Employment Agreement with A.J. “Tony” Best

Form of Change in Control Agreement

Amendment to Change in Control Agreement

Amendment to Employment Agreement

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement is entered into this 1st day of May, 2006 between St. Mary Land & Exploration Company, a Delaware corporation (“St. Mary”), and A. J. “Tony” Best (“Best”).

1.            Employment. On the terms and conditions set forth herein, St. Mary hereby agrees to employ Best as its President and Chief Operating Officer and Best hereby agrees to be so employed. Best shall utilize his full-time good faith best efforts to perform such duties and discharge such responsibilities as are customarily undertaken by such an officer of a corporation, together with such other appropriate duties as may be assigned to him by the Board of Directors and Chief Executive Officer of St. Mary. Such duties and responsibilities shall include, but not be limited to, the following:

(a)          Perform a key role in the development and implementation of St. Mary’s strategic plans and objectives, and identify exploration/development and acquisition opportunities for new areas of growth consistent with St. Mary’s growth strategies;

(b)          Supervise and provide expertise to management of St. Mary’s core operating regions consistent with St. Mary’s exploration, exploitation, development and production objectives for those regions;

(c)          Develop and maintain relationships with key business partners for St. Mary’s operations;

(d)          Administer St. Mary’s property and corporate risk management program; and

(e)          Supervise the coordination of reservoir engineering for external and management reporting in accordance with all applicable requirements.

As President and Chief Operating Officer, Best will be invited to attend all meetings of St. Mary’s Board of Directors and all committee meetings of the Board, except those

 

 

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held exclusively with the independent directors and those held in Executive Session. Furthermore, Best will be involved in internal and external financial reporting reviews as well as shareholder relations efforts.

2.            Compensation. Upon the commencement of Best’s employment with St. Mary, St. Mary shall compensate Best for his services hereunder at an initial base salary of $375,000 per annum payable in semi-monthly installments. Such compensation shall be subject to review and increase, as approved by the Board of Directors of St. Mary, in accordance with the normal schedule for review by the Compensation

Committee of the Board of Directors of executive officer base salaries. Other components of Best’s compensation shall include full and immediate participation in the following programs and plans of St. Mary (subject both to proration where appropriate for Best’s partial year(s) of employment and subject to the terms and conditions of each such program or plan):

 

a.

Cash Bonus Plan

 

 

b.

Change of Control Executive Severance Agreement

 

 

c.

Net Profits Interest Bonus Plan

 

 

d.

Pension Plan for Employees of St. Mary Land & Exploration Company

 

e.

St. Mary Land & Exploration Company Employee Benefits Summary

 

 

f.

St. Mary Land & Exploration Company 401(k) Profit Sharing Plan

 

 

g.

St. Mary Land & Exploration Company Incentive Stock Option Plan

 

 

 

 

 

 

 

 

 

 

 

 

h.

St. Mary Land & Exploration Company Nonqualified Unfunded Supplemental Retirement Plan

 

 

i.

St. Mary Land & Exploration Company Restricted Stock Plan

 

j.

St. Mary Land & Exploration Company Stock Option Plan

 

 

In addition, Best shall receive, upon the commencement of Best’s employment with St. Mary, pursuant to the terms of St. Mary’s Restricted Stock Plan, or, if approved by St. Mary’s stockholders at the 2006 annual meeting of stockholders to be held on May 17, 2006, St. Mary’s 2006 Equity Incentive Compensation Plan: (i) a Special Restricted Stock award of 20,000 shares, which 20,000 shares shall be immediately vested and not subject to forfeiture, and (ii) a Special Restricted Stock Unit (RSU) award whereby Best may earn up to an additional 20,000 shares pursuant to the following schedule (with the shares underlying such RSU to be

 

 

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subject to vesting immediately upon being earned, provided that Best remains employed by St. Mary on the respective scheduled date for the award of such shares, and such RSU to be settled with respect to vested shares upon such vesting date):

Award Date

Base Award

Previous Year Net Asset Value Growth

> 10% but less than 15%.

Previous Year Net Asset Value Growth

15% or Greater

1st Quarter, 2007

1,250 RSUs

2,500 RSUs

1,250 RSUs

1st Quarter, 2008

1,250 RSUs

2,500 RSUs

1,250 RSUs

1st Quarter, 2009

1,250 RSUs

2,500 RSUs

1,250 RSUs

1st Quarter, 2010

1,250 RSUs

2,500 RSUs

1,250 RSUs

Total

5,000 RSUs

10,000 RSUs

5,000 RSUs

 

3. Chief Executive Officer. St. Mary and Best have agreed to enter into this agreement based on the understanding that the Board intends, unless there is an unexpected change of circumstances, to appoint Best to the CEO position within one (1) year of his employment date. In the event Best is not promoted to CEO within one (1) year of his employment date, Best shall be entitled to terminate his employment with St. Mary and receive the severance referenced in Section 9, subject to Section 8 (b).

 

4. Benefits. Best shall participate in the fringe benefits and other benefit plans and practices of St. Mary, in the same manner and to the same comparable extent as other senior executives of St. Mary, which shall include vacation as Best deems appropriate, retirement benefits, life insurance, disability benefits and insurance, and health and hospitalization benefits and insurance.

5. Relocation. Best agrees to relocate from his current residence in College Station, Texas, to the Denver, Colorado area. St. Mary agrees to pay Best a cash stipend equal to one month’s salary in order to offset miscellaneous moving expenses. This amount shall be in addition to the benefits set forth in St. Mary’s Relocation Policy. St. Mary will also provide relocation benefits for Best to his home of origin if his employment is terminated by St. Mary prior to June 12, 2008.

