As of August 6, 2019, each outstanding share of Legacy Amplify common stock, par value $0.0001 per share, available for issuance under the Amplify Energy Corp. 2017 Non-Employee Directors Compensation Plan (the “Legacy Amplify Non-Employee Directors Compensation Plan”) and the Amplify Energy Corp. Management Incentive Plan (the “Legacy Amplify MIP” and, together with the Legacy Amplify Non-Employee Directors Compensation Plan, the “Legacy Amplify Plans”) was converted and assumed by the Company and will be available for future issuance under the Legacy Amplify Plans in satisfaction of the vesting, exercise or other settlement of options and other equity awards that may be granted by the Company following the close of the Merger (after conversion of such shares and appropriate adjustment to reflect the terms of the Merger Agreement).

Legacy Amplify stockholders received 0.933 shares of newly issued Company common stock for each share of Legacy Amplify common stock that they owned. The table below shows the activity related to the Legacy Amplify MIP prior to and after the closing of the Merger, which reflects the conversion of outstanding and unvested equity awards.

Legacy Amplify MIP awards are granted in the form of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards, stock awards and other incentive awards. To the extent that an award under the Legacy Amplify MIP is expired, forfeited or cancelled for any reason without having been exercised in full, the unexercised award would then be available again for future grants under the Legacy Amplify MIP. The Legacy Amplify MIP is administered by the board of directors of the Company. At December 31, 2019, 626,404 shares remain available for issuance under the Legacy Amplify MIP.

On October 21, 2016, Midstates established the 2016 Long-term Incentive Plan (“Midstates 2016 LTIP”) shares for issuance under the terms of the Midstates 2016 LTIP to employees and directors. The types of awards that may be granted under the Midstates 2016 LTIP include stock options, restricted stock units, restricted stock, performance awards and other forms of awards granted or denominated in shares of common stock, as well as certain cash-based awards. To the extent that an award under the Midstates 2016 LTIP is expired, forfeited or are cancelled for any reason without having been exercised in full, the unexercised award would then be available again for future grants under the Midstates 2016 LTIP. After the effective date of the Merger, the Midstates 2016 LTIP shares are available for issuance to employees and directors of the Company. At December 31, 2019, 2,004,934 shares remain available for issuance under the Midstates 2016 LTIP.

Restricted stock units with service vesting conditions (“TSUs”) are accounted for as equity-classified awards. The grant-date fair value is recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures are accounted for as they occur. Compensation costs are recorded as general and administrative expense. The unrecognized cost associated with TSUs was $0.8 million at December 31, 2019. We expect to recognize the unrecognized compensation cost for these awards over a weighted-average period of 1.8 years.

The following table summarizes information regarding the TSUs granted under the Legacy Amplify MIP for the period presented:

				Weighted-
				Average Grant
	Number of			Date Fair Value
	Units			per Unit (1)
TSUs outstanding at May 5, 2017 (Successor)		614,754		$	13.77
Granted (2)		173,070		$	12.87
Forfeited		(105,032	)	$	13.77
Vested		—		$	—
TSUs outstanding at December 31, 2017 (Successor)		682,792		$	13.54
Granted (3)		437,000		$	10.51
Forfeited (4)		(363,513	)	$	13.55
Vested		(158,255	)	$	13.44
TSUs outstanding at December 31, 2018		598,024		$	11.35
Granted (5)		300,517		$	6.80
Forfeited		(38,151	)	$	11.13
Vested		(437,834	)	$	8.71
TSUs outstanding at August 5, 2019		422,556		$	10.87
Ratio to convert TSUs (6)		0.933
Converted TSUs		394,245
TSUs outstanding at August 6, 2019 (7)		394,245		$	5.12
Granted (8)		17,500		$	6.14
Forfeited		(38,652	)	$	5.12
Vested		(81,723	)	$	5.12
TSUs outstanding at December 31, 2019		291,370		$	5.18

(1)

Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)

The aggregate grant date fair value of TSUs issued for the period from May 5, 2017 through December 31, 2017 was $2.2 million based on a grant date market price ranging from $10.00 to $13.77 per share.

(3)

The aggregate grant date fair value of TSUs issued for the year ended December 31, 2018 was $4.6 million based on a grant date market price ranging from $9.30 to $11.00 per share.

(4)

Certain Legacy Amplify departing executives forfeited 298,354 TSUs during the year ended December 31, 2018, in connection with their separation and retirement agreements.

