corp., One Rodney Square, Wilmington, Delaware 19801 as their agent to receive on their behalf service of copies of the summons and complaint and any other process that might be served in an dispute or action (the “Process Agent”). Any Party may make service on any other Party by sending or delivering a copy of the process (i) to the Party to be served at the address and in the manner provided for the giving of notices in Section 11(a) or (ii) to the Party to be served in care of the Process Agent at the address and in the manner provided for the giving of notices in Section 12(a).

(d) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(e) This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective as to any Stockholder when one or more counterparts have been signed by each of Parent, Target and such Stockholder and delivered to Parent, Target and such Stockholder.

(f) This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and this Agreement is not intended to confer upon any other person (other than Parent) any rights or remedies hereunder.

(g) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

(h) Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise, by any of the parties without the prior written consent of the other parties, except by laws of descent or as expressly provided by Section 5(a). Any assignment in violation of the foregoing shall be void.

(i) As between any Stockholder and Parent, each of such parties agrees that irreparable damage to the other, non-breaching party would occur and that such non-breaching party would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the non-breaching party shall be entitled to an injunction or injunctions to prevent breaches by the other party of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which it may be entitled at law or in equity.

(j) If any term, provision, covenant or restriction herein, or the application thereof to any circumstance, shall, to any extent, be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions herein and the application thereof to any other circumstances shall remain in full force and effect, shall not in any way be affected, impaired or invalidated, and shall be enforced to the fullest extent permitted by law.

(k) No amendment, modification or waiver in respect of this Agreement shall be effective against any party unless it shall be in writing and signed by such party.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, Target, Parent, and the Stockholders party hereto have caused this Agreement to be duly executed and delivered as of the date first written above.

	ENERGY PARTNERS, LTD. By:/s/ Richard A. Bachmann Name: Richard A. Bachmann Title: Chairman and Chief Executive Officer

	STONE ENERGY CORPORATION By:/s/ David H. Welch Name: David H. Welch Title: President and Chief Executive Officer

	STOCKHOLDERS:
	/s/ James H. Stone James H. Stone
	/s/ David H. Welch David H. Welch
	/s/ John P. Laborde John P. Laborde
	/s/ Peter K. Barker Peter K. Barker
	/s/ George R. Christmas George R. Christmas
	/s/ Richard A. Pattarozzi Richard A. Pattarozzi
	/s/ David R. Voelker David R. Voelker

	/s/ Raymond B. Gary Raymond B. Gary
	/s/ Robert A. Bernhard Robert A. Bernhard
	B. J. Duplantis B.J. Duplantis
	/s/ Kay G. Priestly Kay G. Priestly

SCHEDULE A

Stockholder Name and Address	Common Stock	Other Securities
James H. Stone 909 Poydras Street, Suite 2650 New Orleans, LA 70130	1,313,397*	78,200 (stock options)
David H. Welch 625 E. Kaliste Saloom Road Lafayette, LA 70508	70,072	46,000 (stock options)
John P. Laborde 601 Poydras Street, Suite 1637 New Orleans, LA 70130	24,537	13,333 (options)
Peter K. Barker 2121 Avenue of the Stars The Fox Plaza Building, Suite 2600 Los Angeles, California 90067-5050	4,200	13,333 (options)
George R. Christmas 7 Walt Whitman Blvd. Stafford, VA 22554	4,033	8,700 (options)
Richard A Pattarozzi 728 Plantation Drive Abita Springs, LA 70420	3,200	13,333 (options)
David R. Voelker 650 Poydras Street, Suite 2710 New Orleans, LA 70130	186,632**	13,333 (options)
Raymond B. Gary 840 Park Avenue New York, NY 10021	45,809	13,333 (options)
Robert A. Bernhard 825 Third Ave., 31^st Floor New York, NY 10022	136,092***	8,333 (options)
B. J. Duplantis 400 E. Kaliste Saloom Road, Suite 4200 Lafayette, LA 70508	13,612	13,333 (options)
Kay G. Priestly c/o Entergy Corporation 639 Loyola Avenue New Orleans, LA 70131	3,200
TOTAL

* Includes shares owned by two partnerships known as James H. Stone Interests I and James H. Stone Interests II, of which Mr. Stone disclaims any beneficial interest with respect to 59,226 and 16,234 shares, respectively; also includes shares owned by a limited liability company in which Mr. Stone has a 4% interest.

A-1

** Includes 72,440 shares owned by two trusts for the benefit of Mr. Stone’s children, of which Mr. Voelker is a trustee but owns no beneficial interest, and 85,970 shares owned by Frantzen/Voelker Investments, L.L.C., in which Mr. Voelker owns a 20% beneficial interest.

*** Includes 30,000 shares held by the Bernhard Trust “B” of which Mr. Bernhard is the trustee and a potential beneficiary.

The “Other Securities” do not include stock options that will not have vested prior to the effective date of the Merger.

