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Exhibit "b" To Employment Agreement After Payout Overriding Royalty Plan Of Raam Global Energy Company And Century Exploration New Orleans, Inc

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CENTURY EXPLORATION HOUSTON, INC. | CENTURY EXPLORATION NEW ORLEANS, INC | RAAM GLOBAL ENERGY COMPANY

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Title: EXHIBIT "B" TO EMPLOYMENT AGREEMENT AFTER PAYOUT OVERRIDING ROYALTY PLAN OF RAAM GLOBAL ENERGY COMPANY AND CENTURY EXPLORATION NEW ORLEANS, INC
Governing Law: Kentucky     Date: 3/17/2011

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Exhibit 10.16

EXHIBIT “B”

TO EMPLOYMENT AGREEMENT

AFTER PAYOUT OVERRIDING ROYALTY PLAN

OF RAAM GLOBAL ENERGY COMPANY

AND CENTURY EXPLORATION NEW ORLEANS, INC.

SECTION I: PURPOSE

The purpose of the APORRI Plan is to promote the success of RAAM by providing certain key employees of RAAM and its subsidiaries, (as determined in the sole discretion of the Committee), an APORRI in successful wells.

SECTION II: DEFINITIONS

“Affiliates” shall mean for any entity, any other entity that directly or indirectly controls, is under common control with, or is controlled by such entity. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event (i) any entity that owns directly or indirectly fifty percent (50%) or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or fifty percent (50%) or more of the partnership or other ownership interests of any other entity (other than as a limited partner of such other entity) shall be deemed to control such entity, and (ii) any subsidiary of RAAM shall be deemed to be an Affiliate of RAAM.

“APORRI” shall mean an after payout overriding royalty interest.

“APORRI Plan” shall mean the entire after payout royalty plan as set forth herein.

“APORRI Units” shall mean the number of units assigned to each Participant in his/her Employment Agreement.

“Calculated APORRI” shall mean for each Well the calculation of each Participant’s Employee APORRI Percentage at the date the well is spud. The Calculated APORRI for each Well shall be attached to the APORRI Plan as Exhibit “A”, and for each new Well after the effective date of the APORRI Plan, a Calculated APORRI shall be prepared and attached to the APORRI Plan as an Amendment to Exhibit “A”.

“Committee” shall mean the members of an employee incentive committee, which shall be appointed by the President of RAAM.


“Combined Working Interest” shall mean the total working interest owned by the Company and RAAM Exploration Company, LLC and RAAM Partners LLC or other such company or organization that receives any participation right from the RAAM Exploration LLC contractual agreement.

“Company” shall mean RAAM, Century Exploration New Orleans, Inc., and/or Century Exploration Houston, Inc. and its Affiliates.

“Effective Date” shall mean December 1, 2004.

“Employee APORRI” shall mean, with respect to a Well, the amount of overriding royalty interest that has been assigned to a Participant, based on the calculation of the APORRI.

“Employee APORRI Percentage” shall mean the overriding royalty percentage calculated for each Participant on a Well-by-Well basis, based on the percentage of APORRI Units granted to the Participant in his/her Employment Agreement, to the total of all APORRI Units granted by the Committee for any Well.

“Lease” shall mean an oil and gas lease.

“Liquidating Event” shall mean the sale of substantially all of the assets of the Company or a change of control as defined in Section VII. 5. of this Agreement

“Participant” or “Participants” shall mean a person or persons granted or eligible to receive an Employee APORRI.

“Payout” shall mean, with respect to a Well, that point in time when the Company has received net revenues from the production of hydrocarbons from any Well (after deduction of production taxes, excise taxes, lessor’s royalty and any existing third party burdens created prior to the time that the Company acquired its interest in such Well) equal to: (i) the Company’s entire monetary investment in the Well (including drilling, testing, completion, repair, recompletion, construction, equipping and operating costs) as determined in accordance with the accounting procedure attached to the applicable operating agreement or if no operating agreement is applicable, the COPAS accounting procedures and (ii) with respect to the first Well drilled on any Prospect, the Company’s share of the leasehold acquisition costs for the Prospect.

“Plan APORRI” shall mean, with respect to a Well, the amount of overriding royalty interest to be subject to the APORRI Plan as provided for in Section V hereof.

“Prospect” shall mean those specific areas with commercial hydrocarbon potential that are delineated by seismic and/or subsurface data from time to time on which the Company has acquired one or more Leases.

“RAAM” shall mean RAAM Global Energy Company, a Delaware corporation.

 

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“Subsidiary” means any corporation, domestic or foreign, of which RAAM has, directly or indirectly, 50% or more of the total combined voting power of all classes of stock or other equity interests and that otherwise qualifies as a “subsidiary corporation” within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended, or any successor thereto.

“Term” shall mean December 1, 2004 to December 31, 2008, unless extended by the Board of Directors on a year-by-year basis. The APORRI Plan shall not be terminated prior to December 31, 2008.

“Year” shall mean a calendar year.

“Well” or “Wells” shall mean any well or wells for which drilling operations were commenced after December 1, 2004, except for development wells that are drilled for the purpose of producing proved reserves established prior to December 1, 2004 (“Pre-Plan Reserve Wells”). Pre-Plan Reserve Wells shall not be included in the APORRI Plan. Wells that are drilled after the Effective Date on Company properties producing prior to the Effective Date and contain reserves which were not classified on the Effective data as proved producing or proved undeveloped, shall be included in the APORRI Plan.

SECTION III: PARTICIPATION

 

1.

Participants under the APORRI Plan and the APORRI Units for each Participant shall be designated by the Committee.

