Document:

Employment Agreement

 Exhibit 10.16 
 

 
 EMPLOYMENT AGREEMENT 
 This Employment Agreement (“Agreement”) is made and effective July 16, 2004 by and between Atlas America, Inc., a Delaware Corporation
located at 311 Rouser Road, Moon Township, Pennsylvania, 15108 or its affiliate, (“Employer”) and Robert R. Firth residing at 1266 Hazel Blvd., Tulsa, Oklahoma 74114, (“Executive”). 
 NOW, THEREFORE, the parties hereto agree as follows: 
 1. Employment/Duties. 
 A. Employment. Employer hereby agrees to employ Executive to serve as President
of Spectrum Field Services LLC or Atlas Pipeline Mid-Continent LLC (the “Company”), an affiliate of the Employer, and Executive hereby accepts such employment in accordance with the terms of this Agreement and the terms of employment
applicable to regular employees of Employer. Executive’s position as President and Chief Executive Officer will be full-time and Executive will be obliged to devote all working abilities and professional efforts to promote the objectives and
interests of the Employer. In the event of any conflict or ambiguity between the terms of this Agreement and terms of employment applicable to regular employees, the terms of this Agreement shall control. 
 B. Duties. Executive reports at the direction of the Managing Board of Directors of Atlas Pipeline Partners, L.P. (“APL”) and is
bound to follow the lawful instructions and directions of the Board of APL at any given time. Executive shall be responsible for the management of the Company, and all of the duties that such management may entail. 
 C. Other Interests. Executive may participate in or serve on corporate, civic and charitable boards or committees, industry associations,
fulfill speaking engagements or teach at educational institutions, and manage portfolio investments or investments in passive activities (as defined in IRC Section 469 and to include non-operated oil and gas interests) that do not conflict with
the business and affairs of Company or interfere, individually or in the aggregate, with Executive’s performance of his duties hereunder. 

 2. Compensation. 
 A. Base Salary. During the Employment term hereof, the Executive will be paid a base salary of $200,000 per annum (“Base Salary”).
Increases may be made to the Executive’s Base Salary at the discretion of the Board of Directors of the Employer (the “Board”). Effective as of the date of any such increase, the Base Salary, as increased, shall be the Base Salary for
all purposes of this Agreement and may not thereafter be reduced. Such Base Salary shall be paid in accordance with the Employer’s regular payroll policies and shall be subject to all applicable withholding requirements. 
 B. Discretionary Cash Bonus. The Executive shall be eligible to receive a bonus determined in the sole discretion of the Board and
which shall be subject to all applicable withholding requirements. 
 C. Incentive Compensation Program. The Executive
shall be eligible to participate in the company’s Incentive Compensation Program for Executive Group pursuant to the terms and conditions set forth in the letter agreement entitled “Incentive Compensation for Executive Group,” annexed
to this Agreement as Schedule “A.” 
 3. Benefits. 
 A. Vacation Leave. Executive is entitled to take vacation days, holidays and personal days according to Employer’s regular policies and
procedures applicable to other executives of the Employer. 
 B. Sick Leave. Executive shall be entitled to sick leave and
emergency leave according to Employer’s regular policies and procedures. 
 C. Medical and Group Life Insurance. Employer
agrees to provide Executive with major medical health and group life insurance that is consistent with what all other Employer Executives receive. Employer retains the right to select and to change the insurance provider at its discretion.

 D. Retirement Plan and Other Benefits. Executive shall be eligible to participate in Employer’s Retirement Plan,
pursuant to the terms of the Plan, and all other benefits applicable to other executives of the Employer. 
 E. Administrative and
Travel Expense. Employer agrees to provide Executive with the use of a vehicle leased by Employer and with a parking space for said vehicle. Employer agrees to provide Executive with reimbursement for reasonable work-related administrative and
travel expenses, pursuant to Employer’s business expense policies and procedures. Written receipts must be submitted to document all expenses for which reimbursement is sought. 
 4. Term and Termination. 
 A. The Term of this Agreement shall commence on July 16, 2004 and continue for a period of three years, unless extended or earlier terminated pursuant to the provisions below. The Agreement may be renewed upon the mutual
agreement of Executive and Employer. 
 B. This Agreement and Executive’s employment may be terminated without cause at
Employer’s discretion during the Term, provided that Employer shall pay to Executive an amount determined as follows. 
  

