Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

This Employment AGREEMENT (“Agreement”) is made by and between EDGE PETROLEUM
CORPORATION, a Delaware corporation (“Company”), and JOHN W. ELIAS
(“Executive”).

 

WITNESSETH:

 

WHEREAS, Company is desirous of employing Executive in an executive capacity on
the terms and conditions, and for the consideration hereinafter set forth and
Executive is desirous of being employed by Company on such terms and conditions
and for such consideration;

 

WHEREAS, Company and Executive desire to amend and restate the Agreement to
establish documentary compliance with Section 409A of the Internal Revenue Code
of 1986, as amended;

 

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, Company and Executives agree as follows:

 

ARTICLE 1

EMPLOYMENT AND DUTIES

 

1.1           EMPLOYMENT:  EFFECTIVE DATE.  Company agrees to employ Executive
and Executive agrees to be employed by Company, beginning as of the Beginning
Date (as hereinafter defined) and continuing for the period of  time set forth
in Article 2, Paragraph 2.1 of this Agreement, subject to the terms and
conditions of this Agreement.  For purposes of this Agreement, the “Effective
Date” shall be the first date that Executive reports for work at the offices of
Company, but no later than November 16, 1998.  This Agreement is amended and
restated effective April 3, 2008.

 

1.2           POSITIONS.  Effective as of the Effective Date, Company shall
cause Executive to be appointed Chairman, President and Chief Executive officer
of Company and to be elected a member of the Board of Directors of Company (the
“Board of Directors”).  Company shall maintain Executive in such position, or in
such other positions as the parties mutually may agree, for the full term of
Executive’s employment hereunder.

 

1.3           DUTIES AND ADVICE.  Executive agrees to serve in the positions
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such office, as well as such
additional duties and services appropriate to such office which the parties
mutually may agree upon from time to time.  Executive’s employment shall also be
subject to the policies maintained and established by Company, as the same may
be amended from time to time.

 

1.4           OTHER INTERESTS.  Executive agrees during the period of his
employment by Company to devote his primary business time, energy and best
efforts to the business and affairs of Company and its affiliates and not to
engage, directly or indirectly, in any other business or

 

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businesses whether or not similar to that of Company, except with the consent of
the Board of Directors.  The foregoing notwithstanding, the parties recognize
and agree that Executive may engage in passive personal investments and other
civic, charitable and business activities that do not conflict with the business
and affairs of Company or interfere with Executive’s performance of his duties
hereunder without the necessity of obtaining the consent of the Board of
Directors.

 

1.5           DUTY OF LOYALTY.  Executive acknowledges and agrees that Executive
owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in
the best interest of Company.  In keeping with these duties, Executive shall
make full disclosure to Company of all business opportunities pertaining to
Company’s business and shall not appropriate for Executive’s own benefit
business opportunities concerning the subject matter of the fiduciary
relationship.

 

ARTICLE 2

TERM AND TERMINATION OF EMPLOYMENT

 

2.1           TERM.  Unless sooner termination pursuant to other provisions
hereof, Company agrees to employ Executive beginning on Monday, November 16,
1998 and extending for a three-year period beginning January 1, 1999 (the “Term
of Employment”).  Beginning with the first anniversary of the Effective Date,
said term of employment shall be extended automatically for an additional
successive one-year period as of each anniversary of the Effective Date that
occurs while this Agreement is in effect; provided, however, that if, at any
time prior to any such anniversary date of the Effective Date, either party
shall give written notice to the other that no such automatic extensions shall
occur, Executive’s employment shall terminate on the last day of the two-year
period beginning on the anniversary date of the Effective Date that next occurs
after such notice is given.

 

2.2           COMPANY’S RIGHT TO TERMINATE.  Notwithstanding the provisions of
paragraph 2.1, Company shall have the right to terminate Executive’s employment
under the Agreement at any time for the following reasons:

               

(i)

 

upon Executive’s death;

 

 

 

(ii)

 

upon Executive’s becoming incapacitated by accident, sickness or other
circumstances which renders him mentally or physically incapable of performing
the duties and services required of him hereunder on a full-time basis with
reasonable accommodations for a period of at least 120 consecutive days or for a
period of 180 business days during any twelve-month period;

 

 

 

(iii)

 

for cause, which for purposes of this Agreement shall mean Executive’s gross
negligence, gross neglect or willful misconduct in the performance of the duties
required of him hereunder or Executive’s final conviction of a felony or if a
misdemeanor involving moral turpitude, excluding misdemeanor convictions
relating to the operation of a motor vehicle;

 

 

 

(iv)

 

for Executive’s material breach of any material provisions of this Agreement
which, if correctable, remains uncorrected for 30 days following written notice
to Executive by Company of such breach; or

 

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(v)

 

for any reason whatsoever, in the sole discretion of the Board of Directors.

