Document:

ampy-ex102_184.htm

 

Exhibit 10.2

 

 

	

	
Amplify Energy Corp.

500 Dallas Street, Suite 1600

Houston, TX 77002

 

(713) 490-8900

 

 

EMPLOYMENT AGREEMENT 

May 5, 2018

This Employment Agreement (“Agreement”) is entered into by and between AMPLIFY ENERGY CORP., a Delaware corporation (the “Company”), and KENNETH MARIANI (the “Employee”), effective as of May 14, 2018 (the “Effective Date”), on the terms set forth herein. The Company and Employee may sometimes hereafter be referred to singularly as a “Party” or collectively as the “Parties.”

 

Accordingly, the Parties, intending to be legally bound, agree as follows:

 

	
1.
	
Position and Duties.

 

1.1Employment; Titles; Reporting. The Company agrees to employ the Employee and the Employee agrees to commence employment with the Company, upon the terms and subject to the conditions provided under this Agreement. During the Employment Term (as defined in Section 2), the Employee will serve the Company as its Chief Executive Officer. In such capacity, the Employee will report to the Board of Directors of the Company (including any committee thereof, the “Board”) and otherwise will be subject to the direction and control of the Board, and the Employee will have such duties, responsibilities and authorities as may be assigned to the Employee by the Board from time to time to the extent consistent with his position as the chief executive officer in a publicly traded company comparable to the Company.

 

1.2Duties. During the Employment Term, the Employee will devote substantially all of the Employee’s full working time to the business and affairs of the Company, will use the Employee’s best efforts to promote the Company’s interests and will perform the Employee’s duties and responsibilities faithfully, diligently and to the best of the Employee’s ability, consistent with sound business practices. The Employee may be required by the Board to provide services to, or otherwise serve as an officer or director of, any direct or indirect subsidiary of the Company. The Employee will comply with the Company’s policies, codes and procedures, as they may be in effect from time to time, applicable to executive officers of the Company.  Subject to the preceding sentence, the Employee may, with the prior written approval of the Board in each instance, engage in other business and charitable activities, provided that such charitable and/or other business activities do not violate Section 7, create a conflict of interest or the appearance of a conflict of interest with the Company, or interfere, individually or in the aggregate, with the performance of the Employee’s obligations to the Company under this Agreement.

 

 

 

1.3Place of Employment. The Employee will perform the Employee’s duties under this Agreement at the Company’s offices in Houston, Texas. The Employee understands and agrees that he will be required to travel from time to time for purposes of the Company’s business.

	
2.
	
Term of Employment.

 

The term of the Employee’s employment by the Company under this Agreement (the “Employment Term”) will commence on the Effective Date and will continue until the Employee’s employment is terminated by either Party under Section 5. The date on which the Employee’s employment ends is referred to in this Agreement as the “Termination Date.” For  the purpose of Sections 5 and 6 of this Agreement, the Termination Date shall be the date upon which the Employee incurs a “separation from service” as defined in Section 409A of the  Internal Revenue Code of 1986, as amended (the “Code”), and regulations issued thereunder (collectively, “Code Section 409A”).

 

	
3.
	
Compensation.

 

3.1Base Salary. During the Employment Term, the Employee will be entitled to receive a base salary (“Base Salary”) at an annual rate of not less than $600,000 for services rendered to the Company and any of its direct or indirect subsidiaries, payable in accordance with the Company’s regular payroll practices. The Employee’s Base Salary shall be reviewed annually by the Board and may be adjusted upward in the Board’s sole discretion, but not downward.

 

3.2Bonus Compensation. During the Employment Term, the Employee shall be eligible for discretionary bonus compensation with a target of 100% of the Employee’s Base Salary (the “Target Bonus”) for each complete calendar year that the Employee is employed by the Company hereunder (any bonus compensation payable, the “Annual Bonus”). The performance targets that must be achieved in order to be eligible for certain bonus levels shall be established by the Board (or a committee thereof) annually, after consultation with the Employee. Notwithstanding the foregoing, the Employee shall be eligible to receive a pro rata bonus for the portion of the 2018 calendar year that the Employee is employed by the Company hereunder (the “2018 Bonus”), based on performance targets set by the Board after consultation with the Employee and communicated to the Employee by May 31, 2018. Each Annual Bonus (including the 2018 Bonus), if any, shall be paid as soon as administratively feasible after the Board (or a committee thereof) certifies whether the applicable performance targets for the applicable calendar year have been achieved, but in no event later than March 15 following the end of such calendar year. Notwithstanding anything in this Section 3.2 to the contrary, but subject to Section 6 below, no Annual Bonus (including the 2018 Bonus), if any, nor any portion thereof, shall be payable for any calendar year unless the Employee remains continuously employed by the Company from the Effective Date through the date on which such Annual Bonus or 2018 Bonus is paid. Any Annual Bonus will be paid in the form of (a) cash, with respect to 25% of the amount of the Annual Bonus, and (b) fully-vested shares of the Company’s common stock having an aggregate fair market value on the grant date (as determined by the Board) equal to 75% of the amount of the Annual Bonus.

 

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3.3Long-Term Incentive Compensation. Within 30 days of the Effective Date, the Employee shall receive a grant of 250,000 restricted stock units (“RSUs”) under the Company’s Management Incentive Plan (as it may be amended from time to time), which RSUs will be subject to vesting in accordance with, and the other terms and conditions set forth in, the form of award agreement attached hereto as Exhibit A.  Thereafter, long-term incentive compensation awards may be made to the Employee from time to time during the Employment Term by the Board in its sole discretion, whose decision will be based upon performance and award guidelines for executive officers of the Company established periodically by the Board in its sole discretion.

 

	
4.
	
Expenses and Other Benefits.

 

4.1Reimbursement of Business Expenses. The Employee will be entitled to receive prompt reimbursement for all reasonable business expenses incurred by the Employee during the Employment Term (in accordance with the policies and practices presently followed by the Company or as may be established by the Board from time to time for the Company’s senior executive officers) in performing services under this Agreement, provided that the Employee properly accounts for such expenses in accordance with the Company’s policies as in effect from time to time. Each reimbursement shall be paid within 30 days after it has been properly submitted to the Company by the Employee in accordance with all applicable policies, but in no event later than the end of the calendar year following the calendar year in which any such reimbursable expense was incurred.

 

The Company shall not be obligated to pay any such reimbursement amount for which the Employee fails to submit an invoice or other documented reimbursement request at least ten business days before the end of the calendar year next following the calendar year in which the expense was incurred. Business related expenses shall be reimbursable only to the extent they were incurred during the Employment Term, but in no event shall the time period extend beyond the later of the lifetime of the Employee or, if longer, 20 years. The amount of such reimbursements that the Company is obligated to pay in any given calendar year shall not affect the amount the Company is obligated to pay in any other calendar year. In addition, the Employee may not liquidate or exchange the right to reimbursement of such expenses for any other benefits.

 

Notwithstanding the foregoing provisions of this Section 4.1, and provided the Effective Date occurs, the Company agrees to reimburse the Employee for the legal fees and expenses that he incurred before the commencement of the Employment Term with respect to the negotiation of this Agreement and any restricted stock unit or other equity incentive award agreement with the Company, provided that such legal fees and expenses do not exceed $15,000.00 in the aggregate. Reimbursement shall be made by the Company to the Employee after the Effective Date and within 30 days after receipt by the Company of invoices or other supporting documentation for such legal fees and expenses.

 

4.2Paid Time Off. The Employee shall be entitled to paid time off in accordance with the Company’s policy as then in effect (prorated for any calendar year during which the Employee is employed with the Company for less than the entire year, based on the number of days that the Employee is employed with the Company during such calendar year); the 

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Company’s policy in effect as of the Effective Date would provide the Employee with 200 hours of paid time off per calendar year.

 

4.3Other Employee Benefits. In addition to the foregoing, during the Employment Term, the Employee will be entitled to participate in and to receive benefits as a senior executive under all of the Company’s employee benefit plans, programs and arrangements available to senior executives, subject to the eligibility criteria and other terms and conditions thereof, as such plans, programs and arrangements may be duly amended, terminated, approved or adopted by the Company from time to time.