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 (1) In the event Executive’s employment is terminated without cause in the first
year of the Term, Employer shall pay to Executive an amount equal to Executive’s base salary and the Employer’s portion of medical health insurance for the remainder of the Term. Executive shall not be entitled to any other compensation
then in effect, prorated or otherwise. 
 (2) In the event Executive’s employment is terminated in the second year of the
Term, Employer shall pay to Executive an amount equal to Executive’s base salary and the Employer’s portion of medical health insurance for the remainder of the Term. In addition, Executive shall be eligible to receive 33% of the Incentive
Compensation set forth in Sections 2(A) and (B) of the letter agreement annexed hereto as Schedule “A” provided that the financial conditions set forth in Sections 2(A) and (B) of such letter agreement are otherwise satisfied.

 (3) In the event Executive’s employment is terminated in the third year of the Term, Employer shall pay to Executive
an amount equal to Executive’s base salary and the Employer’s portion of medical health insurance for the remainder of the Term. In addition, Executive shall be eligible to receive 67% of the Incentive Compensation set forth in Sections
2(A) and (B) of the letter agreement, provided that the financial conditions set forth in Sections 2(A) and (B) annexed as Schedule “A” are otherwise satisfied. In addition, Executive shall be eligible to participate in the
Executive Group Acquisitions Incentive set forth in Section 2(C) of the letter agreement annexed as Schedule “A” if the financial conditions set forth in Section 2(C) are otherwise satisfied. Payment of Incentive Compensation
under Section 2(C) shall be determined at the end of the 16th full quarter following the execution of this Agreement, based on actual distributable cash flow of said acquisitions during the 13th through 16th full quarters following the
execution of this Agreement. 
 C. The Executive may terminate his employment hereunder for Good Reason at any time upon thirty
(30) days’ prior written notice to Employer and Employer shall pay to Executive an amount equal to Executive’s base salary and the Employer’s portion of medical health insurance for the remainder of the Term. For purposes of this
Agreement, “Good Reason” shall mean the occurrence, without the Executive’s written consent, of any one or more of the following events; (i) a substantial and adverse change in the Executive’s functions, duties and
responsibilities resulting in a significant loss of authority or control; (ii) a significant reduction in benefits received by the Executive as of the effective date of this Agreement; (iii) Employer requiring the Executive relocate to a
city other than Tulsa, Oklahoma; and (iv) a failure by Employer to comply with any material provision of this Agreement which has not been cured within thirty (30) days after notice of such non-compliance has been given by the Executive to
Employer. 
 D. This Agreement may be terminated by Executive at Executive’s discretion by providing at least ninety
(90) days prior written notice to Employer. In the event of termination by Executive pursuant to this subsection, Employer may immediately relieve Executive of all duties and immediately terminate this Agreement, provided that Employer shall
pay Executive at the base salary rate to the termination date included in Executive’s original termination notice. 
 E. In the
event that Executive is in breach of any material obligation owed Employer in this Agreement, habitually neglects the duties to be performed under this Agreement, fails or refuses to perform, after fifteen (15) days written notice, the
reasonable and lawful directives of the Board, engages in any conduct which is dishonest, damages the reputation or standing of Employer, violates the official policies of Employer, or is convicted of a 

  

