As filed with the Securities and Exchange Commission on April 20, 2000
Securities Act Registration No. 333-_________
Exchange Act Registration No. 0-20872
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ST. MARY LAND & EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 41-0518430
(State or other jurisdiction (IRS Employer
of incorporation or Identification No.)
organization)
1776 Lincoln Street, Suite 1100
Denver, Colorado 80203
(Address of Principal Executive Offices, including Zip Code)
St. Mary Land & Exploration Company
Stock Option Plan
and
St. Mary Land & Exploration Company
Incentive Stock Option Plan
(Full title of the plans)
Mark A. Hellerstein
President and Chief Executive Officer
St. Mary Land & Exploration Company
1776 Lincoln Street, Suite 1100
Denver, Colorado 80203
(Name and address of agent for service)
(303) 861-8140
(Telephone number, including area code, of agent for service)
<PAGE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum maximum
<TABLE>
<CAPTION>
Title of securities Amount to be offering price aggregate offering Amount of
to be registered registered per share price(1) registration fee
---------------- ---------- --------- -------- ----------------
<S> <C> <C> <C> <C>
Common stock 950,000 shares $33.25(1) $31,587,500 $8,339(2)
</TABLE>
$.01 par value
(1) Solely for the purpose of computing the registration fee in accordance with
Rule 457(h), the price shown is based upon the price of $33.25 per share, the
average of the high and low selling prices for the registrant's common stock as
reported on the Nasdaq National Market System on April 18, 2000.
(2) Calculated under Section 6(b) of the Securities Act as .000264 of
$31,587,500.
This registration statement relates to the previously filed
registration statement discussed below and is being filed under General
Instruction E. of Form S-8 in order to register additional shares of the same
class as other securities for which a registration statement filed on this form
relating to the same employee benefit plan is effective.
On June 25, 1997, the registrant filed a registration statement on Form
S-8 (File No. 333-30055) to register 754,614 shares of common stock, which
included shares of common stock which were issuable under the St. Mary Land &
Exploration Company Stock Option Plan and St. Mary Land & Exploration Company
Incentive Stock Option Plan. The contents of that registration statement are
incorporated by reference into this registration statement. The registrant is
now filing this separate registration statement to register an additional
950,000 shares of common stock which may be issued under the St. Mary Land &
Exploration Company Stock Option Plan and St. Mary Incentive Stock Option Plan.
<PAGE>
Item 8. Exhibits.
The following exhibits are furnished as part of this registration
statement:
Exhibit
No. Description
- --------- -----------
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP*
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in Exhibit
5.1)*
23.3 Consent of Ryder Scott Company, L.P.*
24.1 Power of Attorney (included on signature page hereof)*
99.1 St. Mary Land & Exploration Company Stock Option Plan, as amended on
March 25, 1999 and January 27, 2000*
99.2 St. Mary Land & Exploration Company Incentive Stock Option Plan, as
amended on March 25, 1999 and January 27, 2000*
- ----------------------------
* Filed herewith.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Denver, State of Colorado, on April 20, 2000.
ST. MARY LAND & EXPLORATION COMPANY
By: /s/ MARK A. HELLERSTEIN
-----------------------------
Mark A. Hellerstein,
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes,
constitutes and appoints Mark A. Hellerstein his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his own name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments and other amendments
thereto) to this registration statement on Form S-8 and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing as
he could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ THOMAS E. CONGDON Chairman of the Board and Director April 18, 2000
- ---------------------
Thomas E. Congdon
/s/ MARK A. HELLERSTEIN President, Chief Executive Officer April 20, 2000
- ----------------------- and Director
Mark A. Hellerstein
/s/ RONALD D. BOONE Executive Vice President, Chief April 18, 2000
- ------------------- Operating Officer and Director
Ronald D. Boone
<PAGE>
Signature Title Date
--------- ----- ----
/s/ RICHARD C. NORRIS Vice President - Finance, Secretary April 19, 2000
- --------------------- and Treasurer
Richard C. Norris
/s/ GARRY A. WILLKENING Vice President - Administration April 19, 2000
- ----------------------- and Controller
Garry A. Wilkening
Director
- -------------------
Larry W. Bickle
/s/ DAVID S. DUDLEY Director April 19, 2000
- -------------------
David C. Dudley
/s/ ROBERT L. NANCE Director April 19, 2000
- -------------------
Robert L. Nance
/s/ R. JAMES NICHOLSON Director April 18, 2000
- ----------------------
R. James Nicholson
Director
- ----------------------
Arend J. Sandbulte
Director
- -----------------
John M. Seidl
Director
- -------------
Jack Hunt
Director
- -----------------------
William J. Gardiner
April 19, 2000
St. Mary Land & Exploration Company
1776 Lincoln Street, Suite 1100
Denver, Colorado 80203
Re: St. Mary Land & Exploration Company Stock Option Plan
and St. Mary Land & Exploration Company Incentive Stock
Option Plan (the "Plans")
Gentlemen:
We have acted as counsel to St. Mary Land & Exploration
Company, a Delaware corporation ("St. Mary"), in connection with the filing of a
Registration Statement on Form S-8 (the "Registration Statement") to register
under the Securities Act of 1933, as amended, an additional 950,000 shares of
St. Mary common stock (the "Shares") issuable from time to time upon the
exercise of options ("Options") granted under the Plans.
In that connection, we have examined originals and copies,
certified or otherwise identified to our satisfaction, of the Plans and such
other documents, corporate records and instruments as we have deemed necessary
for the purposes of the opinion expressed below. In giving this opinion, we are
assuming the authenticity of all instruments presented to us as originals, the
conformity with the originals of all instruments presented to us as copies and
the genuineness of all signatures.
Based upon the foregoing, we are of the opinion that the
Shares, when issued upon exercise of the Options granted under the Plans and
upon payment of the option exercise price in accordance with the terms of the
Plans, will be legally issued, fully paid and nonassessable.
We express no opinion concerning the laws of any jurisdiction
other than the laws of the United States and the laws of the State of Delaware.
