Exhibit 10.1

 

EXECUTION COPY

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”) is made and
entered into as of the 12th day of June 2014, by and between ZaZa Energy
Corporation, a Delaware corporation (the “Company”), and Todd Alan Brooks
(“Employee”).

 

1.                                      Restatement of Original Employment
Agreement.  Except as stated herein, the Company and Employee agree to restate
and fully incorporate by reference herein the terms and conditions of the
Employment Agreement dated September 11, 2012 between the parties (the “Original
Employment Agreement”).

 

2.                                      Revision to Section 1 of the Original
Employment Agreement.  The definition of “January Representative Value,” as
appearing in Section 1(o) of the Original Employment Agreement, shall be
terminated and replaced with the following:

 

“(o)                           “Volume-Weighted Average Value” shall mean the
volume weighted average price per share closing price of the Common Stock of
ZaZa Energy Corporation on the NASDAQ Capital Market.”

 

3.                                      Revision to Section 4 of the Original
Employment Agreement.  Section 4 of the Original Employment Agreement shall be
terminated and replaced with the following:

 

“Section 4.                                     Compensation.  During the Term
of Employment, Employee shall be entitled to the following compensation:

 

(a)                                 Base Salary.  Employee shall be paid an
annualized Base Salary of not less than $1 (one dollar), with increases, if any,
as may be approved in writing by the Compensation Committee, until June 2,
2016.  From and after June 2, 2016, Employee’s Base Salary shall be $525,000 or
such other amount as may be approved in writing by the Compensation Committee,
with annual cost of living increases of 3% on January 1 of each year (the “2016
Base Salary”).

 

(b)                                 Short-Term Incentive Awards.

 

(i)                                     Employee shall be eligible for a
short-term incentive award in respect of each fiscal year or partial fiscal
year, as the case may be, during the Term of Employment in accordance with this
Section 4(b) and Exhibit A hereto (the “STI Award”).  If earned, the STI Award
shall be paid no later than February 15th of each year with respect to the
preceding fiscal year.

 

(ii)                                  The target STI Award for each fiscal year
shall be 150% of the 2016 Base Salary, and the maximum STI Award for each fiscal
year shall be 300% of the 2016 Base Salary.  The criteria for achieving the STI
Award shall be as set forth in Exhibit A.

 

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(iii)                               All STI Awards shall be paid in Common
Shares with automatic share withholding for applicable taxes at maximum
withholding rate applicable to such income.  The number of Common Shares to be
distributed to Employee shall equal the dollar value of the STI Award divided by
the Volume-Weighted Average Value for the preceding month of January; provided,
however, that any fractional Common Shares shall be paid in cash.

 

(iv)                              The STI Award for any partial fiscal year
occurring during the Term of Employment shall be pro-rated as and to the extent
provided in Section 8.

 

(c)                                  Long-Term Incentive Awards.

 

(i)                                     Employee shall be eligible for a
long-term incentive award in respect of each LTI Year or partial LTI Year (as
defined in Exhibit B hereto), as the case may be, in accordance with this
Section 4(c) and Exhibit B (the “LTI Award”).

 

(ii)                                  The LTI Option Award.  Twenty-five percent
(25%) of each LTI Award shall consist of a nonqualified stock option grant that
vests ratably over a three-year period beginning on the date of grant and as of
the date of grant has a value equal to $625,000 (six hundred and twenty-five
thousand dollars) using the Black-Scholes assumptions set forth in Exhibit C
hereto (the “LTI Option Award”).  The initial LTI Option Award will be granted
on June 12, 2014 with a strike price equal to the closing price of the Common
Stock of the Company on the NASDAQ on such date.  Each subsequent LTI Option
Award will be granted on June 1 with a strike price equal to the Volume Weighted
Average Value for the preceding month of May.  Hereunder, both strike prices
shall be referred to as the “Strike Price.”  Each LTI Option Award shall expire
on its 10th anniversary.  Any Common Shares distributed to Employee as a result
of his exercise of a LTI Option Award shall be subject to such transfer policies
as the Company may adopt that are applicable to officers, directors and other
management personnel generally.