 

2.3           EXECUTIVE’S RIGHT TO TERMINATE.  Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment under
this Agreement at any time for any of the following reasons:

 

(i)

 

for (A) Company’s material breach of any material provision of this agreement,
(B) Company’s assignment to Executive of duties and responsibilities that are
materially inconsistent with the positions referred to in Article 1, paragraph
1.2, (C) Company’s failure to appoint or elect or reappoint or re-elect
Executive to the positions referred to in Article 1, paragraph 1.2, (D) a change
in the location of Executive’s principal place of employment by Company by more
than 50 miles from the location where he was principally employed immediately
prior to such change; provided, however, that prior to Executive’s termination
of employment under this paragraph 2.3(i), Executive must give written notice to
Company of any such breach, assignment or failure within 90 days of its initial
existence and such breach, assignment or failure must remain uncorrected for 30
days following such written notice (the “Correction Period”), and Executive must
terminate his employment within 30 days of the expiration of the Correction
Period; or

 

 

 

(ii)

 

for any other reason, in the sole discretion of Executive;

 

2.4           NOTICE OF TERMINATION.  If Company or Executive desires to
terminate Executive’s employment hereunder at any time prior to expiration of
the term of employment as provided in paragraph 2.1, it or he shall do so by
giving written notice to the other party that it or he has elected to terminate
Executive’s employment hereunder and stating the effective date and reason for
such termination, provided that no such action shall alter or amend any
provisions hereof or rights arising hereunder, including, without limitation,
the provisions of Article 4 hereof.  Such notice shall also, to the extent
material to any right or obligation hereunder constitute notice under paragraph
2.1 of the discontinuance of any  further automatic extensions of the term of
paragraph 2.1.

 

ARTICLE 3

COMPENSATION AND BENEFITS

 

3.1           BASE SALARY.  During the period of this Agreement, Executive shall
receive a minimum base salary of $350,000.  The Compensation Committee of the
Board of Directors (the “Compensation Committee”) shall review Executive’s base
salary at the end of the initial three-year term and on an annual basis
thereafter, and shall make a recommendation to the Board of Directors regarding
possible increases in Executive’s annual base salary, and the Board of
Director’s, in its sole discretion, may increase but not decrease Executive’s
annual base salary.  Executive’s annual base salary shall be paid in equal
installments in accordance with Company’s standard policy regarding payment of
compensation to executives but no less frequently than monthly.

 

3.2           ANNUAL BONUSES.  For the 1999 performance year, no bonus will be
considered for Executive.  In subsequent years ending during the period of this
Agreement,

 

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Executive shall be eligible to receive an annual bonus under the Edge Petroleum
Corporation Executive Incentive Plan (or any successor thereto) as established
from time to time by the Compensation Committee based on an Incentive Target of
50% of Executive’s annual base salary, with a Maximum Incentive of 100% of
Executive’s annual base salary.  A combination of specific objective and
subjective performance criteria shall be established mutually between the
Compensation Committee and Executive on an annual basis.

 

3.3           INITIAL STOCK OPTION.  On January 4, 1999, Company shall grant to
Executive an option (the “Initial Option”) to purchase 200,000 shares of
Company’s common stock (“Common Stock”).  Such Initial Options will be issued
outside of Company’s 1997 Incentive Plan.  The purchase price for each share of
stock subject to the Initial Option shall be equal to the Fair Market Value (the
mean of the highest and lowest sales price per share of the Common Stock on the
applicable date) of a share of Common Stock as of January 4, 1999.  The Initial
Stock Option shall (i) be a nonqualified stock option, (ii) have a ten-year
term, (iii) become exercisable cumulatively in 33 1/3% increments beginning
January 1, 1999 and at each of January 1, 2000 and January 1, 2001.