 

	
5.
	
Termination of Employment.

 

5.1Death. The Employee’s employment under this Agreement will terminate upon the Employee’s death.

 

5.2Termination by the Company.

 

(a)Terminable at Will. The Company may terminate the Employee’s employment under this Agreement at any time with or without Cause (as defined below).

 

(b)Definition of Cause. For purposes of this Agreement, “Cause” means any of the Employee’s: (1) conviction of a felony, or plea of guilty or nolo contendere to, any felony or any crime of moral turpitude; (2) repeated intoxication by alcohol or drugs during the performance of the Employee’s duties; (3) embezzlement or other willful and intentional misuse of any of the funds of the Company or its direct or indirect subsidiaries, (4) commission of a demonstrable act of fraud; (5) willful and material misrepresentation or concealment on any written reports submitted to the Company or its direct or indirect subsidiaries; (6) material breach of this Agreement; (7) failure to follow or comply with the reasonable, material and lawful written directives of the Board; or (8) conduct constituting a material breach of the Company’s then-current code of conduct or other similar written policy which has been provided to the Employee.

 

(c)Notice and Cure Opportunity in Certain Circumstances. The Employee may be afforded a reasonable opportunity to cure any act or omission that would otherwise constitute Cause hereunder according to the following terms: The Board shall give the Employee written notice stating with reasonable specificity the nature of the circumstances determined by the Board in its reasonable and good faith judgment to constitute Cause. If, in the reasonable and good faith judgment of the Board, the alleged breach is reasonably susceptible to cure, the Employee will have 15 days from the Employee’s receipt of such notice to effect the cure of such circumstances or such breach to the reasonable and good faith satisfaction of the Board. The Board will state whether the Employee will have such an opportunity to cure in the initial notice of Cause referred to above. Prior to a termination for Cause, in those instances where the initial notice of Cause states that the Employee will have an opportunity to cure, the Company shall provide an opportunity for the Employee to be heard by the Board or a Board committee designated by the Board to hear the Employee. The decision as to whether the Employee has satisfactorily cured the alleged breach shall be made at such meeting. If, in the reasonable and good faith judgment of the Board, the alleged breach is not reasonably susceptible to cure, or 

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such circumstances or breach have not been satisfactorily cured within such 15 day cure period, such breach will thereupon constitute Cause hereunder.

5.3Termination by the Employee.

 

(a)Terminable at Will. The Employee may terminate the Employee’s employment under this Agreement at any time with or without Good Reason (as defined below).

 

(b)Notice and Cure Opportunity. If such termination is for Good Reason, the Employee will give the Company written notice, which will identify with reasonable specificity the grounds for the Employee’s resignation and provide the Company with 30 days from the day such notice is given to cure the alleged grounds for resignation contained in the notice. A termination will not be for Good Reason if such notice is given by the Employee to the Company more than 45 days after the first occurrence of the event that the Employee alleges is Good Reason for the Employee’s termination hereunder. The Employee must actually terminate his employment within 30 days following the expiration of the Company’s 30-day cure period. Otherwise, any claim of such circumstances constituting “Good Reason” shall be deemed irrevocably waived by the Employee.

 

(c)Definition of Good Reason. For purposes of this Agreement, “Good Reason” will mean any of the following to which the Employee will not consent in writing: (i) a relocation of the Employee’s principal work location to a location in excess of 40 miles from its then current location; (ii) a reduction in the Employee’s then current Base Salary or Target Bonus, or both; (iii) a material breach of any provision of this Agreement by the Company; or (iv) any material reduction in the Employee’s title, authority, duties, responsibilities or reporting relationship from those in effect as of the Effective Date, except to the extent such reduction occurs in connection with the Employee’s termination of employment for Cause or due to the Employee’s death or Disability.

 

5.4Notice of Termination. Any termination of the Employee’s employment by the Company or by the Employee during the Employment Term (other than termination pursuant to Section 5.1) will be communicated by written Notice of Termination to the other Party hereto in accordance with Section 8.7. For purposes of this Agreement, a “Notice of Termination” means a written notice that (a) indicates the specific termination provision in this Agreement relied  upon, (b) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated, and (c) if the Termination Date is other than the date of receipt of such notice, specifies the Termination Date (which Termination Date will be not more than 30 days after the giving of  such notice).

 

5.5Disability. If the Company determines in good faith that the  Disability  (as defined herein) of the Employee has occurred during the Employment Term, it may, without breaching this Agreement, give to the Employee written notice in accordance with Section 5.4 of its intention to terminate the Employee’s employment. In such event, the Employee’s employment with the Company will terminate effective on the 30th day after receipt of such notice by the Employee, provided that, within 30 days after such receipt, the Employee has not returned to full-time performance of the Employee’s duties hereunder.

 

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“Disability” means the earlier of (a) written determination by a physician selected by the Company and reasonably agreed to by the Employee that the Employee has been unable to perform substantially the Employee’s usual and customary duties under this Agreement for a period of at least 120 consecutive days or a non-consecutive period of 180 days during any 12- month period as a result of incapacity due to mental or physical illness or disease; and (b) “disability” as such term is defined in the Company’s applicable long-term disability insurance plan. At any time and from time to time, upon reasonable request therefor by the Company, the Employee will submit to reasonable medical examination for the purpose of determining the existence, nature and extent of any such disability. Any physician selected by Company shall be Board Certified in the appropriate field and shall have no actual or potential conflict of interest.

 

6.Compensation of the Employee Upon Termination. Subject to the provisions of Section 6.9, the Employee shall be entitled to receive the amount specified upon the termination events designated below:

 

6.1Death. If the Employee’s employment under this Agreement is terminated by reason of the Employee’s death, the Company shall pay to the person or persons designated by the Employee for that purpose in a notice filed with the Company, or, if no such person has been so designated, to the Employee’s estate, the following:

 

(a)an amount equal to the Employee’s accrued but unpaid then current Base Salary through the Termination Date, payable in a lump sum within 30 days following the Termination Date;

 

plus

 

(b)if the Termination Date occurs after the end of the calendar year but prior to the date on which annual bonuses are paid, an amount equal to the Annual Bonus that the Employee would have received (if any) had he been employed on the payment date (the “Actual Full Year Bonus Amount”), payable at the same time annual bonuses for such year are paid to actively-employed senior executives of the Company;

 

plus

 

(c)a pro-rata portion of the Employee’s Annual Bonus for the calendar year  in which the Employee’s Termination Date occurs, based on actual results for such year (determined by multiplying the amount of such Annual Bonus which would be due for the full calendar year by a fraction, (i) the numerator of which is the number of days during the calendar year that the Employee is employed by the Company and (ii) the denominator of which is three hundred sixty-five (365)) (the “Actual Pro Rata Bonus Amount”), if any, payable at the same time annual bonuses for such year are paid to actively-employed senior executives of the Company;

 

plus

 

(d)any other amounts that may be reimbursable by the Company to the Employee as expressly provided under this Agreement, payable in a lump sum within 30 days following the Termination Date.

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The Employee’s entitlement to the amounts set forth in Section 6.1(b) and Section 6.1(c) is subject to the provisions of Section 6.5.

 

Thereafter, the Company will have no further obligation to the Employee under this Agreement, other than for payment of any amounts accrued and vested under any employee benefit plans or programs of the Company and any payments or benefits required to be made or provided under applicable law.

 

6.2Disability. In the event of the Employee’s termination by reason of Disability pursuant to Section 5.5, the Employee will continue to receive the Employee’s Base Salary in effect immediately prior to the Termination Date and participate in applicable employee benefit plans or programs of the Company through the Termination Date, subject to offset dollar-for-dollar by the amount of any disability income payments provided to the Employee under any Company disability policy or program that is maintained by the Company. The Company also shall pay to the Employee the amounts set forth in Section 6.1(a) through Section 6.1(d), at the times and subject to the conditions set forth in Section 6.1.  Thereafter, the Company will have no further obligation to the Employee under this Agreement, other than for payment of any amounts accrued and vested under any employee benefit plans or programs of the Company and any payments or benefits required to be made or provided under applicable law.

