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:

 

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(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 eligible
expense shall be made on or before the last day of the Executive’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)        Executive shall be entitled to receive reimbursement for
out-placement services incurred before the end of the second calendar year
following Executive’s Involuntary Termination in connection with obtaining new
employment up to a maximum cost of $6,000, if Executive is seeking new
employment.  Such reimbursement shall be paid within 90 days of the Company’s
receipt of Executive’s request for reimbursement including any required
documentation of expenses.

 

(e)        The severance benefits payable under this agreement shall be paid to
the Executive on the fifth day after the last day of Executive’s employment with
the

 

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Company.  Any severance benefits paid pursuant to this paragraph will be deemed
to be a severance payment and not compensation for the purposes of determining
benefits under the Company’s qualified plans and shall be subject to any
required tax withholding.

 

(f)          Notwithstanding the foregoing, in addition to the benefits
described in this Paragraph 3, Executive shall be entitled to the life insurance
coverage described in Section 3.5 of the Employment Agreement.

 

4.                Interest on Late Benefit Payments. If any payment provided for
in Paragraph 3(a) or 3(b) hereof is not made when due, the Company shall pay to
Executive interest on the amount payable from the date that such payment should
have been made under such paragraph until such payment is made, which interest
shall be calculated at a rate equal to two percentage points over the prime or
base rate of interest announced by Chase Bank of Texas, N.A. or any successor
thereto, at its principal office in Houston, Texas and shall change when and as
such change in such prime or base rate shall be announced by such bank.

 

5.                Certain Additional Payments by the Company.  Notwithstanding
anything to the contrary in this Agreement, in the event that any payment or
distribution by the Company to or for the benefit of Executive, whether paid or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest or penalties, are
hereinafter collectively referred to as the “Excise Tax”), the Company shall pay
to Executive an additional payment (a “Gross-up Payment”) in an amount such that
after payment by Executive of all taxes (including an interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed on any
Gross-up Payment, Executive retains an amount of the Gross-up Payment equal to
the Excise Tax imposed upon the payment.  The Company and Executive shall make
an initial determination as to whether a Gross-up Payment is required and the
amount of any such Gross-up Payment. Executive shall notify the Company in
writing of any claim by the Internal Revenue Service which, if successful, would
require the Company to make a Gross-up Payment (or a Gross-up Payment in excess
of that, if any, initially determined by the Company and Executive) within ten
days of the receipt of such claim.  The Company shall notify Executive in
writing at least ten days prior to the due date of any response required with
respect to such claim if it plans to contest the claim.  The Gross-up Payment to
Executive shall be made no earlier than the date of the Payment to which such
Gross-up Payment relates and no later than December 31 of the year following the
year during which Executive remits the related taxes.  If the Company decides to
contest such claim, Executive shall cooperate fully with the Company in such
action; provided, however, the Company shall bear and pay directly or indirectly
all cost and expenses (including additional interest and penalties) incurred in
connection with such action and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of the Company’s action. 
If, as a result of the Company’s action with respect to a claim, Executive
receives a refund of any amount paid by the Company with respect to such claim,
Executive shall promptly pay such refund to the Company.  If the Company fails
to timely notify Executive whether it will contest such claim or the

 

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Company determines not to contest such claim, then the Company shall immediately
pay to Executive the portion of such claim, if any, which it has not previously
paid to Executive.

 

6.                General.

 

(a)        Term.  The effective date of this Agreement was January 1, 2004.  The
initial term of this Agreement shall be the period beginning on said effective
date and ending on the two-year anniversary of said effective date.  Within
sixty days after the expiration of this Agreement and within sixty days after
each successive two-year period of time thereafter that this Agreement is in
effect, the Board shall have the right to review this Agreement, and in its sole
discretion either continue and extend this Agreement, terminate this Agreement,
and/or offer Executive a different agreement, and will notify Executive of such
action before the end of said sixty-day time period mentioned above.  This
Agreement shall remain in effect until so terminated and/or modified by the
Board.  Failure of the Board at any time and from time to time to take any
action within any of said sixty-day time periods shall be considered as an
extension of this Agreement for an additional two-year period of time. 
Notwithstanding anything to the contrary contained in this “sunset provision,”
it is agreed that if a Change of Control occurs while this Agreement is in
effect, then this Agreement shall not be subject to termination or modification
under this “sunset provision,” and shall remain in force for a period of two
years after such Change of Control, and if within said two years the contingency
factors occur which would entitle Executive to the benefits as provided herein,
this Agreement shall remain in effect in accordance with its terms.  If, within
such two years after a Change of Control, the contingency factors that would
entitle Executive to said benefits do not occur, thereupon this two-year “sunset
provision” shall again be applicable with the sixty-day time period for Board
action (to either continue, extend, terminate or offer Executive a different
agreement shall thereafter commence at the expiration of said two years after
such Change of Control and on each two-year anniversary date thereafter.

