Exhibit 10.2
AMENDED AND RESTATED SEVERANCE
AGREEMENT
This Amended and Restated Severance
Agreement between Edge Petroleum Corporation , a
Delaware Corporation (the “Company”), and John W.
Elias (“Executive”).
WITNESSETH:
WHEREAS , the Company desires to retain
certain key employee personnel and, accordingly, the Board of
Directors of the Company (the “Board” ) has
approved the Company entering into a severance agreement with
Executive in order to encourage such executive’s continued
service to the Company; and
WHEREAS , Executive is prepared to commit
such services in return for specific arrangements with respect to
severance compensation and other benefits; and
WHEREAS,
Company and Executive
desire to amend and restate the Amended and Restated Severance
Agreement to establish documentary compliance with
Section 409A of the Internal Revenue Code of 1986, as
amended;
NOW THEREFORE
, in consideration of the
foregoing and for other good and valuable consideration, the
Company and Executive agree as follows:
1.
Definitions
(a)
“Change in
Duties “
shall mean the occurrence, within two years after the date upon
which a Change of Control occurs, of any one or more of the
following conditions provided that the Executive has notified the
Company of the existence of such condition within 90 days of its
initial existence and the Company has not cured the condition
within 30 days after such notice is provided (the “Correction
Period”):
(i)
A significant reduction in
the duties of Executive from those applicable to him immediately
prior to the date on which a Change of Control occurs,
(ii)
A material reduction in
Executive’s annual salary from that provided to him
immediately prior to the date on which a Change of Control
occurs;
(iii)
A change in the location
of Executive’s principal place of employment by the Company
by more than 50 miles from the location where he or she was
principally employed immediately prior to the date on which a
Change of Control occurs,
(iv)
A change encompassed by
paragraph 2.3 (i) (C) of the Employment Agreement dated
November 16, 1998 between Executive and the Company, as
thereafter amended (the “Employment
Agreement”).
(b)
“Change of
Control” means the occurrence of either of the following
events:
(i)
The Company (A) shall
not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity other
than a previously wholly-owned subsidiary of the Company) or
(B) is to be dissolved and liquidated, and as a result of or
in connection with such transaction, the persons who were directors
of the Company before such transaction shall cease to constitute a
majority of the Board;
(ii)
Any person or entity,
including a “group” as contemplated by
Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, acquires or gains ownership or control (including,
without limitation, power to vote) of 20% or more of the
outstanding shares of the Company’s voting stock (based upon
voting power), and as a result of or in connection with such
transaction, the persons who were directors of the Company before
such transaction shall cease to constitute a majority of the Board;
or
(iii)
The Company sells all or
substantially all of the assets of the Company to any other person
or entity (other than a wholly-owned subsidiary of the Company) in
a transaction that requires shareholder approval pursuant to the
Texas Business Corporation Act.
(c)
“Code”
shall mean the Internal
Revenue Code of 1986, as amended.
(d)
“Compensation”
shall mean the greater
of:
(i)
Executive’s current
annual salary plus his or her Targeted Bonus Opportunity
immediately prior to the date on which a Change of Control occurs,
or
(ii)
Executive’s current
annual salary plus his or her Targeted Bonus Opportunity at the
time of his or her Involuntary Termination.
(e)
“Elias
Plan” shall mean the Edge Petroleum Corporation John
Elias Stock Incentive Plan, as amended, or any successor
thereto.
(f)
“Incentive
Award” shall mean any grant or award of restricted
stock, stock options or other
benefits or awards made to an Executive under the Incentive Award
Plan or the Elias Plan.
(g)
“Incentive Award
Plan” shall mean Edge Petroleum Corporation 1997
Incentive Plan, as amended, or any successor thereto.
(h)
“Involuntary
Termination” shall mean any termination of Executive’s
employment with the Company which :
(i)
does not result from a
resignation by Executive (other than a resignation pursuant Clause
(ii) of this paragraph (h) or a resignation at the
request of the Company; or
(ii)
results from a resignation
by Executive on or before the date which is thirty days after the
expiration of the Correction Period associated with a Change
in
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Duties, provided,
however, the term “Involuntary
Termination” shall not include a Termination for Cause
or any termination as a result of death, disability under
circumstances entitling him to benefits under the Company’s
long-term disability plan, or Retirement
(i)
“Retirement”
shall mean
Executive’s voluntary resignation on or after
December 31, 2006 (other than a resignation within thirty days
after the expiration of the Correction Period associated with a
Change in Duties or a resignation at the request of the
Company).