 

 

 

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6.

Sign-On Bonus. Upon joining the company, St. Mary will pay Best $50,000 cash.

 

7.            Term. The term of the employment of Best by St. Mary shall commence on June 12, 2006.

 

8.

Termination.

(a)         Voluntary. This Agreement shall continue in effect until terminated by Best or St. Mary upon not less than thirty (30) days prior written notice to the other.

(b)         Involuntary. Notwithstanding the foregoing, the employment of Best by St. Mary hereunder shall terminate (i) in the event of the death of Best or in the event that Best becomes incapacitated from carrying out his duties hereunder in the reasonable judgment of the Board of Directors of St. Mary, or (ii) in the event that Best in the performance of his duties for St. Mary hereunder acts with gross negligence, gross incompetence, fraud or dishonesty, as determined by the Board of Directors of St. Mary.

9.           Severance. In the event Best’s employment is terminated by St. Mary for any reason other than the occurrence of an event described in subparagraph 8(b), St. Mary shall continue the salary of Best at its rate at the time of such termination for a period of two years thereafter, together with a continuation for two years of the insurance benefits in effect for him at the time of such termination.

In the event that the employment of Best is terminated under circumstances such that the terms of the Change of Control Executive Severance Agreement would apply, and to the extent that severance pay or benefits, each considered separately, to be received by Best pursuant to the terms of the Change of Control Executive Severance Agreement would exceed the severance pay or benefits, each considered separately, pursuant to the terms of this Agreement, Best shall receive such excess severance pay or benefits under the Change of Control Executive Severance Agreement pursuant to the terms thereof.

 

 

 

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10.        Internal Revenue Code Section 409A. This Agreement is intended in all respects to comply with the provisions of Section 409A of the Code and in particular, those provisions of Section 409A dealing with distributions. St. Mary and Best shall interpret and apply the provisions of this Agreement in a manner consistent with Section 409A of the Code. As a result, any payments that are to be made to Best under other provisions of this Agreement which, under Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986 (the “Code”), may not be made before the date which is six months after the date of the separation of Best from employment service (the “Section 409A Six-Month Waiting Period”) shall not be made during the Section 409A Six-Month Waiting Period. Rather, any such payments shall be deferred and made immediately following the expiration of the Section 409A Six-Month Waiting Period. In particular, with respect to the severance payments provided for under Section 9 of this Agreement, (i) such severance payments that would otherwise be made during the Section 409A Six-Month Waiting Period shall be made in one lump sum upon the expiration of the Section 409A Six-Month Waiting Period, and (ii) severance payments for the remaining 18-month period (immediately after the expiration of the Section 409A Six-Month Waiting Period) of the two full years of severance payments to which Best may become entitled under Section 9 of this Agreement shall also be made in lump sum upon the expiration of the Section 409A Six-Month Waiting Period.

 

11.

Miscellaneous.

(a)          The rights and obligations of Best and St. Mary under this Agreement may not be assigned, transferred, pledged or encumbered but shall otherwise inure to the benefit of and be binding upon the heirs, personal representatives and successors of Best and St. Mary.

(b)          This Agreement and all questions arising hereunder shall be governed by the laws of the State of Colorado.

(c)          This Agreement may be executed in counterparts, and signature pages may be delivered by email or fax transmission.

 

 

 

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IN WITNESS WHEREOF, the undersigned have executed this Employment Agreement as of the day and year first above written.

 

AGREED:

 

ST. MARY LAND & EXPLORATION COMPANY,

a Delaware corporation

 

By: /S/ MARK A. HELLERSTEIN                

 

Mark A. Hellerstein

 

 

Chairman of the Board of Directors, President and

 

Chief Executive Officer

 

 

 

 

 

 

 

BY: /S/ A.J. “TONY” BEST                            

A. J. “Tony” Best

 

 

 

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 #Top of the Document

 

CHANGE OF CONTROL EXECUTIVE SEVERANCE AGREEMENT

                                                                    EXHIBIT 10.1
 
                                     FORM OF
                 CHANGE OF CONTROL EXECUTIVE SEVERANCE AGREEMENT
 
 
          This Change of Control Executive Severance Agreement is entered into
this 2nd day of July, 2001 by and between St. Mary Land & Exploration
Company, a Delaware corporation (the "Company"), and [the Executive listed on
Attachment A] (the "Executive").
 
                                    RECITALS
 
          A. The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company to ensure that the Company will
have the continued dedication of the Executive notwithstanding the possibility
of a Change of Control (as defined in Section 1) of the Company and to provide
the Executive with customary compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
companies, and therefore the Board has previously adopted a Change of Control
Executive Severance Policy applicable to the Executive.
 
          B. This Agreement reflects the terms and conditions of the Change of
Control Executive Severance Policy.
 
          C. The Company desires to continue the employment of the Executive and
the Executive desires to continue his employment with the Company, all upon and
subject to the terms and conditions set forth in this Agreement.
 
          NOW, THEREFORE, in consideration of the Executive's continued
employment with the Company and the mutual agreements set forth herein, the
parties agree as follows:
 
                                    AGREEMENT
 
Section 1. Certain Definitions. The following terms shall for purposes of this
------------------------------
Agreement have the following respective definitions:
 
          (a) "Accrued Compensation" shall mean all compensation amounts earned
or accrued by the Executive through the Termination Date (as defined below) but
not paid to the Executive as of the Termination Date, including (i) Base Salary
(as defined below), (ii) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon), (iii) vacation and
sick leave pay (to the extent provided by Company policy, plan, program or
practice or applicable law), (iv) bonuses and incentive compensation, and (v)
reimbursement for reasonable and necessary business expenses incurred by the
Executive on behalf of the Company during the period ending on the Termination
Date.
 