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felony or other crime involving moral turpitude, then Employer may terminate this Agreement for cause upon five (5) days notice to Executive and may suspend
Executive with pay from the time of the damaging event until termination. The date of termination shall be the termination date set forth in Employer’s written notice of termination. In the event of termination of the Agreement pursuant to this
subsection, Executive shall be paid only at the base salary rate up to and including the date of termination. Executive shall not be paid any other compensation, prorated or otherwise. 
 5. Confidentiality. Executive acknowledges that he will have access to certain proprietary and confidential information of Employer that is
not generally known to the public including, but not limited to, its services, personnel, procedures and financial information. Executive agrees not to use or disclose any proprietary or confidential information during the Term of this Agreement or
thereafter other than in connection with performing Executive’s services for Employer in accordance with this Agreement. Upon termination of employment, Executive agrees not to retain or take with him any confidential notes, records, documents
or other proprietary or confidential information about Employer prepared or obtained in the course of employment. The provisions of this Paragraph 5 shall survive termination of this agreement and Executive’s employment with the Company.

 6. Non-competition. Executive acknowledges that his position with Employer as President and Chief Executive Officer is
special, unique and intellectual in character and his position in Employer will place him in a position of confidence and trust with Executives and clients of Employer. Executive agrees that during the Term of this Agreement and for a period of
eighteen (18) months thereafter Executive will not directly or indirectly engage in any business in direct competition with Employer located in the counties in which the Company maintained operations or in which he worked, and Executive will not
solicit from any client of Employer business of the type performed by Employer, or recruit, solicit or hire any employee or consultant of Employer or induce any employee or consultant of Employer to terminate its relationship with Employer. If
Executive shall violate any of the provisions of this Paragraph 6, Employer shall be entitled, in addition to any remedies at law, to an injunction upon notice, but without bond, restraining Executive from the continuance of such violation.
Executive agrees that the terms of this provision are necessary and reasonable and that they are supported by adequate consideration. 
 7. Representations. (a) Executive represents and warrants to Employer that he is not now subject to any non-competition, restrictive covenant, or other restriction or agreement that would prevent, limit or impair in any way
his ability to perform all his obligations under this Agreement. 
 (b) Executive agrees that he will disclose and provide a copy of the
confidentiality and non-competition provisions of this Agreement to any prospective Employer and/or recruiter. 
 8. Notices.
Any notice required by this Agreement or given in connection with it, shall be in writing and shall be given to the appropriate party by personal delivery or by certified mail, postage prepaid or recognized overnight delivery service. 
  

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 If to Employer: 
 Michael L. Staines 
 Executive Vice President 
 311 Rouser Road 
 Moon Township, PA 15108

 If to Executive: 
 Robert R.
Firth 
 1266 Hazel Blvd. 
 Tulsa,
OK 74114 
 9. Final Agreement. This Agreement terminates and supersedes all prior understandings or agreements on the subject
matter herein. This Agreement may be modified only by a further writing that is duly executed by both parties. 
 10. Governing
Law. This agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to conflict of law principles. 
 11. Interpretation of Agreement. The provisions of this Agreement shall not be construed in favor of or against either party. In the event
any provision of this Agreement is determined by a court to be invalid or unenforceable, the parties contemplate that the provisions may be modified by the court to make them enforceable to the fullest extent allowed by law. 
 12. Headings. The headings in this agreement are inserted for convenience only and shall not be used to define, limit or describe the scope
of the Agreement of any of the obligations above. 
 13. No Assignment. Neither this Agreement nor any or interest in this
Agreement may be assigned by Executive without the prior express written approval of Employer, which may be withheld by Employer at Employer’s absolute discretion. 
 14. Severability. If any provision of the Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in
full force and effect as if such invalid or unenforceable term had never been included. 
 15. Waiver of Jury Trial. The
parties hereby knowingly, voluntarily and intentionally waive the right any of them may have to a trial by jury in respect of any litigation based hereon or arising out of, under or in connection with this Agreement, or any course of conduct, course
of dealing, statements (whether verbal or written) or actions of any party in connection with Executive’s employment with Employer. This provision is a material inducement for the parties’ acceptance of this Agreement. 
 16. Indemnification. The Employer shall, to the fullest extent permitted by applicable law, from time to time in effect, indemnify Employee
from and against any and all expenses, liabilities or other matters arising from or related to Employee’s actions, duties or responsibilities associated with the Company or as an officer or employee of any related entities of Employer including
any partnership, joint venture, limited liability company, trust or other 