 

(iii)                               The LTI Bonus.  Seventy-five percent (75%)
of each LTI Award shall be distributed to Employee as a bonus payable in cash,
Common Shares or a combination thereof, such division being at the complete
discretion of the Compensation Committee (the “LTI Bonus”); provided, however,
that any fractional Common Shares shall be paid in cash.  The target LTI Bonus
for each fiscal year shall be $1,875,000 (one million, eight-hundred seventy
five thousand dollars). Employee may earn the LTI Bonus ratably over a
three-year period beginning on the first day of the applicable LTI Year, subject
to the terms, conditions, performance metrics, and multipliers described in
Exhibit B hereto.  The Company shall pay Employee the earned and vested LTI
Bonus (calculated in accordance with Exhibit B) no later than the June 15 of the
third (3rd) year following the LTI Bonus award date. If the Compensation
Committee elects to pay any portion of the LTI Bonus in Common Shares, the
number of Common Shares to be distributed to Employee shall equal the dollar
value of the LTI Bonus divided by the Volume-Weighted Average Value as described
in Exhibit B.  The Compensation

 

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Committee shall also withhold the requisite Common Shares to satisfy the
applicable tax withholding requirements.”

 

4.                                      Revision to Section 8 of the Original
Employment Agreement.  Section 8 of the Original Employment Agreement shall be
terminated and replaced with the following:

 

“Section 8.                                     Termination of Employment.

 

(a)                                 General.  The Term of Employment shall
terminate upon the earliest to occur of (i) an Expiration, (ii) Employee’s
death, (iii) a termination by reason of a Disability, (iv) a termination by the
Company with or without Cause, and (v) a termination by Employee with or without
Good Reason.  Notwithstanding anything herein to the contrary, the payment (or
commencement of a series of payments) hereunder of any nonqualified deferred
compensation (within the meaning of Section 409A of the Code) upon a termination
of employment shall be delayed until such time as Employee has also undergone a
“separation from service” as defined in Treas. Reg. 1.409A-1(h), at which time
such nonqualified deferred compensation (calculated as of the date of Employee’s
termination of employment hereunder) shall be paid (or commence to be paid) to
Employee on the schedule set forth in this Section 8 as if Employee had
undergone such termination of employment (under the same circumstances) on the
date of his ultimate “separation from service.

 

(b)                                 Termination Due to Death or Disability. 
Employee’s employment shall terminate automatically upon his death.  The Company
may terminate Employee’s employment immediately upon the occurrence of a
Disability, such termination to be effective upon Employee’s receipt of written
notice of such termination.  In the event Employee’s employment is terminated
due to his death or Disability, Employee or his estate or his beneficiaries, as
the case may be, shall be entitled to:

 

(i)                                     The Accrued Obligations; and

 

(ii)                                  A cash payment (in lieu of Common Shares)
representing the value of any unpaid target STI Award in respect of any
completed fiscal year that has ended prior to the date of such termination,
which amount shall be paid within sixty (60) days from the date of such; and

 

(iii)                               A cash payment (in lieu of Common Shares)
representing the value of any target STI Award that would have been payable with
respect to the year of termination in the absence of the Employee’s death or
Disability, pro-rated for the period Employee worked prior to his death or
Disability, which amount shall be paid at such time STI Awards are paid to other
senior executives of the Company, but in no event later than one day prior to
the date that is 2½ months following the last day of the fiscal year in which
such termination occurs; and

 

(iv)                              Immediate vesting of any unvested LTI Option
Award and in exchange for such options, a cash payment by the Company equal to
the greater of (1) the

 

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dollar value of the unexercised LTI Options on the date of termination using the
Black-Scholes assumptions set forth in Exhibit C or (2) the dollar value of the
number of unexercised LTI Options on the date of termination multiplied by the
difference between the closing share price of the Common Stock of the Company on
NASDAQ on the date of termination and the applicable Strike Price; and

 

(v)                                 Immediate vesting of any unvested LTI Bonus,
the value of which will be determined as of the date of death or Disability and
will be the greater of the target LTI Bonus or the value of the LTI Bonus as
calculated by applying the terms, conditions, performance metrics, and
multipliers described in Exhibit B hereto as of the date of termination due to
death or Disability; and

 

(vi)                              LTI Award at target level for any year(s) for
which a LTI Award has not yet been determined, including a pro-rated LTI Award
for such partial year at target level.  Such pro-rated LTI Award will be granted
and issued in accordance with the terms of Section 4(c) and will be immediately
vested upon issuance; and

 

(vii)                           Continuation and/or payment of Employee’s and/or
Employee’s dependents’ medical insurance premiums for a period of eighteen (18)
months; and

 

(viii)                        The rights to the same compensation and benefits
as provided in Section 8(d) below, in lieu of clauses (i) through (vii) hereof,
if the termination of Employee’s employment is by reason of death or Disability
while Employee is traveling on official Company business.