          (b) "Base Salary" shall mean the greater of (i) the Executive's annual
base salary at the rate in effect on the Termination Date or (ii) the
Executive's annual base salary at the rate in effect immediately prior to a
Change of Control, and shall include all amounts of his base salary that are
deferred under the qualified and nonqualified employee benefits plans, policies,
programs or practices of the Company or any other compensation agreement or
arrangement.
 
          (c) "Cause" shall mean for purposes of termination of employment (i)
the conviction of the Executive of a felony involving moral turpitude or (ii) a
resolution adopted in good faith by two-thirds of the members of the Board that
the Executive (A) intentionally and continually failed to substantially perform
his reasonably assigned duties with the Company (other than a failure resulting
from the Executive's incapacity due to physical or mental illness or from the
assignment to the Executive of duties that would constitute Good Reason (as
defined below)), which failure continued for a period of at least 30 days after
a written notice of demand for substantial performance has been delivered by the
Company to the Executive, which notice specifies the manner in which the
Executive failed to substantially perform, or (B) intentionally engaged in
conduct which is demonstrably and materially injurious to the Company; provided,
however, that no termination of the Executive's employment shall be for Cause
until written notice has been delivered to the Executive which sets forth the
conduct under this Section 1(c) of which the Executive is allegedly guilty and
specifying the particulars thereof in detail. Neither an act nor a failure to
act on the Executive's part shall be considered "intentional" unless the
Executive has acted or failed to act with a lack of good faith and with a lack
of reasonable belief that the Executive's action or failure to act was in the
best interests of the Company. Notwithstanding anything to the contrary
contained in this Agreement, no failure to perform by the Executive after a
Notice of Termination (as defined below) is given by the Executive to the
Company shall constitute Cause for purposes of this Agreement.
 
          (d) "Change of Control" shall mean any of the following events:
 
                    (i) The acquisition by any individual, entity or group
          (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
          Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
          beneficial ownership (within the meaning of Rule 13d-3 promulgated
          under the Exchange Act) of more than 50% of either (A) the then
          outstanding shares of common stock of the Company (the "Outstanding
          Company Common Stock"), or (B) the combined voting power of the then
          outstanding voting securities of the Company entitled to vote
          generally in the election of directors (the "Outstanding Company
          Voting Securities"); provided, however, that the following
          acquisitions shall not constitute a Change of Control: (1) any
          acquisition by the Company, (2) any acquisition by any employee
          benefit plan (or related trust) sponsored or maintained by the Company
          or any corporation controlled by the Company or (3) any acquisition
          pursuant to a reorganization, merger, consolidation or similar
          transaction, if, following such transaction, the conditions described
          in clauses (A), (B) and (C) of subsection (d)(iii) of this Section 1
          are satisfied; or
 
                    (ii) Individuals who, as of the date this Agreement is
          executed, constitute the Board (the "Incumbent Board") cease for any
          reason to constitute at least a majority of the members of the Board;
          provided, however, that any individual becoming a director subsequent
          to the date hereof whose election, or nomination for election by the
          Company's stockholders, was approved by a vote of at least a majority
          of the directors then comprising the Incumbent Board shall be
          considered as though such individual were a member of the Incumbent
          Board, but excluding for this purpose any such individual whose
          initial assumption of office occurs as a result of either an actual or
          threatened proxy or election contest or other actual or threatened
          solicitation of proxies or consents by or on behalf of a Person other
          than the Board; or
 
                    (iii) A reorganization, merger, consolidation or similar
          transaction with respect to the Company, unless following such
          transaction all of the following conditions described in clauses (A),
          (B) and (C) below are met:
 
                              (A) 50% or more of, respectively, the then
                    outstanding shares of common stock of the corporation
                    resulting from such transaction and the combined voting
                    power of the then outstanding voting securities of such
                    corporation entitled to vote generally in the election of
                    directors is then beneficially owned, directly or
                    indirectly, by all or substantially all of the individuals
                    and entities who were the beneficial owners, respectively,
                    of the Outstanding Company Common Stock and Outstanding
                    Company Voting Securities immediately prior to such
                    transaction, in substantially the same proportions as their
                    ownership immediately prior to such transaction of the
                    Outstanding Company Common Stock and Outstanding Company
                    Voting Securities, as the case may be,
 
                              (B) no Person (excluding the Company, any employee
                    benefit plan (or related trust) of the Company or such
                    corporation resulting from such transaction and any Person
                    beneficially owning, immediately prior to such transaction,
                    directly or indirectly, 20% or more of the Outstanding
                    Company Common Stock or Outstanding Voting Securities, as
                    the case may be) beneficially owns, directly or indirectly,
                    20% or more of, respectively, the then outstanding shares of
                    common stock of the corporation resulting from such
                    transaction or the combined voting power of the then
                    outstanding voting securities of such corporation entitled
                    to vote generally in the election of directors, and
 
                              (C) at least a majority of the members of the
                    board of directors of the corporation resulting from such
                    transaction were members of the Incumbent Board at the time
                    of the execution of the initial agreement providing for such
                    transaction; or
 
                    (iv) The acquisition of more than 50% of the assets of the
          Company (on a consolidated basis), other than by a corporation with
          respect to which following such transaction meets the conditions
          described in clauses (A), (B) and (C) of subsection (d)(iii) of this
          Section 1.
 