 

3.4           SUBSEQUENT STOCK OPTIONS. Subject to the discretion of the Board
of Directors, Company shall grant to Executive the option to purchase a number
of shares of stock pursuant to Company’s 1997 Incentive Plan or, at the election
of the Compensation Committee, out of other appropriate Company stock outside of
the 1997 Incentive Plan, in accordance with the following schedule:

 

January 1, 2000

 

50,000 shares

January 1, 2001

 

50,000 shares

January 1, 2002

 

50,000 shares

January 1, 2003

 

50,000 shares

January 1, 2004

 

50,000 shares

 

The purchase price for each share of Common Stock subject to each subsequent
option shall be equal to the Fair Market Value of a share of stock as of the
date of grant of such subsequent option.  Subject to the terms of the 1997
Incentive Plan and the agreement to be executed by Company and Executive
evidencing each subsequent option, each subsequent option shall (i) be a
nonqualified stock option (ii) have a ten-year term, and (iii) become
exercisable 100% on the second anniversary of the date of grant of such
subsequent option.

 

3.5           LIFE INSURANCE.  Company will provide, or cause to be provided, to
Executive, at no cost to Executive, $1,000,000 of term life insurance coverage
payable to a beneficiary to be designated in writing by Executive, together with
a tax gross-up payment in the amount necessary to offset any applicable taxes
imposed on Executive by reason of such coverage and such tax gross-up payment. 
In no event will any gross-up payment be made later than 30 days after the end
of the calendar year in which the applicable life insurance coverage is
provided.  Notwithstanding the foregoing, however, if Executive fails to qualify
medically for such insurance coverage at standard rates for his age group,
Company shall not be required to provide such coverage unless Executive pays the
cost of such coverage that is in excess of the standard rate cost.  Such
insurance, including replacement or substitute policies therefor, shall be

 

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maintained for the same period as Executive’s compensation hereunder is
continued pursuant to Article 7 hereof.

 

3.6           OTHER PERQUISITES.  During his Term of Employment, Executive shall
be afforded the following benefits as incidences of his employment:

 

(i)

 

BUSINESS AND ENTERTAINMENT EXPENSES. Subject to Company’s standard policies and
procedures with respect to expense reimbursement as applied to its executive
employees generally, Company shall reimburse Executive for, or pay on behalf of
Executive, reasonable and appropriate expenses incurred by Executive for
business-related purposes, including dues and fees to industry and professional
organizations and cost of entertainment and business development.

 

 

 

(ii)

 

CLUB EXPENSES. In addition to other business and entertainment expenses
reimbursable pursuant to subparagraph 3.6(i) above, Company shall pay all
membership fees, dues and assessment for a club if Executive is requested to
join a club. The foregoing notwithstanding, Company shall not be obligated to
buy from Executive, or to reimburse Executive for the price of, his membership
in any club of which Executive is a member prior to the Effective Date.

 

 

 

(iii)

 

ANNUAL PHYSICAL EXAMINATION. Company shall pay for the cost of an annual
physical examination to be conducted by a doctor or clinic of Executive’s
choosing in Houston, Texas.

 

 

 

(iv)

 

PARKING. Company shall provide at no expense to Executive a parking place
convenient to Executive’s office.

 

 

 

(v)

 

VACATION. During each year of his employment, Executive shall be entitled to
five weeks of paid vacation in accordance with Company vacation policy.

 

 

 

(vi)

 

SUPPORT STAFF. Executive shall be entitled to secretarial and/or other
assistance to the extent needed to fulfill his corporate responsibilities.

 

 

 

(vii)

 

BENEFIT PLAN. Executive shall be allowed to participate in all employee benefit
plans.

 

 

 

(viii)

 

OTHER COMPANY BENEFITS. Executive and, to the extent applicable, Executive’s
spouse, dependents and beneficiaries, shall be allowed to participate in all
benefits, plans and programs, including improvements or modifications of the
same, which are now, or may hereafter be, available to other executive employees
of Company. Such benefits, plans and programs shall include, without limitation,
any profit sharing plan, thrift plan, employee stock ownership plan, health
insurance or health care plan, life insurance, disability insurance, pension
plan, supplemental retirement plan, vacation and sick leave plan, and the like
which may be maintained by Company. Company shall not, however, by reason of
this subparagraph be obligated to institute, maintain, or refrain from changing,
amending, or discontinuing, any such benefit plan or program, so long as such
changes are similarly applicable to executive employees generally.