  

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enterprise, except that such indemnification shall not cover any actions by Executive that are unlawful, grossly negligent or in willful violation of Company
policy. Such indemnification shall continue even though Employee has ceased to be an employee or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. The indemnification provided by this paragraph shall
not be deemed exclusive of any other rights to which Employee may be entitled under any provision of the Employer’s Certificate of Incorporation, Bylaws, other agreement or insurance coverage, both as to actions in her official capacity and as
to action in another capacity while holding such office. 
 17. Mitigation. The Executive shall not be required to find new
employment or otherwise mitigate the amount of any payment provided for in this Agreement. Any salary or remuneration received by Executive from a third party for providing personal services shall not reduce the Employer’s obligation to make
any payment to Executive as may be required by this Agreement. 
 18. Agreement is knowing and voluntary. Executive has
carefully reviewed this Employment Agreement to assure his complete understanding of the Agreement’s full effect. The Executive has actively engaged in negotiations concerning the terms and conditions of the Agreement. The Executive has been
represented by counsel of his choice in negotiating and reviewing the Agreement and has been given the opportunity by the Employer to engage in this review independently, in consultation with his attorney, and to discuss the Agreement with his
family. Executive’s signing of this Employment Agreement is knowing and voluntary. 
 IN WITNESS WHEREOF, Employer and Executive have
executed this Employment Agreement on the first date written below: 
  

					
	Date: July 16, 2004	 	By:	 	 /s/ ROBERT R. FIRTH

		 		 	Robert R. Firth

  

					
	Date: July 16, 2004	 	Atlas America, Inc.
			
		 	By:	 	 /s/ MICHAEL L. STAINES

		 	Name:	 	Michael L. Staines
		 	Title:	 	Executive Vice President

  

 6Letter Agreement

 Exhibit 10.16(a) 
 Schedule A 
 

 
 Mr. Robert R. Firth 
 1266 Hazel Boulevard 
 Tulsa, Oklahoma 74114 
 Mr. David D. Hall 
 3716 East 43 Place 
 Tulsa, Oklahoma 74135 
 Re: Incentive Compensation for Executive Group 
 Dear Messrs. Firth and Hall: 
 This letter agreement (the
“Letter Agreement”) will set forth the terms and conditions of incentive compensation which you will be eligible to receive as members of the Executive Group of Spectrum Field Services LLC or Atlas Pipeline Mid-Continent LLC (collectively,
the “Company”) pursuant to your Employment Agreements with Atlas America, Inc. (the “Employment Agreements”). 
 1.
“Executive Group” shall mean (1) Robert R. Firth (“Firth”), the President and Chief Executive Officer of the Company; (2) David D. Hall (“Hall”), the Vice President and Chief Financial Officer of the Company;
and (3) such other officers of the Company as shall be mutually agreed upon in writing by the President and Chief Executive, the Vice President and Chief Financial Officer, and the Board of Directors of the Atlas Pipeline Partners GP,LLC, the
sole member of the Company. Any person becoming a member of the Executive Group pursuant to the foregoing clause (3) shall enter into an employment agreement with Atlas America, Inc. of its affiliates (the “Employer”) having terms
materially acceptable to such person and the Employer. 
 2. The Company’s Incentive Program for the Executive Group is structured in
three parts: (A) Base Incentive; (B) Additional Incentive; and (C) Acquisition Look-Back Incentive. 
 A. Base
Incentive. 
 (1) The Executive Group shall receive from Atlas Pipeline Partners, L.P. (“APL”) that number of Common Units of
Limited Partnership in APL (“Units”) equal to $1 million dollars divided by the closing price on the day before the date hereof rounded to the 

 
nearest whole number (the “Base Incentive”), on the day following the earlier of the filing of Atlas Pipeline Partners, L.P. September 30,
2007 quarterly financial report, or a Change of Control of the Company, if and only if each of the following conditions is met: 
  

