Annual report pursuant to Section 13 and 15(d)

SEVERANCE ARRANGEMENTS

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SEVERANCE ARRANGEMENTS
12 Months Ended
Dec. 31, 2014
SEVERANCE ARRANGEMENTS [Abstract]  
SEVERANCE ARRANGEMENTS
NOTE 17     SEVERANCE ARRANGEMENTS

The Company’s former president, Ryan Gilbertson, resigned effective October 1, 2012.  In connection with his resignation, the Company and Mr. Gilbertson entered into a separation and release agreement and a consulting agreement (collectively, the “New Agreements”), which terminated and superseded his prior employment agreement with the Company (except for certain surviving provisions).  Pursuant to the New Agreements, Mr. Gilbertson’s outstanding and unvested restricted stock awards continued to vest on their original vesting schedules, so long as Mr. Gilbertson does not terminate the consulting agreement and the Company did not terminate the consulting agreement for cause (as defined).  In addition, pursuant to the New Agreements the Company (i) provided Mr. Gilbertson with a prorated portion of his 2012 year-end bonus (based on predetermined performance metrics and as determined by the Company’s compensation committee following the end of 2012), (ii) bought out the lease and transferred title to Mr. Gilbertson on his Company-leased vehicle, and (iii) reimbursed Mr. Gilbertson for continuation coverage pursuant to COBRA on the Company’s health plans for 18 months.

In connection with the New Agreements, the Company concluded the unvested restricted stock awards were modified in connection with the change in Mr. Gilbertson’s employment status and service requirements.  Because the Company expected Mr. Gilbertson’s awards would vest under the modified conditions but his period of active service in substance had concluded, $4.3 million of share based compensation costs was reflected in general and administrative expense during the third quarter of 2012 related to the modified awards.   Additionally, the cash expenses estimated for Mr. Gilbertson’s prorated 2012 bonus, Company-leased vehicle and continuation coverage pursuant to COBRA was estimated at approximately $0.6 million and was reflected in general and administrative expense during the third quarter of 2012.

On October 16, 2012, the Company terminated the employment of its Chief Operating Officer, James R. Sankovitz.  Mr. Sankovitz’s termination was “not for cause” under his existing employment agreement with the Company, and as a result he was entitled to certain severance benefits which included a single lump-sum payment of one times his $325,000 base salary.   In addition, the Company agreed to buy out the lease and transfer title to Mr. Sankovitz on his Company-leased vehicle, and reimburse Mr. Sankovitz for continuation coverage pursuant to COBRA on the Company’s health plans for 18 months.