Exhibit 10.1
SECOND AMENDED AND RESTATED SEVERANCE
AGREEMENT
This Second
Amended and Restated Severance Agreement
between Edge Petroleum
Corporation , a Delaware Corporation (the
“Company”), and
(“Employee”).
WITNESSETH:
WHEREAS , the Company previously entered into
a Severance Agreement because it desired to retain certain employee
personnel and, accordingly, the Board of Directors of the Company
(the “Board” ) approved the Company entering
into a severance agreement with Employee in order to encourage such
employee’s continued service to the Company; and
WHEREAS , Employee previously committed such
services in return for specific arrangements with respect to
severance compensation and other benefits; and
WHEREAS , effective immediately, the Company
and Employee desire to amend and restate the 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 Employee 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 Employee
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 Employee from those applicable to the Employee
immediately prior to the date on which a Change of Control occurs;
or
(ii)
A material reduction in
Employee’s annual salary from that provided to the Employee
immediately prior to the date on which a Change of Control occurs;
or
(iii)
A change in the location
of Employee’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.
(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)
Employee’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)
Employee’s current
annual salary plus his or her Targeted Bonus Opportunity at the
time of his or her Involuntary Termination.
(e)
“Incentive
Award” shall mean any grant or award of restricted
stock, stock options or other benefits or awards made to an
Employee under the Incentive Award Plan.
(f)
“Incentive Award
Plan” shall mean Edge Petroleum Corporation 1997
Incentive Plan, as amended, or any successor thereto.
(g)
“Involuntary
Termination” shall mean any termination of Employee’s
employment with the Company which:
(i)
does not result from a
resignation by Employee (other than a resignation pursuant to
Clause (ii) of this paragraph (g) or a resignation at the
request of the Company; or
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(ii)
results from a resignation
by Employee on or before the date which is thirty days after the
expiration of the Correction Period associated with a Change in
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.
(h)
“Severance
Amount” shall mean an amount equal to 2.00 times
Employee’s Compensation.
(i)
“Targeted
Bonus Opportunity
” shall mean the Employee’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.
(j )
“Termination for
Cause” shall mean termination of Employee’s
employment by the Company (or its subsidiaries) by reason of
(a) conviction of the Employee by a court of competent
jurisdiction of any felony or a crime involving moral turpitude;
(b) the Employee’s knowing failure or refusal to follow
reasonable instructions of the Board or reasonable policies,
standards and regulations of the Company or its subsidiaries as set
forth in the employee manual or otherwise; (c) the
Employee’s continued failure or refusal to faithfully and
diligently perform the usual, customary duties of his or her
employment with the Company or a subsidiary; (d) the Employee
continuously conducting himself or herself in an unprofessional,
unethical, immoral or fraudulent manner; or (e) the
Employee’s conduct discredits the Company or a subsidiary or
is detrimental to the reputation, character and standing of
the Company or a subsidiary.
(k)
“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.
Employee agrees
that he or she will render services to the Company (as well as any
subsidiary thereof or successor thereto) during the period of his
or her employment to the best of his or her ability and in a
prudent and businesslike manner.
3.
Severance
Benefits. If Employee’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 Employee
shall be entitled to receive, as additional compensation for
services rendered to the Company (including its subsidiaries), the
following severance benefits:
(a)
A lump sum cash payment in
an amount equal to Employee’s Severance Amount.
(b)
Effective as of the date
of Involuntary Termination, Employee shall become fully vested in
all outstanding Incentive Awards that had not previously vested
or
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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)
Employee 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 Employee
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
Employee’s obtainment of new employment and eligibility for
similar Welfare Benefit coverage(s) (with Employee 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 Employee 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 Section 3(c) hereof during the
Employee’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 eligible expense shall be
made on or before the last day of the Employee’s taxable year
following the taxable year in which the expense was incurred, and
the right to reimbursement or provision of in-kind benefit is not
subject to liquidation or exchange for another benefit.
(d)
Employee shall be entitled
to receive reimbursement for out-placement services incurred before
the end of the second calendar year following Employee’s
Involuntary Termination in connection with obtaining new employment
up to a maximum cost of $6,
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