EXHIBIT 10.7
STANDSTILL AGREEMENT
This Standstill Agreement dated as of January 29, 2003 (the
"Agreement") is by and among St. Mary Land & Exploration Company, a Delaware
corporation ("St. Mary"), and Flying J Oil & Gas Inc., a Utah corporation
("FJOG") and Big West Oil & Gas Inc., a Utah corporation ("BWOG") (with
FJOG, BWOG and the Parent collectively referred to herein as "Flying J").
RECITALS
WHEREAS, St. Mary, FJOG and BWOG have entered into that certain
Purchase and Sale Agreement dated as of December 13, 2002 (the "PSA") by and
among FJOG and BWOG, NPC Inc., a Colorado corporation, and St. Mary, whereby
upon the closing of the PSA St. Mary shall issue to FJOG and BWOG a total of
3,380,818 shares (the "Shares") of St. Mary common stock, $0.01 par value per
share (the "St. Mary Stock"); and
WHEREAS, as a condition to the closing of the PSA, St. Mary desires
that each of FJOG and BWOG make certain agreements, covenants, representations
and warranties with respect to St. Mary Stock as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the PSA, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms shall have the following respective meanings:
(a) "Affiliate" and "Associate" shall have the respective
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meanings set forth in Rule 12b-2 promulgated by the SEC under the
Exchange Act.
(b) "Beneficial Owner" and "Beneficially Own" shall have the
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same meanings as set forth in Rule 13d-3 promulgated by the SEC under
the Exchange Act, except that a Person shall also be deemed to be the
Beneficial Owner of all securities which such Person has the right to
acquire pursuant to the exercise of any rights in connection with any
securities or any agreement, regardless of when such rights may be
exercised and whether they are conditional.
(c) "Exchange Act" shall mean the Securities Exchange Act of
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1934, as amended.
(d) "Person" shall mean any individual, partnership,
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corporation, limited liability company, association, joint stock
company, trust, joint venture, other form of business organization, or
unincorporated organization.
(e) "SEC" shall mean the United States Securities and Exchang
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Commission.
(f) "St. Mary Board" shall mean the Board of Directors of St.
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Mary.
(g) "Standstill Period" shall mean that period of time
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beginning upon the Closing of the PSA and ending upon the expiration of
two years and six months after such closing.
All other capitalized terms used but not defined herein shall have the
respective meanings given to them in the PSA.
Section 2. Standstill Agreement.
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(a) No Increase in Ownership of St. Mary After Closing of PSA.
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Each of FJOG and BWOG covenants and agrees that, from and after the
date hereof and until the expiration of the Standstill Period, neither
it nor any of its Affiliates or Associates shall, without the prior
written consent of St. Mary specifically expressed in a resolution
adopted by the St. Mary Board, directly or indirectly, purchase or
cause to be purchased or otherwise acquire or agree to acquire, or
become or agree to become the Beneficial Owner of, any additional
equity securities of St. Mary, or any additional securities convertible
into or exchangeable for any equity securities of St. Mary. The
foregoing shall not however apply to any securities distributed by St.
Mary to the holders of the St. Mary Stock, to any transfer between FJOG
and BWOG or to any transfer to Flying J Inc. in accordance with Section
2 of the Share Transfer Restriction Agreement.
(b) Other Prohibited Actions. Each of FJOG and BWOG covenants
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and agrees that, during the Standstill Period, neither it nor any of
its Affiliates or Associates shall, without the prior written consent
of St. Mary specifically expressed in a resolution adopted by the St.
Mary Board, directly or indirectly, solicit, request, advise, assist or
encourage any Person to:
(i) form, join in or in any other way participate in
a "partnership, limited partnership, syndicate or other group"
within the meaning of Section 13(d)(3) of the Exchange Act
with respect to securities of St. Mary or deposit any voting
securities of St. Mary in a voting trust or similar
arrangement or subject any voting securities of St. Mary to
any voting agreement or pooling arrangement, other than with
respect to an arrangement among FJOG and BWOG or their
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respective Affiliates and Associates concerning the Shares of
St. Mary Stock to be issued under the PSA;
(ii) solicit proxies or written consents with respect
to St. Mary voting securities under any circumstances, or
make, or in any way participate in, any "solicitation" of any
"proxy" to vote any St. Mary voting securities, or become a
"participant" in any contested solicitation for the election
of directors with respect to St. Mary (as such terms are
defined or used in Rules 14a-1 and Item 4 of Schedule 14A
under the Exchange Act), or seek to advise or influence any
Person with respect to the voting, holding or disposition of
any St. Mary voting securities other than in accordance with
any solicitation or recommendation by the St. Mary Board or
management of St. Mary;
(iii) seek to call, or to request the call of, a
special meeting of the St. Mary stockholders, or seek to make,
or make, a stockholder proposal at any meeting of the St. Mary
stockholders, or seek to make, or make, any nomination for
election of a director to the St. Mary Board or make a request
for a list of the St. Mary stockholders;
(iv) commence or announce any intention to commence
any tender offer for any shares of St. Mary Stock, or file
with or send to the SEC a Schedule 13D or any amendments to
any Schedule 13D under the Exchange Act with respect to St.
