Exhibit 10.7

 

SM ENERGY COMPANY

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

This Restricted Stock Unit Award Agreement (the “Agreement”) is made effective
as of July 1, 2011 (the “Award Date”), by and between SM Energy Company, a
Delaware corporation (the “Company”), and [Name] (the “Participant”) to whom
restricted stock units have been awarded under the Company’s Equity Incentive
Compensation Plan, as amended (the “Plan”).

 

Pursuant to the terms of the Plan and this Agreement, as of the Award Date the
Company has made an award (the “Award”) to the Participant of [Number]
restricted stock units (the “Units”).  Capitalized terms used but not defined in
this Agreement shall have the meanings given to them in the Plan.

 

ARTICLE I

 

RESTRICTED STOCK UNITS

 

1.1           Units.  Each Unit represents the right to receive one share of the
Company’s common stock, $.01 par value per share (sometimes referred to herein
as the “Common Stock”), to be delivered upon settlement of the Units as set
forth in Section 1.3 below, subject to the terms and conditions set forth in the
Plan and this Agreement.  Any Common Stock that is issued pursuant to any
provision of this Agreement may be referred to in this Agreement as a “Share” or
“Shares.”

 

1.2           Vesting of Units.

 

(a)           Vesting.  Subject to the provisions contained herein, the Units
shall vest as follows (the “RSU Vesting Schedule”):

 

1/7th (approximately 14.3%) on July 1, 2012

2/7ths (approximately 28.6%) on July 1, 2013

4/7ths (approximately 57.1%) on July 1, 2014

 

In addition, the Units may become fully vested or be forfeited under certain
circumstances specified in this Agreement.  As of the Award Date, the
Participant must be an employee of the Company or a subsidiary thereof.  If the
Participant ceases to be an employee of the Company or a subsidiary thereof
prior to the vesting of all of the Units pursuant to the RSU Vesting Schedule,
the Participant shall forfeit the remaining unvested Units under the Award,
except as otherwise provided in this Section 1.2 and Section 1.5.

 

(b)           Continued Vesting Upon Early Retirement.  The Units shall,
notwithstanding any other provision of this Section 1.2, continue to vest
according to the RSU Vesting Schedule after the termination of the Participant’s
employment with the Company or a subsidiary thereof if (i) such termination is
the result of the Participant’s

 

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retirement from the Company or a subsidiary thereof upon the Participant’s
having both reached the age of sixty (60) and completed twelve (12) years of
service with the Company or a subsidiary thereof, and (ii) the Participant does
not after such early retirement become employed on a full-time basis by a
competitor of the Company prior to the earlier of the settlement of the Units or
the Participant’s reaching the age of sixty-five (65).

 

(c)           Acceleration Upon Death, Total Disability or Normal Retirement. 
The Units shall become fully vested, notwithstanding any other provision of this
Section 1.2, upon termination of the Participant’s employment with the Company
or a subsidiary thereof because of death, Total Disability (as defined below),
or retirement upon reaching the Company’s normal retirement age of sixty-five
(65).  In the event of such acceleration of the vesting of the Units, the RSU
Settlement Date (as defined in Section 1.3) shall also be accelerated to permit
prompt settlement of the Units.  For purposes of this Agreement, “Total
Disability” means a medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, by reason of which the Participant is unable
to engage in any substantial gainful activity or is receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Company.

 

(d)           Termination for Cause.  Notwithstanding any other provision of
this Section 1.2, the Participant shall forfeit any unvested and unsettled Units
under this Award upon the termination of the employment of the Participant by
the Company or a subsidiary thereof for cause, which term is specifically not
capitalized as such term is in Section 1.5(a) of this Agreement, it being the
specific intent of the Company and the Participant that “cause” in this instance
shall be broadly defined as any event, action, or inaction by the Participant
that would reasonably be the basis for an employer to terminate the employment
of the affected individual.