          (e) "Change of Control Date" shall mean the first date during the term
of this agreement (as specified in Section 2) on which a Change of Control
occurs. Notwithstanding anything to the contrary contained in this Agreement, if
a Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect the Change of Control or (ii) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes of this Agreement
the "Change of Control Date" shall mean the date immediately prior to the date
of such termination of employment.
 
          (f) "Change of Control Period" shall mean the period commencing on the
Change of Control Date and ending on the date two and one-half years after the
Change of Control Date.
 
          (g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
 
          (h) "Disability" shall mean a physical or mental infirmity which
impairs the Executive's ability to substantially perform his employment duties
with the Company on a full-time basis for a period of 120 consecutive business
days, and the Executive has not returned to full-time performance of his
employment duties within 30 days after notice by the Company of its intention to
terminate employment of the Executive as a result thereof.
 
          (i) "Good Reason" shall mean the occurrence after a Change of Control
of any of the following events or conditions:
 
                    (i) a change in the Executive's status, authority, position,
          offices, titles, duties or responsibilities (including reporting
          responsibilities) with the Company which in the Executive's reasonable
          judgment represents a diminution or adverse change in, or are
          inconsistent with, such status, authority, position, offices, titles,
          duties or responsibilities in effect at any time within the 90 days
          preceding the Change of Control Date or at any time thereafter,
          excluding for this purpose (A) an isolated, unsubstantial and
          inadvertent action by the Company not taken in bad faith and which is
          remedied by the Company promptly after receipt of notice thereof given
          by the Executive and (B) any removal or failure to reappoint or
          reelect the Executive to any such position or offices in connection
          with the termination of his employment for death, Disability or Cause;
 
                    (ii) any reduction in the Executive's salary or any failure
          to pay the Executive any compensation or benefits to which he is
          entitled within ten business days after notice thereof;
 
                    (iii) the failure by the Company to provide the Executive
          with compensation and benefits, in the aggregate, at least equal (in
          terms of benefit levels and/or incentive or reward opportunities) to
          those provided for under each compensation and employee benefit
          policy, plan, program and practice in which the Executive was
          participating at any time within 90 days preceding the Change of
          Control Date or at any time thereafter;
 
                    (iv) the Company's requiring the Executive to be based at
          any place outside a 25-mile radius from his current location of
          employment, except for reasonably required travel for the Company's
          business which is not materially greater than such travel requirements
          prior to the Change of Control;
 
                    (v) any material breach by the Company of any provision of
          this Agreement;
 
                    (vi) any purported termination by the Company of the
          Executive's employment other than as expressly permitted by this
          Agreement;
 
                    (vii) the insolvency of the Company or the filing (by any
          party, including the Company) of a petition for bankruptcy of the
          Company, which petition is not dismissed within 60 days; or
 
                    (viii) the failure by the Company to obtain an agreement
          reasonably satisfactory to the Executive from any successor to the
          Company to assume and agree to perform this Agreement as contemplated
          by Section 7(b).
 
Any event or condition described in clauses (i) through (viii) above which
occurs prior to a Change of Control but which the Executive reasonably
demonstrates (A) resulted from the request of a third party who has taken steps
reasonably calculated to effect a Change of Control which actually occurs or (B)
otherwise arose in connection with or anticipation of a Change of Control which
actually occurs, shall constitute Good Reason for purposes of this Agreement
notwithstanding the fact that it occurred prior to the Change of Control. The
Executive's right to terminate his employment for Good Reason shall not be
affected by his incapacity due to a Disability.
 
          (j) "Notice of Termination" shall mean a written notice of termination
of the Executive's employment which (i) indicates the specific termination
provision in this Agreement relied upon for such termination, (ii) to the extent
applicable sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination under the provision so indicated and
(iii) if the Termination Date is other than the date of receipt of such notice,
specifies the Termination Date under such notice.
 
          (k) "Termination Date" shall mean (i) if the Executive's employment is
terminated by the Executive for Good Reason, the date of receipt of the Notice
of Termination or any later date of employment termination as specified therein,
(ii) if the Executive's employment is terminated by reason of death, the
Termination Date shall be the date of death and (iii) in all other cases, the
date of employment termination specified in the Notice of Termination; provided,
however, that if the Executive's employment is terminated by the Company for
Cause or due to a Disability, the date specified in the Notice of Termination
shall be at least 30 days from the date the Notice of Termination is given to
the Executive, provided that in the case of Disability the Executive shall not
have returned to the full-time performance of his duties during such 30-day
period.
 
Section 2. Term of Agreement. This Agreement shall commence as of the date
----------------------------
hereof and shall continue in effect until December 31, 2001; provided, however,
that on December 31, 2001 and on each annual anniversary of such date (such date
and each annual anniversary thereof shall be hereinafter referred to as the
"Renewal Date"), the term of the Agreement shall be automatically extended so as
to terminate one year from such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company has given written notice to the Executive that the
term of the Agreement shall not be so extended, and provided further that
notwithstanding any such notice by the Company not to extend, the term of the
Agreement shall not expire after the occurrence of a Change of Control until the
expiration of the Change of Control Period, as long as the term of the Agreement
had not expired prior to the occurrence of the Change of Control.
 
