Compensation Discussion and Analysis
In the event Messrs. Gallagher, Dalton, Roberts or Hinson were terminated by reason of death or Disability, the executive would be entitled to (i) the Accrued Obligations, (ii) continued base salary through the end of the
fiscal year in which the executive was terminated, (iii) a
pro-rata
portion of the annual bonus based on the actual achievement of applicable performance conditions for the year in which the executive was
terminated, (iv) acceleration in full of all unvested outstanding time-based equity awards held by the executive, and (v) acceleration at target of all unvested outstanding performance-based equity awards held by the executive.
Upon a Change of Control, so long as the executive was employed on the date that is immediately prior to the occurrence of the
Change of Control, all unvested outstanding performance-based equity awards shall immediately vest based on the actual achievement of the applicable performance conditions measured from the first day of the applicable performance period through the
date immediately prior to the Change of Control.
Finally, if within 12 months following a Change of Control we were to
terminate Messrs. Gallagher, Dalton, Roberts or Hinson without Cause, or Messrs. Gallagher, Dalton, Roberts or Hinson were to terminate their employment for Good Reason, they would be entitled to the VP Severance Benefits described above plus an
additional 0.75 times the Cash Severance. Additionally, upon such a termination following a Change of Control, all unvested outstanding time-based equity awards held by the executives upon such a termination would be accelerated in full.
The employment agreements with each of Messrs. Gallagher, Dalton, Roberts and Hinson also contain certain restrictive covenants,
which would require the executives to preserve and protect our confidential information and work product and, for a
one-year
period following his termination of employment (six months in the event he was
terminated by us without Cause or terminated his employment for Good Reason), to refrain from competing with us or soliciting our employees. Additionally, the employment agreements with each of Messrs. Gallagher, Dalton, Roberts and Hinson require
the execution of a release to receive the severance benefits (other than the Accrued Obligations) described above.
Employment Agreement Defined Terms
As used in the employment agreements, Cause generally means: (i) violation of our substance abuse policy;
(ii) refusal or inability (other than by reason of death or Disability) to perform the duties assigned to the executive; (iii) acts or omissions evidencing a violation of the executives duties of loyalty and good faith, candor, fair
and honest dealing, integrity, or full disclosure to us, as well as any acts or omissions which constitute self-dealing; (iv) willful disobedience of lawful orders, policies, regulations, or directives issued to the employee;
(v) conviction or commission of a felony, a crime of moral turpitude, or a crime that could reasonably be expected to impair the ability of the executive to perform his duties; (vi) breach of any part of the employment agreement by the
executive; (vii) revocation or suspension of any necessary license or certification; (viii) generation of materially incorrect financial, geological, seismic or engineering projections, compilations or reports; or (ix) a false
statement by the executive to obtain his position, in each case as determined by the Board in good faith and in its sole and absolute discretion.
As used in the employment agreements, Good Reason generally means: (i) a material diminution in the
executives base compensation; (ii) a material diminution in the executives authority, duties, or responsibilities; or (iii) any other action or inaction that constitutes a material breach by us of the employment agreement, in
each case, without the employees consent. Mr. Sheffields employment agreement provides that a requirement that he begin reporting to a corporate officer or employee rather than directly to our Board of Directors or a material
diminution in the budget over which he retains authority would also constitute a Good Reason. The executive must provide written notice to us and we must be given an opportunity to resolve the issue prior to terminating his employment
for Good Reason.
As used in the employment agreements, Disability generally means the executives
inability to perform the essential functions of his position, with reasonable accommodation, due to an illness or physical or mental impairment or other incapacity that continues, or can reasonably be expected to continue, for a period in excess of
ninety (90) days (whether or not consecutive) during any period of three hundred sixty-five (365) consecutive days.
As used in the employment agreements, Change of Control generally means the occurrence of any of the following events:
(i) A change in the ownership of the company, which would occur on the date that any one person, or more
than one person acting as a group, acquires ownership of stock in us that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of our stock.
(ii) A change in the effective control of the company, which would occur on the date that either
(A) any one person, or more than one person acting as a group, acquires (or has acquired during the
12-month
period ending on the date of the most recent acquisition) ownership of our stock possessing 35%
or more of the total voting power of our stock; or (B) a majority of the members of our Board of Directors are replaced during any
12-month
period by directors whose appointment or election is not
endorsed by a majority of the members of our Board of Directors prior to the date of the appointment or election.
(iii) A change in the ownership of a substantial portion of the companys assets, which would occur on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the
12-month
period ending on the