 

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ARTICLE 4

PROTECTION OF INFORMATION

 

4.1           DISCLOSURE TO EXECUTIVE.  Company shall disclose to Executive, or
place Executive in a position to have access to or develop, trade secrets or
confidential information of Company or its affiliates; and/or shall entrust
Executive with business opportunities of Company or its affiliates; and/or shall
place Executive in a position to develop business goodwill on behalf of Company
or its affiliates.

 

4.2           DISCLOSURE TO AND PROPERTY OF COMPANY.  All information, ideas,
concepts, improvements, discoveries, and inventions, whether patentable or not,
which are conceived, made, developed, or acquired by Executive, individually or
in conjunction with others, during Executive’s employment by Company (whether
during business hours or otherwise and whether on Company’s premises or
otherwise) which relate to Company’s business, products, or services (including,
without limitation, all such information relating to corporate opportunities,
research, financial and sales data, pricing terms, evaluations, opinions,
interpretations, acquisitions and prospects, the identity of customers or their
requirements, the identity of key contacts within the customer organizations or
within the organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and markets) shall be disclosed to Company and
are and shall be the sole and exclusive property of Company.  Moreover, all
documents, drawings, memoranda, notes, records, files, correspondence, manuals,
models, specification computer programs, E-mail, voice mail, electronic
databases, maps, and all other writings or materials of any type embodying any
such information, ideas, concepts, improvements, discoveries, and innovations
are and shall be the sole and exclusive property of Company.  Upon termination
of Executive’s employment by Company, for any reason, Executive promptly shall
deliver the same, and all copies thereof, to Company.

 

4.3           NO UNAUTHORIZED USE OR DISCLOSURE.  Executive will not, at any
time during or after Executive’s employment by Company, make any unauthorized
disclosure of any confidential business information or trade secrets of Company
or its affiliates, or make any use thereof except in the carrying out of its
Executive employment responsibilities hereunder.  Affiliates of Company shall be
third party beneficiaries of Executive’s obligations under this paragraph.  As a
result of Executive’s employment by Company, Executive may also from time to
time have access to, or knowledge of, confidential business information or trade
secrets of third parties, such as customers, suppliers, partners, joint
venturers, and the like, of Company and its affiliates.  Executive also agrees
to preserve and protect the confidential information and trade secrets to the
same extent, and on the same basis, as Company’s confidential business
information and trade secrets.

 

4.4           OWNERSHIP BY COMPANY.  If during Executive’s employment by
Company, Executive creates any work of authorship fixed in any tangible media of
expression which is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawing maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company’s business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business

 

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hours or otherwise and whether on Company’s premises or otherwise), Company
shall be deemed the author of such work.  If the work is prepared by Executive
in the scope of Executive’s employment but is specially ordered by Company as a
contribution to a collective work, as a part of a motion picture or other
audiovisual work, as a translation, as a supplementary work, as a compilation,
or as an instructional text, then the work shall be considered to be work made
for hire and Company shall be the author of the work.  If such work related in
any way to the business of Company but is neither prepared by Executive within
the scope of Executive’s employment nor is work especially ordered that is
deemed to be a work for hire, then Executive hereto agrees to assign, and by
these presents does assign, to Company all of Executive’s worldwide right,
title, and interest in and to such work and all rights of copyright therein.

 

4.5           ASSISTANCE OF EXECUTIVE.  Both during the period of Executive’s
employment by Company and thereafter, Executive shall assist Company and its
nominee, at any time, in the protection of Company’s worldwide right, title, and
interest in and to information, ideas, concepts, improvements, discoveries, and
inventions and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by Company or its nominee
and the execution of all lawful oaths and applications for patents and
registration of copyright in the United States and foreign countries.

 

4.6           REMEDIES.  Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Article by Executive, and company shall
be entitled to enforce the provisions of this Article by termination of payments
then owing to Executive under this Agreement and/or to specific performance and
injunctive relief as remedies for such breach or any threatened breach;
provided, however, that payments then owing to Executive may not be terminated
unless the Board of Directors determines that such breach by Executive has
directly resulted or could reasonably be expected to result in a material
adverse economic impact on Company’s business.  Such remedies shall not be
deemed the exclusive remedies for a breach of this Article, but shall be in
addition to all remedies available at law or in equity to Company, including the
recovery of damages from Executive and his agents involved in such breach and
remedies available to Company pursuant to this and other agreements with
Executive.