We do not undertake to advise you of any changes in the opinion expressed herein
resulting from changes in law, changes in facts or any other matters that might
occur or be brought to our attention after the date hereof.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 17, 2000
included in St. Mary Land & Exploration Company's Form 10-K for the year ended
December 31, 1999 and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
- -----------------------
Arthur Andersen LLP
Denver, Colorado,
April 19, 2000.
EXHIBIT 23.3
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS
The undersigned hereby consents to the incorporation by reference in
the St. Mary Land & Exploration Company registration statement on Form S-8 (File
No. 333-__________) of information contained in our reserve reports as of
January 1, 1998, 1999 and 2000 setting forth estimates of revenues from St. Mary
Land & Exploration Company's oil and gas reserves.
/s/ RYDER SCOTT COMPANY, L.P.
-----------------------------
Ryder Scott Company, L.P.
Denver, Colorado
April 20, 2000
EXHIBIT 99.1
As Amended on January 27, 2000
ST. MARY LAND & EXPLORATION COMPANY
-----------------------------------
STOCK OPTION PLAN
-----------------
ARTICLE I
ESTABLISHMENT AND PURPOSE
-------------------------
1.1 Establishment. St. Mary Land & Exploration Company, a Delaware
-------------
corporation (the "Company"), hereby establishes a stock option plan for key
employees, consultants and members of the Board of Directors of the Company or
of a subsidiary of the Company, providing material services to the Company,
which shall be known as the ST. MARY LAND & EXPLORATION COMPANY STOCK OPTION
PLAN (the "Plan"). The Company shall enter into Option agreements with Optionees
pursuant to the Plan.
1.2 Purpose. The purpose of the Plan is to enhance shareholder value by
-------
attracting, retaining and motivating key employees, consultants and members of
the Board of Directors of the Company and of a subsidiary of the Company by
providing them with a means to acquire a proprietary interest in the Company's
success.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
-----------------------------
All current and former employees, consultants and members of the Board
of Directors of the Company (the "Board"), and of any subsidiary of the Company,
are eligible to participate in the Plan and receive Options under the Plan.
Optionees under the Plan shall be selected by the Board, in its sole discretion,
from among those current and former employees, consultants and members of the
Board of the Company, and of any subsidiary of the Company, who, in the opinion
of the Board, are or were in a position to contribute materially to the
Company's continued growth and development and to its long-term success.
<PAGE>
ARTICLE III
ADMINISTRATION
--------------
Administration. The Board shall be responsible for administering the Plan.
--------------
(a) The Board is authorized to interpret the Plan; to prescribe,
amend, and rescind rules and regulations relating to the Plan; to provide
for conditions and assurances deemed necessary or advisable to protect the
interests of the Company with respect to the Plan; and to make all other
determinations necessary or advisable for the administration of the Plan.
Determinations, interpretations, or other actions made or taken by the
Board with respect to the Plan and Options granted under the Plan shall be
final and binding and conclusive for all purposes and upon all persons.
(b) At the discretion of the Board the Plan may be administered by a
Committee of two or more non-employee Directors appointed by the Board (the
"Committee"). The members of the Committee may be Directors who are
eligible to receive Options under the Plan, but Options may be granted to
such persons only by action of the full Board and not by action of the
Committee. The Committee shall have full power and authority, subject to
the limitations of the Plan and any limitations imposed by the Board, to
construe, interpret and administer the Plan and to make determinations
which shall be final, conclusive and binding upon all persons, including
any persons having any interests in any Options which may be granted under
the Plan, and, by resolution or resolutions to provide for the creation and
issuance of any Option, to fix the terms upon which and the time or times
at or within which, and the price or prices at which any shares may be
purchased from the Company upon the exercise of an Option. Such terms, time
or times and price or prices shall, in every case, be set forth or
incorporated by reference in the instrument or instruments evidencing an
Option, and shall be consistent with the provisions of the Plan.
(c) Where a Committee has been created by the Board pursuant to this
Article III, references in the Plan to actions to be taken by the Board
shall be deemed to refer to the Committee as well, except where limited by
the Plan or by the Board.
(d) No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under it.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
-------------------------
4.1 Number. The total number of shares of common stock of the Company
------
(the "Stock") hereby made available and reserved for issuance under the Plan
upon exercise of Options shall be 1,650,000 shares. Notwithstanding anything to
the contrary contained in the foregoing, to the extent that options are issued
under any Incentive Stock Option Plan adopted by the Company, the shares of
common stock reserved for issuance pursuant to Options granted under this Plan
shall be reduced. The aggregate number of shares of Stock available under the
Plan shall be subject to adjustment as provided in Section 4.3.
<PAGE>
4.2 Unused Stock. If an Option shall expire or terminate for any reason
------------
without having been exercised in full, or if an "immaculate cashless exercise"
(as described in Section 5.4) results in the issuance of a reduced number of
shares in satisfaction of an option grant, the unpurchased shares of Stock
subject thereto shall (unless the Plan shall have terminated) become available
for other Options under the Plan.
4.3 Adjustment in Capitalization. In the event of any change in the
-------------------------------
outstanding shares of Stock of the Company by reason of a stock dividend or
split, recapitalization, reclassification, or other similar capital change, the
aggregate number of shares of Stock set forth in Section 4.1 shall be
appropriately adjusted by the Board, whose determination shall be conclusive. In
any such case, the number and kind of shares of Stock that are subject to any
Option and the Option price per share shall be proportionately and appropriately
adjusted without any change in the aggregate Option price to be paid therefor
upon exercise of the Option.
ARTICLE V
TERMS OF STOCK OPTIONS
----------------------
5.1 Grant of Options. Subject to Section 4.1, Options may be granted to
----------------
current and former employees, consultants and members of the Board of the
Company and of any subsidiary of the Company at any time and from time to time
as determined by the Board. The Board shall have complete discretion in
determining the terms and conditions and number of Options granted to each
Optionee. In making such determinations, the Board may take into account the
nature of services rendered by such current and former employees, consultants
and members of the Board, their present and potential contributions to the
Company and such other factors as the Board in its discretion shall deem
relevant.
5.2 Option Agreement; Terms and Conditions to Apply Unless Otherwise
-------------------------------------------------------------------
Specified. As determined by the Board on the date of grant, each Option shall be
- ---------
evidenced by an option agreement (the "Option Agreement") that specifies: the
Option price; the duration of the Option; the number of shares of Stock to which
the Option applies; such vesting or exercisability restrictions which the Board
may impose; and any other terms or conditions which the Board may impose. All
such terms and conditions shall be determined by the Board at the time of grant
of the Option.