	 	•	 	 Distributable Cash Flow generated by the assets acquired by the Company from Spectrum Field Services, Inc., as may have been expanded from time to time, averages no
less than 10.7%, on an annualized basis, of Average Gross Long Term Assets over the 13 quarters ending September 30, 2007, including the partial quarter ended September 30, 2004. 

  

	 	•	 	 No more than two (2) quarters with Distributable Cash Flow of less than 7%, on an annualized basis, of Gross Long Term Assets for that quarter, including the
partial quarter ended September 30, 2004. 

 If the above conditions are met, Units shall be issued (subject to compliance with
securities laws) promptly following the filing of the Atlas Pipeline Partners, L.P. September 30, 2007 quarterly financial report, but in no event later than December 31, 2007. 
 B. Additional Incentive. 
 (1) To the extent that the
average annual distributable cash flow exceeds 10.7% of Gross Long Term Assets for the 13 quarters ending September 30, 2007, the Executive Group shall receive from APL additional Units in an amount equal to 7.42% of the Base Incentive for each
one tenth of one percent (0.1%) or portion thereof in excess of 10.7%, up to a maximum of the Base Incentive, to be issued (subject to compliance with securities laws) promptly following the filing of the Atlas Pipeline Partners, L.P.
September 30, 2007 quarterly financial report, but in no event later than December 31, 2007. 
 C. Acquisition Look-Back
Incentive. 
  

	 	 •
	 	 At the end of the 12th full quarter following the execution of this Agreement, provided at least one of Firth and Hall is still employed by the Employer at that date, the Executive Group shall be eligible for further
incentive compensation if a member of the Executive Group is actively employed by Employer at the time and has met the requirements necessary to receive the Base Incentive, as described above, based on the following: 

  

	 	•	 	 The Executive Group as a whole shall be entitle to receive a number of Units determined by dividing (X) the sum of (i) 1.5% of the aggregate Imputed Value
determined as provided below) of all acquisitions completed by the Company in the Mid-continent of the United States between the date hereof and December 31, 2007 (the “measurement Period”) that were identified by members of the Executive
Group or by employees of the Company who directly report to any member of the Executive Group and (ii) 0.5% of the aggregate Imputed Value of all acquisitions completed by the Company in the Mid-continent of the United States during the Measurement
Period which are sourced or identified to the Company by others by (Y) the average of the closing prices of the Units on the New York Stock Exchange on each of the five (5) trading days preceding the Award Date (as defined below). The aggregate
number of Units to which the Executive Group shall be entitled shall be allocated among the members of the Executive Group at the sole discretion of the President and Chief Executive Officer of the Company. Attached as Exhibit A hereto is a model
calculation of the Acquisition Look-Back Incentive, which is provided for illustrative purposes only. 

  

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	 	•	 	 The Imputed Value of acquisition completed by the Company during the Measurement Period shall be equal to (i) the actual Distributable Cash Flow generated by the
acquired company during the period January 1, 2008, through December 31, 2008, divided by (ii) the Yield. For purposes of the foregoing, Yield shall mean an amount determined by dividing (i) the amount of the regular quarterly distribution made by
APL in respect of the fourth calendar quarter of 2008 multiplied by four (4) by (ii) the closing price of a Unit on the New York Stock Exchange on the last business day of such calendar quarter. The amount of Distributable Cash Flow with respect to
an acquisition completed during the Measurement Period shall be based on the consolidating audited financial statements of such acquisition for the year ending December 31, 2008. 