Mary Stock to reflect changes to the disclosures set forth
therein and exhibits filed therewith, except to the extent
such filing is solely to report one or a combination of (A)
permitted purchases of St. Mary Stock, or (B) permitted
dispositions of St. Mary Stock (including dispositions that
reduce the Beneficial Ownership of FJOG or BWOG below 5%). In
addition, FJOG or BWOG may file a Schedule 13D to comply with
amendments after the date hereof to Section 13(d) of the
Exchange Act, to the rules promulgated thereunder, or to the
SEC's interpretation of either of the foregoing (it being
understood that nothing contained in this Section 2(b)(iv)
shall be deemed to permit any action or disclosure that is
otherwise prohibited by this Agreement);
(v) make a proposal or bid with respect to, or
announce any intention or desire to make, or publicly make or
disclose, or cause to be made or disclosed publicly, any
proposal or bid with respect to, the acquisition of any
material portion of the assets of St. Mary or of all or any
portion of the outstanding St. Mary Stock, or any merger,
consolidation, other business combination, restructuring,
recapitalization, liquidation or other extraordinary
transaction involving St. Mary;
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(vi) arrange, or in any way participate in, any
financing for any transaction referred to in clauses (i)
through (v) above; or
(vii) publicly disclose, or cause or facilitate the
public disclosure of (including by disclosure to any
journalist or other representative of the media), any request,
or otherwise seek (in any manner that would require public
disclosure by FJOG or BWOG or any of their respective
Affiliates or Associates), to obtain any waiver or consent
under, or any amendment of, any provision of this Agreement.
Section 3. Voting of St. Mary Stock.
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(a) Stockholder Meetings. During the Standstill Period, each
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of FJOG and BWOG shall cause all shares of St. Mary Stock that are
Beneficially Owned by it, and/or its Affiliates or Associates, and that
are entitled to vote as of the record date for any meeting of St. Mary
stockholders, to be present for quorum purposes at such meeting and to
be voted in favor of (i) the St. Mary Board's nominees for election as
directors at such meeting or at any adjournments or postponements
thereof, and (ii) the St. Mary Board's proposals at such meeting or any
adjournments or postponements thereof.
(b) Further Assurances and Proxies. Each of FJOG and BWOG
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further agree to take all action necessary to carry out the intention
of this Section. In connection with the foregoing, each of FJOG and
BWOG shall deliver to St. Mary executed proxies authorizing those
individuals designated by the St. Mary Board in its proxy solicitation
for such meeting to vote all shares of St. Mary Stock that are
Beneficially Owned by each of FJOG and BWOG and/or their respective
Affiliates or Associates as of the record date for any meeting of St.
Mary stockholders during the Standstill Period in favor of (i) the St.
Mary Board's nominees for election as directors at such meeting or at
any adjournments or postponements thereof, and (ii) the St. Mary
Board's proposals at such meeting or any adjournments or postponements
thereof. Such proxies will be coupled with an interest and shall be
irrevocable.
Section 4. Press Releases and Other Public Statements. During the
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Standstill Period, each of FJOG and BWOG agrees that neither it nor any of its
Affiliates or Associates will issue any press release, make any public
statement, or issue a letter to St. Mary stockholders which contains statements
about St. Mary, without obtaining the prior written consent of St. Mary.
Section 5. Transfers of St. Mary Stock.
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(a) Transferees Bound. In the event that during the Standstill
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Period FJOG, BWOG or any Affiliate or Associate of either FJOG or BWOG
transfers any shares of St. Mary Stock subject to this Agreement, which
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transfer must comply with the transfer restrictions set forth in that
certain Share Transfer Restriction Agreement dated as of January 29,
2003 (the "Share Transfer Restriction Agreement") by and among FJOG,
BWOG and St. Mary, to any Person that is not a party hereto or
otherwise subject to the terms and provisions hereof, such Person shall
take such shares subject to all of the terms and provisions of this
Agreement and such transfer shall be effective if and only if such
Person executes and delivers a written agreement to St. Mary to the
effect that such Person shall be bound by the terms of this Agreement
as if such Person were an original party hereto.