 

1.3           Settlement of Units.  The portion of the Units that vest on a
particular vesting installment date as set forth in the RSU Vesting Schedule
shall be settled on such vesting installment date (the “RSU Settlement Date”),
provided that such portion of the Units has not been previously terminated. 
Settlement of the vested Units may be made (a) solely through the issuance of
Shares or (b) at the mutual election of the Participant and the Company, in a
combination of Shares and cash.  The cash value of Units settled in cash shall
be based on the closing price of a Share as reported on the New York Stock
Exchange or other applicable public market on the trading day corresponding to
the RSU Settlement Date.  In no event shall the total value of Unit settlements
with the Participant under the Plan during any calendar year exceed the value at
the time of settlement of the maximum number of Shares issuable to any one
participant under the Plan during any calendar year pursuant to Section 4.1 of
the Plan.  Upon the settlement of the Units through the issuance of Shares, the
Company shall deliver to the Participant evidence of book-entry Shares or a
certificate for the number of Shares issued to the Participant in settlement of
the Units.  The Shares shall not be subject to any holding or transfer
restrictions after settlement of the Units.  The Participant shall not be
permitted to elect to further defer settlement beyond the RSU Settlement Date
pursuant to Section 6.1(b)(ii) of the Plan.

 

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1.4           Transfer Restrictions.  Outstanding Units that have not been
settled shall not be transferable by the Participant, and the Participant shall
not be permitted to sell, transfer, pledge, assign, or otherwise alienate or
encumber such Units or the Shares issuable in settlement thereof, other than
(i) to the person or persons to whom the Participant’s rights under such Units
pass by will or the laws of descent and distribution, (ii) to the spouse or the
descendants of the Participant or to trusts for such persons to whom or which
the Participant may transfer such Units by gift, (iii) to the legal
representative of any of the foregoing, or (iv) pursuant to a qualified domestic
relations order as defined under Section 414(p) of the Internal Revenue Code of
1986, as amended (the “Code”), or a similar order or agreement pursuant to state
domestic relations law (including a community property law) relating to the
provision of child support, alimony payments, or marital property rights to a
spouse, former spouse, child, or other dependent of the Participant.  Any such
transfer shall be made only in compliance with the Securities Act of 1933 and
the requirements therefor as set forth by the Company.  Any attempted transfer
in contravention of the foregoing provisions shall be null and void and of no
effect.

 

1.5           Change of Control Termination.

 

(a)           Vesting Upon Change of Control Termination.  Notwithstanding any
other provision of this Agreement, the Units shall become fully vested upon a
Change of Control Termination.  For purposes of this Agreement, a “Change of
Control Termination” occurs upon the termination of the Participant’s employment
with the Company or a subsidiary thereof in the event that (i) a Change of
Control (as defined in the Plan) of the Company occurs, and (ii) the
Participant’s employment with the Company or a subsidiary thereof is
subsequently terminated without Cause (as defined below) or the Participant
terminates his or her employment with the Company or a subsidiary thereof for
Good Reason (as defined below), and such termination of employment occurs
(x) within 30 months of the Change of Control and (y) prior to the normal
completion of vesting of the Units.  The normal vesting and settlement
provisions in Article I of this Agreement shall not be affected by the first
sentence of this subsection if a Change of Control of the Company occurs but
there is not also a Change of Control Termination with respect to the
Participant’s employment with the Company or a subsidiary thereof.  If the
Participant has entered into a separate written Change of Control Executive
Severance Agreement or Change of Control Severance Agreement (with either to be
subsequently referred to herein as a “Change of Control Severance Agreement”)
with the Company, the terms “Cause” and “Good Reason” used herein shall have the
meanings set forth in such Change of Control Severance Agreement.  If the
Participant has not entered into a separate written Change of Control Severance
Agreement, the terms “Cause” and “Good Reason” used herein shall have the
meanings set forth in the Company’s Change of Control Severance Plan (the
“Change of Control Severance Plan”).

 

(b)           Settlement upon Change of Control Termination.  Notwithstanding
any other provision of this Agreement to the contrary, in the event of a Change
of Control Termination with respect to the Participant’s employment with the
Company or a subsidiary thereof as set forth in Section 1.5(a) above, the vested
Units shall be settled either in Shares or in cash of equivalent value, as
determined by the Committee or other

 

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duly authorized administrator of the Plan, in its discretion, within thirty (30)
days following the effective date of the Change of Control Termination;
provided, however, that the time and manner of such settlement shall comply with
Section 409A of the Code as referred to in Section 2.11 of this Agreement.