 

ARTICLE 5

NONCOMPETITION OBLIGATIONS

 

5.1           IN GENERAL.  As part of the consideration for the compensation and
benefits to be paid to Executive hereunder, to protect the trade secrets and
confidential information of Company and its affiliates that have been and will
be disclosed or entrusted to Executive, the business goodwill of Company and its
affiliates that has been and will in the future be developed by Executive, or
the business opportunities that have been and will in the future be disclosed or
entrusted to Executive by Company and its affiliates and as an additional
incentive for Company to enter into this Agreement, Company and Executive agree
to the non-competition obligations hereunder. Executive shall not, directly or
indirectly, for Executive or for others, in any geographic area or market (other
than Company’s home office) where Company or any of its affiliates are
conducting any business (or is active in pursuing a geologic trend) or have
during the previous twelve months conducted such business or actively pursued a
geologic trend:

 

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(i)

 

engage in any business that is directly competitive with the business conducted
by Company;

 

 

 

(ii)

 

render advice or services to, or otherwise assist, any other person,
association, or entity who is engaged, directly or indirectly, in any business
competition with the business conducted by Company with respect to such
competitive business; or

 

 

 

(iii)

 

induce any employee of Company or any of its affiliates to terminate his or her
employment with Company or such affiliates, or hire or assist in the hiring of
any such employee by any person, association, or entity not affiliated with
Company.

 

These non-competition obligations shall apply during the period that Executive
is employed by Company and during any period after Executive’s termination of
Employment when Company is providing Executive with Termination Benefits
pursuant to Article 7.  Notwithstanding the preceding sentence, these
non-competition obligations shall not apply after Executive’s termination of
employment by Company by reason of paragraph 2.2(v).

 

5.2           ENFORCEMENT AND REMEDIES.  Executive acknowledges that money
damages would not be sufficient remedy for any breach of this Article by
Executive, and Company shall be entitled to enforce the provisions of this
Article by terminating any payments then owing to Executive under this Agreement
and/or to specific performance and injunctive relief as remedies for such breach
or any threatened breach, provided, however, that payments then owing to
Executive may not be terminated unless the Board of Directors determines that
such breach by Executive has directly resulted or could reasonably be expected
to result in a material adverse economic impact on Company business.  Such
 remedies shall not be deemed the exclusive remedies for a breach of  this
Article, but shall be in addition to all remedies available at  law or in equity
to Company, including without limitation, the  recovery of damages from
Executive and Executive’s agents involved in such breach and remedies available
to Company  pursuant to this and  other agreements with Executive.

 

5.3           REFORMATION.  It is expressly understood and agreed that Company
and Executive consider the restrictions contained in this Article to be
reasonable and necessary to protect the proprietary information of Company. 
Nevertheless, if any of the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, or overly broad as to geographic area or time,
or otherwise unenforceable, the parties intend for the restrictions therein set
forth to be modified by such court so as to be reasonable and enforceable and,
as so modified by the court, to be fully enforced.

 

ARTICLE 6

STATEMENTS CONCERNING COMPANY

 

6.1           IN GENERAL.  Executive shall refrain, both during the employment
relationship and after the employment relationship terminates, from publishing
any oral or written statements about Company, any of its affiliates, or any of
such entities, officers, employees, agents or representatives that are
slanderous, libelous, or defamatory; or that disclose private or confidential
information about Company, any of its affiliates, or on such entities’ business
affairs, officers, employees, agents or representatives; or that constitute an
intrusion into the seclusion or private lives of any of such entities’ officers,
employees, agents or representatives; or that give rise to unreasonable adverse
publicity about the private lives of any of such entities’ officers, employees,
agents, or representatives

 

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or that place Company, any of its affiliates, or any of such entities’ officers,
employees, agents, or representatives in a false light before the public; or
that constitute a misappropriation of the name or likeness of Company, any of
its affiliates, or any such entities’ officers, employees, agents, or
representatives, except where any of such actions are disclosures required by
operation of law or judicial process.  A violation or threatened violation of
this prohibition may be enjoined by the courts. The rights afforded Company and
its affiliates under this provision are in addition to any and all rights and
remedies otherwise afforded by law.