(b) Exceptions. The foregoing provisions of subsection (a) of
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this Section shall not apply to the following transactions or under the
following circumstances:
(i) Subject to the transfer restrictions set forth in
the Share Transfer Restriction Agreement, sales of shares of
St. Mary Stock in open market transactions to Persons who are
unrelated to Flying J; and
(ii) In the event of an Acquisition of St. Mary,
which for purposes of this Agreement shall mean the occurrence
of any of the following events: (A) St. Mary shall not be the
surviving entity in any merger (other than a merger with a
subsidiary of St. Mary), share exchange, consolidation or
other reorganization (or survives only as a subsidiary of an
entity other than an Affiliate of St. Mary); or (B) St. Mary
sells, leases or exchanges all or substantially all of its
assets to any other Person (other than a wholly owned
subsidiary of St. Mary). In the event of a tender offer for
shares of St. Mary Stock which is approved by the St. Mary
Board pursuant to a plan intended to result in a subsequent
Acquisition of St. Mary, FJOG, BWOG and any of their
respective Affiliates or Associates may participate in such
tender offer, without the restrictions of this Section, with
respect to the shares of St. Mary Stock that are Beneficially
Owned by them, and the maker of such tender offer shall not be
subject to the restrictions on transfer with respect to such
shares of St. Mary Stock.
Section 6. Stock Certificate Legend. For so long as this Agreement
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remains in effect, each certificate representing shares of St. Mary Stock
subject to this Agreement shall bear, in addition to any legend or legends
required by applicable securities laws and any other agreements pertaining to
such shares, a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE PROVISIONS OF A STANDSTILL
AGREEMENT DATED JANUARY 29, 2003, BY AND AMONG
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THE COMPANY AND CERTAIN STOCKHOLDERS OF THE
COMPANY, PURSUANT TO WHICH THE ACQUISITION OF
ADDITIONAL SHARES AND THE VOTING OF SUCH
SHARES ARE SUBJECT TO CERTAIN TERMS AND
RESTRICTIONS. A COPY OF SUCH STANDSTILL
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY WHERE IT MAY BE INSPECTED.
Section 7. Termination. This Agreement shall terminate and be of no
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further force and effect upon the expiration of the Standstill Period.
Section 8. Injunctive Relief and Specific Performance. Each party
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hereto hereby acknowledges and agrees that irreparable harm would occur in the
event any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, and that damages would be
an inadequate remedy for a breach of this Agreement. Therefore, it is agreed
that the parties shall be entitled to specific relief hereunder, including,
without limitation, an injunction or injunctions to prevent and enjoin breaches
of the provisions of this Agreement and an order of specific performance of the
terms and provisions of this Agreement, in addition to any other remedy to which
they may be entitled at law or in equity. Any requirements for the securing or
posting of any bond in connection with obtaining any such remedy are hereby
waived.
Section 9. Representations and Warranties of Flying J. To induce St.
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Mary to enter into this Agreement and the PSA and to consummate the transactions
contemplated hereby and thereby, each of FJOG and BWOG represents and warrants
to St. Mary as follows:
(a) Binding Agreement. The execution, delivery and performance
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of this Agreement by such party and the consummation by such party of
the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of such party.
This Agreement has been duly executed and delivered by such party, and,
assuming the valid authorization, execution and delivery hereof by St.
Mary, is a valid and binding obligation of such party, enforceable
against such party in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, and other similar laws affecting or relating to the
enforcement of creditors' rights generally and by general principles of
equity (whether applied in a proceeding at law or in equity).
(b) Execution; No Violations. The execution and delivery of
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this Agreement by such party does not, and the consummation by such
party of the transactions contemplated hereby will not: (i) violate or
conflict with the organizational documents of such party or any
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agreement, order, injunction, decree, or judgment to which such party
is a party or by which such party or any of its respective properties
is bound; or (ii) violate any law, rule or regulation applicable to
such party.
(c) Governmental and Other Consents. No consent, approval or
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authorization of, or designation, registration, declaration or filing
with, any governmental entity or third Person is required on the part
of such party in connection with the execution or delivery of this
Agreement or the consummation by it of the transactions contemplated
hereby.
(d) Ownership of St. Mary Securities. Neither such party nor
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any of its Affiliates or Associates owns any securities of St. Mary, or
any securities convertible into or exchangeable or exercisable for any
securities of St. Mary, or which, upon redemption thereof could result
in such party or any of its Affiliates or Associates receiving any
securities of St. Mary, or options, warrants, contractual rights or
other rights of any kind to acquire or vote any voting securities of
St. Mary, except the Shares of St. Mary Stock to be issued to FJOG and
BWOG under the PSA.
Section 10. Miscellaneous.