Section 3. Payments and Benefits Upon Termination of Employment During Change of
--------------------------------------------------------------------------------
Control Period. If during the term of this Agreement the Executive shall cease
--------------
to be employed by the Company within a Change of Control Period, the Executive
shall be entitled to the following compensation payments and benefits:
 
          (a) Termination Other than for Cause or Disability or Termination for
              ------------------------------------------------------------------
Good Reason. If the Executive's employment with the Company shall be terminated
-----------
before the Executive's death and Normal Retirement Age (as that term is defined
as of the date hereof in the Company's 401(k) Plan) either (i) by the Company
other than for Cause or Disability or (ii) by the Executive for Good Reason, the
Executive shall be entitled to the following:
 
                    (i) the Company shall pay the Executive all Accrued
          Compensation;
 
                    (ii) as severance pay, the Company shall continue to make
          payments to the Executive at the Base Salary rate for the remainder of
          the Change of Control Period after the Termination Date, in such Base
          Salary installment amounts and pursuant to such Base Salary
          installment payment schedule as was in effect immediately prior to the
          Change of Control; provided, however, that in no event shall such
          continued payments be made for less than one full year after the
          Termination Date; and
 
                    (iii) for one full year after the Termination Date (the
          "Continuation Period"), the Company shall at its expense continue on
          behalf of the Executive and his dependents and beneficiaries all
          insurance and other fringe benefits provided to the Executive at any
          time during the 30-day period prior to the Change of Control. The
          insurance coverages and other fringe benefits (including deductibles
          and costs) provided in this Section 3(a)(iii) during the Continuation
          Period shall be no less favorable to the Executive and his dependents
          and beneficiaries than the most favorable of such insurance coverages
          and benefits during the 30-day period prior to the Change of Control.
          The Company's obligation hereunder with respect to the foregoing
          benefits shall be limited to the extent that the Executive obtains any
          such benefits pursuant to a subsequent employer's benefit plans, in
          which case the Company may reduce the coverage of any benefits it is
          required to provide the Executive hereunder as long as the aggregate
          coverages and benefits of the combined benefit plans is no less
          favorable to the Executive than the coverages and benefits required to
          be provided hereunder. This Section 3(a)(iii) shall not be interpreted
          so as to limit any benefits to which the Executive, his dependents or
          beneficiaries may be entitled following the Executive's termination of
          employment under any of the Company's employee benefit policies,
          plans, programs or practices, including without limitation retiree
          medical and life insurance benefits.
 
Notwithstanding any other provision in this Agreement to the contrary, in the
event that subsequent to a termination of the Executive's employment under this
Section 3(a) and within the Change of Control Period or Continuation Period the
Executive suffers a physical or mental infirmity which otherwise may have at
such subsequent time qualified as grounds for termination of the Executive's
employment due to a Disability had the Executive been employed by the Company at
such subsequent time, the severance payments under Section 3(a)(ii) and the
insurance coverages and other fringe benefits under Section 3(a)(iii) shall
nevertheless continue as set forth in Section 3(a)(ii) and Section 3(a)(iii).
 
          (b) Termination for Cause, Disability or Death or Other than for Good
              ------------------------------------------------------------------
Reason. If the Executive's employment with the Company shall be terminated
------
either (i) by the Company for Cause or Disability, (ii) by reason of the
Executive's death, (iii) after the Executive has reached his Normal Retirement
Age or (iv) by the Executive other than for Good Reason, the Company shall pay
to the Executive all Accrued Compensation.
 
          (c) Other Compensation and Benefits. The Executive's entitlement to
              -------------------------------
any other compensation or benefits from or any indemnification by the Company
shall be determined in accordance with the Company's employee benefit and other
applicable compensation plans, programs, policies and practices, and any
applicable indemnification provisions or agreements then in effect. Nothing in
this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
subsequent to the Termination Date shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. If the Executive is entitled to severance pay and
benefits pursuant to Section 3(a)(ii) and (iii), such severance pay and benefits
shall be reduced to the extent of any other severance or termination pay
explicitly designated as such to which the Executive may be entitled under any
agreement with the Company or any of its affiliated companies.
 
Section 4. Notice of Termination. Following a Change of Control, any purported
           ---------------------
termination of the Executive's employment by the Company, for Cause or
otherwise, or by the Executive for Good Reason, shall be communicated by a
Notice of Termination to the other party hereto given in accordance with Section
8(d). For purposes of this Agreement, no such purported termination shall be
effective without such Notice of Termination. The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the Executive's or
the Company's rights hereunder. If the Company determines in good faith that a
Disability of the Executive has occurred while the Executive is employed by the
Company during the Change of Control Period, it may give to the Executive
written notice in accordance with Section 8(d) of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive, provided that within the 30 days after such receipt the
Executive shall not have returned to full-time performance of the Executive's
duties.
 
Section 5. No Set-Off or Mitigation; Resolution of Disputes.
------------------------------------------------------------------
 
          (a) No Set-Off. The Company's obligation to make the payments provided
              ----------
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others.
 
          (b) No Mitigation Required. In no event shall the Executive be
              ----------------------
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement and, except as provided in Section 3(a)(iii), such amounts shall not
be reduced whether or not the Executive obtains other employment.
 
          (c) Payments Pending Resolution of Disputes. If there shall be any
              ---------------------------------------
dispute between the Company and the Executive under this Agreement (i) in the
event of any termination of the Executive's employment by the Company, whether
such termination was validly for Cause, or (ii) in the event of any termination
of employment by the Executive, whether Good Reason existed, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, the Company shall pay all amounts and provide all benefits to the
Executive and/or the Executive's dependents or other beneficiaries, as the case
may be, that the Company would be required to pay or provide pursuant to Section
3(a) as though such termination were by the Company other than for Cause, or by
the Executive for Good Reason; provided, however, that the Company shall not be
required to pay any disputed amount pursuant to this Section 5(c) except upon
receipt of an undertaking by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such court not to be
entitled.
 