(5)

The aggregate grant date fair value of TSUs issued for the period from January 1, 2019 through August 5, 2019 was $2.0 million based on a grant date market price ranging from $4.48 to $8.70 per share.

(6)

The merger ratio used to convert Legacy Amplify TSUs into newly issued TSUs.

(7)

This reflects the unvested TSUs converted into newly issued Company’s TSUs at August 6, 2019 at a stock price of $5.12 per share.

(8)

The aggregate grant date fair value of TSUs issued for the period August 6, 2019 through December 31, 2019 was $0.1 million based on a grant date market price of $6.14 per share.

Restricted stock units with market and service vesting conditions (“PSUs”) are accounted for as equity-classified awards. The grant-date fair value is recognized as compensation cost on a graded-vesting basis. As such, the Company recognizes compensation cost over the requisite service period for each separately vesting tranche of the award as though the award were, in substance, multiple awards. The Company accounts for forfeitures as they occur. Compensation costs are recorded as general and administrative expense. The unrecognized cost related to the PSUs was $0.1 million at December 31, 2019. We expect to recognize the unrecognized compensation cost for these awards over a weighted-average period of approximately 1.4 years.

The PSUs will vest based on the satisfaction of service and market vesting conditions with market vesting based on the Company’s achievement of certain share price targets. The PSUs are subject to service-based vesting such that 50% of the PSUs service vest on the applicable market vesting date and an additional 25% of the PSUs service vest on each of the first and second anniversaries of the applicable market vesting date.

In the event of a qualifying termination, subject to certain conditions, (i) all PSUs that have satisfied the market vesting conditions will fully service vest, upon such termination, and (ii) if the termination occurs between the second and third anniversaries of the grant date, then PSUs that have not market vested as of the termination will market vest to the extent that the share targets (in each case, reduced by $0.25) are achieved as of such termination. Subject to the foregoing, any unvested PSUs will be forfeited upon termination of employment.

A Monte Carlo simulation was used to determine the fair value of these awards at the grant date.

Share price targets	$	12.50		$	15.00		$	17.50

Risk-free interest rate:
Awards Issued on January 1, 2019		2.44	%		2.44	%		2.44	%
Awards Issued on April 1, 2019		2.28	%		2.28	%		2.28	%
Awards Issued on July 1, 2019		1.73	%		1.73	%		1.73	%
Awards Issued on October 1, 2019		1.50	%		1.50	%		1.50	%

Dividend yield		—			—			—

Expected volatility:
Awards Issued on January 1, 2019		54.0	%		54.0	%		54.0	%
Awards Issued on April 1, 2019		50.0	%		50.0	%		50.0	%
Awards Issued on July 1, 2019		57.0	%		57.0	%		57.0	%
Awards Issued on October 1, 2019		65.0	%		65.0	%		65.0	%

Calculated fair value per PSU:
Awards Issued on January 1, 2019	$	6.76		$	5.86		$	5.11
Awards Issued on April 1, 2019	$	4.22		$	3.43		$	2.80
Awards Issued on July 1, 2019	$	2.63		$	2.05		$	1.64
Awards Issued on October 1, 2019	$	3.40		$	2.83		$	2.38

Share price targets	$	12.50		$	15.00		$	17.50

Risk-free interest rate:
Awards Issued on May 14, 2018		2.68	%		2.68	%		2.68	%
Awards Issued on July 1, 2018		2.61	%		2.61	%		2.61	%
Awards Issued on August 1, 2018		2.76	%		2.76	%		2.76	%
Awards Issued on October 1, 2018		2.88	%		2.88	%		2.88	%
Awards Issued on November 1, 2018		2.89	%		2.89	%		2.89	%

Dividend yield		—			—			—

Expected volatility:
Awards Issued on May 14, 2018		50.0	%		50.0	%		50.0	%
Awards Issued on July 1, 2018		50.0	%		50.0	%		50.0	%
Awards Issued on August 1, 2018		55.0	%		55.0	%		55.0	%
Awards Issued on October 1, 2018		53.0	%		53.0	%		53.0	%
Awards Issued on November 1, 2018		54.0	%		54.0	%		54.0	%

Calculated fair value per PSU:
Awards Issued on May 14, 2018	$	9.71		$	8.52		$	7.48
Awards Issued on July 1, 2018	$	9.87		$	8.72		$	7.68
Awards Issued on August 1, 2018	$	9.79		$	8.66		$	7.65
Awards Issued on October 1, 2018	$	8.54		$	7.57		$	6.66
Awards Issued on November 1, 2018	$	7.65		$	6.72		$	5.88