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(a) Notices. All notices, consents, requests, instructions,
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authorizations, approvals, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed
duly given to a party when (i) delivered to the appropriate address by
hand or by nationally recognized overnight courier service (costs
prepaid); (ii) sent by facsimile or e-mail with confirmation of
transmission by the transmitting equipment; or (iii) received or
rejected by the addressee, if sent by certified mail, return receipt
requested, in each case to the addresses, facsimile numbers or e-mail
addresses and marked to the attention of the person (by name or title)
designated in the PSA (or to such other address, facsimile number,
e-mail address or person as a party may designate by notice to the
other parties).
(b) Entire Agreement. This Agreement sets forth the entire
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understanding of the parties with respect to the subject matter hereof.
(c) Binding Effect. Except as otherwise expressly set forth
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herein, this Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto, their respective Affiliates and
Associates, and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer
on any Person other than the parties hereto or their respective
Affiliates, Associates, successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this
Agreement.
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(d) Assignment. Neither FJOG nor BWOG , nor their respective
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Affiliates or Associates, may assign their rights or delegate their
obligations hereunder (whether voluntarily, involuntarily, or by
operation of law) without the prior written consent of St. Mary. Any
such attempted assignment shall be null and void.
(e) Further Assurances. Each of FJOG and BWOG agrees that at
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any time and from time to time, upon the written request of St. Mary,
FJOG and BWOG shall execute and deliver such further documents and do
such further acts and things as St. Mary may reasonably request to
effect the purposes of this Agreement.
(f) Amendments. This Agreement may be amended only by an
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agreement in writing executed by each of the parties hereto.
(g) Waiver. The observance of any term of this Agreement may
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be waived only with the written consent of the party to be bound by
such waiver. No failure on the part of a party to exercise any right or
remedy shall operate as a waiver thereof.
(h) Governing Law. This Agreement shall be governed by and
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construed and interpreted in accordance with the laws of the State of
Colorado, without regard to any conflict of laws provisions thereof,
except that the Delaware General Corporation Law shall govern as to
matters of corporate law pertaining to St. Mary and the Utah Revised
Business Corporation Act shall govern as to matters of corporate law
pertaining to FJOG and BWOG.
(i) Jurisdiction and Venue. The parties hereto agree that any
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actions, suits or proceedings arising out of or relating to this
Agreement, the transactions contemplated hereby or any document
referred to herein shall be brought solely and exclusively in the
courts of the State of Colorado located in the City and County of
Denver, Colorado and/or the courts of The United States of America
located in the City and County of Denver, Colorado (and the parties
agree not to commence any action, suit or proceeding relating thereto
except in such courts), and further agree that service of any process,
summons, notice or document by U.S. registered mail to the respective
addresses referred to in Section 10(a) hereof shall be effective
service of process for any such action, suit or proceeding brought
against any party in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any
action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in the courts of the State of
Colorado or The United States of America located in the City and County
of Denver, Colorado, and hereby further irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
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(j) Severability. If any term, provision, covenant or
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restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable under applicable law,
the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and the term, provision,
covenant or restriction that is held to be invalid, void or
unenforceable shall be modified so that it accomplishes to the maximum
extent possible the original business purpose of such term, provision,
covenant or restriction in a valid and enforceable manner.
(k) Attorney Fees. If any action at law or in equity is
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necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney fees,
costs and necessary disbursements in addition to any other relief to
which such party may be entitled.
(l) Adjustments in Capitalization. The shares of St. Mary
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Stock subject to this Agreement shall be subject to proportionate and
appropriate adjustment in the event of any change in the number of
outstanding shares of St. Mary Stock that occurs by reason of a stock
dividend or split, recapitalization, reclassification, or other similar
change in capitalization by St. Mary.
(m) Headings. The headings, subheadings and other captions of
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this Agreement are for convenience and reference only and shall not be
used in interpreting, construing or enforcing any of the provisions of
this Agreement.
(n) Counterparts and Facsimile Signatures. This Agreement may
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be executed in any number of counterparts, and signature pages may be
delivered by facsimile transmission.
[Signature page follows]
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IN WITNESS WHEREOF, this Standstill Agreement has been duly executed on
behalf of each of the parties hereto by their duly authorized representatives as
of the date first above written.
ST. MARY LAND & EXPLORATION COMPANY,
a Delaware corporation
By:/s/ MILAM RANDOLPH PHARO
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Milam Randolph Pharo, Vice President -
Land and Legal
FLYING J OIL & GAS INC.,
a Utah corporation
By:/s/ JOHN R. SCALES
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John R. Scales, President
BIG WEST OIL & GAS INC.,
a Utah corporation
By:/s/ JOHN R. SCALES
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John R. Scales, President
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