 

6.3By the Company for Cause or by the Employee Without Good Reason.

 

(a)Termination by Company For Cause. If the Employee’s employment is terminated by the Company for Cause, the Employee will receive (i) the Employee’s accrued but unpaid then current Base Salary through the Termination Date and (ii) any other amounts that may be reimbursable by the Company to the Employee as expressly provided under this Agreement, in each case, payable in a lump sum within 30 days following the Termination Date. Thereafter, the Company will have no further obligation to the Employee under this Agreement, other than for payment of any amounts accrued and vested under any employee benefit plans or programs of the Company, and any payments or benefits required to be made or provided under applicable law. No bonus will be paid to the Employee for a termination of the Employee’s employment for Cause.

 

(b)Termination by Employee Without Good Reason. If the Employee’s employment is terminated by the Employee without Good Reason, the Employee will receive (i) the Employee’s accrued but unpaid then current Base Salary through the Termination Date and (ii) any other amounts that may be reimbursable by the Company to the Employee as expressly provided under this Agreement, in each case, payable in a lump sum within 30 days following the Termination Date. Thereafter, the Company will have no further obligation to the Employee under this Agreement, other than for payment of any amounts accrued and vested under any employee benefit plans or programs of the Company, and any payments or benefits required to be made or provided under applicable law. No bonus will be paid to the Employee for a termination of the Employee’s employment without Good Reason.

 

6.4By the Employee for Good Reason or by the Company Without Cause. Subject to the provisions of Section 6.5, if the Company terminates the Employee’s employment without Cause, or the Employee terminates his employment for Good Reason, then the Employee will be entitled to the following (with the amounts payable under clauses (b), (c), (e) and (f) below, 

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collectively, the “Severance Benefits”):

 

(a)an amount equal to the Employee’s accrued but unpaid then current Base Salary through the Termination Date, payable in a lump sum within 30 days following the Termination Date;

 

plus

 

(b)if the Termination Date occurs after the end of the calendar year but prior to the date on which annual bonuses are paid, the Actual Full Year Bonus Amount, payable at  the same time annual bonuses for such year are paid to actively-employed senior executives of the Company;

 

plus

 

(c)the Actual Pro Rata Bonus Amount, if any, payable at the same time annual bonuses for such year are paid to actively-employed senior executives of the Company;

 

plus

 

(d)any other amounts that may be reimbursable by the Company to the Employee as expressly provided under this Agreement;

 

plus

 

(e)(i) if the Employee’s termination occurs on or prior to the 18-month anniversary of the Effective Date, an amount equal to the Employee’s monthly Base Salary rate as in effect on the day before the Termination Date (but not as an employee), and (ii) if the Employee’s termination occurs after the 18-month anniversary of the Effective Date, an amount equal to 200% of the Employee’s monthly Base Salary rate as in effect on the day   before the Termination Date, in each case, payable in accordance  with  the  Company’s  regularly scheduled payroll practices for a period of 12  months  following  the  Termination Date; provided that to the extent the payment of any amount constitutes “nonqualified deferred compensation” for purposes of Code Section 409A, any such payment scheduled  to  occur during the first 60 days following the Termination Date shall not be paid  until  the  first  regularly scheduled pay period following the 60th day after the Termination Date and shall include  payment  of  any  amount  that  was otherwise scheduled to be paid prior thereto;

 

plus

 

(f)subject to the Employee’s (i) timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), and (B) continued copayment of premiums at the same level and cost to the Employee as if the Employee were a senior executive of the Company (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars), continued participation in the Company’s group health plan (to the extent permitted under applicable law and the terms of such plan) which covers the Employee (and his spouse and eligible dependents, if applicable) for a 

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period of 12 months, provided that the Employee is eligible and remains eligible for COBRA coverage; provided, further, that the Company may modify the continuation coverage contemplated by this Section 6.4(f) to the extent reasonably necessary to avoid the imposition of any excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and/or the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable); and provided, further, that in the event that the Employee obtains other employment that offers group health plan coverage, such continuation of coverage by the Company under this Section 6.4(f) shall cease as of the end of the month in which the Employee obtains such other employer-provided, group health plan coverage.

 

6.5Conditions to Receipt of Certain Post-Termination Payments and Benefits.

 

(a)Release. As a condition to receiving the Actual Full Year Bonus Amount, the Actual Pro Rata Bonus Amount and/or any Severance Benefits to which the Employee may otherwise be entitled under Section 6.1, Section 6.2 or Section 6.4, the Employee must execute and not revoke a general release of claims, which will include an affirmation of the restrictive covenants set forth in Section 7, in form and substance satisfactory to the Company (the “Release”).  The Company will provide the Release to the Employee for signature within ten days after the Termination Date. If the Company has provided the Release to the Employee for signature within ten days after the Termination Date, and if the Release is not executed and non-revocable within 60 days after the Termination Date and prior to the date on which such payment and/or benefits are to be first paid or provided to the Employee, the Employee will not be entitled to the Actual Full Year Bonus Amount, the Actual Pro Rata Bonus Amount and/or any Severance Benefits, as the case may be, and the Company will have no further obligations with respect to the provision of those payments and/or benefits except as may be required by law. If the Release consideration period spans two calendar years, no payments and/or benefits subject to the Release will be paid or provided until the later of (i) the date on which the Release becomes effective and non-revocable and (ii) January 2nd of the second calendar year.

(b)Limitation on Benefits. If, following a termination of employment that gives the Employee a right to the payment of the Actual Full Year Bonus Amount, the Actual  Pro Rata Bonus Amount and/or any Severance Benefits to which the Employee may otherwise  be entitled under Section 6.1, Section 6.2 or Section 6.4, the Employee violates any of the covenants in Section 7 or as otherwise set forth in the Release, the Employee will have no further right or claim to the Actual Full Year Bonus Amount, the Target Pro Rata Bonus Amount and/or any Severance Benefits to which the Employee may otherwise be entitled under Section 6.1, Section 6.2 or Section 6.4 from and after the date on which the Employee engages in such activities, and the Company will have no further obligations with respect to such payments or benefits, and the covenants in Section 7 will nevertheless continue in full force and effect.

 

6.6Certain Amounts Not Includable for Employee Benefits Purposes. Except to the extent the terms of any applicable benefit plan, policy or program provide otherwise, any benefit programs of the Company that take into account the Employee’s income will exclude the Actual Full Year Bonus Amount, the Actual Pro Rata Bonus Amount and/or any Severance Benefits to which the Employee may otherwise be entitled under Section 6.1, Section 6.2 or Section 6.4.

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6.7Exclusive Severance Benefits. The Actual Full Year Bonus Amount, the Actual Pro Rata Bonus Amount and/or any Severance Benefits to which the Employee may otherwise  be entitled under Section 6.1, Section 6.2 or Section 6.4, if they become payable under the terms of this Agreement, will be in lieu of any other severance or similar benefits that would otherwise be payable under any other agreement, plan, program or policy of the Company, excluding, for this purpose, any post-termination treatment of equity incentive awards provided under the terms of the governing award agreements.

 

6.8Code Section 280G; Code Section 409A. Notwithstanding anything in this Agreement to the contrary:

 

(a)If any of the payments or benefits received or to be received by the Employee (including, without limitation, any payment or benefits received in connection with a “change of control” or the Employee’s termination of employment, whether pursuant to the  terms of this Agreement or any other plan, arrangement or agreement, or otherwise) (all such payments collectively referred to herein as the (“280G Payments”) constitute “parachute payments” within the meaning of Section 280G of the Code and would, but for this Section 6.8(a), be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then prior to making the 280G Payments, a calculation shall be made comparing (i) the Net Benefit (as defined below) to the Employee of the 280G Payments after payment of the Excise Tax to (ii) the Net Benefit to the Employee if the 280G Payments are limited to the extent necessary to avoid being subject to the Excise Tax.     Only if the amount calculated under clause (i) above is less than the amount under clause (ii) above will the 280G Payments be reduced to the minimum extent necessary to ensure that no portion of the 280G Payments is subject to the Excise Tax. “Net Benefit” shall mean the present value of the 280G Payments net of all federal, state, local, foreign income, employment and excise taxes. Any reduction made pursuant to this Section 6.8(a) shall be made in a manner determined by the Company that is consistent with the requirements of Code Section 409A and that maximizes the Employee’s economic position and after-tax income; for the avoidance of doubt, the Employee shall not have any discretion in determining the manner in which the payments and benefits are reduced.