          (d) Attorney Fees and Expenses. The Company shall pay as they become
              --------------------------
due all attorney fees and related expenses (including the costs of experts,
evidence and counsel) reasonably incurred by the Executive as a result of the
Executive seeking to obtain or enforce any right or benefit provided by this
Agreement.
 
Section 6. Excise Tax Limitation.
--------------------------------
 
          (a) Notwithstanding anything to the contrary contained in this
Agreement, if the payments and benefits provided under this Agreement and
benefits provided to, or for the benefit of, the Executive under any other
Company plan or agreement (such payments or benefits are collectively referred
to as the "Payments") would be subject to the excise tax (the "Excise Tax")
imposed under Section 4999 of the Code, the Payments shall be reduced to the
Limited Payment Amount of the greater of (i) the largest amount of Payments that
would result in no portion of the Payments being subject to the Excise Tax, or
(ii) the largest amount of Payments, up to and including the total Payments,
after taking into account all applicable federal, state and local employment
taxes, income taxes, and the Excise Tax (all computed at the highest applicable
marginal rate), that results in the Executive's receipt, on an after-tax basis,
of the greater amount of Payments notwithstanding that all or some portion of
the Payments may be subject to the Excise Tax. The intent of the foregoing
provision is to reduce the Payments only in the event and to the extent that
doing so will maximize the net present value of the Payments, on an after-tax
basis, to be received by the Executive. Unless the Executive shall have given
prior written notice specifying a different order to the Company to effectuate
any reduction in Payments, the Company shall reduce or eliminate the Payments by
first reducing or eliminating the portion of the Payments which are not payable
in cash and then by reducing or eliminating cash payments, in each case in
reverse order beginning with payments or benefits which are to be paid the
farthest in time from the Determination (as defined below). Any notice given by
the Executive pursuant to the preceding sentence shall take precedence over the
provisions of any other plan, arrangement or agreement governing the Executive's
rights and entitlements to any benefits or compensation.
 
          (b) The determination of whether the Payments shall be reduced to the
Limited Payment Amount pursuant to this Agreement and the amount of such Limited
Payment Amount shall be made, at the Company's expense, by an accounting firm
selected by the Executive which is one of the five largest accounting firms in
the United States (the "Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations and documentation, to the Company and the Executive within ten
business days of the Termination Date, if applicable, or such other time as
requested by the Company or by the Executive (provided that the Executive
reasonably believes that any of the Payments may be subject to the Excise Tax),
and if the Accounting Firm determines that no Excise Tax is payable by the
Executive with respect to the Payments it shall furnish the Executive with an
opinion reasonably acceptable to the Executive that no Excise Tax will be
imposed with respect to any such Payments. The Determination shall be binding,
final and conclusive upon the Company and the Executive.
 
Section 7. Successors and Assigns.
---------------------------------
 
          (a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
 
          (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to the business and/or 50% or more of the assets of the Company (on a
consolidated basis) to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement, the
term "Company" shall mean the Company as previously defined and any successor to
its business and/or assets which assumes and agrees to perform this Agreement by
operation of law or otherwise.
 
Section 8. Miscellaneous.
------------------------
 
          (a) Governing Law and Venue. This Agreement shall be governed by and
              -----------------------
construed in accordance with the laws of the State of Colorado, without
reference to principles of conflict of laws. Any action brought by any party to
this Agreement shall be brought and maintained in a court of competent
jurisdiction located in Denver, Colorado.
 
          (b) Captions. The captions of this Agreement are for convenience of
              --------
reference only, are not part of the provisions hereof and shall have no force or
effect in the interpretation of this Agreement.
 
          (c) Amendment. This Agreement may not be amended or modified otherwise
              ---------
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
 
          (d) Notice. All notices and other communications hereunder shall be in
              ------
writing and shall be given by hand delivery to the other party, by confirmed
telefax, or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
 
              If to the Executive:      ------------------------------
                                        ------------------------------
                                        ------------------------------
                                        ------------------------------
                                        Telefax: ---------------------
 
              If to the Company:        St. Mary Land & Exploration Company
                                        1776 Lincoln Street, Suite 1100
                                        Denver, CO  80203
                                        Attn: President
                                        Telefax: (303) 861-0934
 
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
 
          (e) Severability. The invalidity or unenforceability of any provision
              ------------
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and any provision that is determined to be invalid
or unenforceable shall be enforced to the maximum extent permissible under law.
 
          (f) Entire Agreement. This Agreement constitutes the entire agreement
              ----------------
between the parties concerning the subject matter hereof.
 
          (g) Tax Withholding. The Company may withhold from any amounts payable
              ---------------
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
 
          (h) Waiver. The Executive's or the Company's failure to insist upon
 
strict compliance with any provision hereof or the failure to assert any right
the Executive or the Company may have hereunder, including, without limitation,
the right of the Executive to terminate employment for Good Reason, shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
 
          (i) No Guaranteed Employment. The Executive and the Company
              ------------------------
acknowledge that, except as may otherwise be provided under any other written
agreement between the Executive and the Company concerning the Executive's
employment with the Company, the provisions of such other agreement not
inconsistent herewith which shall remain in full force and effect, the
employment of the Executive by the Company is "at will" and, prior to the Change
of Control Date, may be terminated by either the Executive or the Company at any
time.
 