  

	 	•	 	 Award Date means December 31, 2008. 

  

	 	•	 	 Payment of Units to the Executive Group shall be made as promptly as practicable after the Award Date and the completion of all necessary consolidating financial
statements for the year ending December 31, 2008. 

  

	 	•	 	 For the avoidance of doubt, the assets of the Company (and all expansions thereto) that represent the assets of Spectrum Field Services, Inc. which were acquired by
the company on July 16, 2004, pursuant to the certain Securities Purchase Agreement dated July 10, 2004, shall be excluded for purposes of this Section C and such acquisition and assets (and expansions thereto) shall not be considered an
acquisition completed during the Measurement Period. 

 D. Limitations on Units to be received by any Individual.

 Notwithstanding any provisions of this Letter, no individual (or group of related individuals) shall receive Units in an amount in excess
of one percent of the total number of Units outstanding. Any amount due hereunder to any individual hereunder in excess of this amount shall be paid in cash based on the average closing price of the Units for the five (5) trading days preceding
the date of required payment. 
 E. Definitions. 
 “Gross Long Term Assets” are defined as total assets, less current assets, less closing costs associated with any acquisition, plus accumulated depreciation, depletion and amortization, provided that
any impairment to goodwill shall not be deducted from gross long-term assets, in each case calculated in accordance with GAAP. 
 “Distributable Cash Flow” is defined as earnings before interest, depreciation, amortization and any direct or indirect allocation of parent, subsidiary or affiliate overhead, less maintenance capital
expenditures of those assets acquired from Spectrum Field Services, Inc. as may have been expanded from time to time. It does not include any contributions from preexisting Atlas Pipeline Partners LP activities or from subsequent acquisitions.
Computations will be made separately for acquisition sourced by the Executive Group and those sourced by others. 
  

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 “Executive Group” is defined as Mr. Robert Firth, Mr. David Hall and such
other officers of the Company as may be mutually agreed upon in writing from time to time by the President and Chief Executive Officer of the Company, the Vice President and Chief Financial Officer, and the Board of Directors of the Company.

 “Maintenance Capital Expenditures” are those capitalized costs expended to maintain the existing integrity and
capability of the assets. They specifically do not include any costs to expand the capability of the system, including costs necessary to connect new and/or expand existing sources of gas supply to the system. 
 “Mid-continent of the United States” for purposes of this Agreement, is defined as the states of Arkansas, Kansas, Oklahoma, New Mexico
and Texas. 
 “Change of Control” shall mean the transaction or series of related transactions in which the outstanding
shares of the Company are exchanged for cash, securities or other property as a result of which the current owners of the capital shares of the Company do not own capital shares in the Company representing at least fifty-one percent (51%) of
the voting power therein. 
 3. Allocation of the Compensation Incentives among the members of the Executive Group shall be determined at the
discretion of the President and Chief Executive Officer, provided, however that no individual shall be entitled to more than sixty percent of the total compensation provided for hereunder. 
 4. The terms and conditions set forth in this letter agreement supersede any prior agreements concerning incentive compensation for the Executive Group
and may be modified only by writing, executed by the President and Chief Executive Officer and the Board of Directors of the Company. 
  

							
		 		 	Very truly yours
			
		 		 	 /s/ MICHAEL L. STAINES

		 		 	 Michael L. Staines
 Executive Vice
President

			
	I understand and agree to the terms set forth in this Letter Agreement	 		 	ATLAS PIPELINE PARTNERS, L.P.
				
		 		 	By:	 	Atlas Pipeline Partners GP, LLC, its general partner
				
	 /s/ ROBERT R. FIRTH
	 		 		 	
	Robert R. Firth	 		 	By:	 	  

				
	 /s/ DAVID D. HALL
	 		 		 	
	David D. Hall	 		 		 	

  

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