 

Following such termination of Employee’s employment by reason of death or
Disability, except as set forth in this Section 8(b), Employee shall have no
further rights to any compensation or any other benefits under this Agreement.

 

(c)                                  Termination by the Company for Cause.

 

(i)                                     The Company may terminate Employee’s
employment at any time for Cause, effective upon Employee’s receipt of written
notice of such termination; provided, however, that with respect to any Cause of
termination relying on clause (i), (ii), (vi) or (vii) of the definition of
Cause set forth in Section 1(d) hereof, to the extent such act or acts are
curable, Employee shall be given not less than twenty (20) days’ written notice
by the Board of the Company’s intention to terminate him for Cause, such notice
to state in detail the particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause is based, and
such termination shall be effective at the expiration of such twenty (20) day
notice period unless Employee has substantially cured such act or acts or
failure or failures to act that give rise to Cause during such period.

 

(ii)                                  In the event the Company terminates
Employee’s employment for Cause, he shall be entitled only to the Accrued
Obligations, and any previously awarded nonqualified stock options, Common
Shares and cash portion of any LTI Bonus which

 

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are not vested as of the date of termination shall be cancelled.  Following such
termination of Employee’s employment for Cause, except as set forth in this
Section 8(c)(ii), Employee shall have no further rights to any compensation or
any other benefits under this Agreement.

 

(d)                                 Termination Upon an Expiration or by the
Company without Cause.  The Company may terminate Employee’s employment at any
time without Cause, effective upon Employee’s receipt of at least sixty (60)
days written notice of such termination.  Upon an Expiration or in the event
Employee’s employment is terminated by the Company without Cause (other than due
to death or Disability), Employee shall be entitled to:

 

(i)                                     The Accrued Obligations; and

 

(ii)                                  A cash payment (in lieu of Common Shares)
representing the value of any unpaid target STI Award in respect of any
completed fiscal year that has ended prior to the date of such termination,
which amount shall be paid at such time STI Awards are paid to other senior
executives of the Company, but in no event later than one day prior to the date
that is 2½ months following the last day of the fiscal year in which such
termination occurs; and

 

(iii)                               A cash payment (in lieu of Commons Shares)
representing the value of any target STI Award for the year in which termination
occurs, pro-rated for the period the Employee worked prior to such termination,
which amount shall be paid at such time STI Awards are paid to other senior
executives of the Company, but in no event later than one day prior to the date
that is 2½ months following the last day of the fiscal year in which such
termination occurs; and

 

(iv)                              Immediate vesting of any unvested LTI Option
Award and in exchange for such options, a payment by the Company equal to the
greater of (1) the value of the unexercised LTI Options on the date of
termination using the Black-Scholes assumptions set forth in Exhibit C or
(2) the value of the number of unexercised LTI Options on the date of
termination multiplied by the difference between the closing share price of the
Common Stock of the Company on the date of termination and the applicable Strike
Price; and

 

(v)                                 Immediate vesting of any unvested LTI Bonus,
the value of which will be the greater of the target LTI Bonus or the value of
the LTI Bonus as calculated by applying the terms, conditions, performance
metrics, and multipliers described in Exhibit B hereto as of the date of
termination; and

 

(vi)                              LTI Award at the target level for any
year(s) for which an LTI Award has not yet been determined, including a
pro-rated LTI Award for such partial year at the target level.  Such pro-rated
LTI Award will be granted and issued in accordance with the terms of
Section 4(c) and will be immediately vested upon issuance; and

 

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(vii)                           2016 Base Salary and target STI Award (payable
in cash) payable in equal installments during the Severance Term in accordance
with the Company’s regular payroll practices; and

 