 

(b)In the event that any benefits payable or otherwise provided under this Agreement would be deemed to constitute non-qualified deferred compensation subject to Code Section 409A, the Company will have the discretion to adjust the terms of such payment or benefit (but not the amount or value thereof) to the minimum extent reasonably necessary to comply with the requirements of Code Section 409A to avoid the imposition of any excise tax or other penalty with respect to such payment or benefit under Code Section 409A.

 

6.9Timing of Payments by the Company. Notwithstanding anything in this Agreement to the contrary, in the event that the Employee is a “specified employee” (as determined under Code Section 409A) at the time of the separation from service triggering the payment or provision of benefits, any payment or benefit under this Agreement which is determined to provide for a deferral of compensation pursuant to Code Section 409A shall not commence being paid or made available to the Employee until after six months from the Termination Date that constitutes a “separation from service” within the meaning of  Code Section 409A or such earlier date as may be permitted under Code Section 409A.

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7.
	
Restrictive Covenants.

 

7.1Confidential Information. During the Employment Term and thereafter, the Employee shall keep secret and retain in strictest confidence, and shall not use for the benefit of himself or others, any confidential matters or trade secrets of, or confidential and competitively valuable information concerning, the Company and its direct or indirect subsidiaries (collectively, the “Company Group”), including, without limitation, information concerning their organization and operations, business and affairs, formulae, manufacturing processes, proprietary information, technical data, “know-how”, customer lists, details of client or consultant contracts, vendor and purchasing arrangements, terms and discounts, pricing methods and policies, financial information, operational methods, marketing plans or strategies, business acquisition plans, new personnel acquisition plans, technical processes, projects, financing/financial projections, budget information and procedures, marketing plans or strategies, and research products. The confidentiality obligations set forth in this Section 7.1 shall not apply to any information that becomes part of the public domain other than through the Employee’s  disclosure in violation of the terms hereof. Nothing herein shall be construed as prohibiting the Employee from using or disclosing such confidential information as is necessary and has been authorized in his proper performance of services for the Company Group.

 

(a)SEC Provisions. The Employee understands that nothing contained in this Agreement limits the Employee’s ability to file a charge or complaint with the Securities and Exchange Commission (“SEC”). The Employee further understands that this Agreement does not limit the Employee’s ability to communicate with the SEC or otherwise participate in any investigation or proceeding that may be conducted by the SEC, including providing documents or other information, without notice to the Company. This Agreement does not limit the Employee’s right to receive an award for information provided to the SEC. This Section 7.1(a) applies only for the period of time that the Company is subject to the Dodd-Frank Act.

 

(b)Trade Secrets. The  parties  specifically acknowledge that 18 U.S.C. § 1833(b) provides: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.”   Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, notwithstanding anything to the contrary in the foregoing, the Parties have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. If the Employee files a lawsuit for retaliation against the Company for reporting a suspected violation of law, the Employee may disclose the Company’s trade secrets to the Employee’s attorney and use the trade secret information in the court proceeding, if the Employee first files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.

 

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7.2No Interference. Notwithstanding any other provision of this Agreement, (a) the Employee  may  disclose  confidential  information  (as  described  in  Section  7.1  above)  when required to do so by a court of competent jurisdiction, by any governmental agency having authority over the Employee or the business of the Company or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order the Employee to divulge, disclose or make accessible such information, in each case, subject to the Employee’s obligations to notify the Company and first obtain a protective order, to the extent permitted by applicable law; and (b) nothing in this Agreement is intended to interfere with the Employee’s right to (i) report possible violations of state or federal law or regulation to any governmental or law enforcement agency or entity; (ii) make other disclosures that are protected under the whistleblower provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies); (iii) file a claim or charge any governmental agency or entity; or (iv) testify, assist or participate in an investigation, hearing, or proceeding conducted by any governmental or law enforcement agency or entity, or any court. For purposes of clarity, in making or initiating any such reports or disclosures or engaging in any of the conduct outlined in subsection (b) above, the Employee may disclose confidential information to the extent necessary to such governmental or law enforcement agency or entity or such court, need not seek prior authorization from the Company and is not required to notify the Company of any such reports, disclosures or conduct.

 

7.3Return of Property. The Employee agrees to deliver promptly to the Company, upon termination of the Employee’s employment hereunder, or at any other time when the Company so requests, all documents relating to the business of the Company Group; provided, however, that the Employee will be permitted to retain copies of any documents or materials of a personal nature or otherwise related to the Employee’s rights under this Agreement, copies of this Agreement and any attendant or ancillary documents specifically including any documents referenced in this Agreement and copies of any documents related to the Employee’s long-term incentive awards and other compensation.

 

7.4Non-Competition. The Employee acknowledges that the Employee (a) will perform services of a unique nature for the Company Group that are irreplaceable, and that the Employee’s performance of such services to a competing business will result in irreparable harm to the Company Group, (b) will have access to Confidential Information which, if disclosed, would unfairly and inappropriately assist in competition against the Company Group, (c) would inevitably use or disclose such Confidential Information in the course of the Employee’s employment by a competitor, (d) will have access to the customers of the Company Group, (e) will receive specialized training from the Company Group, and (f) will generate goodwill for the Company Group in the course of the Employee’s employment. Accordingly, during the Employment Term and for a period of 12 months immediately thereafter, the Employee agrees that the Employee will not, directly or indirectly, other than through the Company, engage or participate (or prepare to engage or participate), in any manner, whether directly or indirectly through an employee, employer, consultant, agent, principal, partner, more than 1% shareholder, officer, director, licensor, lender, lessor or in any other individual or representative capacity, in any business or activity which is in competition with the business of the Company Group in the leasing, acquiring, exploring or producing hydrocarbons and related products within the boundaries of, or within a ten-mile radius of the boundaries of, any mineral property interest of any member of the Company Group (including, without limitation, a mineral lease, overriding 

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royalty interest, production payment, net profits interest, mineral fee interest or option or right to acquire any of the foregoing, or an area of mutual interest as designated pursuant to contractual agreements between any member of the Company Group and any third party), or any other property on which any of the Company Group has an option, right, license or authority to conduct or direct exploratory activities, such as three-dimensional seismic acquisition or other seismic, geophysical and geochemical activities (but not including any preliminary geological mapping), provided that the foregoing will not restrict the Employee from obtaining post-termination employment with an entity that only has de minimis operations in the restricted territory (as determined by the Board in good faith); provided that, this Section 7.4 will not preclude the Employee from making passive investments in securities of oil and gas companies which are registered on a national stock exchange, if (i) the aggregate amount owned by the Employee and his spouse and children, if any, does not exceed 1% of such company’s outstanding securities, and (ii) the aggregate amount invested in such investments by the Employee and his spouse and children does not exceed $1,000,000.

 

7.5Non-Solicitation; Non-Interference.

 

(a)During the Employment Term and for a period of 12 months immediately thereafter, the Employee agrees that he shall not, except in the furtherance of the Employee’s duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, induce or attempt to induce any customer, supplier, agent, intermediary or other business relation of the Company Group to reduce or cease doing business with the Company Group, or interfere with the relationship between any such customer, supplier, agent, intermediary or business relation and the Company Group (including making any negative statements or communications concerning the Company Group); provided that nothing contained in this Section 7.5(a) will prohibit public advertising or general solicitations that are not specifically directed to customers, suppliers, licensees or other business relations of the  Company Group.

 

(b)During the Employment Term and for a period of 12 months immediately thereafter, the Employee agrees that he shall not, except in the furtherance of the Employee’s duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid or induce any employee, representative or agent of the Company Group to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company Group or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent. An employee, representative or agent shall be deemed covered by this Section 7.5(b) while so employed or retained and for a period of six months thereafter.