The following table summarizes information regarding the PSUs granted under the Legacy Amplify MIP for the period presented:

				Weighted-
				Average Grant
	Number of			Date Fair Value
	Units			per Unit (1)
PSUs outstanding at December 31, 2017 (Successor)		—		$	—
Granted (2)		395,500		$	8.14
Forfeited		(2,000	)	$	7.59
Vested		—		$	—
PSUs outstanding at December 31, 2018		393,500		$	8.14
Granted (3)		17,750		$	4.06
Forfeited		(22,750	)	$	7.59
Vested		—		$	—
PSUs outstanding at August 5, 2019		388,500		$	7.98
Ratio to convert PSUs (4)		0.933
Converted PSUs		362,471
PSUs outstanding on August 6, 2019 (5)		362,471		$	2.11
Granted (6)		17,500		$	2.87
Forfeited		(74,078	)	$	2.11
Vested		—		$	—
PSUs outstanding at December 31, 2019		305,893		$	2.15

(1)

Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)

The aggregate grant date fair value of PSUs issued for the year ended December 31, 2018 was $3.2 million based on a calculated fair value price ranging from $5.88 to $9.87 per share.

(3)

The aggregate grant date fair value of PSUs issued for the period January 1, 2019 through August 5, 2019 was less than $0.1 million based on a calculated fair value price ranging from $1.64 to $6.76 per share.

(4)

The merger ratio used to convert Legacy Amplify PSUs into newly issued Company PSUs.

(5)

This reflects the unvested PSU awards converted into newly issued PSUs at August 6, 2019 based on a calculated fair value price ranging from $1.64 to $2.63 per share.

(6)

The aggregate grant date fair value of PSUs issued for the period August 6, 2019 through December 31, 2019 was less than $0.1 million based on a calculated fair value price ranging from $2.38 to $3.40 per share.

On May 4, 2017, the Legacy Amplify board of directors approved grants of restricted stock unit awards and restricted stock options (collectively the “Emergence Awards”) to certain of Legacy Amplify employees, including Legacy Amplify’s executive officers. Emergence Awards generally vest annually in three equal installments on each of the first three anniversaries of the Effective Date, subject to the grantee’s continued employment through each such vesting date. However, upon a grantee’s termination of employment by the Company without Cause, or due to death or Disability, or the grantee resigns from Service for Good Reason (as such terms are defined in the respective Emergence Award agreement), all unvested restricted stock unit awards shall fully vest upon such termination or resignation date. Moreover, (i) upon a grantee’s termination of employment by the Company without Cause, or due to death or Disability, or the grantee resigns from Service for Good Reason (as such terms are defined in the respective Emergence Award agreement), any portion of the then unvested restricted stock options that would have vested had the grantee continued his or her Service during the 12 months following such termination or resignation shall vest on such termination or resignation date and (ii) upon a grantee’s termination of employment by the Company without Cause or the grantee resigns from Service for Good Reason, in each case, following a Change of Control, all unvested restricted stock options shall fully vest as of such termination or resignation date. Notwithstanding the foregoing, the vesting of such Emergence Awards may be subject to and limited by employment-related agreements by and between the Company and grantee.

Restricted stock options are accounted for as equity-classified awards. The grant-date fair value is recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures are accounted for as they occur. Compensation costs are recorded as general and administrative expense.

The fair value for restricted stock options granted during the year ended December 31, 2017 had been estimated using Black-Scholes option pricing model using the following assumptions:

The following table summarizes information regarding the restricted stock option awards granted under the Legacy Amplify MIP for the period presented:

On April 27, 2018, in connection with the separation and retirement of certain Legacy Amplify executives, the board of directors of Legacy Amplify approved the acceleration of the vesting schedule for 298,354 unvested restricted stock option awards with an exercisable period of two years that otherwise would have been forfeited upon an involuntary termination.

The acceleration of the restricted stock options vesting schedule represented an improbable to probable modification. The grant-date fair value compensation cost of approximately $0.5 million was reversed and the modified-date grant fair value compensation cost of $0.3 million was recognized during the year ended December 31, 2018.