          (j) Execution in Counterparts and by Facsimile. This Agreement may be
              ------------------------------------------
executed in counterparts and signature pages may be delivered by facsimile
transmission.
 
 
 
                                    * * * * *
 
 
 
 
 
 
 
 
 
          IN WITNESS WHEREOF, this Change of Control Executive Severance
Agreement is hereby duly executed by each party hereto as of the day and year
first above written.
 
COMPANY:
 
ST. MARY LAND & EXPLORATION COMPANY,
a Delaware corporation
 
By: ----------------------------------------
Printed name: ------------------------------
Title: -------------------------------------
 
 
EXECUTIVE:
 
 
------------------------------------------
Printed name: ----------------------------
 
 
 
 
 
 
                                  Attachment A
                                       to
                                     Form of
                 Change of Control Executive Severance Agreement
 
 
Executives with Change of Control Executive Severance Agreements:
 
         Mark A. Hellerstein
         Ronald D. Boone
         Richard C. Norris
         Milam Randolph Pharo
         Douglas W. York
         W. David Hart
         George M. Hearne IV
         Julian C. Pope
         Michael H. Rosenzweig
         Garry A. Wilkening
         Kevin E. Willson
         Robert L. Nance
         Robert T. Hanley
         Charles M. Jones
 

#Top of the Document

 

CHANGE OF CONTROL SEVERANCE AMDMNT

Exhibit 10.9

 

FORM OF AMENDMENT TO

CHANGE OF CONTROL EXECUTIVE SEVERANCE AGREEMENT

 

This Amendment (the “Amendment“) to the Change of Control Executive Severance Agreement (the “Agreement”) dated the 16th day of June, 2005, by and between St. Mary Land & Exploration Company, a Delaware corporation (the “Company”), and [an executive referred to on Attachment A] (the “Executive”), is executed by the Company and the Executive on this 16th day of June, 2005.

RECITALS

A.         The Company and the Executive desire to amend certain provisions of the Agreement in order to conform such provisions to the provisions of Section 409A of the Internal Revenue Code and related guidance published by the Internal Revenue Service through the date of this Amendment; and

B.         All capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Agreement.

NOW, THEREFORE, in consideration of the Executive’s continued employment with the Company and the mutual agreements set forth herein, the parties agree as follows:

AGREEMENT

Section 1.

Amendments to Agreement.

(a)        The definition of the term “Change of Control” as set forth in Section 1(d) of the Agreement is hereby amended in its entirety to read as follows:

“(d)

‘Change of Control’ shall mean any of the following events:

(i)             (A)The acquisition by any individual or entity (a “Person”) or group of Persons of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of more than 50% of either (1) the then value of the outstanding shares of common stock of the Company, or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors.

(B)        For purposes of paragraph (A), Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business

 

 

transaction with the Company. If a Person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. For purposes of determining stock ownership, see (d)(iv), below.

(ii)         A majority of members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or

(iii)          (A)Any one Person, or more than one Person acting as a group (as determined in (d)(iii)(C) below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Company that have a total gross fair market value equal to or more than 50 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

(B)        A transfer of assets by the Company is not treated as a change in the ownership of such assets if the assets are transferred to –

(1)        A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;

(2)        An entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the Company;

(3)        A Person, or more than one Person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the Company; or

(4)        An entity, at least 50 percent of the total value or voting power of which is owned, directly or indirectly, by a Person described in (d)(iii)(B)(3).

For purposes of this paragraph (d)(iii)(B) and except as otherwise provided, a Person’s status is determined immediately after the transfer of the assets. For example, a transfer to a corporation in which the Company has no ownership interest before the transaction, but which is a majority-

 

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owned subsidiary of the Company after the transaction, is not treated as a change in the ownership of the assets of the Company.

(C)       Persons will not be considered to be acting as a group for purposes of this paragraph (d)(iii) solely because they purchase assets of the Company at the same time, or as a result of the same public offering. However, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of assets, or similar business transaction with the Company. If a Person, including an entity shareholder, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only to the extent of the ownership in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

(D)       For purposes of determining stock ownership, see (d)(iv) below.

(iv)        For purposes of determining whether there has been a Change of Control, Code Section 318(a) applies to determine stock ownership. Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). For purposes of the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as defined by §§1.83-3(b) and (j) of the income tax regulations promulgated by the Internal Revenue Service), the stock underlying the option is not treated as owned by the individual who holds the option.”

(b)        The definition of the term “Good Reason” as set forth in Section 1(i) of the Agreement is hereby amended to delete the event and condition set forth in Section 1(i)(vii) related to the insolvency of the Company or the filing of a petition for bankruptcy of the Company.