 

7.6Non-Disparagement. The Employee agrees not to make any negative,  disparaging, detrimental or derogatory remarks or public statements (written, oral, telephonic, electronic, or by any other method) about the Company or any other member of the Company Group or their respective successors and assigns or any of their respective officers, directors, employees, shareholders, agents or products. The Company agrees not to make any negative, disparaging, detrimental or derogatory remarks or public statements (written, oral, telephonic, 

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electronic or by any other method) about the Employee. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

 

7.7Assignment of Developments.

 

(a)The Employee acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products, developments, software, know-how, processes, techniques, works of authorship and other work product, whether patentable or unpatentable, (i) that are reduced to practice, created, invented, designed, developed, contributed to, or improved with the use of any Company Group resources and/or within the scope of the Employee’s work with the Company Group or that relate to the business, operations or actual or demonstrably anticipated research or development of the Company Group, and that are made or conceived by the Employee, solely or jointly with others, during the Employment Term, or (ii) suggested by any work that the Employee performs in connection with the Company Group, either while performing the Employee’s duties with the Company Group or on the Employee’s own time, but only insofar as the Inventions are related to the Employee’s work as an employee or other service provider to the Company Group, shall belong exclusively to the Company (or its designee), whether or not patent or other applications for intellectual property protection are filed thereon (the “Inventions”). The Employee will keep full and complete written records (the “Records”), in the manner prescribed by the Company, of all Inventions, and will promptly disclose all Inventions completely and in writing to the Company. The Records shall be the sole and exclusive property of the Company, and the Employee will surrender them upon the termination of the Employment Term, or upon the Company’s earlier request. The Employee irrevocably conveys, transfers and assigns to the Company the Inventions and all patents or other intellectual property rights that may issue thereon in any and all countries, whether during or subsequent to the Employment Term, together with the right to file, in the Employee’s name or in the name of the Company (or its designee), applications for patents and equivalent rights (the “Applications”). The Employee will, at any time during and subsequent to the Employment Term, make such applications, sign such papers, take all rightful oaths, and perform all other acts as may be requested from time to time by the Company to perfect, record, enforce, protect, patent or register the Company’s rights in the Inventions, all without additional compensation to the Employee from the Company. The Employee will also execute assignments to the Company (or its designee) of the Applications, and give the Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for the Company’s benefit, all without additional compensation to the Employee from the Company, but entirely at the Company’s expense.

 

(b)In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United States, on behalf of the Company, and the Employee agrees that the Company will be the sole owner of the Inventions, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to the Employee. If the Inventions, or any portion thereof, are deemed not to be Work for Hire, or the rights in such Inventions do not otherwise automatically vest in the Company, the Employee hereby irrevocably conveys, transfers and 

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assigns to the Company, all rights, in all media now known or hereinafter devised, throughout  the universe and in perpetuity, in and to the Inventions, including, without limitation, all of the Employee’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights of any kind or any nature now or hereafter recognized, including, without limitation, the unrestricted right to make modifications, adaptations and revisions to the Inventions, to exploit and allow others to exploit the Inventions and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation of the Inventions, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages therefrom. In addition, the Employee hereby waives any so-called “moral rights” with respect to the Inventions. To the extent that the Employee has any rights in the results and proceeds of the Employee’s service to the Company that cannot be assigned in the manner described herein, the Employee agrees to unconditionally waive the enforcement of such rights.  The Employee hereby waives any and all currently existing and future monetary rights in and to the Inventions and all patents and other registrations for intellectual property that may issue thereon, including, without limitation, any rights that would otherwise accrue to the Employee’s benefit by virtue of the Employee being an employee of or other service provider to the Company.

 

7.9Injunctive Relief. The Employee acknowledges that a breach of any of the covenants contained in this Section 7 may result in material, irreparable injury to the Company Group for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely, and that, in the event of such a breach or threat of breach,  the Company or any other member of the Company Group will be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining the Employee from engaging in activities prohibited by this Section 7 or such other relief as may be required to specifically enforce any of the covenants in this Section 7.

 

7.10Adjustment of Covenants. The Parties consider the covenants and restrictions contained in this Section 7 to be reasonable. However, if and when any such covenant or restriction is found to be void or unenforceable and would have been valid had some part of it been deleted or had its scope of application been modified, such covenant or restriction will be deemed to have been applied with such modification as would be necessary and consistent with the intent of the Parties to have made it valid, enforceable and effective.

 

7.11Forfeiture Provision.

 

(a)Detrimental Activities. If the Employee engages in any activity that violates any covenant or restriction contained in this Section 7, in addition to any other remedy the Company may have at law or in equity, (i) the Employee will be entitled to no further payments or benefits from the Company under this Agreement or otherwise, except for any payments or benefits required to be made or provided under applicable law; (ii) all forms of equity compensation held by or credited to the Employee will terminate effective as of the date on which the Employee engages in that activity, unless terminated sooner by operation of  another term or condition of this Agreement or other applicable plans and agreements; and (iii) any exercise, payment or delivery pursuant to any equity compensation award that occurred within one year prior to the date on which the Employee engages in that activity may be rescinded within one year after the first date that any member of the Board first became aware 

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that the Employee engaged in that activity. In the event of any such rescission, the Employee  will pay to the Company the amount of any gain realized or payment received as a result of the rescinded  exercise,  payment  or  delivery  (after  deducting  the  Employee’s  actual  income tax liability incurred with respect to such gain or payment), in such manner and on such terms and condition as may be required. Notwithstanding any provision of this Agreement to the contrary, if the Employee disputes whether he has violated any covenant or restriction contained in Section 7, and such dispute has been adjudicated to a final decision pursuant to Section 8.5 in the Employee’s favor, the Company will pay to the Employee all amounts withheld or clawed back pursuant to this Section 7.11 to the extent ordered by a court of competent jurisdiction; provided that legal action in this respect is filed by the Employee within 60 days after being notified of the Company’s decision affecting the Employee under this Section 7.11.

 

(b)Right of Setoff. The Employee consents to a deduction from any amounts the Company owes the Employee from time to time (including amounts owed as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to the Employee by the Company), to the extent of the amounts the Employee owes the Company  under Section 7.11(a) (above). Whether or not the Company elects to make any setoff in whole or in part, if the Company does not recover by means of setoff the full amount the Employee owes, calculated as set forth above, the Employee agrees to pay immediately the unpaid balance to the Company.

 

	
8.
	
Miscellaneous.

 

8.1Assignment; Successors; Binding Agreement. This Agreement may not be assigned by either Party, whether by operation of law or otherwise, without the prior written consent of the other Party, except that any right, title or interest of the Company arising out of this Agreement may be assigned to any corporation or entity controlling, controlled by, or under common control with the Company, or succeeding to the business and substantially all of the assets of the Company or any affiliates for which the Employee performs substantial services. Subject to the foregoing, this Agreement will be binding upon and will inure to the benefit of the Parties and their respective heirs, legatees, devisees, personal representatives, successors and assigns. The Company shall obtain from any successor or other person or entity acquiring a majority of the Company’s assets or equity securities a written agreement to perform all terms of this Agreement, and any failure by the Company to obtain such written agreement shall be a material breach of this Agreement.

 

8.2Modification and Waiver. Except as otherwise provided below, no provision of this Agreement may be modified, waived, or discharged unless such waiver, modification or discharge is duly approved by the Board and is agreed to in writing by the Employee and such officer(s) as may be specifically authorized by the Board to effect it. No waiver by any Party of any breach by any other Party of, or of compliance with, any term or condition of this Agreement to be performed by any other Party, at any time, will constitute a waiver of similar or dissimilar terms or conditions at that time or at any prior or subsequent time.

 

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8.3Entire Agreement. This Agreement, together with any documents specifically referenced in this Agreement, embodies the entire understanding of the Parties hereto, and, upon the Effective Date, will supersede all other oral or written agreements or understandings between them regarding the subject matter hereof; provided, however, that if there is a conflict between any of the terms in this Agreement and the terms in any award agreement between the Company and the Employee pursuant to any long-term incentive plan or otherwise, the terms of the   award agreement shall govern. No agreement or representation, oral or otherwise, express or implied, with respect to the subject matter of this Agreement, has been made by either Party which is not set forth expressly in this Agreement or the other documents referenced in this Section 8.3.