(a) If not otherwise specified by the Board, the following terms and
conditions shall apply to Options granted under the Plan:
(i) Term.The duration of the Option shall be for ten years from
----
the date of grant.
(ii) Exercise of Option. Unless an Option is terminated as
--------------------
provided hereunder, an Optionee may exercise an Option pursuant to a
vesting and exercisability schedule as determined by the Board, which
vesting and exercisability schedule shall provide that (A) an Option
held by an Optionee who retires from employment with the Company after
having both reached the age of sixty and
<PAGE>
completed twelve years of service with the Company shall continue to
vest in accordance with the vesting schedule set forth in the
applicable Option Agreement notwithstanding the termination of the
Optionee's employment with the Company, provided that prior to the
exercise of the Option such Optionee does not after such retirement
become employed on a full-time basis by a competitor of the Company
prior to reaching age sixty-five, and (B) an Option held by a
non-employee Director of the Company who retires from the Board after
completing at least five years of service to the Company shall become
fully vested.
(iii) Termination. Each Option granted pursuant to the Plan shall
-----------
expire upon the earliest to occur of:
(A) The date set forth in such Option, not to exceed ten
years from the date of grant;
(B) The completion of the merger or sale of substantially
all of the Stock or assets of the Company with or to another
company in a transaction in which the Company is not the
survivor, except for the merger of the Company into a
wholly-owned subsidiary (and the Company shall not be considered
the surviving corporation for purposes hereof if the Company is
the survivor of a reverse triangular merger), provided that the
Company shall have given the Optionee at least thirty days' prior
written notice of its intent to enter into such merger or sale;
or
(C) The termination of the employment of an Optionee for
cause by the Company.
(iv) Acceleration. An Option shall become fully vested and
------------
exercisable irrespective of its other provisions (A) immediately prior
to the completion of the merger or sale of substantially all of the
stock or assets of the Company in a transaction in which the Company
is not the survivor, except for the merger of the Company into a
wholly-owned subsidiary (and the Company shall not be considered the
surviving corporation for purposes hereof if the Company is the
survivor of a reverse triangular merger); (B) upon termination of the
Optionee's employment with the Company or a subsidiary thereof because
of death, disability or normal retirement upon reaching the age of
sixty-five; or (C) in the event that the Optionee is a non-employee
member of the Company's Board of Directors, upon retirement from the
Company's Board of Directors after reaching the age of seventy.
(v) Transferability.In addition to the Optionee, the Option may
---------------
be exercised, to the extent exercisable by the Optionee, by the person
or persons to whom the Optionee's rights under the Option pass by will
or the laws of descent and distribution, by the spouse or the
descendants of the Optionee or by trusts for such persons, to whom or
which the Optionee may have transferred the Option, or by legal
representative of any of the foregoing. Any such transfer shall be
made only in
<PAGE>
compliance with the Securities Act of 1933, as amended, and the
requirements therefor as set forth by the Company.
(b) The Board shall be free to specify terms and conditions
other than and in addition to those set forth above, in its
discretion.
(c) All Option Agreements shall incorporate the provisions
of the Plan by reference.
5.3 Option Price. No Option granted pursuant to the Plan shall have an
------------
Option price that is less than the fair market value of Stock on the date the
Option is granted, as determined by the Board. The Option exercise price shall
be subject to adjustment as provided in Section 4.3 above.
5.4 Payment. Payment for all shares of Stock shall be made at the time
-------
that an Option, or any part thereof, is exercised, and no shares shall be issued
until full payment therefor has been made. Payment shall be made (i) in cash, or
(ii) if acceptable to the Board, in Stock, by the surrender of Option rights
hereunder valued at the difference between the Option exercise price plus income
taxes to be withheld, if any, and the fair market value of the common stock
(referred to as "immaculate cashless exercise"), or in some other form.
ARTICLE VI
WRITTEN NOTICE, ISSUANCE OF STOCK
CERTIFICATES, SHAREHOLDER PRIVILEGES
------------------------------------
6.1 Written Notice. An Optionee wishing to exercise an Option shall
---------------
give written notice to the Company, in the form and manner prescribed by the
Board. Full payment for the shares of Stock acquired pursuant to the Option must
accompany the written notice.
6.2 Issuance of Stock Certificates. As soon as practicable after the
------------------------------
receipt of written notice and payment, the Company shall deliver to the Optionee
a certificate or certificates for the requisite number of shares of Stock.
6.3 Privileges of a Shareholder. An Optionee or any other person
-----------------------------
entitled to exercise an Option under the Option Agreement shall not have
shareholder privileges with respect to any Stock covered by the Option until the
date of issuance of a stock certificate for such Stock.
ARTICLE VII
RIGHTS OF OPTIONEES
-------------------
Nothing in the Plan shall interfere with or limit in any way the right
of the Company or a subsidiary corporation to terminate any employee's or
consultant's employment at any time, nor confer upon any employee or consultant
any right to continue in the employ of the Company or a subsidiary corporation.
<PAGE>
ARTICLE VIII
AMENDMENT, MODIFICATION, AND
TERMINATION OF THE PLAN
-----------------------
The Board may at any time terminate and from time to time may amend or
modify the Plan. Any amendment or modification of the Plan by the Board may be
accomplished without approval of the shareholders of the Company, except in the
event that shareholder approval of such amendment or modification is required by
any law or regulation governing the Company.
No amendment, modification, or termination of the Plan shall in any
manner adversely affect any outstanding Option under the Plan without the
consent of the Optionee holding the Option.
<PAGE>
ARTICLE IX
ACQUISITION, MERGER OR LIQUIDATION
----------------------------------
9.1 Acquisition.
-----------
(a) In the event that an acquisition occurs with respect to
the Company, the Company shall have the option, but not the obligation,
to cancel Options outstanding as of the effective date of such
acquisition, whether or not such Options are then exercisable, in
return for payment to the Optionees of an amount equal to a reasonable
estimate of an amount (hereinafter the "Spread"), determined by the
Board, equal to the difference between the net amount per share payable
in the acquisition or as a result of the acquisition, less the exercise
price of the Option. In estimating the Spread, appropriate adjustments
to give effect to the existence of the Options shall be made, such as
deeming the Options to have been exercised, with the Company receiving
the exercise price payable thereunder, and treating the Stock
receivable upon exercise of the Options as being outstanding in
determining the net amount per share.