(viii)                        Continuation, during the Severance Term, of the
health benefits provided to Employee and his covered dependants under the
Company’s health plans, it being understood and agreed that the Company’s
obligation to provide such continuation of benefits shall terminate prior to the
expiration of the Severance Term in the event that Employee becomes eligible to
receive any health benefits while employed by or providing service to, in any
capacity, any other business or entity during the Severance Term; provided,
however, that as a condition of the Company’s providing the continuation of
health benefits described herein, the Company may require Employee to elect
continuation coverage under COBRA.  Notwithstanding the forgoing, if such health
benefits are provided to employees of the Company generally through a
self-insured arrangement, and Employee qualifies as a “highly compensated
individual” (within the meaning of Section 105(h) of the Code), (i) such
continuation of benefits shall be provided on a fully taxable basis, based on
100% of the monthly premium cost of participation in the self-insured plan less
any portion required to be paid by Employee pursuant to clause (A) above (the
“Taxable Cost”), and, as such, Employee’s W-2 shall include the after-tax value
of the Taxable Cost for each month during the applicable benefit continuation
period, and (ii) on the last payroll date of each calendar month during which
any health benefits are provided pursuant to this Section 8(d)(vii), Employee
shall receive an additional payment, such that, after payment by the Employee of
all federal, state, local and employment taxes imposed on Employee as a result
of the inclusion of the portion of the Taxable Cost in income during such
calendar month, Employee retains (or has had paid to the Internal Revenue
Service on his behalf) an amount equal to such taxes as Employee is required to
pay as a result of the inclusion of the Taxable Cost in income during such
calendar month; and

 

(ix)                              Reimbursement of Employee’s reasonable,
documented outplacement expenses for up to 12 months, not to exceed $20,000 in
the aggregate.

 

Following such termination of Employee’s employment upon an Expiration or by the
Company without Cause, except as set forth in this Section 8(d), Employee shall
have no further rights to any compensation or any other benefits under this
Agreement.

 

(e)                                  Termination by Employee with Good Reason. 
Employee may terminate his employment with Good Reason by providing the Company
twenty (20) days’ written notice setting forth in reasonable specificity the
event that constitutes Good Reason.  During such twenty (20) day notice period,
the Company shall have a cure right (if curable), and if not cured within such
period, Employee’s termination will be effective upon the expiration of such
cure period, and Employee shall be entitled to the same payments and benefits as
provided in Section 8(d) above for a termination upon an Expiration and by the
Company without Cause, subject to the same conditions on payment and benefits as
described in Section 8(d) above.  Following such termination of

 

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Employee’s employment by Employee with Good Reason, except as set forth in this
Section 8(e), Employee shall have no further rights to any compensation or any
other benefits under this Agreement.

 

(f)                                   Termination by Employee without Good
Reason.  Employee may terminate his employment without Good Reason by providing
the Company sixty (60) days’ written notice of such termination.  In the event
of a termination of employment by Employee under this Section 8(f), except as
provided in Section 8(g), Employee shall be entitled only to the Accrued
Obligations, and any previously awarded nonqualified stock options, Common
Shares and cash portion of any LTI Bonus which are not vested as of the date of
termination shall be cancelled.  In the event of termination of Employee’s
employment under this Section 8(f), the Company may, in its sole and absolute
discretion, by written notice accelerate such date of termination without
changing the characterization of such termination as a termination by Employee
without Good Reason.  Following such termination of Employee’s employment by
Employee without Good Reason, except as set forth in this Section 8(f) or
Section 8(g), Employee shall have no further rights to any compensation or any
other benefits under this Agreement.

 

(g)                                  Change of Control and Termination Following
Change of Control.  Upon a Change of Control, the Company shall (i) pay to
Employee, on the thirtieth (30th) day following the effective date of the Change
of Control and payable in a lump sum an amount equal to three (3) times target
STI Award under Section 4(b), and (ii) immediately vest any unvested LTI Option
Award and LTI Bonus using the share price as of the Change of Control for
calculation purposes.  If, during the one (1) year period following such Change
of Control, Employee is terminated because of an Expiration or by the Company
without Cause, or Employee terminates his employment with or without Good
Reason, in lieu of the benefits payable pursuant to Sections 8(d) or 8(e) or
8(f) hereof, as applicable, and in addition to the benefits payable pursuant to
the preceding sentence, Employee shall be entitled to:

 

(i)                                     The Accrued Obligations; and

 

(ii)                                  A lump-sum cash payment equal to two
(2) times 2016 Base Salary which amount shall be paid within thirty (30) days
after the effective date of termination; and

 

(iii)                               payment equal to the benefit described in
Section 8(d)(vi); and

 

(iv)                              Continuation, during the Change of Control
Severance Term, of the health benefits provided to Employee and his covered
dependants under the Company’s health plans, subject to the terms and conditions
set forth in Section 8(d)(vii) above.