 

8.4Governing Law. The validity, interpretation, construction and performance of this Agreement will be governed by the laws of the State of Texas other than the conflict of laws provision thereof.

 

8.5Consent to Jurisdiction; Service of Process; Waiver of Right to Jury Trial.

 

(a)Disputes. In the event of any dispute, controversy or claim between the Company and the Employee arising out of or relating to the interpretation, application or enforcement of the provisions of this Agreement, the Company and the Employee agree and consent to the personal jurisdiction of the state and local courts of Harris County, Texas and/or the United States District Court for the Southern District of Texas, Houston Division for resolution of the dispute, controversy or claim, and that those courts, and only those courts, shall have any jurisdiction to determine any dispute, controversy or claim related to, arising under or  in connection with this Agreement. The Company and the Employee also agree that those courts are convenient forums for the parties to any such dispute, controversy or claim and for any potential witnesses and that process issued out of any such court or in accordance with the rules of practice of that court may be served by mail or other forms of substituted service to the Company at the address of its principal executive offices and to the Employee at the Employee’s last known address as reflected in the Company’s records.

 

(b)Waiver of Right to Jury Trial. THE COMPANY AND THE EMPLOYEE HEREBY VOLUNTARILY, KNOWINGLY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY TO ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT, AS WELL AS TO ALL CLAIMS ARISING OUT OF THE EMPLOYEE’S EMPLOYMENT WITH THE COMPANY OR TERMINATION  THEREFROM.

 

8.6Withholding of Taxes. The Company will withhold from any amounts payable under the Agreement all federal, state, local or other taxes as legally will be required to be withheld.

 

8.7Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by facsimile (with written confirmation of receipt), provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a Party may designate by notice to the other parties).

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To the Company:

 

AMPLIFY ENERGY CORP.

Attn: General Counsel 500 Dallas Street

Suite 1600

Houston, TX 77002

Facsimile: (713) 456-2940 To the Employee:

At the address reflected in the Company’s written records.

 

Addresses may be changed by written notice sent to the other Party at the last recorded address of that Party.

 

8.8Severability. The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.

 

8.9Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

 

8.10Headings. The headings used in this Agreement are for convenience only, do not constitute a part of the Agreement, and will not be deemed to limit, characterize, or affect in any way the provisions of the Agreement, and all provisions of the Agreement will be construed as if no headings had been used in the Agreement.

 

8.11Construction. As used in this Agreement, unless the context otherwise requires:

(a) the terms defined herein will have the meanings set forth herein for all purposes; (b) references to “Section” are to a section hereof; (c) “include,” “includes” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import; (d) “writing,” “written” and comparable terms refer to printing, typing, lithography and other means of reproducing words in a visible form; (e) “hereof,” “herein,” “hereunder” and comparable terms refer to the entirety of this Agreement and not to any particular section or other subdivision hereof or attachment hereto; (f) references to any gender include references to all genders; and (g) references to any agreement or other instrument or statute or regulation are referred to as amended or supplemented from time to time (and, in the case of a statute or regulation, to any successor provision).

 

8.12Capacity; No Conflicts. The Employee represents and warrants to the Company that: (a) the Employee has full power, authority and capacity to execute and deliver this Agreement, and to perform the Employee’s obligations hereunder, (b) such execution, delivery and performance will not (and with the giving of notice or lapse of time, or both, would not) result in the breach of any agreement or other obligation to which the Employee is a party or is otherwise bound, and (c) this Agreement is the Employee’s valid and binding obligation, enforceable in accordance with its terms.

 

[Signature page follows.]

 

 

 

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

 

	
 
	
AMPLIFY  ENERGY CORP.

	
 
	
 
	
 

	
 
	
By:
	
/s/ ERIC M. WILLIS

	
 
	
Name:
	
ERIC M. WILLIS

	
 
	
Title:
	
Vice President and General Counsel

	
 
	
 
	
 

	
 
	
EMPLOYEE

	
 
	
 
	
 

	
 
	
/s/ Kenneth Mariani

	
 
	
Kenneth Mariani

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Employment Agreement]ampy-ex103_183.htm

 

Exhibit 10.3

 

	

	
Amplify Energy Corp.

500 Dallas Street, Suite 1600

Houston, TX 77002

 

(713) 490-8900

 

 

 

April 27, 2018

 

William J. Scarff

500 Dallas Street, Suite 1600

Houston, Texas 77002

 

 

Dear Mr. Scarff:

 

This letter agreement (together with Appendixes A and B hereto, the “Agreement”) sets forth our mutual understanding concerning your retirement from Amplify Energy Corp., a Delaware corporation (the “Company”). To accept the Agreement, you must sign and return a copy of the Agreement to the Company at the address indicated in Section 9(f)(iv)(C) below, by no later than May 1, 2018 (the date on which you actually execute the Agreement, the “Effective Date”).

 

1.Chief Executive Officer Transition and Retirement.

 

(a)With great thanks for your valuable contributions to the Company to date, we hereby acknowledge your intent to retire from your position as the Company’s Chief Executive Officer effective as of the earlier of (i) May 17, 2018 (or a later mutually agreed date) and (ii) the date on which a successor is appointed as Chief Executive Officer (such earlier date, the “Retirement Date”). Your employment and all positions you held with the Company and its subsidiaries and affiliates (collectively, the “Company Group”) will terminate in all capacities as of the Retirement Date; provided that you will continue to serve as a member of the Company’s Board of Directors until May 17, 2018. You agree to execute such additional documents as reasonably requested by the Company to evidence the foregoing.

 

(b)During the period beginning on the Effective Date and ending on the Retirement Date, you will (i) continue to receive your base salary at the rate currently in effect, paid in accordance with the Company’s regular payroll practices, and (ii) remain eligible to participate in the Company’s retirement and health and welfare plans in accordance with the terms and conditions of such plans.

 

2.Consideration.  You acknowledge that: (a) the Retirement Payments (as defined in Section 3) constitute full settlement of all of your rights under the Agreement and in connection with your separation from the Company, (b) except as otherwise provided specifically in the Agreement, you have no entitlement under any other severance, change in control, equity incentive or similar agreement with, or arrangement maintained by, any member of the Company Group, and 

 

 

(c) except as otherwise provided specifically in the Agreement, the Company does not and will not have any other liability or obligation to you by reason of the termination of your employment with the Company Group. You further acknowledge that, in the absence of the Effective Date and the Re-Execution Effective Date (as defined in Appendix A), the Retirement Payments would not otherwise be due to you.

 

3.Retirement Payments. In consideration of the covenants set forth herein and the Effective Date and the Re-Execution Effective Date, the Company will provide you with the following payments and benefits (collectively, the “Retirement Payments”):

 

(a)an aggregate amount of $3,000,000 (the “Severance”), less all applicable withholdings and authorized or required deductions, which will be paid to you in installments, with the first installment of $1,500,000 paid on the sixtieth (60th) calendar day following the Retirement Date (provided that the Re-Execution Effective Date occurs), and the remaining

$1,500,000 paid in installments of $375,000 on each of the three, four, five and six month anniversaries of the Retirement Date;

 

(b)to the extent you timely elect COBRA continuation coverage under the Company’s group insurance plans, the Company will reimburse you for the amount of COBRA continuation premiums (less required co-pay) until the earlier of (i) 12 months following the Retirement Date and (ii) such time as you are no longer eligible for COBRA continuation coverage (with you being required to notify the Company within one week after becoming eligible for group medical coverage from another employer);

 

(c)the Company will reimburse you for (i) financial counseling services for 12 months following the Retirement Date, subject to a maximum benefit of $30,000, and (ii) outplacement counseling services for 12 months following the Retirement Date, subject to a maximum benefit of $30,000. You will be responsible for selecting any financial counseling advisors and any outplacement services providers;

 