(b) For purposes of this section, an "acquisition" shall mean
any transaction in which substantially all of the Company's assets are
acquired or in which a controlling amount of the Company's outstanding
shares are acquired, in each case by a single person or entity or an
affiliated group of persons and entities. For purposes of this section,
a controlling amount shall mean more than fifty percent of the issued
and outstanding shares of Stock of the Company. The Company shall have
the above option to cancel Options regardless of how the acquisition is
effectuated, whether by direct purchase, through a merger or similar
corporate transaction, or otherwise. In cases where the acquisition
consists of the acquisition of assets of the Company, the net amount
per share shall be calculated on the basis of the net amount receivable
with respect to shares upon a distribution and liquidation by the
Company after giving effect to expenses and charges, including but not
limited to taxes, payable by the Company before the liquidation can be
completed.
(c) Where the Company does not exercise its option under this
Section 9.1 the remaining provisions of this Article IX shall apply, to
the extent applicable.
9.2 Merger or Consolidation. If the Company shall be the surviving
------------------------
corporation in any merger or consolidation, any Option granted hereunder shall
pertain to and apply to the securities to which a holder of the number of shares
of Stock subject to the Option would have been entitled in such merger or
consolidation, provided that the Company shall not be considered the surviving
corporation for purposes hereof if the Company is the survivor of a reverse
triangular merger.
9.3 Other Transactions. A dissolution or a liquidation of the Company
-------------------
or a merger and consolidation in which the Company is not the surviving
corporation (the Company shall not be considered the surviving corporation for
purposes hereof if the Company is the survivor of a reverse triangular merger)
shall cause every Option outstanding hereunder to terminate as of the effective
date of such dissolution, liquidation, merger or
<PAGE>
consolidation. However, the Optionee either (i) shall be offered a firm
commitment whereby the resulting or surviving corporation in a merger or
consolidation will tender to the Optionee an option (the "Substitute Option") to
purchase its shares on terms and conditions both as to number of shares and
otherwise, which will substantially preserve to the Optionee the rights and
benefits of the Option outstanding hereunder granted by the Company, or (ii)
shall have the right immediately prior to such dissolution, liquidation, merger,
or consolidation to exercise any unexercised Options whether or not then vested,
subject to the other provisions of the Plan. The Board shall have absolute and
uncontrolled discretion to determine whether the Optionee has been offered a
firm commitment and whether the tendered Substitute Option will substantially
preserve to the Optionee the rights and benefits of the Option outstanding
hereunder.
ARTICLE X
SECURITIES REGISTRATION
-----------------------
10.1 Securities Registration. In the event that the Company shall deem
-----------------------
it necessary or desirable to register under the Securities Act of 1933, as
amended, or any other applicable statute, any Options or any Stock with respect
to which an Option may be or shall have been granted or exercised, or to qualify
any such Options or Stock under the Securities Act of 1933, as amended, or any
other statute, then the Optionee shall cooperate with the Company and take such
action as is necessary to permit registration or qualification of such Options
or Stock.
10.2 Representations. Unless the Company has determined that the
---------------
following representation is unnecessary, each person exercising an Option under
the Plan may be required by the Company, as a condition to the issuance of the
shares of Stock pursuant to exercise of the Option, to make a representation in
writing (i) that he is acquiring such shares for his own account for investment
and not with a view to, or for sale in connection with, the distribution of any
part thereof within the meaning of the Securities Act of 1933, and (ii) that
before any transfer in connection with the resale of such shares, he will obtain
the written opinion of counsel for the Company, or other counsel acceptable to
the Company, that such shares may be transferred without registration thereof.
The Company may also require that the certificates representing such shares
contain legends reflecting the foregoing. To the extent permitted by law,
including the Securities Act of 1933, nothing herein shall restrict the right of
a person exercising an Option to sell the shares received in an open market
transaction.
ARTICLE XI
TAX WITHHOLDING
---------------
Whenever shares of Stock are to be issued in satisfaction of Options
exercised under the Plan, the Company shall have the power to require the
recipient of the Stock to remit to the Company an amount sufficient to satisfy
federal, state, and local withholding tax requirements, if any.
<PAGE>
ARTICLE XII
INDEMNIFICATION
---------------
To the extent permitted by law, each person who is or shall have been a
member of the Board or the Committee shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of judgment in any such
action, suit, or proceeding against him, provided he shall give the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's certificate of
incorporation or bylaws, as a matter of law, or otherwise, or any power that the
Company or a Subsidiary Corporation may have to indemnify them or hold them
harmless.
ARTICLE XIII
REQUIREMENTS OF LAW
-------------------
13.1 Requirements of Law. The granting of Options and the issuance of
--------------------
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
13.2 Governing Law. The Plan, and all agreements hereunder, shall be
-------------
construed in accordance with and governed by the laws of the State of Colorado.
ARTICLE XIV
EFFECTIVE DATE OF PLAN
----------------------
The Plan shall be effective on November 21, 1996.
ARTICLE XV
NO OBLIGATION TO EXERCISE OPTION
--------------------------------
The granting of an Option shall impose no obligation upon the holder
thereof to exercise such Option.
<PAGE>
THIS STOCK OPTION PLAN was adopted by the Board of Directors of St.
Mary Land & Exploration Company on November 21, 1996, to be effective upon
adoption, and was amended by the Board of Directors on January 31, 1997, on
March 25, 1999 to increase the number of shares available for issuance under
Article IV to 1,650,000, and on January 27, 2000.