 

ARTICLE 7

EFFECT OF TERMINATION ON COMPENSATION

 

7.1           BY EXPIRATION.  If Executive’s employment hereunder shall
terminate upon expiration of the Term of Employment provided in paragraph 2.1
hereof, then all compensation and all benefits to Executive hereunder shall
terminate contemporaneously with termination of his employment.

 

7.2           BY COMPANY.  If Executive’s employment hereunder shall be
terminated by Company prior to expiration of the Term of Employment provided in
paragraph 2.1, then, upon such termination, regardless of the reason therefor,
all compensation and benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment; provided, however,
that if such termination shall be for any reason other than those encompassed by
paragraphs 2.2(iii) or (iv), then Company shall provide Executive with the
Termination Benefits.  For the purpose of this Agreement, the term “Termination
Benefits” shall mean the following: (i) Company shall continue to pay to
Executive his base salary then in effect pursuant to paragraph 3.1 for the
unexpired portion of the term set forth in paragraph 2.1 (the “Salary Severance
Amount”) as determined pursuant to Section 7.7(i) below; (ii) all outstanding
stock options granted by Company to Executive shall become immediately
exercisable in full upon Executive’s termination of employment and for a period
of twelve months thereafter (but in no event shall any such stock option be
exercisable after the expiration of the original term of such stock option);
(iii) Company shall pay to Executive a lump sum cash payment equal to
Executive’s Incentive Target (the “Target Bonus”) amount prorated for the number
of months in the performance year of Executive’s termination of employment that
have elapsed prior to termination at the time determined pursuant to
Section 7.7(ii) below, (iv) pursuant to Section 7.7(iii) below, the life
insurance coverage and annual tax gross-up pursuant to paragraph 3.5 shall
continue to be provided to Executive for the unexpired portion of the Term of
Employment set forth in paragraph 2.1, (v) within 10 business days after the
date of Executive’s termination of employment, Company shall pay Executive a
lump sum cash payment equal to the amount credited to his accounts under the
Edge Petroleum Corporation Employees’ Profit Sharing Plan and the Employee Stock
Ownership Plan, or any similar plans or programs that are forfeitable in
accordance with the terms of such plans and (vi) during the period, if any (but
in no event for more than 18 months after the date of Executive’s termination of
employment), that Executive elects to continue coverage for himself and any of
his eligible dependents under Company’s group health plan pursuant to the
continuation of coverage provisions contained in Sections 601 et req. of the
Employee Retirement Income Security Act of 1974, as amended, Executive’s
premiums for such coverage shall be no greater than that charged by Company
generally to its

 

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active executive employees for coverage under such plans.  In the event Company
does not fulfill its obligations under paragraph 1.1 to employ Executive and
appoint him to the positions set forth in paragraph 1.2, Executive shall be
entitled to the Initial Option and to Termination Benefits as if Executive’s
employment terminated on the Effective Date.

 

7.3           BY EXECUTIVE.  If Executive’s employment hereunder shall be
terminated by Executive prior to expiration of the term provided in paragraph
2.1, then, upon such termination, regardless of the reason thereof, all
compensation and benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment; provided, however,
that if such termination shall occur for the reason encompassed by paragraph
2.3(i), then Company shall provide Executive with the Termination Benefits.

 

7.4           NO DUTY TO MITIGATE.  Executive shall have no duty to find new
employment following the termination of his employment under circumstances which
require Company to pay any amount to Executive pursuant to this Article 7.  Any
salary or remuneration received by Executive from a third party for the
providing of personal services (whether by employment or by functioning as an
independent contractor) following the termination of his employment under
circumstances pursuant to which this Article 7 apply shall not reduce company
obligations to make a payment to Executive (or the amount of such payment)
pursuant to this Article 7.  Notwithstanding the preceding sentence, if, and to
the extent that, following the termination of his employment under circumstances
pursuant to which this Article 7 applies, Executive becomes entitled to receive
benefits from a third party that are comparable to the Termination Benefits set
forth in paragraph 7.2(iv) and (vi), Company’s obligation to provide such
Termination Benefits to Executive shall cease.