 

(b)       Indemnification.  If Executive shall obtain any money judgment or
otherwise prevail with respect to any litigation brought by Executive or the
Company to enforce or interpret any provision contained herein, the Company, to
the fullest extent permitted by applicable law, hereby indemnifies Executive for
his reasonable attorneys’ fees and disbursements incurred in such litigation and
hereby agrees (i) to pay in full all such fees and disbursements and (ii) to pay
prejudgment interest on any money judgment obtained by Executive from the
earliest date that payment to him should have been made under this Agreement
until such judgment shall have been paid in full, which interest shall be
calculated at a rate equal to two percentage points over the prime or base rate
of interest announced by Chase Bank of Texas, N.A. (or any successor thereto) at
its principal office in Houston, Texas, and shall change when and as any such
change in such prime or base rate shall be announced by such bank.

 

(c)       Payment Obligations Absolute.  The Company’s obligation to pay (or
cause one of its subsidiaries to pay) Executive the amounts and to make the
arrangements

 

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provided herein shall be absolute and unconditional and shall not be affected by
any circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company (including its
subsidiaries) may have against him or anyone else.  All amounts payable by the
Company (including its subsidiaries hereunder) shall be paid without notice or
demand.  Executive shall not be obligated to seek other employment in mitigation
of the amounts payable or arrangements made under any provision of this
Agreement, and, except as provided in Paragraph 3 (c) hereof, the obtaining of
any such other employment shall in no event effect any reduction of the
Company’s obligations to make (or cause to be made) the payments and
arrangements required to be made under this Agreement.

 

(d)       Successors.  This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company, by merger, combination,
asset sale or otherwise.  This Agreement shall also be binding upon and inure to
the benefit of Executive and his or her estate.  If Executive shall die prior to
full payment of amounts due pursuant to this Agreement, such amounts shall be
payable pursuant to the terms of this Agreement to his estate.

 

(e)       Severability.  Any provision in this Agreement which is prohibited or
un-enforceable in any jurisdiction by reason of applicable law shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition
or unenforceability without invalidating or affecting the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

 

(f)        Non-Alienation.  Executive shall not have any right to pledge,
hypothecate, anticipate or assign this Agreement or the rights hereunder, except
by will or the laws of descent and distribution.

 

(g)       Notices.  Any notices or other communications provided for in this
Agreement shall be sufficient if in writing.  In the case of Executive, such
notices or communications shall be effectively delivered if hand delivered to
Executive at his principal place of employment or if sent by registered or
certified mail to Executive at the last address he or she has filed with the
Company.  In the case of the Company, such notices or communications shall be
effectively delivered if sent by registered or certified mail to the Company at
its principal executive offices.

 

(h)       Controlling Law.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas.  Further, Executive agrees
that any legal proceeding to enforce the provisions of this Agreement shall be
brought in Houston, Harris County, Texas, and hereby waives his right to any
pleas regarding subject matter or personal jurisdiction and venue.

 

(i)        Release.   Any benefit payable pursuant to Paragraph 3 herein is
subject to Executive’s execution of a release, without subsequent revocation,
within 60 days of Executive’s termination, in the form established by the
Company, releasing the Company, its shareholders, partners, officers, directors,
employees and agents

 

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from any and all claims and from any and all causes of action of any kind or
character (except claims arising under this Agreement), including but not
limited to all claims or causes of action arising out of Executive’s employment
with the Company or, with the exception of rights provided in any other written
agreement between the Company and Executive, the termination of such employment.

 

(j)        Full Settlement.  If Executive is entitled to and receives the
benefits provided hereunder, performance of the obligations of the Company
hereunder will constitute full settlement of all claims that executive might
otherwise assert against the Company on account of this termination of
employment, except such claims as may be asserted pursuant to any other
agreement between the Company and Executive.

 

(k)       Unfunded Obligation.  The obligation to pay amounts under this
Agreement is an unfunded obligation of the Company (including its subsidiaries),
and no such obligation shall create a trust or be deemed to be secured by any
pledge or encumbrance on any property of the Company (including its
subsidiaries).

 

(l)        Not a Contract of Employment.  This Agreement shall not be deemed to
constitute a contract of employment, nor shall any provision hereof affect
(i) the right of the Company (or its subsidiaries) to discharge Executive at
will, subject to the terms of any other agreement between the Company (or its
subsidiaries) and Executive, or (ii) the terms and conditions of any other
agreement between the Company and Executive except as provided herein.

 

(m)      Number and Gender.  Wherever appropriate herein, words used in the
singular shall include the plural and the plural shall include the singular. 
The masculine gender where appearing herein shall be deemed to include the
feminine gender.

 

(n)       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.

 

(o)       Headings.  The headings in this Agreement are for convenience only and
shall be disregarded in construing this Agreement.

 

(p)       Code 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

 

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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.

 

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IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AMENDED AND RESTATED
AGREEMENT EFFECTIVE ON THE 3rd DAY OF APRIL, 2008.

 

 

 

“Executive”

 

 

 

 

 

/s/ John W. Elias

 

John W. Elias

 

 

 

 

 

“Company”

 

 

 

Edge Petroleum Corporation

 

 

 

By:

/s/ David F. Work

 

Name:

David F. Work

 

Title:

Chairman, Compensation Committee of

 

 

Board of Directors

 

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