ST. MARY LAND & EXPLORATION COMPANY
By: /s/ RICHARD C. NORRIS
---------------------
Richard C. Norris
Title: Vice President-Finance, Secretary and Treasurer
EXHIBIT 99.2
As Amended on January 27, 2000
ST. MARY LAND & EXPLORATION COMPANY
INCENTIVE STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
-------------------------
1.1 Establishment. St. Mary Land & Exploration Company, a Delaware
-------------
corporation (the "Company"), hereby establishes a stock option plan for key
employees providing material services to the Company or any subsidiary of the
Company as described herein, which shall be known as the "ST. MARY LAND &
EXPLORATION COMPANY INCENTIVE STOCK OPTION PLAN" (the "Plan"). It is intended
that the options issued to employees pursuant to the Plan constitute incentive
stock options within the meaning of Section 422 of the Internal Revenue Code.
The Company shall enter into stock option agreements with recipients of options
pursuant to the Plan.
1.2 Purpose. The purpose of the Plan is to enhance shareholder value by
-------
attracting, retaining and motivating key employees of the Company and of any
subsidiary of the Company by providing them with a means to acquire a
proprietary interest in the Company's success.
ARTICLE II
DEFINITIONS
-----------
2.1 Definitions. Whenever used herein, the following terms shall have
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the respective meanings set forth below, unless the context clearly requires
otherwise, and when such meaning is intended, the term shall be capitalized.
(a) "Board" means the Board of Directors of the Company.
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(b) "Code" means the Internal Revenue Code of 1986, as
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amended.
(c) "Committee" shall mean the Committee provided for by
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Article IV hereof, which may be created at the discretion of the Board.
(d) "Company" means St. Mary Land & Exploration Company, a
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Delaware corporation.
(e) "Date of Exercise" means the date the Company receives
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notice, by an Optionee, of the exercise of an Option pursuant to
Section 8.1 of the Plan. Such notice shall indicate the number of
shares of Stock the Optionee intends to acquire pursuant to exercise of
the Option.
(f) "Employee" means any person, including an officer or
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director of the Company or a Subsidiary Corporation, who is employed by
the Company or a Subsidiary Corporation.
(g) "Fair Market Value" means the fair market value of Stock
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upon which an option is granted under the Plan, determined as follows:
(i) If the Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange, the
Fair Market Value shall be the last reported sale price of the
Stock on the composite tape of such exchange on the date of
issuance of this option, or if such day is not a normal trading
day, the last trading day prior to the date of issuance of this
option, and if no
<PAGE>
such sale is made on such day, the Fair Market Value shall be the
average closing bid and asked prices for such day on the
composite tape of such exchange; or
(ii) If the Stock is not so listed or admitted to unlisted
trading privileges, the Fair Market Value shall be the mean of
the last reported bid and asked prices reported by the National
Association of Securities Dealers Quotation System (or, if not so
quoted on NASDAQ, by the National Quotation Bureau, Inc.) on the
last trading day prior to the date of issuance of the option.
(h) "Incentive Stock Option" means an Option granted under the
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Plan which is intended to qualify as an "incentive stock option" within
the meaning of Section 422 of the Code.
(i) "Option" means the right, granted under the Plan, to
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purchase Stock of the Company at the option price for a specified
period of time.
(j) "Optionee" means an Employee holding an Option under the
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Plan.
(k) "Parent Corporation" shall have the meaning set forth in
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Section 424(e) of the Code with the Company being treated as the
employer corporation for purposes of this definition.
(l) "Subsidiary Corporation" shall have the meaning set forth
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in Section 424(f) of the Code with the Company being treated as the
employer corporation for purposes of this definition.
(m) "Significant Shareholder" means an individual who, within
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the meaning of Section 422(b)(6) of the Code, owns stock possessing
more than ten percent of the total combined voting power of all classes
of stock of the Company or of any Parent Corporation or Subsidiary
Corporation of the Company. In determining whether an individual is a
Significant Shareholder, an individual shall be treated as owning stock
owned by certain relatives of the individual and certain stock owned by
corporations in which the individual is a shareholder, partnerships in
which the individual is a partner, and estates or trusts of which the
individual is a beneficiary, all as provided in Section 424(d) of the
Code.
(n) "Stock" mean the $.01 par value common stock of the
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Company.
2.2 Gender and Number. Except when otherwise indicated by the context,
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any masculine terminology when used in the Plan also shall include the feminine
gender, and the definition of any term herein in the singular also shall include
the plural.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
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All Employees are eligible to participate in the Plan and receive
Incentive Stock Options under the Plan. Optionees in the Plan shall be selected
by the Board, in its sole discretion, from among those Employees who, in the
opinion of the Board, are in a position to contribute materially to the
Company's continued growth and development and to its long-term financial
success.
ARTICLE IV
ADMINISTRATION
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The Board shall be responsible for administering the Plan.
(a) The Board is authorized to interpret the Plan; to
prescribe, amend, and rescind rules and regulations relating to the
Plan; to provide for conditions and assurances deemed necessary or
advisable to protect the interests of the Company; and to make all
other determinations necessary or advisable for the administration of
the Plan. Determinations, interpretations, or other actions made or
taken by the Board with respect to the Plan and Options granted under
the Plan shall be final and binding and conclusive for all purposes and
upon all persons.
<PAGE>
(b) At the discretion of the Board the Plan may be
administered by a Committee of two or more non-employee Directors
appointed by the Board (the "Committee"). The Committee shall have full
power and authority, subject to the limitations of the Plan and any
limitations imposed by the Board, to construe, interpret and administer
the Plan and to make determinations which shall be final, conclusive
and binding upon all persons, including any persons having any
interests in any Options which may be granted under the Plan, and, by
resolution or resolutions to provide for the creation and issuance of
any Option, to fix the terms upon which, the time or times at or within
which, and the price or prices at which any shares of Stock may be
purchased from the Company upon the exercise of an Option. Such terms,
time or times and price or prices shall, in every case, be set forth or
incorporated by reference in the instrument or instruments evidencing
an Option, and shall be consistent with the provisions of the Plan.
(c) Where a Committee has been created by the Board pursuant
to this Article IV, references in the Plan to actions to be taken by
the Board shall be deemed to refer to the Committee as well, except
where limited by the Plan or by the Board.
(d) No member of the Board or the Committee shall be liable
for any action or determination made in good faith with respect to the
Plan or any Option granted under it.