 

2.

Members of the Board of Directors shall not participate in this APORRI Plan unless a member of the Board of Directors is a full-time employee of the Company.

 

3.

The Participants in the Plan APORRI for each Well shall be determined on a Well-by-Well basis as follows:

 

 

a.

For each Well drilled prior to the execution of this Agreement, but after the Effective Date, and for all subsequent Wells included in the APORRI Plan, a Calculated APORRI shall be prepared and shall be attached as Exhibit “A” of this Agreement. As new Wells are drilled from time to time, a separate Calculated APORRI shall be prepared for each Well, and added to the APORRI Plan as an amendment to the Exhibit. The Participants in each Well shall be only those Participants at the date on which the Well is spud, and the APORRI Units for each Participant shall be those APORRI Units granted to each Participant in his/her Employment Agreement. On the 1 st day of the month following Payout of any specific Well included in the APORRI Plan, an assignment shall be made to each Participant in accordance with the Calculated APORRI attached hereto.

 

 

b.

Notwithstanding anything in Section III 3. (a) to the contrary, should any APORRI Participant die or become disabled while being an active APORRI Participant, as defined in any such APORRI Participant’s Employment Agreement, any such Participant (or his/her heirs or devisees) shall remain a

 

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Participant in all wells that have been spud and for which the APORRI Participant has been included on the Calculated APORRI prior to the date of death or disability. The Participant will not be included in any Wells that have been spud after the date of death or disability.

 

 

c.

Should a Participant resign or be terminated by the Company for cause as defined in such Participant’s Employment agreement, the Participant shall:

 

 

i.

Retain any Employee APORRI already assigned or any APORRI for which an assignment is due hereunder, and

 

 

ii.

Shall forfeit his/her participation on any Well that has not reached Payout even though the Participant was included in the Calculated APORRI. The Calculated APORRI for all Wells that have been spud, but having not reached Payout, shall be recalculated using the reduced number of Participants; thereby, increasing the percentage of Calculated APORRI to be assigned to the remaining Participants.

 

 

d.

At the end of the Term or, if extended, at the end of the extended Term of the APORRI Plan, a final Calculated APORRI shall be prepared including all Participants as of the date of termination of the APORRI Plan. Based on the calculated percentage, each Participant shall receive an assignment of an APORRI in each Lease or Lease unit for which a Well has been spud during the term of this Agreement even though the Wells have not reached Payout.

 

 

e.

Upon any sale of a Lease with a drillable Prospect, but on which a Well has not been drilled, the Company shall assign to the Participants at the time of the sale the Employee APORRI, as follows:

 

 

i.

If the Company recovers all of its costs associated with the Lease and other Prospect development costs, including Lease and Lease bonus costs and allocated project level geological and geophysical costs and seismic costs, then the Company shall assign to then current Participants in the APORRI Plan one half of any overriding royalty interest retained by the Company, such that the overriding royalty interest assigned to the APORRI Plan does not exceed three percent (3%).

 

 

f.

In the event the Company enters into a farmout of a Lease with a drillable Prospect, the Calculated APORRI will be calculated only on the combined working interest retained by the Company, and to the extent the farmee will accept the additional burden of the Plan APORRI. If the farmee will only accept a reduced royalty, then the reduced royalty will become the Plan APORRI for that portion of the Well acquired by farmee.

 

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g.

Upon the occurrence of a Liquidating Event, each Participant at the date of such Liquidating Event shall receive an assignment for each Lease in which a Well has been spud in accordance with the Calculated APORRI, even though the Well has not reached Payout.

 

4.

From time to time and in the sole discretion of the Committee, additional employees may be hired and may become Participants in the APORRI Plan. Such additional employees shall be Participants as to Wells that have been spudded after he/she becomes a Participant, with the exception of Wells that are drilled for the purpose of producing proved reserves from Company properties established prior to the additional employee becoming a Participant in the same manner as Pre-Plan Reserve Wells which are not included in the APORRI Plan for the initial Participants.

SECTION IV: ADMINISTRATION OF THE APORRI PLAN

 

1.

The Committee shall administer the APORRI Plan.

 

2.

All costs of implementing and administering the APORRI Plan shall be borne by the Company.

 

3.

The Company shall provide each Participant in a Well with a quarterly Payout statement for that Well during its Payout period (which shall show the detailed and itemized computation of Payout). After Payout of each Well and upon the assignment of the Employee APORRI to the Participant, on a monthly basis the Company shall remit payment to each Participant in respect of its APORRI, such remittance to be accompanied by an itemized computation of the APORRI, in the same manner and time as the Company provides such information to other royalty holders.

SECTION V: AMOUNT OF OVERRIDING ROYALTY INTEREST TO BE SUBJECT TO THE APORRI PLAN

 

1.

On Wells drilled on any Prospect developed by Century Exploration New Orleans, Inc., the APORRI shall be 3% of 8/8ths on each Lease with a net revenue interest, attributable to the 100% leasehold interest, equal to or greater than 75%, proportionately reduced in the event the Combined Working Interest owns less than 100% of the Leases comprising that Prospect. For each such Lease with a net revenue interest, attributable to the 100% leasehold interest, less than 75%, the APORRI shall be 2% of 8/8ths, proportionately reduced in the event the Combined Working Interest owns less than 100% of the Leases comprising that Prospect.

 

2.

Notwithstanding anything in Section V.1. to the contrary, on any Well in which TechXplore has an overriding royalty interest by virtue of its Participation and Exploration Agreement with the Company, the APORRI shall be one half (50%) of the interest described above in Section V.1.

 

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