(c)        Section 3(a)(ii) of the Agreement is hereby amended in its entirety to read as follows:

“(ii)       as severance pay, the Company shall continue to make payments to the Executive at the Base Salary rate for the remainder of the Change of Control Period after the Termination Date, in such Base Salary installment amounts and pursuant to such Base Salary installment payment schedule as was in effect immediately prior to the Change of Control; provided, however, that in no event shall such continued payments be made for less than one full year after the Termination Date; and provided, however, that the timing of such payments shall be subject to the provisions of Section 3(d) of this Agreement; and”

 

 

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(d)        A new Section 3(d) is hereby added to the Agreement, which Section 3(d) shall read as follows:

“(d)       Section 409A of the Code. Notwithstanding any other provision of this Agreement to the contrary, in the event that any payments or benefits pursuant to the other provisions of this Agreement would result in the imposition on the Executive of any additional taxes or interest pursuant to the provisions of Section 409A of the Code and any temporary or final Treasury Regulations or Internal Revenue Service guidance thereunder, the timing of such payments or benefits shall be appropriately and equitably adjusted, together with any appropriate and equitable adjustments to reflect the time value of money, and any necessary amendments to the provisions of this Agreement shall be made, in order that the Executive may receive the same economic benefits as provided under this Agreement and in compliance with Section 409A of the Code and without the imposition on the Executive of any additional taxes or interest thereunder. In connection therewith, any payments to the Executive under this Agreement which Section 409A(a)(2)(B)(i) of the Code indicates may not be made before the date which is six months after the date of the Executive’s separation from employment service (the “Section 409A Six-Month Waiting Period”) shall not be made during the Section 409A Six-Month Waiting Period but rather shall be delayed until the expiration of the Section 409A Six-Month Waiting Period. With respect to the severance payments provided for under Section 3(a)(ii) of this Agreement, (i) such severance payments that would otherwise occur during the Section 409A Six-Month Waiting Period shall be paid in lump sum upon the expiration of the Section 409A Six-Month Waiting Period, (ii) such severance payments for the remaining six-month period (immediately after the expiration of the Section 409A Six-Month Waiting Period) of the one full year of severance payments to which the Executive may become entitled under Section 3(a)(ii) of this Agreement shall also be paid in lump sum upon the expiration of the Section 409A Six-Month Waiting Period, and (iii) any additional severance payments (in excess of payments for one full year) to which the Executive may become entitled under Section 3(a)(ii) of this Agreement shall be made pursuant to an installment payment schedule commencing on the date which is one full year after the Termination Date and which is otherwise consistent with the provisions of Section 3(a)(ii) of this Agreement.”

Section 2.         Incorporation of Amendment and Remainder of Agreement. The terms and provisions of Section 1 of this Amendment are hereby incorporated into the Agreement and, except for the amendment provisions herein contained, all of the terms and provisions of the Agreement shall remain in full force and effect, unaltered and unchanged by this Amendment. To the extent that the terms and provisions of this Amendment conflict with the terms and provisions of the Agreement, the terms and provisions of this Amendment shall control.

Section 3.         Execution in Counterparts and by Facsimile. This Amendment may be executed in counterparts and signature pages may be delivered by facsimile transmission.

 

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IN WITNESS WHEREOF, this Amendment to the Change of Control Executive Severance Agreement is hereby duly executed by each party on this 16th day of June, 2005.

 

THE COMPANY:

 

ST. MARY LAND & EXPLORATION COMPANY,

a Delaware corporation

 

By: _______________________________________

Mark A. Hellerstein

Chairman, President and Chief Executive Officer

 

 

EXECUTIVE:

 

___________________________________________

Printed name:________________________________

 

 

5

 

 

 

ATTACHMENT A

TO

FORM OF AMENDMENT TO

CHANGE OF CONTROL EXECUTIVE SEVERANCE AGREEMENT

 

Executives with Change of Control Executive Severance Agreements;

 

All employees of St. Mary Land & Exploration Company who have an officer tile of Vice President or an officer title which is senior to a Vice President.

 

 

6

 

 

 

 

 

 

 

EX-10.28 2 a11-3036_1ex10d28.htm EX-10.28

EXHIBIT 10.28

 

AMENDMENT TO

EMPLOYMENT AGREEMENT

 

This Amendment to Employment Agreement is entered into this 31st day of December, 2010 between SM Energy Company (f/k/a St. Mary Land & Exploration Company), a Delaware corporation (“SM Energy”), and Anthony J. Best (“Best”).  It amends the Employment Agreement between SM Energy and Best dated May 1, 2006.

 

1.             Amendment to Agreement.  The last sentence of Section 10 is hereby deleted and replaced with the following two sentences:

 

In particular, with respect to the severance payments provided for under Section 9 of this Agreement, such severance payments that would otherwise be made during the Section 409A Six-Month Waiting Period shall be paid in one lump sum upon the expiration of the Section 409A Six-Month Waiting Period, together with simple interest on the amount of each deferred payment at the short term applicable federal rate as of the date of the separation of Best from employment.  For purposes of this Agreement, “termination of employment,” “separation from service” or similar language means separation from service by Best from SM Energy for any reason whatsoever within the meaning of Code Section 409A and Treasury Regulation § 1.409A-1(h).

 

2.             Incorporation of Amendment and Remainder of Agreement.  The terms and provisions of Section 1 of this Amendment are hereby incorporated into the Agreement and, except for the amendment provisions herein contained, all of the terms and provisions of the Agreement shall remain in full force and effect, unaltered and unchanged by this Amendment.  To the extent that the terms and provisions of this Amendment conflict with the terms and provisions of the Agreement, the terms and provisions of this Amendment shall control.

 

3.             Execution in Counterparts and Delivery of Signature Pages.  This Amendment may be executed in counterparts and signature pages may be delivered by email or facsimile transmission.

 



 

IN WITNESS WHEREOF, this Amendment to the Employment Agreement is hereby duly executed by each party on this 31st day of December, 2010.

 

AGREED:

 

SM ENERGY COMPANY,

a Delaware corporation

 

 

By:

/s/ JOHN R MONARK

 

 

John R. Monark, Vice President-Human Resources

 

 

 

 

By:

/s/ ANTHONY J. BEST

 

 

Anthony J. Best, CEO & President