 

(c)           Controlling Documents for Change of Control Termination.  To the
extent that the Participant is subject to either a written Change of Control
Severance Agreement or the Change of Control Severance Plan, the terms and
conditions of such Change of Control Severance Agreement or Change of Control
Severance Plan, as applicable, shall also apply to this Award in the event of a
Change of Control Termination; provided, however, that with respect to the Units
under this Award, the terms of the Plan and this Agreement shall control in the
event of any inconsistency between their terms and the terms of the Change of
Control Severance Agreement or the Change of Control Severance Plan.

 

ARTICLE II

 

GENERAL PROVISIONS

 

2.1           Adjustments Upon Changes in Capitalization.  In the event that a
stock split, stock dividend, or other similar change in capitalization of the
Company occurs, the number and kind of Shares that may be issued under this
Agreement and that have not yet been issued shall be proportionately and
appropriately adjusted.

 

2.2           No Dividend Equivalents or Stockholder Rights Until Shares
Issued.  The Units shall not be credited with Dividend Equivalents.  In
addition, the Participant shall have no voting, transfer, liquidation, or other
rights of a holder of Shares with respect to the Units until such time as
Shares, if any, have been issued by the Company to the Participant in settlement
of the Units.  Until the Units are settled or terminated, they will represent
only bookkeeping entries by the Company to evidence unfunded and unsecured
obligations of the Company.

 

2.3           Notices.  Any notice to the Participant relating to this Agreement
shall be in writing and delivered in person or by mail, fax, or email
transmission to the address or addresses on file with the Company.  Any notice
to the Company shall be addressed to it at its principal office, and be
specifically directed to the attention of the Secretary.  Anyone to whom a
notice may be given under this Agreement may designate a new address by notice
to that effect.

 

2.4           Benefits of Agreement.  This Agreement shall inure to the benefit
of and be binding upon each successor of the Company and the Participant’s
heirs, legal representatives, and permitted transferees.  This Agreement and the
Plan shall be the sole and exclusive source of any and all rights that the
Participant and the Participant’s heirs, legal representatives, and permitted
transferees may have with respect to this Award, the Units, and the Plan.

 

2.5           Resolution of Disputes.  Any dispute or disagreement that arises
under, or is a result of, or in any way relates to, the interpretation,
construction, or applicability of this Agreement shall be resolved as determined
by the Committee, or the Board of Directors of the Company (the “Board”), or by
any other committee appointed by the Board for such purpose.  Any determination
made hereunder shall be final, binding, and conclusive for all purposes.

 

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2.6           Controlling Documents.  The provisions of the Plan are hereby
incorporated by reference into this Agreement.  In the event of any
inconsistency between this Agreement and the Plan, the Plan shall control.

 

2.7           Amendments.  This Agreement may be amended only by a written
instrument executed by both the Company and the Participant.

 

2.8           No Right of Participant to Continued Employment.  Nothing
contained in this Agreement or the Plan shall confer on the Participant any
right to continue to be employed by the Company or any subsidiary thereof, or
shall limit the Company’s right to terminate the employment of the Participant
at any time; provided, however, that nothing contained in this Agreement shall
affect any separate contractual provisions that exist between the Participant
and the Company or its subsidiaries with respect to the employment of the
Participant.

 

2.9           Vesting Dates and Settlement Dates.  In the event that any vesting
date, settlement date, or any other measurement date with respect to this Award
does not fall on a normal business day, such date shall be deemed to occur on
the next following normal business day.

 

2.10         Tax Withholding.  The Company may make such provisions and take
such steps as it deems necessary or appropriate for the withholding of any taxes
that the Company is required by law or regulation of any governmental authority,
whether Federal, state, or local, to withhold in connection with the Units or
Shares subject to this Agreement.  The Participant shall elect, prior to any tax
withholding event related to this Award and at a time when the Participant is
not aware of any material nonpublic information about the Company and the
Participant would be permitted to engage in a transaction in the Company’s
securities under the Company’s Securities Trading Policy, whether the
Participant will satisfy all or part of such tax withholding requirement by
paying the taxes in cash or by having the Company withhold Shares having a fair
market value equal to the minimum statutory withholding that may be imposed on
the transaction (based on minimum statutory withholding rates for Federal,
state, and local tax purposes, as applicable, that are applicable to such
transaction).  The Participant’s election shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.