ARTICLE V
STOCK SUBJECT TO THE PLAN
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5.1 Number. The total number of shares of Stock hereby made available
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and reserved for issuance under the Plan upon exercise of Options shall be
1,650,000 shares. Notwithstanding anything to the contrary contained in the
foregoing, to the extent that options are issued under any other current Stock
Option Plan adopted by the Company, the shares of Stock reserved for issuance
pursuant to Options granted under the Plan shall be reduced. The aggregate
number of shares of Stock available under the Plan shall be subject to
adjustment as provided in Section 5.3.
5.2 Unused Stock. If an Option shall expire or terminate for any reason
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without having been exercised in full, the unpurchased shares of Stock subject
thereto shall (unless the Plan shall have terminated) become available for other
Options under the Plan.
5.3 Adjustment in Capitalization. In the event of any change in the
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outstanding shares of Stock by reason of a stock dividend or split,
recapitalization, reclassification, or other similar capital change, the
aggregate number of shares of Stock set forth in Section 5.1 shall be
appropriately adjusted by the Board, whose determination shall be conclusive. In
any such case, the number and kind of shares of Stock that are subject to any
Option and the Option price per share shall be proportionately and appropriately
adjusted without any change in the aggregate Option price to be paid therefor
upon exercise of the Option.
ARTICLE VI
DURATION OF THE PLAN
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Subject to approval of shareholders, the Plan shall be in effect for
ten years from the date of its adoption by the Board. Any Options outstanding at
the end of such period shall remain in effect in accordance with their terms.
The Plan shall terminate before the end of such period if all Stock subject to
it has been purchased pursuant to the exercise of Options granted under the
Plan.
ARTICLE VII
TERMS OF STOCK OPTIONS
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7.1 Grant of Options. Subject to Section 5.1, Options may be granted to
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Employees at any time and from time to time as determined by the Board. The
Board shall have complete discretion in determining the terms and conditions and
number of Options granted to each Optionee. In making such determinations, the
Board may take into account the nature of services rendered by such Employees,
their present and potential contributions to the Company and its Subsidiary
Corporations, and such other factors as the Board in its discretion shall deem
relevant. The Board is expressly given the authority to issue amended or
replacement Options with respect to shares of Stock subject to an
<PAGE>
Option previously granted hereunder. An amended Option amends the terms of an
Option previously granted and thereby supersedes the previous Option. A
replacement Option is similar to a new Option granted hereunder except that it
provides that it shall be forfeited to the extent that a previously granted
Option is exercised, or except that its issuance is conditioned upon the
termination of a previously granted Option.
7.2 No Tandem Options. Where an Option granted under the Plan is
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intended to be an Incentive Stock Option, the Option shall not contain terms
pursuant to which the exercise of the Option would affect the Optionee's right
to exercise another Option, or vice versa, such that the Option intended to be
an Incentive Stock Option would be deemed a tandem stock option within the
meaning of the regulations under Section 422 of the Code.
7.3 Option Agreement; Terms and Conditions to Apply Unless Otherwise
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Specified. As determined by the Board on the date of grant, each Option shall be
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evidenced by an Option agreement (the "Option Agreement") that includes the
non-transferability provisions required by Section 10.2 hereof and that
specifies: the Option price; the duration of the Option; the number of shares of
Stock to which the Option applies; such vesting or exercisability restrictions
which the Board may impose and any other terms or conditions which the Board may
impose. All such terms and conditions shall be determined by the Board at the
time of grant of the Option.
(a) If not otherwise specified by the Board, the following terms
and conditions shall apply to Options granted under the Plan:
(i) Term. The duration of the Option shall be for ten years
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from the date of grant.
(ii) Exercise of Option. Unless an Option is terminated as
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provided hereunder, an Optionee may exercise an Option pursuant
to a vesting and exercisability schedule as determined by the
Board, which vesting and exercisability schedule shall provide
that an Option held by an Optionee who terminates his employment
with the Company for reasons other than death, permanent and
total disability, or termination of employment by the Company for
cause shall upon such termination become exercisable to the
extent vested immediately prior to such termination.
(iii) Termination. Each Option granted pursuant to the Plan
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shall expire upon the earliest to occur of:
(A) The date set forth in such Option, not to exceed
ten years from the date of grant (five years in the case of
a Significant Shareholder);
<PAGE>
(B) The completion of the merger or sale of
substantially all of the Stock or assets of the Company with
or to another company in a transaction in which the Company
is not the survivor, except for the merger of the Company
into a wholly-owned subsidiary and, provided that the
Company shall have given the Optionee at least thirty days'
prior written notice of its intent to enter into such merger
or sale (and the Company shall not be considered the
surviving corporation for purposes hereof if the Company is
the survivor of a reverse triangular merger);
(C) Ninety days following the termination of the
employment of an Optionee, except for termination for cause
by the Company or termination because of the Optionee's
death or disability (in which event of termination of
employment due to the Optionee's death or disability, the
Option shall expire one year following the termination of
employment of an Optionee); or
(D) Immediately upon the termination of the employment
of an Optionee by the Company for cause.
(iv) Acceleration. An Option shall become fully vested and
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exercisable irrespective of its other provisions (A) immediately
prior to the completion of the merger or sale of substantially
all of the stock or assets of Company in a transaction in which
the Company is not the survivor, except
<PAGE>
for the merger of the Company into a wholly-owned subsidiary (and
the Company shall not be considered the surviving corporation for
purposes hereof if the Company is the survivor of a reverse
triangular merger); or (B) upon termination of the Optionee's
employment with the Company or a Subsidiary Corporation because
of death, disability or normal retirement upon reaching the age
of sixty-five.
(v) Nontransferability. All Options granted under the Plan
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shall be nontransferable by the Optionee, other than by will or
the laws of descent and distribution, and shall be exercisable
during the Optionee's lifetime only by the Optionee.
(b) The Board shall be free to specify terms and conditions other
than and in addition to those set forth above, in its discretion.
(c) All Option Agreements shall incorporate the provisions of the
Plan by reference.
7.4 Option Price. No Option granted pursuant to the Plan shall have an
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Option price that is less than the Fair Market Value of Stock on the date the
Option is granted. Incentive Stock Options granted to Significant Shareholders
shall have an Option price of not less than 110% of the Fair Market Value of
Stock on the date of grant. The Option exercise price shall be subject to
adjustment as provided in Section 5.3 above.