 

Following such termination of Employee’s employment following a Change of
Control, except as set forth in this Section 8(g), Employee shall have no
further rights to any compensation or any other benefits under this Agreement.

 

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(h)                                 Release.  Notwithstanding any provision
herein to the contrary, the Company may require that, prior to payment of any
amount or provision of any benefit pursuant to subsection (d), (e), or pursuant
to clauses (ii) and (iii) of subsection (g) of this Section 8, Employee shall
have executed, on or prior to the Release Expiration Date, a customary general
release in favor of the Company in such form as is reasonably required by the
Company, and any waiting periods contained in such release shall have expired. 
To the extent that the Company requires execution of such release, the Company
shall deliver such release to Employee within ten (10) business days following
the termination of Employee’s employment hereunder, and the Company’s failure to
deliver such release prior to the expiration of such ten (10) business day
period shall constitute a waiver of any requirement to execute such release. 
Such release, if any, shall contain mutual releases whereby the Company also
issues a release in favor of Employee.    Assuming a timely delivery of the
release by the Company, if Employee fails to execute such release on or prior to
the Release Expiration Date or timely revokes his acceptance of such release
thereafter, Employee shall not be entitled to any payments or benefits pursuant
to subsection (d), (e), or pursuant to clauses (ii) and (iii) of subsection
(g) of this Section 8.  Notwithstanding anything herein to the contrary, in any
case where the date of termination and the Release Expiration Date fall in two
separate taxable years, any payments required to be made to Employee that are
treated as deferred compensation for purposes of Section 409A of the Code shall
be made in the later taxable year.”

 

5.                                      Revision to Section 11 of the Original
Employment Agreement.  Section 11 of the Original Employment Agreement shall be
terminated and replaced with the following:

 

“Section 11.                              Withholding of Taxes.

 

“The Company may withhold from any payments and any grants of nonqualified stock
options and Common Shares made under this Agreement all applicable taxes,
including but not limited to income, employment, and social insurance taxes, as
shall be required by applicable law.  Employee acknowledges and represents that
the Company has not provided any tax advice to him in connection with this
Agreement and that he has been advised by the Company to seek tax advice from
his own tax advisors regarding this Agreement and payments that may be made to
him pursuant to this Agreement, including specifically, the application of the
provisions of Section 409A of the Code to such payments.”

 

6.                                      Addition of Section 22.  A new
Section 22 is added to the Original Employment Agreement as follows:

 

“Section 22.                              Legal Fees.

 

Company agrees to reimburse Employee up to $15,000 for Employee’s legal fees
relating to the negotiation and documentation of this Amendment.  Employee shall
provide Company with a copy of the necessary documentation and/or invoice
relating to such fees.”

 

[signature page to follow]

 

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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
first above written.

 

 

ZAZA ENERGY CORPORATION

 

 

 

/s/ TRAVIS BURRIS

 

By: TRAVIS BURRIS

 

Title: CHAIRMAN

 

 

 

 

 

EMPLOYEE

 

 

 

/s/ TODD ALAN BROOKS

 

TODD ALAN BROOKS

 

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EXHIBIT A

 

Annual STI Award will be based on achievement of (1) achievement of Average
Daily Production or Reserve metrics as described below and (2) Minimum Ending
Cash Balance of $5,000,000 as of the last day of the applicable fiscal year.

 

Metrics for STI are as follows.  Target STI is 150% of 2016 Base Salary up to a
maximum award of 300% of 2016 Base Salary.

 

Percentage of Target

 

Performance Level

150%

 

75% increase in Average Daily Production or Reserves over applicable fiscal year

225%

 

100% increase in Average Daily Production or Reserves over applicable fiscal
year

300%

 

125% increase in Average Daily Production or Reserves over applicable fiscal
year

 

“Average Daily Production” shall mean the Company’s average daily production
during the month of December prior to the applicable fiscal year, measured in
barrels of oil equivalent (BOE) per day, adjusted to include deemed production
from any producing well that is unable to produce due to events beyond the
reasonable control of the Company (in an amount equal to its most recent fully
productive day).

 

“Reserves” shall mean the Company’s total reserves, measured in barrels of oil
equivalent (BOE) for December 31.

 

“Minimum Ending Cash Balance” means the total dollar amount available to the
Company through bank accounts, loans, lines of credit and other forms of credit
including but not limited to an At-the-Market (ATM) Issuance facility that be
may accessed by the Company within thirty (30) days of the last day of the
applicable fiscal year.