 

2.11         Compliance with Section 409A of the Code.  Notwithstanding any
provision in this Agreement to the contrary, to the extent that this Agreement
constitutes a nonqualified deferred compensation plan or arrangement to which
Section 409A of the Code applies, the administration of this Award (including
the time and manner of payments under the Award and this Agreement) shall comply
with Section 409A of the Code.  In connection therewith, any settlement or
payment to the Participant with respect to the Award under this Agreement which
Section 409A(a)(2)(B)(i) of the Code indicates may not be made before the date
which is six months after the date of the Participant’s separation from
employment service (the “Section 409A Six-Month Waiting Period”), as a result of
the fact that the Participant is a specified key employee referred to in
Section 409A(a)(2)(B)(i) of the Code, shall not occur or be made during the
Section 409A Six-Month Waiting Period but rather shall be delayed, if such
settlement or payment would otherwise occur during the Section 409A Six-Month
Waiting Period, until the expiration of the Section 409A Six-Month Waiting
Period.

 

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2.12         Personal Data.  The Participant hereby consents to the collection,
use, and transfer, in electronic or other form, of the Participant’s personal
data as described in this Agreement by and among, as applicable, the Company and
its affiliates for the exclusive purpose of implementing, administering, and
managing the Participant’s participation in the Plan.  The Company holds, or may
receive from any agent designated by the Company, certain personal information
about the Participant, including, but not limited to, the Participant’s name,
home address and telephone number, date of birth, social security insurance
number or other identification number, salary, nationality, job title, any
shares of Common Stock held, details of this Award and any other rights to
shares of Common Stock awarded, canceled, exercised, vested, unvested, or
outstanding in the Participant’s favor, for the purpose of implementing,
administering, and managing the Plan, including complying with applicable tax
and securities laws (the “Personal Data”).  The Personal Data may be transferred
to any third parties assisting in the implementation, administration, and
management of the Plan.  The Participant authorizes such recipients of the
Personal Data to receive, possess, use, retain, and transfer the Personal Data,
in electronic or other form, for the purposes described above.  The Participant
may, at any time, view the Personal Data, request additional information about
the storage and processing of the Personal Data, require any necessary
amendments to the Personal Data, or refuse or withdraw the consents herein, in
any case without cost, by contacting the Secretary of the Company in writing. 
Any such refusal or withdrawal of the consents herein may affect the
Participant’s ability to participate in the Plan.

 

2.13         Electronic Delivery of Documents.  The Company may, in its sole
discretion, deliver any documents related to this Award, or any future awards
that may be granted under the Plan, by electronic means, or request the
Participant’s consent to participate in the Plan or other authorizations from
the Participant in connection therewith by electronic means.  The Participant
hereby consents to receive such documents by electronic delivery and, if
requested, to participate in the Plan through an on-line or electronic system
established and maintained by the Company or another third party designated by
the Company.

 

2.14         Receipt of Award and Related Documents.  The Participant hereby
acknowledges the receipt, either directly or electronically, of the Award, a
copy of the Plan, and a prospectus for the Plan.

 

2.15         Execution and Counterparts.  This Agreement may be executed in
counterparts.  Execution of a written instrument for this Agreement may be
evidenced by any appropriate form of electronic signature or affirmative email
or other electronic response attached to or logically associated with such
written instrument, which is executed or adopted by a party with an indication
of the intention by such party to execute or adopt such instrument for purposes
of execution thereof.

 

*     *     *     *     *

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Company and the Participant have caused this Restricted
Stock Unit Award Agreement to be entered into effective as of the Award Date.

 

 

COMPANY:

 

SM ENERGY COMPANY,

a Delaware corporation

 

 

By:

 

 

 

 

Printed Name:  John R. Monark

 

Title:  Vice President, Human Resources

 

Date signed:

 

 

 

 

PARTICIPANT:

 

 

 

 

 

Signature:

 

 

 

 

Printed Name:  NAME

 

 

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