Employment Agreement between RAM Energy, Inc. and William W. Talley II

Summary

This agreement is between RAM Energy, Inc. and William W. Talley II, appointing him as Chairman of the Board. It outlines his duties, compensation, and benefits, including a base salary, meeting fees, eligibility for bonuses, participation in company benefit plans, and reimbursement of expenses. The agreement remains in effect as long as Mr. Talley serves as Chairman and provides for special severance benefits upon termination. The purpose is to ensure Mr. Talley's continued leadership and to compensate him for his service as Chairman.

EX-10.6 3 0003.txt EMPLOYMENT AGREEMENT Exhibit 10.6 RAM ENERGY, INC. EMPLOYMENT AGREEMENT William W. Talley, II EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of January 1, 2001 (the "Effective Date") by and between RAM ENERGY, INC., a Delaware corporation (the "Company"), and William W. Talley II, an individual (the "Executive"). WHEREAS, the Executive is Chairman of the Board of Directors of the Company (the "Board") and is presently making and is expected to continue making substantial contributions to the Company as Chairman of the Board ("Chairman"); and WHEREAS, the Board deems the services of the Executive as Chairman to be of great and unique value to the Company and the Board desires to assure to the Company continuity of management and leadership by the Executive as Chairman and to the Executive the continued status as Chairman; and WHEREAS, it is in the best interests of the Company and its shareholders to induce the Executive to remain Chairman; and WHEREAS, the Company desires to provide an additional inducement for the Executive to remain Chairman by providing to him special compensation for serving as Chairman. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive and the Company hereby agree as provided below. 1. Operation of Agreement. The purpose of this Agreement is to provide to the Executive special compensation (in lieu of director fees) for serving as Chairman and special severance benefits upon termination of his service Chairman, on the terms and conditions provided herein. 2. Term of Agreement. The term of this Agreement (the "Term") shall be for the period commencing on the Effective Date and ending on the date the Executive ceases to hold the office of Chairman. 3. Duties; Compensation. (a) Status; Duties. The Bylaws of the Company provide that the Chairman shall be an officer of the Company, and during the Term the Executive shall be considered an officer and employee of the Company for all purposes. Executive's position (including status, offices, secretarial and administrative support, titles and reporting requirements), authority, duties and responsibilities shall be that of Chairman. During the Term, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Term it shall not be a violation of this Agreement for the Executive to (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (iii) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as Chairman. It is expressly understood and agreed that to the extent that any such activities have been con ducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company. (b) Compensation. (i) Salary. During the Term, the Executive shall receive an annual base salary ("Base Salary") equal to at least $65,000. In addition to the Base Salary, the Executive shall also receive as additional salary the sum of $1,000 per Board meeting attended by the Executive up to a maximum of six (6) Board meetings per year. The Base Salary shall be payable monthly in cash and the per meeting component of total salary shall be paid in cash within a reasonable time following each meeting. Salary payments shall be computed prior to any reductions for (i) any deferrals of compensation made pursuant to Sections 125 or 401(k) of the Code or pursuant to any other program or arrangement provided by the Company and (ii) any withholding, income or employment taxes. The Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be determined by the Board. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Base Salary shall not be reduced after any such increase. (ii) Bonus. In addition to Base Salary, the Executive may be paid, for any fiscal year during the Term, a bonus ("Bonus"), either pursuant to the incentive compensation plan of the Company or otherwise as may be determined by the Board. (iii) Incentive, Savings and Retirement Plans. In addition to Base Salary and Bonus, the Executive shall be entitled to participate during the Term in all incentive, savings and retirement plans, practices, supplemental retirement plan policies and programs applicable to other key management employees of the Company and its subsidiaries. Such plans, practices, policies and programs, in the aggregate, shall provide the Executive with compensation, benefits and reward opportunities at least as favorable as the most favorable of such compensation, benefits and reward opportunities provided by the Company to other key management employees of the Company and its subsidiaries. (iv) Welfare Benefit Plans. During the Term, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its subsidiaries (including, without limitation, any medical, prescription, dental, disability, salary continuance, employee life, group life, acci dental death and travel accident insurance plans and programs), at least as favorable as the most favorable of such plans, practices, policies and programs provided by the Company and its subsidiaries to other key management employees of the Company and its subsidiaries. (v) Expenses. During the Term, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies, practices and procedures of the Company and its subsidiaries provided to other key management employees of the Company and its subsidiaries. (vi) Fringe Benefits. During the Term, the Executive shall be entitled to fringe benefits, including use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and its subsidiaries