The modified-date grant fair value was estimated at December 31, 2018 using the Black-Scholes option pricing model using the following assumptions:

In June 2017, in connection with the Plan, Legacy Amplify implemented the Legacy Amplify Non-Employee Directors Compensation Plan to attract and retain services of experienced non-employee directors of the Company or its subsidiaries. At December 31, 2019, 104,503 shares remain available for issuance under the Legacy Amplify Non-Employee Directors Compensation Plan.

The Legacy Amplify Non-Employee Directors Compensation Plan awards are granted in the form of nonqualified stock options, restricted stock awards, restricted stock units, and other cash-based awards and stock-based awards. To the extent that an award under the Legacy Amplify Non-Employee Directors Compensation Plan is expired, forfeited or cancelled for any reason without having been exercised in full, the unexercised award would then be available again for grant under the Legacy Amplify Non-Employee Directors Compensation Plan. Awards granted generally vest annually in three equal installments on each of the first three anniversaries of the grant date, subject to the grantee’s continued employment through each such vesting date.

The restricted stock units with a service vesting condition (“Board RSUs”) granted are accounted for as equity-classified awards. The grant-date fair value is recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures are accounted for as they occur. Compensation costs are recorded as general and administrative expense. The unrecognized cost associated with Board RSUs was less than $0.1 million at December 31, 2019. We expect to recognize the unrecognized compensation cost for these awards over a weighted-average period of 2.2 years.

The following table summarizes information regarding the Board RSUs granted under the Director Compensation Plan for the period presented:

				Weighted-
				Average Grant
	Number of			Date Fair Value
	Units			per Unit (1)
Board RSUs outstanding at May 5, 2017 (Successor)		—		$	—
Granted (2)		16,341		$	13.77
Forfeited		—		$	—
Vested		—		$	—
Board RSUs outstanding at December 31, 2017 (Successor)		16,341		$	13.77
Granted (3)		28,708		$	10.45
Forfeited		—		$	—
Vested		(5,445	)	$	13.77
Board RSUs outstanding at December 31, 2018		39,604		$	11.36
Granted (4)		42,933		$	6.95
Forfeited		—		$	—
Vested		(49,723	)	$	9.54
Board RSUs outstanding at August 5, 2019		32,814		$	8.35
Ratio to convert Board RSUs (5)		0.933
Converted Board RSUs		30,616
Board RSUs outstanding on August 6, 2019 (6)		30,616		$	5.12
Granted		—		$	—
Forfeited		—		$	—
Vested		(14,459	)	$	5.12
Board RSUs outstanding at December 31, 2019		16,157		$	5.12

(1)

Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)

The aggregate grant date fair value of Board RSUs issued in 2017 was $0.2 million based on grant date market price of $13.77 per share.

(3)

The aggregate grant date fair value of Board RSUs issued in 2018 was $0.3 million based on a grant date market price of $10.45 per share.

(4)

The aggregate grant date fair value of Board RSUs issued for the period from January 1, 2019 through August 5, 2019 was $0.3 million based on a grant date market price of $6.95 per share.

(5)

The merger ratio used to convert Legacy Amplify Board RSUs into newly issued Company Board RSUs.

(6)

This reflects the unvested Board RSU awards converted into newly issued Board RSUs at August 6, 2019 in which the stock price was at $5.12 per share.

In December 2011, the board of directors of our Predecessor’s general partner adopted the Memorial Production Partners GP LLC Long-Term Incentive Plan (“LTIP”) for employees, officers, consultants and directors of the general partner and any of its affiliates, who perform services for the Predecessor. The LTIP authorized the grant of restricted units, phantom units, unit options, unit appreciation rights, distribution equivalent rights (“DERs”), other unit-based awards and unit awards. The LTIP initially limited the number of common units that could be delivered pursuant to awards under the plan to 2,142,221 common units. Common units that were cancelled, forfeited or withheld to satisfy exercise prices or tax withholding obligations would have been available for delivery pursuant to other awards. The LTIP was administered by the board of directors of our Predecessor’s general partner or a committee thereof.

The restricted common units awarded were subject to restrictions on transferability, customary forfeiture provisions and typically graded vesting provisions in which one-third of each award vested on the first, second, and third anniversaries of the date of grant. Award recipients had all the rights of a Predecessor with respect to the restricted common units, including the right to receive distributions thereon if and when distributions were made by the Predecessor to its unitholders. The term “restricted common unit” represented a time-vested unit. Such awards were non-vested until the required service period expired.