(j)
“Severance
Amount” shall mean an amount equal to 2.99 times
Executive’s Compensation.
(k)
Targeted
Bonus
Opportunity ” shall mean the Executive’s
current targeted bonus opportunity, if any, as approved by the
Compensation Committee effective for the year with respect to which
such targeted bonus opportunity, if any, is being determined or for
the last year for which such an opportunity was so approved if one
has not been approved for the current year, expressed as a dollar
amount.
(l )
“Termination for
Cause” shall mean termination of Executive’s
employment by the Company (or its subsidiaries) by reason of
Executive’s gross negligence, gross neglect or willful
misconduct in the performance of his duties or Executive’s
final conviction of a felony or of a misdemeanor involving moral
turpitude, excluding misdemeanor convictions relating to the
operation of a motor vehicle.
(m)
“Welfare Benefit
Coverages” shall mean the current medical, dental, life,
insurance and accidental death and dismemberment coverages provided
by the Company to its active employees.
2.
Services.
Executive agrees
that he will render services to the Company (as well as any
subsidiary thereof or successor thereto) during the period of his
employment to the best of his ability and in a prudent and
businesslike manner.
3.
Severance
Benefits. If Executive’s employment by the
Company or any subsidiary thereof or successor thereto shall be
subject to an Involuntary Termination which occurs within two years
after the date upon which a Change of Control occurs, then
Executive shall be entitled to receive, as additional compensation
for services rendered to the Company (including its subsidiaries),
the following severance benefits in lieu of any other severance
benefits provided under any other plan or agreement between the
Company and Executive, with the exception of the life insurance
coverage described in Paragraph 3(f) herein:
(a)
An amount equal to
Executive’s Severance Amount to be paid in the following
forms: (i) The portion of the Severance Amount attributable to
Executive’s Target Bonus Opportunity shall be paid in the
form of a cash lump sum, (ii) the portion of the Severance
Amount attributable to Executive’s annual salary that is in
excess of the “Salary Severance Amount” described in
Section 7.1(i) of the Employment Agreement shall be paid
in the form of a cash lump sum, (iii) the
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remaining portion of the
Severance Amount attributable to Executive’s annual salary
shall be paid in accordance with Section 7.7(i) of the
Employment Agreement.
(b)
Effective as of the date
of Involuntary Termination, Executive shall become fully vested in
all outstanding Incentive Awards that had not previously vested or
otherwise become exercisable as of such date due to restrictions or
other provisions contained in the document granting such Incentive
Award, such restrictions or other provisions in such document
notwithstanding.
(c)
Executive shall be
entitled to continue the Welfare Benefit Coverages for himself and,
where applicable, his eligible dependents following his Involuntary
Termination for up to thirty-six months, as long as Executive
continues either to pay the premiums paid by active employees of
the Company for such coverages or to pay the actual (nonsubsidized)
cost of such coverages for which the Company does not subsidize for
active employees. Such benefit rights shall apply only to
those Welfare Benefit Coverages which the Company has in effect
from time to time for active employees, and the applicable payments
shall adjust as premiums for active employees of the Company or
actual costs, whichever is applicable, change. Welfare
Benefit Coverage(s) shall immediately end upon
Executive’s obtainment of new employment and eligibility for
similar Welfare Benefit coverage(s) (with Executive being
obligated hereunder to promptly report such eligibility to the
Company). Nothing herein shall be deemed to adversely affect
in any way the additional rights, after consideration of this
extension period, of Executive and his eligible dependents to
health care continuation coverage as required pursuant to
Part 6 of Title I of the Employment Retirement Income Security
Act of 1974, as amended. All reimbursements or provision of
in-kind benefits pursuant to this Agreement shall be made in
accordance with Treasury Regulations
§1.409A-3(i)(1)(iv) such that the reimbursement or
provision will be deemed payable at a specified time or on a fixed
schedule relative to a permissible payment event.
Specifically, the amount reimbursed or provided under this
Paragraph 3(c) hereof during the Executive’s taxable
year may not affect the amounts reimbursed or provided in any other
taxable year (except that total reimbursements may be limited by a
lifetime maximum under a group health plan), the reimbursement of
an el
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