Explanatory Note
On February 15, 2019, Chaparral Energy, Inc. (the “Company”) filed a Current Report on Form8-K under Item 5.02 (the “Original8-K”) to report the retirement of Joseph O. Evans effective as of March 15, 2019 and the appointment of Scott Pittman as Chief Financial Officer and Senior Vice President of the Company effective as of March 16, 2019. The Company is filing this Amendment no. 1 to the Current Report on Form8-K/A to amend the Original8-K to disclose the details of (i) the employment agreement entered into by and between the Company and Mr. Pittman and (ii) the restricted award of Class A common stock of the Company, $0.01 par value per share (the “Common Stock”), made to Mr. Pittman pursuant to the Chaparral Energy, Inc. Management Incentive Plan, dated as of August 9, 2017, each of which was expected to be approved in connection with Mr. Pittman’s appointment but was not yet determined at the time of filing of the Original8-K.
Except for the following disclosures, this amendment does not modify or update any other disclosures contained in the Original8-K. This amendment supplements and does not supersede the Original8-K and, accordingly, should be read in conjunction with the Original8-K.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employment Agreement
On April 22, 2019, the Company entered into an employment agreement with Mr. Pittman (the “Employment Agreement”).
Mr. Pittman’s Employment Agreement is effective through April 22, 2022, after which the term will be automatically extended so as to terminate on April 22, 2024, and subsequently will be automatically extended so as to terminate on each anniversary thereafter unless notice of termination is properly given by the Company or Mr. Pittman prior to any renewal date. Pursuant to the Employment Agreement, Mr. Pittman is entitled to an initial base salary of $325,000 per year. Mr. Pittman will also be entitled to an annual performance bonus if certain performance criteria are met. Under the Employment Agreement, Mr. Pittman is also eligible from time to time to receive awards of long-term equity incentive compensation under the Company’s equity incentive plans.
If Mr. Pittman’s employment is terminated for certain reasons, he would be entitled to severance payments consisting of twelve months of his base salary in effect on the date of termination, plus 100% of the annual bonus granted to him for the fiscal year of the Company immediately preceding the date of termination, payable in the form of a salary continuation for a period of twelve months. If Mr. Pittman’s employment is terminated for certain reasons within the six months following a Change in Control (as defined in the Employment Agreement), he would be entitled to severance payments consisting of eighteen months of his base salary in effect on the date of termination, plus 150% of the annual bonus granted to him for the fiscal year of the Company immediately preceding the date of termination, payable in the form of a salary continuation for a period of eighteen months.
As consideration for the Company entering into the Employment Agreement, Mr. Pittman has agreed that, during the term of his employment and for a period of twelve months following the date of termination, he will not solicit, direct or attempt to solicit or divert any customer of the Company or an affiliate of the Company or solicit any employee or consultant of the Company to discontinue his or her status of employment or consultancy with the Company.
The Company also entered into an indemnification agreement with Mr. Pittman in the form previously filed as Exhibit 10.5 to the Company’s Current Reporton Form 8-K (File No. 333-134748) on March 27, 2017, which is incorporated by reference herein.
The foregoing description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Employment Agreement, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