provided to other key management employees of the Company and its subsidiaries. (vii) Office and Support Staff. During the Term, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to the most favorable of the foregoing provided to other key management employees of the Company and its subsidiaries. (viii) Vacation. During the Term, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its subsidiaries provided to other key management employees of the Company and its subsidiaries. (ix) Effect of Increases. Any increase in Base Salary, Bonus or any other benefit or perquisite described in the foregoing Sections (i)-(viii) shall in no way diminish any obligation of the Company under the Agreement. (x) No Additional Severance Payments. Notwithstanding any provision to the contrary in this Agreement or in any policy, practice or procedure now in effect or hereinafter adopted by the Company, with the exception of (i) Accrued Obligations (hereinafter defined), and (ii) obligations of the Company incurred by reason of the termination, effective December 31, 2000, of that certain Special Severance Agreement between the Company and the Executive dated December 1, 1997, no severance or other similar payment shall be paid or payable to the Executive upon termination of this Agreement or of his employment by the Company. 4. Termination. (a) Death or Disability. The Term shall terminate automatically upon the Executive's death. If the Board determines in good faith that the Disability of the Executive has occurred (pursuant to the definition of "Disability" set forth below), it will give to the Executive written notice of its inten tion to remove Executive as Chairman. In such event, Executive shall be removed as Chairman effective on the 30th day after the date of such notice (the "Disability Effective Date"), provided that, within such time period, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" means disability (either physical or mental) which (i) materially and adversely affects Executive's ability to perform the duties required of his office, and (ii) at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Replacement/Removal; Resignation. The Executive may be replaced as Chairman by vote of the Board or removed as a director by vote of the stockholders of the Company having the right to vote with respect to such removal (the "Stockholders"), in either case with or without cause. The Executive may resign as Chairman of the Company at any time. (c) Notice of Termination. Any replacement or removal of the Executive or resignation by the Executive shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. (d) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination by either the Company or the Executive as the case may be or any later date specified therein; provided, however, that if the Executive cease to serve as Chairman by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. 5. Obligations of the Company upon Termination. (a) Death. If this Agreement is terminated by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than those obligations accrued or earned and vested (if applicable) by the Executive as of the Date of Termination, including, for this purpose (i) the Executive's annual full Base Salary through the Date of Termination at the rate in effect on the Date of Termination, and (ii) any compensation previously deferred by the Executive (together with any accrued interest thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (such amounts specified in clauses (i) and (ii) are hereinafter referred to as "Accrued Obligations"). All such Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Company and any of its subsidiaries to surviving families of other key management employees of the Company and such subsidiaries under such plans, programs, practices and policies relating to family death benefits, if any, in accordance with the most favorable plans, programs, practices and policies of the Company and its subsidiaries provided to other key management employees of the Company and its subsidiaries and their families. (b) Disability. If the Executive is replaced as Chairman by the Board by reason of the Executive's Disability, this Agreement shall terminate without further obligations to the Executive, other than those obligations accrued or earned and vested (if applicable) by the Executive as of the Date of Termination, including for this purpose, all Accrued Obligations. All such Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled after the effective date of the Disability to receive disability and other benefits at least equal to the most favorable of those provided by the Company and its subsidiaries to disabled key management employees and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, in accordance with the most favorable plans, programs, practices and policies of the Company and its subsidiaries provided to other key management employees of the Company and its subsidiaries and their families. (c) Replacement/Removal; Resignation. If the Executive (i) is replaced as Chairman by the Board, (ii) is removed as a director by the Stockholders, or (iii) resigns as Chairman, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive all Accrued Obligations. All such Accrued Obligations to which the Executive shall be entitled shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. 6. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices, provided by the Company or any of its subsidiaries and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any stock option or other agreements with the Company or any of its subsidiaries, including, without limitation, rights accruing to the Executive under Section 5(d)(ii) of that certain Special Severance Agreement dated December 1, 1997, by and between the Company and the Executive (the "Prior Agreement"), by reason of the termination by the Company, without cause, of the Prior Agreement, effective December 31, 2000. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its subsidiaries at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program. 7. Acceleration of Vesting. In the event that the Company has any type of plan, program or arrangement which include, by example, not by limitation, stock option plans, restricted stock award plans, phantom stock plans and supplemental retirement income plans (the "Other Plans") and the Executive is not 100% vested in his benefits in the Other Plans at the time this Agreement is terminated, and the Executive would otherwise be entitled to the payment of benefits pursuant to the terms of this Agreement, then, the Executive shall be deemed to be 100% vested and non-forfeitable in his benefits in the Other Plans; provided, no acceleration of vesting shall occur in the Other Plans if such act would result in the disqualification of or otherwise adversely affect the tax qualified status of such Other Plans or the participants in such Other Plans. Further, in the event that the Company is unable to accelerate vesting in the Other Plans because such acceleration would adversely effect the tax status of any of the Other Plans or the participants in such Other Plans, then, the Company shall pay to the Executive the amount equal to the benefits which have been lost due to the inability to accelerate vesting in the Other Plans; and such additional amounts shall be paid at the same time in the same manner as benefits would otherwise be paid pursuant to the terms of this Agreement. 8. Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof, plus in each case interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code. 9. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its subsidiaries, and their respective busi nesses, which shall have been obtained by the Executive during the term of this Agreement and which shall not be or become public knowledge (other than by acts by the Executive or his representatives in violation of this Agreement). After termination of this Agreement, the Executive shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 10. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the bene fit of and be enforceable by the Executive's legal representa tives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. 11. Indemnification and Insurance. The Executive shall be indemnified and held harmless by the Company during the term of this Agreement and following any termination of this Agreement for any reason whatsoever in the same manner as would any other key management employee of the Company with respect to acts or omissions occurring prior to (a) the termination of this Agreement or (b) the termination of employment of the Executive. In addition, during the term of this Agreement and for a period of five years following the termination of this Agreement for any reason whatsoever, the Executive shall be covered by a Company held Directors and Officers liability insurance policy covering acts or omissions occurring prior to (a) the termination of this Agreement or (b) the termination of employment of the Executive. Provided, in no event will the obligation of the Company to indemnify the Executive or provide Directors and Officers insurance to the Executive under this Section be less than the obligation and insurance coverage which the Company had to the Executive immediately prior to the occurrence of the Executive's Date of Termination. 12. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: At his last known address evidenced on the Company's payroll records If to the Company: RAM Energy, Inc. Meridian Tower, Suite ###-###-#### E. Skelly Drive Tulsa, OK 74135 Attention: Mr. Larry E. Lee, President With a copy to: McAfee & Taft A Professional Corporation 10th Floor, Two Leadership Square Oklahoma City, Oklahoma 73102 Attention: C. David Stinson, Esq. or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any pro vision of this Agreement shall not affect the validity or enforce ability of any other provision of this Agreement. (d) The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (f) This Agreement contains the entire under standing of the Company and the Executive with respect to the subject matter hereof. (g) The Executive and the Company acknowledge that this Agreement may be terminated by either the Executive or the Company at any time. Upon a termination of this Agreement prior to the Effective Date, there shall be no further rights under this Agreement. 13. No Trust. No action under this Agreement by the Company or its Board of Directors shall be construed as creating a trust, escrow or other secured or segregated fund, in favor of the Executive or his beneficiary. The status of the Executive and his beneficiary with respect to any liabilities assumed by the Company hereunder shall be solely those of unsecured creditors of the Company. Any asset acquired or held by the Company in connection with liabilities assumed by it hereunder, shall not be deemed to be held under any trust, escrow or other secured or segregated fund for the benefit of the Executive or his beneficiary or to be security for the performance of the obligations of the Company, but shall be, and remain a general, unpledged, unrestricted asset of the Company at all times subject to the claims of general creditors of the Company. 14. No Assignability. Neither the Executive nor his beneficiary, nor any other person shall acquire any right to or interest in any payments payable under this Agreement, otherwise than by actual payment in accordance with the provisions of this Agreement, or have any power to transfer, assign, anticipate, pledge, mortgage or otherwise encumber, alienate or transfer any rights hereunder in advance of any of the payments to be made pursuant to this Agreement or any portion thereof which is expressly declared to be nonassignable and nontransferable. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. WILLIAM W. TALLEY II William W. Talley II "EXECUTIVE" RAM ENERGY, INC. By LARRY E. LEE Larry E. Lee, President "COMPANY"