7.5 $100,000 Per Year Limitation. To the extent that the aggregate fair
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market value of Stock (determined as of the time the option with respect to such
Stock is granted) with respect to which incentive stock options are exercisable
for the first time by any Optionee during any calendar year (under this Plan and
all other plans of the Company and any Parent Company or Subsidiary Corporation)
exceeds $100,000, such options shall be treated as options which are not
incentive stock options. The foregoing provision shall be applied by taking
options into account in the order in which they were granted.
7.6 Payment. Payment for all shares of Stock shall be made at the time
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that an Option, or any part thereof, is exercised, and no shares shall be issued
until full payment therefor has been made. Payment shall be made (i) in cash, or
(ii) if acceptable to the Board, in Stock or in some other form; provided,
however, in the case of an Incentive Stock Option, that such other form of
payment does not prevent the Option from qualifying for treatment as an
"incentive stock option" within the meaning of the Code.
ARTICLE VIII
WRITTEN NOTICE, ISSUANCE OF STOCK
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CERTIFICATES, SHAREHOLDER PRIVILEGES
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8.1 Written Notice. An Optionee wishing to exercise an Option shall
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give written notice to the Company, in the form and manner prescribed by the
Board. Full payment for the shares of Stock to be acquired pursuant to the
exercise of the Option must accompany the written notice.
8.2 Issuance of Stock Certificates. As soon as practicable after the
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receipt of written notice and payment, the Company shall deliver to the Optionee
a certificate or certificates for the requisite number of shares of Stock.
8.3 Privileges of a Shareholder. An Optionee or any other person
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entitled to exercise an Option under the Option Agreement shall not have
shareholder privileges with respect to any Stock covered by the Option until the
date of issuance of a stock certificate for such Stock.
<PAGE>
ARTICLE IX
TERMINATION OF EMPLOYMENT OR SERVICES
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9.1 Death or Disability. Subject to any prior partial exercise of the
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Option, if an Optionee's employment terminates by reason of Optionee's death or
permanent and total disability, the Option may be exercised up to one hundred
percent of the shares originally subject to the Option at any time prior to the
expiration date of the Option or within 12 months after the date of such death
or disability, whichever period is the shorter, by the person or persons
entitled to do so under the Optionee's will or, if the Optionee shall fail to
make a testamentary disposition of an Option or shall die intestate, the
Optionee's legal representative or representatives.
9.2 Termination other than for Cause or Due to Death. In the event of
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an Optionee's termination of employment other than by reason of death or
permanent and total disability, the Optionee may exercise such portion of his
Option as was vested and exercisable by him at the date of such termination (the
"Termination Date") at any time within ninety days of the Termination Date. In
any event, the Option cannot be exercised after the expiration of the term of
the Option. Options not exercised within the applicable period specified above
shall terminate.
(a) In the case of an Employee, a change of duties or position
within the Company or an assignment of employment in a Subsidiary
Corporation or Parent Corporation of the Company, if any, or from such
a Corporation to the Company, shall not be considered a termination of
employment for purposes of the Plan.
(b) The Option Agreements may contain such provisions as the
Board shall approve with reference to the effect of approved leaves of
absence upon termination of employment.
9.3 Termination for Cause. In the event of an Optionee's termination of
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employment, which termination is by the Company or a Subsidiary Corporation for
cause, any Option or Options held by him under the Plan, to the extent not
exercised before such termination, shall terminate upon notice of termination
for cause.
ARTICLE X
RIGHTS OF OPTIONEES
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10.1 Service. Nothing in the Plan shall interfere with or limit in any
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way the right of the Company or a Subsidiary Corporation to terminate any
Employee's employment at any time, nor confer upon any Employee any right to
continue in the employ of the Company or a Subsidiary Corporation.
10.2 Non-transferability. All Options granted under the Plan shall be
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nontransferable by the Optionee, other than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's lifetime only by
the Optionee.
ARTICLE XI
OPTIONEE-EMPLOYEE'S TRANSFER
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OR LEAVE OF ABSENCE
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For purposes of the Plan:
(a) A transfer of an Optionee who is an Employee from the
Company to a Subsidiary Corporation or Parent Corporation, or from one
such Corporation to another, or
(b) A leave of absence for such an Optionee (i) which is duly
authorized in writing by the Company or a Subsidiary Corporation, and
(ii) if the Optionee holds an Incentive Stock Option, which qualifies
under the applicable regulations under the Code which apply in the case
of incentive stock options,
shall not be deemed a termination of employment. However, under no circumstances
may an Optionee exercise an Option during any leave of absence, unless
authorized by the Board.
<PAGE>
ARTICLE XII
AMENDMENT, MODIFICATION, AND
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TERMINATION OF THE PLAN
-----------------------
(a) The Board may at any time terminate and from time to time
may amend or modify the Plan, provided, however, that no such action of
the Board, without approval of the shareholders, may:
(i) increase the total amount of Stock which may
be purchased through Options granted under the Plan, except as
provided in Article V;
(ii) change the class of Employees eligible to
receive Options; or
(iii) otherwise amend or modify the Plan where
approval of the shareholders is required by any law or
regulation governing the Company.
(b) No amendment, modification, or termination of the Plan
shall in any manner adversely affect any outstanding Option under the
Plan without the consent of the Optionee holding the Option.
ARTICLE XIII
ACQUISITION, MERGER OR LIQUIDATION
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13.1 Acquisition.
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(a) In the event that an acquisition occurs with respect to
the Company, the Company shall have the option, but not the obligation,
to cancel Options outstanding as of the effective date of such
acquisition, whether or not such Options are then exercisable, in
return for payment to the Optionees of an amount equal to a reasonable
estimate of an amount (hereinafter the "Spread"), determined by the
Board, equal to the difference between the net amount per share payable
in the acquisition or as a result of the acquisition, less the exercise
price of the Option. In estimating the Spread, appropriate adjustments
to give effect to the existence of the Options shall be made, such as
deeming the Options to have been exercised, with the Company receiving
the exercise price payable thereunder, and treating the shares
receivable upon exercise of the Options as being outstanding in
determining the net amount per share.