 

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EXHIBIT B

 

Each LTI Bonus shall vest ratably over a three (3) year period.  Target LTI
Bonus is $1,875,000.  Each LTI Bonus Year shall begin on June 1 and end on the
following May 30 (e.g., June 1, 2014 to May 30, 2015).

 

1/3 of each LTI Bonus shall vest upon achievement of Average Daily Production
growth or Reserves growth as described below multiplied by the Volume-Weighted
Average Value (VWAV) during the month of May that the LTI Bonus becomes vested
divided by the VWAV during the month of May immediately preceding the date the
LTI Bonus was granted.

 

LTI Bonus Year One and Two Vesting

 

LTI Bonus Multiplier

 

Performance Level

100%

 

Between 75% and up to 100% increase in Average Daily Production or Reserves over
prior LTI Bonus Year’s minimum target growth

150%

 

Between 100% and up to 120% increase in Average Daily Production or Reserves
over prior LTI Bonus Year’s minimum target growth

200%

 

120% or more increase in Average Daily Production or Reserves over prior LTI
Bonus Year’s minimum target growth

 

LTI Bonus Year Three Vesting

 

LTI Bonus Multiplier

 

Performance Level

100%

 

Between 50% and up to 75% increase in Average Daily Production or Reserves over
prior LTI Bonus Year’s minimum target growth

150%

 

Between 75% and up to 100% increase in Average Daily Production or Reserves over
prior LTI Bonus Year’s minimum target growth

200%

 

100% or more increase in Average Daily Production or Reserves over prior LTI
Bonus Year’s minimum target growth

 

“Average Daily Production” shall mean the Company’s average daily production
during the month of May prior to the applicable LTI Bonus Year, measured in
barrels of oil equivalent (BOE) per day, adjusted to include deemed production
from any producing well that is unable to produce due to events beyond the
reasonable control of the Company (in an amount equal to its most recent fully
productive day).

 

“Reserves” shall mean the Company’s total reserves, measured in barrels of oil
equivalent (BOE) for May 30.

 

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By way of example, if Year 1 minimum target growth was Average Daily Production
of 600 BOE, and if the minimum target growth increase for Year 2 and Year 3 was
75% over prior year’s minimum target production, the production performance
levels would be compared to 1,050 BOE in Year 2 (600 + [600* .75] = 1050) and
1,837.50 BOE in Year 3 (1050 + [1050 * .75] = 1,837.50).  Thus, if production
was 1,575 BOE in Year 2, 100% of the portion of the LTI Bonus for Year 2 would
vest, and if production was 3,675 BOE in Year 3, 200% of the portion of the LTI
Bonus for Year 3 would vest.

 

LTI Bonus Example

 

The following example illustrates vesting of the LTI Bonus for year one of
three.

 

Upon meeting the following threshold, the executive shall be entitled to a LTI
Bonus equal to X (as defined in (i)-(iv) below):

 

(i)             $0 if Average Daily Production or Reserves over prior LTI Bonus
Year’s minimum target growth was less than 75%;

 

(ii)          1/3 of $1,875,000 if Average Daily Production or Reserves over
prior LTI Bonus Year’s minimum target was between 75% and 100%;

 

(iii)       1/3 of $2,812,500 if Average Daily Production or Reserves over prior
LTI Bonus Year’s minimum target was between 100% and 120%; or

 

(iv)      1/3 of $3,750,000 if Average Daily Production or Reserves over prior
LTI Bonus Year’s minimum target was 120% or more;

 

multiplied by the VWAV as of May 30 of the year the LTI Bonus becomes vested
divided by the VWAV as of May 30 of the year the LTI Bonus is granted.

 

For example, if the VWAV was $0.50 during May 2014 and $1.00 for May 2015, and X
was 1/3 of $1,875,000, THEN, the award earned is $1,250,000.  If the same
performance metrics were achieved for the second tranche vesting on May 30,
2016, and the VWAV for the May 2016 is $2, Employee would be entitled to
$2,500,000 (in respect of the 2014 LTI bonus — since the share multiple is 4X).

 

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EXHIBIT C

Black-Scholes Assumptions

 

Expiration: 10 years

 

Volatility Coefficient: 20%

 

Annual Risk-Free Interest Rate: 1.55% (based on 5-year US Treasury rate)

 

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