 

7.5           LIQUIDATED DAMAGES.  In light of the difficulties in estimating
the damages for an early termination of this Agreement, company and Executive
hereby agree that the payments, if any, to be received by Executive pursuant to
this Article 7 shall be received by Executive as liquidated damages.

 

7.6           INCENTIVE AND DEFERRED COMPENSATION.  This Agreement governs the
rights and obligations of Executive and Company with respect to Executive’s base
salary and certain perquisites of employment.  Except as expressly provided
herein, Executive’s rights and obligations both during the term of his
employment and thereafter with respect to stock options, incentive and deferred
compensation, life insurance policies insuring the life of Executive, and other
benefits under the plans and programs maintained by Company shall be governed by
the separate agreements, plans and other documents and instruments governing
such matters.  Without limiting the scope of the preceding sentence, Executive
acknowledges that he has no right to grants of stock options either under the
stock plans maintained by Company or otherwise other than (i) as provided in
paragraphs 3.3 or 3.4 hereof or (ii) in the discretion of the Compensation
Committee or the Board of Directors.

 

7.7           TIME AND FORM OF TERMINATION PAYMENTS

 

(i)            Salary Severance Amount.  The Salary Severance Amount described
in Section 7.2(i) above shall be paid as follows in the event of a termination
during 2008:

 

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(a) First Payment Level.  A portion of the Salary Severance Amount equal to two
times the limit on compensation set forth in Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the “Code”) ($460,000 for 2008) shall be paid
in an immediate lump sum on the date five days following his Termination Date.

 

(b) Second Payment Level.  A portion of the Salary Severance Amount shall be
paid according to paragraphs (1) or (2) to be determined as follows:

 

(1)           Termination On or Before June 30, 2008.  If the date of
Executive’s termination of employment (“Termination Date”) occurs on or before
June 30, 2008, the Second Payment Level shall be comprised of the following
payments:

 

(A)  On the date that is six months following the Termination Date, Executive
shall receive a lump sum payment of a portion of the Salary Severance Amount
equal to the total amount of base salary Executive would have received during
such six-month period had he remained employed.

 

(B)  Following the six-month period described in the immediately preceding
paragraph, Executive shall receive a portion of the Salary Severance Amount in
monthly payments equal to the monthly base salary payments he would have
received had he remained employed through December 31, 2008; provided that the
sum of the First Payment Level and the monthly payments under this section shall
not exceed the Salary Severance Amount.

 

(C)  On January 2, 2009, Executive shall receive a cash lump sum equal to the
amount of Salary Severance Amount, if any, that remains unpaid following the
payment of the amounts described in the First Payment Level and Second Payment
Level.

 

(2)           Termination After June 30, 2008.  If Executive’s Termination Date
occurs after June 30, 2008, Executive shall receive the remaining balance of his
Salary Severance Amount as reduced by the First Payment Level on the later of
January 2, 2009 or five days after his Termination Date.

 

(ii)           Target Bonus.  Executive’s Target Bonus described in
Section 7.2(iii) above shall be paid as follows:

 

(a)           If Executive’s Termination Date occurs in 2008, the Target Bonus
shall be paid on the later of (1) January 2, 2009 or (2) five days following his
Termination Date.

 

(b)          If Executive’s Termination Date occurs in 2009, the Target Bonus
shall be paid five days following his Termination Date.

 

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(iii)          Life Insurance Gross-Up.  Executive’s life insurance gross-up
payment shall be made on the later of January 2, 2009 or five days following
Executive’s Termination Date.

 

7.8           SECTION 409A.  This Agreement is intended to comply with Code
Section 409A and any ambiguous provision will be construed in a manner that is
compliant with or exempt from the application of Code Section 409A.  If any
provision of this Agreement would cause Executive to incur any additional tax or
interest under Code Section 409A and accompanying Treasury regulations and
guidance, Employer shall, after consulting with Executive, reform such provision
to comply with Code Section 409A, to the extent permitted under Code
Section 409A; provided, however, that Employer agrees to maintain, to the
maximum extent practicable, the original intent and economic benefit to
Executive of the applicable provision without violating the provisions of Code
Section 409A.  Notwithstanding any provision to the contrary in this Agreement,
if Executive is deemed on his termination date to be a “specified employee”
within the meaning of that term under Section 409A(a)(2)(B) of the Code, then
the payments and benefits under this Agreement that are subject to Code
Section 409A shall be made or provided (subject to the last sentence hereof) on
the later of (A) the payment date set forth in this Agreement or (B) the date
that is the earliest of (i) the expiration of the six-month period measured from
the date of Executive’s Termination of employment or (ii) the date of
Executive’s death (the “Delay Period”).  Payments subject to the Delay Period
shall be paid to Executive without interest for such delay in payment. 
Notwithstanding any provision of this Agreement to the contrary, Executive
acknowledges and agrees that the Company and its employees, officers, directors,
Affiliates and Subsidiaries shall not be liable for, and nothing provided or
contained in this Agreement will be construed to obligate or cause the Company
and/or its employees, officers, directors, Affiliates and Subsidiaries to be
liable for, any tax, interest or penalties imposed on Executive related to or
arising with respect to any violation of Section 409A.