The restricted common units granted were accounted for as equity-classified awards. The grant-date fair value was recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures accounted for as they occur. The fair value of the restricted unit awards granted to the independent directors of our Predecessor’s general partner was also recognized as compensation cost on a straight-line basis over the requisite service period. Compensation costs were recorded as direct general and administrative expenses.

On May 1, 2017, the Company effectively cancelled the unvested restricted common unit awards under the LTIP and recorded $2.3 million in compensation expense.

The following table summarizes information regarding restricted common unit awards for the periods presented:

The following table summarizes information regarding the Predecessor’s phantom unit awards granted under the LTIP:

Phantom units issued to non-employee directors of our Predecessor in January 2016 vested on the first anniversary of the date of grant and were settled in cash for less than $0.1 million. Phantom units issued to certain employees in June 2016 were scheduled to vest in substantially equal one-third increments on the first, second, and third anniversaries of the date of grant. The awards included distribution equivalent rights (“DERs”) pursuant to which the recipient would receive, upon vesting, receive a cash payment with respect to each phantom unit equal to any cash distributions that we pay to a holder of a common unit. DERs were treated as additional compensation expense. Upon vesting, the phantom units were scheduled to be settled through an amount of cash in a single lump sum payment equal to the product of (y) the closing price of our common units on the vesting date and (z) the number of such vested phantom units. In lieu of a cash payment, the board of directors of our Predecessor’s general partner, in its discretion, was permitted to elect for the recipient to receive either a number of common units equal to the number of such vested phantom units or a combination of cash and common units. Upon emergence from bankruptcy, the remaining awards were settled in cash for less than $0.1 million.

Midstates restricted stock units are accounted for as equity-classified awards. Restricted stock units granted to employees in 2019 under the Midstates 2016 LTIP would have vested in full on March 1, 2021, or upon the occurrence of a change in control. Upon the closing of the Merger all restricted stock units outstanding vested.

On August 5, 2019 Midstates had 585,547 restricted stock units outstanding related to employees and certain executive management and in connection with the Merger all outstanding restricted stock units vested. No restricted stock units were outstanding at December 31, 2019.

Midstates 2019 Performance Stock Units Issued to Certain Members of Executive Management Containing a Market Condition

On March 7, 2019, Midstates issued 193,921 restricted stock units to certain members of Midstates executive management team that contained a market vesting condition. Midstates previously accounted for these restricted stock awards as equity awards. In connection with the Merger all 193,921 restricted stock units issued were cancelled and no shares were outstanding at December 31, 2019.

The Midstates stock options are accounted for as equity-classified awards. Stock Option awards outstanding under the Midstates 2016 LTIP would have vested ratably over a period of three years: one-sixth vest on the six-month anniversary of the grant date, an additional one-sixth vest on the twelve-month anniversary of the grant date, an additional one-third vest on the twenty-four month anniversary of the grant date and the final one-third vest on the thirty-six month anniversary of the grant date. Stock Option awards expire 10 years from the grant date. On August 5, 2019, Midstates had 54,365 stock options outstanding and in connection with the Merger all outstanding stock options vested. No stock options were outstanding at December 31, 2019.

Midstates Non-Employee Director Restricted Stock Units Containing a Market Condition

On November 23, 2016, Midstates issued restricted stock units to non-employee directors that contained a market vesting condition. Midstates previously recognized the non-employee director restricted stock units containing a market condition as liability awards. On August 5, 2019, Midstates had 50,864 market condition awards outstanding and in connection with the Merger all restricted stock units to non-employee directors that contained a market vesting condition vested. No shares were outstanding at December 31, 2019 related to non-employee director restricted stock units containing a market condition.

The following table summarizes the amount of recognized compensation expense associated with these awards that are reflected in the accompanying statements of operations for the periods presented (in thousands):

			Successor					Predecessor
	For the		For the			Period from		Period from
	Year Ended		Year Ended			May 5, 2017		January 1, 2017
	December 31,		December 31,			through		through
	2019		2018			December 31, 2017		May 4, 2017
Equity classified awards
TSUs (Successor)	$	1,797	$	1,445		$	1,906	$	—
PSUs (Successor)		981		1,404			—		—
Board RSUs (Successor)		264		142			41		—
Restricted stock options (Successor)		—		(214	)		569		—
Restricted common units (Predecessor)		—		—			—		3,713
Liability classified awards
Phantom units (Predecessor)		—		—			—		(46	)
	$	3,042	$	2,777		$	2,516	$	3,667