August 3, 1995
Ralph H. Smith
7060 S. Yale, Suite 800
Copper Oakes Center
Tulsa, OK 47136-5741
Dear Ralph:
I am pleased to inform you that our Board has elected you
Senior Vice President/ Mid-Continent effective October 1, 1995 on
the terms and conditions we discussed in mid-July. This will
confirm our agreement regarding your employment by St. Mary Land
& Exploration Company on the following terms.
1. Effective date: October 1, 1995.
2. Salary: $167,000 per annum.
3. Benefit Plan Participation: All standard benefit plans
offered by St. Mary, including the following.
Life insurance
Accidental death and dismemberment insurance
Medical insurance
Disability insurance
Dental insurance
Vision care reimbursement
Pension plan (after one year, but will
include 1996)
401(k) plan (after one year)
These plans are described in the St. Mary Land & Exploration
Company Employee Handbook, a copy of which will be provided to
you.
4. Vacation: 4 weeks per annum.
5. Participation: You will participate in all Tulsa-
managed oil and gas interests acquired during each calendar year.
Your initial participation for the period October - December 1995
shall be 7.5%. Thereafter your participation shall be no less
than 2.5% and no more than 10%, the specific participation
percentage to be elected by you on a calendar year basis prior to
the start of each calendar year. A failure by you to advise St.
Mary of your election prior to the start of a calendar year shall
be deemed to be an election by you to continue your participation
for the forthcoming year at the same level as existed for the
year just concluded. All costs associated with your share of
these interests will be paid by you in proportion to your
participation.
6. Incentivized compensation:
a. Participate in the Stock Appreciation Rights
Plan beginning January 1, 1996.
b. Participate in the Cash Bonus Plan beginning
in 1996.
7. Existing interests: You will retain your existing oil
and gas interests and will incur your pro rata share of all
exploration, development and operating costs.
We have agreed that, as long you have oil and gas interests
administered by St. Mary or any related entity, you will combine
your interest (but not your title) with those of St. Mary and
others for revenue and joint interest billing purposes only. In
addition, you will pay your pro rata share of all overhead costs
(net of COPAS reimbursements, interest earned by suspensed funds,
and charges to outsiders such as Dona and Kent) incurred with
respect to assets jointly owned by St. Mary and you. As between
St. Mary, George, Dona and you, our respective shares of these
costs have been 65%-St. Mary and 5%-you. Accordingly, as you and
St. Mary go forward with interests managed by the Tulsa office,
these costs will be shared 92.8571% by St. Mary and 7.1429% by
you. However, there will be applied against your share of
overhead costs a credit equal to 2.5% of St. Mary's share of non-
overhead expenditures for leasehold acquisitions, exploration and
seismic programs and drilling operations on interests managed
from the Tulsa office, the credit to be reduced by the increase
in your vested interest in the Pension Plan for that calendar
year.
We have also agreed that, if at some future time you dispose
of your working interests in properties managed by the Tulsa
office and terminate your ongoing participation with St. Mary in
the acquisition, exploration and development of Tulsa-managed
properties, as long as you are employed by St. Mary you will be
eligible to participate in the Company's Net Profits Interest
Bonus Plan in accordance with the terms and conditions of the
Plan as a replacement for the credit against overhead described
above. Under this Plan, an annual "pool" of oil and gas wells
completed, plugged and abandoned, or acquired by the Company
during each calendar year is created. In addition, a separate
pool is created for any unusually large oil and gas project which
has commenced or been acquired during a calendar year. When the
revenue from these pools equals 100% of all costs incurred with
respect to the interests in each pool plus all leasehold,
geological and geophysical costs incurred during that year
(together with interest at prime rate on the separate pools for
unusually large projects or acquisitions), 10% of the subsequent
net profits are distributable to participants in each such pool.
When the Company has recovered 200% of such costs, the amount
distributable to pool participants increases to 20% of net
profits.
This agreement is for an indefinite term, subject to the
right of each party to terminate it upon six months written
notice delivered to the other party. We have agreed that, in the
event this employment relationship is terminated either by you or
by St. Mary, a copy will be made of all technical data and
records relating to the interests managed by the Tulsa office and
any other oil and gas properties in which you and St. Mary may
have a joint interest, and a copy will be provided to each party.
The cost of the copies will be shared by you and St. Mary in
proportion to our overhead sharing ratios described above.
Finally, certain furniture in the Tulsa office has been
purchased and contributed by you, and you shall be entitled to
that furniture at such time as this employment relationship is
terminated.
If this letter satisfactorily sets for the terms of our
agreement, please indicate by signing below and returning one
copy to me.
Very truly yours,
Mark A. Hellerstein
President and Chief Executive Officer
Acknowledged and agreed to this ______ day of August, 1995 in
Tulsa, Oklahoma.
_______________________________________
Ralph H. Smith