A-2

EX-3 3 ex_3.htm EXHIBIT 3 Exhibit 3

Exhibit 3

AMENDMENT NO. 3 TO THE RIGHTS AGREEMENT

This AMENDMENT NO. 3 (this “Amendment”) to the Rights Agreement (the “Rights Agreement”) dated as of October 15, 1998, between Stone Energy Corporation, a Delaware corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey limited liability company, as rights agent (the “Rights Agent”), as amended by Amendment No. 1 thereto dated as of October 28, 2000, and as amended by Amendment No. 2 thereto dated as of April 23, 2006, is between the Company and the Rights Agent and is entered into as of June 22, 2006. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to such terms in the Rights Agreement.

WHEREAS, Section 29 of the Rights Agreement permits the Company to amend the Rights Agreement in the manner provided therein at any time prior to the Distribution Date, and there has not been a Distribution Date.

NOW, THEREFORE, the Rights Agreement is hereby amended as follows:

Section 1. Amendments to Rights Agreement. The Rights Agreement is hereby amended as follows:

(a) Notwithstanding any provision of the Rights Agreement to the contrary, none of the execution or the delivery of one or more of the EPL Merger Documents or the consummation of one or more of the EPL Merger Transactions shall cause or permit the Rights to become exercisable, the Rights to become separated from the stock certificates to which they are attached or any operative provision of the Rights Agreement to apply to EPL, EPL Merger Sub or any Affiliate or Associate thereof solely by reason of or in connection with the EPL Merger Documents or the EPL Merger Transactions, including, without limitation, the designation of EPL, EPL Merger Sub or any Affiliate or Associate thereof as an Acquiring Person, the occurrence of a Distribution Date or the occurrence of a Shares Acquisition Date.

(b) The definition of “Acquiring Person” set forth in Section 1 of the Rights Agreement is hereby amended to add the following sentence at the end thereof:

“In addition, and notwithstanding anything in this Rights Agreement to the contrary, none of EPL, EPL Merger Sub or any of their respective Affiliates or Associates shall be deemed to be an Acquiring Person solely by virtue of (i) the announcement of the EPL Merger, (ii) the acquisition of Common Shares of the Company pursuant to the EPL Merger, (iii) the execution of the EPL Merger Agreement or the EPL Voting Agreements or (iv) the consummation of the EPL Merger or of the other transactions contemplated in the EPL Merger Agreement or the EPL Voting Agreements.”

(c) The definition of “Final Expiration Date” set forth in Section 1 of the Rights Agreement is hereby amended and restated as follows:

“Final Expiration Date” shall mean the earlier of (i) immediately prior to the Effective Time (as defined in the EPL Merger Agreement) and (ii) the Close of Business on September 30, 2008.

(d) The following definitions used in this Agreement are hereby added to Section 1 of the Rights Agreement:

““EPL” shall mean Energy Partners, Ltd., a Delaware corporation.”

““EPL Merger” shall have the meaning set forth in the EPL Merger Agreement.”

““EPL Merger Agreement” shall mean the Agreement and Plan of Merger among the Company, EPL and EPL Merger Sub dated [the date hereof], as such agreement may be amended from time to time.”

““EPL Merger Documents” shall mean the Merger Agreement and the Voting Agreements.”

““EPL Merger Sub” shall mean EPL Acquisition Corp. LLC, a Delaware limited liability corporation.”

““EPL Merger Transactions” shall mean the transactions contemplated under the EPL Merger Documents.”

““EPL Voting Agreements” shall mean each of (i) the Voting Agreement among the Company, EPL and the EPL stockholders signatory thereto dated the date hereof, and (ii) the Voting Agreement among the Company, EPL and the Company stockholders signatory thereto dated the date hereof, as each such agreement may be amended from time to time.”

(e) Section 3(a) of the Rights Agreement is amended to add the following sentence at the end thereof:

“Notwithstanding anything in this Rights Agreement to the contrary, neither a Distribution Date nor a Shares Acquisition Date shall be deemed to have occurred solely as the result of (i) the announcement of the EPL Merger, (ii) the acquisition of Common Shares of the Company pursuant to the EPL Merger, (iii) the execution of the EPL Merger Agreement or the EPL Voting Agreements or (iv) the consummation of the EPL Merger or of the other transactions contemplated in the EPL Merger Agreement or the EPL Voting Agreements.”

Section 2. Certification. This Section 2 shall constitute a certificate from an appropriate officer of the Company for purposes of Section 29 of the Rights Agreement, and the Company and the officer of the Company signing this Amendment below, on behalf of the Company, (i) hereby certify that to their knowledge this Amendment is in compliance with the terms of Section 29 of the Rights Agreement and (ii) request and direct that the Rights Agent execute and deliver this Amendment, in accordance with Section 29.

Section 3. Full Force and Effect. Except as expressly amended hereby, the Rights Agreement shall continue in full force and effect unamended and in accordance with the provisions thereof on the date hereof.