XML 47 R19.htm IDEA: XBRL DOCUMENT v2.4.0.8
Commitments and Contingencies
 6 Months Ended
Dec. 31, 2013
Commitments and Contingencies  
Commitments and Contingencies

Note 11 — Commitments and Contingencies

 

We are subject to various claims and contingencies in the normal course of business. In addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdiction in which we operate. At a minimum we disclose such matters if we believe it is reasonably possible that a future event or events will confirm a loss through impairment of an asset or the incurrence of a liability. We accrue a loss if we believe it is probable that a future event or events will confirm a loss and we can reasonably estimate such loss and we do not accrue future legal costs related to that loss. Furthermore, we will disclose any matter that is unasserted if we consider it probable that a claim will be asserted and there is a reasonable possibility that the outcome will be unfavorable. We expense legal defense costs as they are incurred.  For legal proceedings, see “Part II, Item 1. Legal Proceedings.”

 

Lease Commitments.  We have a non-cancelable operating lease for office space that expires on August 1, 2016. Future minimum lease commitments as of December 31, 2013 under this operating lease are as follows:

 

For the twelve months ended December 31,

 

 

 

2014

 

$

159,011

 

2015

 

159,011

 

2016

 

92,756

 

Total

 

$

410,778

 

 

Rent expense for the three months ended December 31, 2013 and 2012 was $44,759 and $36,808, respectively.  For the corresponding six month periods of 2013 and 2012 rent expense was $86,667 and $73,617, respectively.

 

Employment Contracts.  We have employment agreements with our three named executive officers.  The employment contracts provide for a severance package for termination by us for any reason other than cause or permanent disability, or in the event of a constructive termination, that includes payment of base pay and certain medical and disability benefits from six months to a year after termination.  The total contingent obligation under the employment contracts as of December 31, 2013 is approximately $692,000.

 

In connection with Sterling McDonald’s retirement announced in January 2014, we expect to pay Mr. McDonald a severance of $478,000 representing his base salary and anticipated bonus under our Cash Incentive Plan and $70,000 in other benefits.  In addition, we will accelerate the vesting of Mr. McDonald’s previously unvested restricted stock awards which will result in $220,500 of stock compensation expense to us.

 

Delhi Payout. We are presently in a dispute with the Delhi Field Operator concerning charges arising from the environmental event that began in June 2013.  We believe the Operator has indemnified us for such events, with the effect that payout should not be delayed.  To date, the Operator has not agreed to the application of the indemnity and their 2006 assumption of environmental liabilities.  Accordingly, we have filed a lawsuit against the Operator seeking declaration of the validity of the 2006 agreements, including the indemnity, and recovery of damages and attorney’s fees.