(b) For purposes of this section, an "acquisition" shall mean
any transaction in which substantially all of the Company's assets are
acquired or in which a controlling amount of the Company's outstanding
shares are acquired, in each case by a single person or entity or an
affiliated group of persons and entities. For purposes of this section,
a controlling amount shall mean more than 50% of the issued and
outstanding shares of Stock of the Company. The Company shall have the
above option to cancel Options regardless of how the acquisition is
effectuated, whether by direct purchase, through a merger or similar
corporate transaction, or otherwise. In cases where the acquisition
consists of the acquisition of assets of the Company, the net amount
per share shall be calculated on the basis of the net amount receivable
with respect to shares upon a distribution and liquidation by the
Company after giving effect to expenses and charges, including but not
limited to taxes, payable by the Company before the liquidation can be
completed.
(c) Where the Company does not exercise its option under this
Section 13.1 the remaining provisions of this Article XIII shall apply,
to the extent applicable.
13.2 Merger or Consolidation. If the Company shall be the surviving
------------------------
corporation in any merger or consolidation, any Option granted hereunder shall
pertain to and apply to the securities to which a holder of the number of shares
of Stock subject to the Option would have been entitled in such merger or
consolidation, provided that the Company shall not be considered the surviving
corporation for purposes hereof if the Company is the survivor of a reverse
triangular merger.
13.3 Other Transactions. A dissolution or a liquidation of the Company
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or a merger and consolidation in which the Company is not the surviving
corporation (the Company shall not be considered the surviving corporation
<PAGE>
for purposes hereof if the Company is the survivor of a reverse triangular
merger) shall cause every Option outstanding hereunder to terminate as of the
effective date of such dissolution, liquidation, merger or consolidation.
However, the Optionee either (i) shall be offered a firm commitment whereby the
resulting or surviving corporation in a merger or consolidation will tender to
the Optionee an option (the "Substitute Option") to purchase its shares on terms
and conditions both as to number of shares and otherwise, which will
substantially preserve to the Optionee the rights and benefits of the Option
outstanding hereunder granted by the Company, or (ii) shall have the right
immediately prior to such dissolution, liquidation, merger, or consolidation to
exercise any unexercised Options whether or not then vested, subject to the
provisions of the Plan. The Board shall have absolute and uncontrolled
discretion to determine whether the Optionee has been offered a firm commitment
and whether the tendered Substitute Option will substantially preserve to the
Optionee the rights and benefits of the Option outstanding hereunder. In any
event, any Substitute Option for an Incentive Stock Option shall comply with the
requirements of Code Section 424(a).
ARTICLE XIV
SECURITIES REGISTRATION
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14.1 Securities Registration. In the event that the Company shall deem
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it necessary or desirable to register under the Securities Act of 1933, as
amended, or any other applicable statute, any Options or any Stock with respect
to which an Option may be or shall have been granted or exercised, or to qualify
any such Options or Stock under the Securities Act of 1933, as amended, or any
other statute, then the Optionee shall cooperate with the Company and take such
action as is necessary to permit registration or qualification of such Options
or Stock.
14.2 Representations. Unless the Company has determined that the
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following representation is unnecessary, each person exercising an Option under
the Plan may be required by the Company, as a condition to the issuance of the
shares pursuant to exercise of the Option, to make a representation in writing
(i) that he is acquiring such shares for his own account for investment and not
with a view to, or for sale in connection with, the distribution of any part
thereof within the meaning of the Securities Act of 1933, (ii) that before any
transfer in connection with the resale of such shares, he will obtain the
written opinion of counsel for the Company, or other counsel acceptable to the
Company, that such shares may be transferred without registration thereof. The
Company may also require that the certificates representing such shares contain
legends reflecting the foregoing. To the extent permitted by law, including the
Securities Act of 1933, nothing herein shall restrict the right of a person
exercising an Option to sell the shares received in an open market transaction.
ARTICLE XV
TAX WITHHOLDING
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Whenever shares of Stock are to be issued in satisfaction of Options
exercised under the Plan, the Company shall have the power to require the
recipient of the Stock to remit to the Company an amount sufficient to satisfy
federal, state, and local withholding tax requirements, if any.
<PAGE>
ARTICLE XVI
INDEMNIFICATION
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To the extent permitted by law, each person who is or shall have been a
member of the Board or the Committee shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of judgment in any such
action, suit, or proceeding against him, provided he shall give the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's certificate of
incorporation or bylaws, as a matter of law, or otherwise, or any power that the
Company or any Subsidiary Corporation may have to indemnify them or hold them
harmless.
ARTICLE XVII
REQUIREMENTS OF LAW
-------------------
17.1 Requirements of Law. The granting of Options and the issuance of
--------------------
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
17.2 Governing Law. The Plan, and all agreements hereunder, shall
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be construed in accordance with and governed by the laws of the State of
Colorado.
ARTICLE XVIII
EFFECTIVE DATE OF PLAN
----------------------
The Plan shall be effective on March 27, 1997.
ARTICLE XIX
COMPLIANCE WITH CODE
--------------------
Incentive Stock Options granted hereunder are intended to qualify as
"incentive stock options" under Code ss. 422. If any provision of the Plan is
susceptible to more than one interpretation, such interpretation shall be given
thereto as is consistent with Incentive Stock Options granted under the Plan
being treated as incentive stock options under the Code.
ARTICLE XX
NO OBLIGATION TO EXERCISE OPTION
--------------------------------
The granting of an Option shall impose no obligation upon the holder
thereof to exercise such Option.
ARTICLE XXI
SHAREHOLDER APPROVAL
--------------------
The Plan was approved by a vote of the majority of the shares of common
stock of the Company on May 21, 1997.
<PAGE>
THIS INCENTIVE STOCK OPTION PLAN was adopted by the Board of Directors
of St. Mary Land & Exploration Company on March 27, 1997, to be effective upon
adoption, and was amended by the Board of Directors on July 24, 1997, on March
25, 1999 to increase the number of shares available for issuance under Article V
to 1,650,000, and on January 27, 2000.
ST. MARY LAND & EXPLORATION COMPANY
By: /s/ RICHARD C. NORRIS
---------------------
Richard C. Norris
Title: Vice President-Finance, Secretary and Treasurer