 

ARTICLE 8

MISCELLANEOUS

 

8.1           NOTICES.  For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

 

If to Company to:

 

Edge Petroleum Corporation

 

 

Texaco Heritage Plaza

 

 

1111 Bagby, Suite 2100

 

 

Houston, Texas 77002

 

 

Telecommunications Number: (713) 654-8960

 

 

Attention: Corporate Secretary

 

 

 

If to Executive:

 

John W. Elias

 

 

1923 Olympia Drive

 

 

Houston, Texas 77019

 

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or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.

 

8.2           APPLICABLE LAW.  This Agreement is entered into under, and shall
be governed for all purposes by, the laws of the State of Texas.

 

8.3           NO WAIVER.  No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provisions of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.

 

8.4           SEVERABILITY.  If a court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable, then the
invalidity or enforceability of the provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.

 

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

 

8.6           WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS.  Company may
withhold from any benefits and payments made pursuant to this agreement all
federal, state, city and other taxes as may be required pursuant to any law or
government regulation or ruling and all other normal employee deductions made
with respect to Company’s employees generally.

 

8.7           HEADINGS.  The paragraph headings have been inserted for purposes
of convenience and shall not be used for interpretive purposes.

 

8.8           GENDER AND PLURALS.  Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and converse.

 

8.9           AFFILIATE.  As used in this Agreement, the term “affiliate” shall
mean any entity which owns or controls, is owned or controlled by, or is under
common ownership or control with, Company.

 

8.10         ASSIGNMENT.  This agreement shall be binding upon and inure to the
benefit of Company and any successor of Company, by merger or otherwise. Except
as provided in the preceding sentence, this Agreement, and the rights and
obligations of the parties hereunder, are personal and neither this Agreement,
nor any right, benefit, or obligation of either party hereto, shall be subject
to voluntary or involuntary assignment, alienation or transfer, whether by
operation of law or otherwise without the prior written consent of the other
party.

 

8.11         TERM.  This Agreement has a term co-extensive with the term of
employment provided in paragraph 2.1.  Termination shall not affect any right or
obligation of any party which is accrued or vested prior to such terminations. 
Without limiting the scope of the

 

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preceding sentences, the provisions of Articles 4, 5 and 6 shall survive any
termination of the employment relationship and/or of this Agreement.

 

8.12         ENTIRE AGREEMENT.  Except as provided in (i) the written benefit
plans and programs and agreements referenced in Article 3 and (ii) any signed
written agreement contemporaneously or hereafter executed by Company and
Executive, including, without limitation, the Severance Agreement, this
Agreement constitutes the entire agreement of the parties with regard to the
subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
employment of Executive by Company.  Without limiting the scope of the preceding
sentence, all prior understandings and agreements among the parties hereto
relating to the subject matter hereof are hereby null and void and of no further
force and effect.  Any modification of this Agreement will be effective only if
it is in writing and signed by the party to be charged.

 

IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AMENDED AND RESTATED
AGREEMENT ON THE 3rd DAY OF APRIL, 2008 TO BE EFFECTIVE IMMEDIATELY.

 

 

 

 

 

Edge Petroleum Corporation

 

 

 

 

By:

/s/ David F. Work

 

Name:

David F. Work

 

Title:

Chairman, Compensation Committee of

 

 

Board of Directors

 

 

 

 

 

 

 

Edge Petroleum Corporation

 

 

 

 

 

 

 

/s/ John W. Elias

 

John W. Elias

 

 

“Executive”

 

 

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