(d)the option to purchase 125,854 shares of the Company’s Common Stock that was granted to you under the Company’s Management Incentive Plan and the Stock Option Award Agreement thereunder, dated as of May 4, 2017 (the “Option Agreement”), will fully vest on the Retirement Date and will remain exercisable until it expires on the second anniversary of the Retirement Date;

 

(e)at your election as indicated on the signature page hereto (provided that the Re-Execution Effective Date occurs), either (i) a cash payment of $296,594, less all applicable withholdings and authorized or required deductions, or (ii) 41,951 shares of the Company’s Common Stock, paid or delivered, as applicable, on the sixtieth (60th) calendar day following the Retirement Date; provided that such shares, if applicable, may not be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner, other than by will or the laws of descent or distribution, prior to the third anniversary of the Retirement Date; and

 

 

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(f)in the event that a Change of Control (as defined in the Company’s Management Incentive Plan) occurs on or prior to October 27, 2018, the 83,903 shares of the Company’s Common Stock covered by the award of restricted stock units granted to you under the Company’s Management Incentive Plan and the Restricted Stock Unit Award Agreement thereunder, dated as of May 4, 2017 (the “RSU Agreement”), that were scheduled to vest in installments of 41,951 shares on May 4, 2019 and 41,952 shares on May 4, 2020 will immediately be 100% vested. This arrangement supersedes Section 2(c) of the RSU Agreement, which would provide for immediate forfeiture of the unvested restricted stock units upon the Retirement Date.

 

For clarity, you will not be eligible to vest in the 41,951 shares covered by the RSU Agreement that were scheduled to vest on May 4, 2018, and the 83,903 shares covered by the RSU Agreement that were scheduled to vest in installments on May 4 of 2019 and 2020 will only become vested in the event that a Change of Control occurs on or prior to October 27, 2018.

 

Notwithstanding the foregoing, if the Re-Execution Effective Date does not occur, you will automatically and without further action forfeit your right to the Severance (but you will retain your right to the Retirement Payments other than the Severance, subject to the terms set forth in the Agreement, and the release of non-ADEA Claims set forth in Section 9(a) will remain in full force and effect).

 

4.No Other Compensation or Benefits. Except for compensation and benefits you earned through the Retirement Date (to be paid to you in accordance with the Company’s policies), as otherwise specifically provided herein, or as required for COBRA coverage under Section 4980B(f) of the Internal Revenue Code of 1986, as amended, you will not be entitled to any compensation or benefits or to participate in any benefit programs or arrangements of the Company Group after the Retirement Date. Additional information regarding COBRA coverage will be provided to you separately.

 

5.Return of Property.  You confirm that, on or prior to the Retirement Date, you will have returned to the Company all property of the Company Group in your possession and all property made available to you in connection with your employment with the Company Group, including, without limitation, any and all Company Group credit cards, keys, security access codes, work-related passwords, records, manuals, customer lists, notebooks, computers, computer programs and files, papers, electronically stored information and documents kept or made by you in connection with your employment with the Company Group.

 

6.Non-Disparagement. You agree to refrain from making or causing to be made, any intentional statement, oral or written, for the purpose of causing, or that reasonably may be expected to cause, any material harm to the Company Group’s business, business relationships, operations, goodwill or reputation.

 

7.Cooperation. You acknowledge that because of your position with the Company, you may possess information that may be relevant to or discoverable in connection with claims, litigation or judicial, arbitral or investigative proceedings initiated by a private party or by a regulator, governmental entity, or self-regulatory organization, that relates to or arises from matters with which you were involved during your employment with the Company, or that concern matters of which you have information or knowledge (collectively, a “Proceeding”). You agree that you 

 

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will testify truthfully in connection with any such Proceeding. Except as provided in Section 11, you agree that you will cooperate with the Company in connection with every such Proceeding, and that your duty of cooperation will include an obligation to meet with the Company representatives and/or counsel concerning all such Proceedings for such purposes, and at such times and places, as the Company reasonably requests on reasonable prior notice and during normal business hours, and to appear for deposition and/or testimony upon the Company’s request and without a subpoena. The Company will reimburse you for reasonable out-of-pocket expenses that you incur in honoring your obligation of cooperation under this Section 7.

 

8.Breach of Agreement. If you violate any provisions of the Agreement or the Restrictive Covenant Agreement (as defined in Section 9(h)), no further Retirement Payments will be due to you, and you will be required to promptly repay to the Company any of the Retirement Payments previously paid to you.

 

9.Release.

 

(a)General Release.  In consideration of the Retirement Payments provided to you under the Agreement, you, and each of your heirs, executors, administrators, representatives, agents, successors and assigns (collectively, the “Releasors”) hereby irrevocably and unconditionally release and forever discharge the Company Group and its parent, and each of their subsidiaries, affiliates and joint venture partners, and all of their past and present directors, officers, employees, consultants, founders, owners, shareholders, representatives, members, attorneys, partners, insurers, benefit plans and agents, and all of their predecessors, successors and assigns (collectively, the “Releasees”) from any and all claims, actions, causes of action, suits, controversies, cross-claims, counter-claims, rights, judgments, obligations, compensatory damages, liquidated damages, punitive or exemplary damages, any other damages, demands, accountings, debts, claims for costs and attorneys’ fees, losses or liabilities of whatever kind or character in law and in equity and any other liabilities, known or unknown, suspected or unsuspected of any nature whatsoever (collectively, “Claims”), including, without limitation, any Claims under Title VII of the Civil Rights Act, as amended, the Americans with Disabilities Act, as amended, the Family and Medical Leave Act, as amended, the Equal Pay Act, as amended, the Employee Retirement Income Security Act, as amended, the Civil Rights Act of 1991, as amended, the Worker Adjustment and Retraining Notification Act, as amended, and any other Claims under any federal, state, local or foreign law, act, statute, code, order, judgment, injunction, ruling, decree, writ, ordinance or regulation arising from or in any way related to (i) your employment with the Company Group or the termination of such employment, at any time prior to the Effective Date and/or the Reaffirmation Date (as applicable), (ii) any agreement entered into as part of your employment with the Company Group with any of the Releasees, and/or (iii) any awards, policies, plans, programs or practices of any of the Releasees that may apply to you or in which you may participate; provided, however, that the release set forth in this Section 9(a) will not apply to the obligations of the Company under the Agreement. The Releasors further agree that the Retirement Payments will be in full satisfaction of any and all Claims for payments or benefits, whether express or implied, that the Releasors may have against the Releasees arising out of your employment with the Company Group and the termination thereof. This Section 9(a) does not apply to any Claims that the Releasors may have as of the Effective Date arising under the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act of 1990, as amended, and the applicable rules and regulations promulgated thereunder (“ADEA”). Claims arising under ADEA are addressed in Section 9(f) of the Agreement.

 

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(b)You understand that you may later discover claims or facts that may be different than, or in addition to, those which you now know or believe to exist with regards to the subject matter of the Agreement and the releases in this Section 9, and which, if known at the time of executing the Agreement, may have materially affected the Agreement or your decision to enter into it. You hereby waive any right or claim that might arise as a result of such different or additional claims or facts.

 

(c)The Agreement is not intended to bar or affect (i) any Claims that may not be waived by private agreement under applicable law, such as claims for workers’ compensation or unemployment insurance benefits, or (ii) vested rights under the Company’s 401(k) or pension plan.

 

(d)Nothing in the Agreement is intended to prohibit or restrict your right to file a charge with, or participate in a charge by, the Equal Employment Opportunity Commission or any other local, state, or federal administrative body or government agency; provided, however, that you hereby waive the right to recover any monetary damages or other relief against any Releasee to the fullest extent permitted by law, excepting any benefit or remedy to which you are or become entitled to pursuant to Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

(e)You represent that you have made no assignment or transfer of any right or Claim covered by this Section 9 and that you further agree that you are not aware of any such right or Claim covered by this Section 9.

 

(f)Specific Release of ADEA Claims. As of the Re-Execution Effective Date (as defined in Appendix A), you acknowledge and agree that you are hereby waiving and releasing any age Claims or rights you may have under ADEA through the Reaffirmation Date. In connection with this ADEA release, you agree that (i) you are hereby entering into this waiver and release knowingly and voluntarily, (ii) this ADEA release does not apply to any rights or Claims that may arise under ADEA after the Reaffirmation Date, (iii) the consideration given for this release of ADEA Claims is in addition to anything of value to which you were already entitled, and (iv) you have been advised by this writing that:

 

(A)you should consult with an attorney prior to executing the Agreement;

 

(B)you have until June 12, 2018, which is at least forty-five (45) days

after receipt of the Agreement, to consider whether to re-execute it, by signing the Reaffirmation Page set forth on Appendix A, and release any age Claim under ADEA following the Retirement Date; provided, however, that the Agreement may not be reaffirmed by you prior to the Retirement Date. If you choose to re-execute the Agreement before June 12, 2018, you do so knowingly and voluntarily;

 

(C)you have seven (7) days following your re-execution of the Agreement to revoke the portion of the release applicable to ADEA Claims set forth in Section 9(f) by notifying the Company of this fact, in writing, within such seven (7) day period, at 500 Dallas Street, Suite 1600, Houston, Texas 77002, attention: Kim Evans, Vice President, Human Resources & Administration; and

 

 

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(D)in accordance with the requirements of ADEA, you were provided with information, appended hereto as Appendix B, regarding (i) the job title and age of each employee in an affected job classification or organizational unit whose employment is being terminated on the date hereof or in proximity thereto and (ii) the job title and age of each employee in such affected job classification or organizational unit who is not being terminated on the date hereof or in proximity hereto.

 

(g)Representation.  You hereby represent that you have not instituted, assisted or otherwise participated in connection with, any action, complaint, claim, charge, grievance, arbitration,  lawsuit, or administrative agency proceeding, or action at law or otherwise against any of the Releasees. You understand that the release of Claims contained in the Agreement extends to all of the aforementioned Claims and potential Claims which arose on or before the Effective Date and the Reaffirmation Date (as applicable), whether now known or unknown, suspected or unsuspected, and that this constitutes an essential term of the Agreement. You further understand and acknowledge the significance and consequences of the Agreement and of each specific release and waiver, and expressly consent that the Agreement shall be given full force and effect to each and all of its express terms and provisions, including those relating to unknown and uncompensated Claims, if any, as well as those relating to any other Claims specified herein. You hereby waive any right or Claim that you may have to employment, reinstatement or re-employment with the Company Group.

 

(h)Indemnification; D&O Insurance. The Agreement does not impair or terminate any rights you have to indemnification under the Company Group’s organizational documents, applicable law or the Company Group’s Directors’ and Officers’ liability insurance policy as in effect from time to time.  For six (6) years after the Effective Date, the Company will provide you with coverage under a Directors’ and Officers’ liability insurance policy on the same basis, if any, as the Company provides coverage to its then current directors and officers.

 

10.Restrictive Covenants. You acknowledge that you have entered into a Restrictive Covenant Agreement with the Company, dated as of May 4, 2017 (the “Restrictive Covenant Agreement”), and that the obligations applicable to you under the Restrictive Covenant Agreement, including without limitation the non-competition, non-solicitation and confidentiality covenants contained therein, will remain in full force and effect following the Retirement Date in accordance with their terms and will not be superseded by the terms of the Agreement.

 

11.Employee Protections. (a) You have the right under federal law to certain protections for cooperating with or reporting legal violations to the Securities and Exchange Commission (the “SEC”) and/or its Office of the Whistleblower, as well as certain other governmental entities and self-regulatory organizations. As such, nothing in the Agreement or otherwise prohibits or limits you from disclosing the Agreement to, or from cooperating with or reporting violations to or initiating communications with, the SEC or any other such governmental entity or self-regulatory organization, and you may do so without notifying the Company. No member of the Company Group may retaliate against you for any of these activities, and nothing in the Agreement or otherwise requires you to waive any monetary award or other payment that you might become entitled to from the SEC or any other governmental entity or self-regulatory organization. Moreover, nothing in the Agreement or otherwise prohibits you from notifying the Company that you are going to make a report or disclosure to law enforcement.

 

 

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(b)Notwithstanding anything to the contrary in the Agreement or otherwise,  as provided for in the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)), you will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Without limiting the foregoing, if you file a lawsuit for retaliation by the Company for reporting a suspected violation of law,

you may disclose the trade secret to your attorney and use the trade secret information in the court proceeding, if you (x) file any document containing the trade secret under seal, and (y) do not disclose the trade secret, except pursuant to court order.

 

12.Miscellaneous.

 

(a)Entire Agreement. Except for the Restrictive Covenant Agreement, the Option Agreement (as modified by Section 3(d)) and the RSU Agreement (as modified by Section 3(f)), the Agreement sets forth the entire agreement and understanding of the parties hereto with respect to the matters covered hereby and supersedes and replaces any express or implied, written or oral, prior agreement, plan or arrangement with respect to the terms of your employment with the Company Group and the termination thereof which you may have had with the Company Group, including without limitation the following agreements entered into between you and the Company: the Severance Agreement, dated as of May 4, 2017, and the Change of Control Agreement, dated as of May 4, 2016, as amended as of May 4, 2017 (the “CoC Agreement”), each of which shall hereafter be null and void in their entirety. For clarity, if a Change of Control (as defined in the CoC Agreement) occurs within six months following the Retirement Date, you will not be entitled to any payments under the CoC Agreement or otherwise, except to the extent set forth in Section 3(f). The Agreement may be amended only by a written document signed by an authorized representative of the Company and you.

 

(b)Withholding Taxes. The Retirement Payments will be reduced by any applicable withholding taxes.

 

(c)Waiver. The failure of either party to the Agreement to enforce any of its terms, provisions or covenants will not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of the Agreement will not operate as a waiver of any other breach or default.

 

(d)Severability. In the event that any provision of the Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of the Agreement will not in any way be affected or impaired thereby. If any provision of the Agreement is held to be excessively broad as to duration, activity or subject, such provision will be construed by limiting and reducing it so as to be enforceable to the maximum extent allowed by applicable law.

 

 

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(e)Counterparts. The Agreement may be executed in one or more counterparts, which together will constitute one and the same agreement. A faxed or PDF signature shall operate the same as an original signature and shall be considered to have the same binding legal effect as if it were the original signed version of the Agreement delivered in person.

 

(f)Successors and Assigns. You shall not assign any rights, or delegate or subcontract any obligations, under the Agreement. The Company may freely assign all rights and obligations of the Agreement to any affiliate or successor (including a purchaser of any assets of the Company).

 

(g)Governing Law; Jury Trial. The Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the conflicts of laws principles thereof. YOU EXPRESSLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THE AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

(h)No Admission of Wrongdoing. Neither the Agreement, nor the furnishing of the consideration for the Agreement, shall be deemed or construed at any time to be an admission by the parties of any improper or unlawful conduct, and all of the parties expressly deny any improper or unlawful conduct.

 

(i)Third-Party Beneficiaries. You acknowledge and agree that all Releasees are third-party beneficiaries of the Agreement and have the right to enforce the Agreement.

 

 

 

 

 

 

[Signature page follows]

 

 

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AMPLIFY ENERGY CORP.

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ ERIC M. WILLIS

	
 
	
Name: 
	
ERIC M. WILLIS

	
 
	
Title:
	
Vice President and General Counsel

 

YOU HEREBY ACKNOWLEDGE THAT YOU HAVE READ THE AGREEMENT, THAT YOU FULLY KNOW, UNDERSTAND AND APPRECIATE ITS CONTENTS, AND THAT YOU HEREBY ENTER INTO THE AGREEMENT VOLUNTARILY AND OF YOUR OWN FREE WILL.

 

ACCEPTED AND AGREED:

 

	
/s/ William J Scarff

	
William J Scarff

 

Date:  April 27, 2018

 

 

 

Pursuant  to Section 3(e) of the Agreement, indicate, whether you  elect to  receive payment  in  cash or shares of the Company’s Common Stock:

☒  Cash payment of $296,594.

☐  41,951 shares of the Company’s Common Stock.

 

 

 

 

 

 

 

[Signature page to Retirement Agreement]

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