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.

 

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(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 $6,000, if Employee is seeking new
employment.  Such reimbursement shall be paid within 90 days of the Company’s
receipt of Employee’s request for reimbursement including any required
documentation of expenses.

 

(e)                            The severance benefits payable under this
agreement shall be paid to the Employee on or before the fifth day after the
last day of Employee’s employment with the Company.  Any severance benefits paid
pursuant to this paragraph will be deemed to be a severance payment and not
compensation for the purposes of

 

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determining benefits under the Company’s qualified plans and shall be subject to
any required tax withholding.

 

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 Employee 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 Employee, 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 Employee an additional payment (a “Gross-up Payment”) in an amount such
that after payment by Employee of all taxes (including an interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed on any
Gross-up Payment, Employee retains an amount of the Gross-up Payment equal to
the Excise Tax imposed upon the payment.  The Company and Employee shall make an
initial determination as to whether a Gross-up Payment is required and the
amount of any such Gross-up Payment. Employee 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 Employee) within ten
days of the receipt of such claim.  The Company shall notify Employee 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 Employee
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 Employee remits the related taxes.  If the Company decides to
contest such claim, Employee 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 Employee 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, Employee
receives a refund of any amount paid by the Company with respect to such claim,
Employee shall promptly pay such refund to the Company.  If the Company fails to
timely notify Employee whether it will contest such claim or the Company
determines not to contest such claim, then the Company shall immediately pay to
Employee the portion of such claim, if any, which it has not previously paid to
Employee.

 

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6.                                    General.

 

(a)                        Term.  The original effective date of this Agreement
was                       .  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 Company 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 Employee a different
agreement, and will notify Employee 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 Company.  Failure of the Company 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 Employee
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 Employee to said benefits do not
occur, thereupon this two-year “sunset provision” shall again be applicable with
the sixty-day time period for Company action (to either continue, extend,
terminate or offer Employee 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 Employee shall obtain any money
judgment or otherwise prevail with respect to any litigation brought by Employee
or the Company to enforce or interpret any provision contained herein, the
Company, to the fullest extent permitted by applicable law, hereby indemnifies
Employee for his or her 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 Employee from the earliest date that payment to Employee 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) Employee 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 the Employee or anyone else.  All amounts payable
by the Company (including its subsidiaries hereunder) shall be paid without
notice or demand.  Employee 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 Employee and his or her estate.  If Employee 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 or her
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.  Employee 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
Employee, such notices or communications shall be effectively delivered if hand
delivered to Employee at his or her principal place of employment or if sent by
registered or certified mail to Employee 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,
Employee agrees that any legal proceeding to enforce the provisions of this
Agreement shall be brought in Houston, Harris County, Texas, and hereby waives
the right to any pleas regarding subject matter or personal jurisdiction and
venue.

 

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(i)                           Release.  Any benefit payable pursuant to
Section 3 herein is subject to Employee’s execution of a release, without
subsequent revocation, within 60 days of Employee’s termination, in the form
established by the Company, releasing the Company, its shareholders, partners,
officers, directors, employees and agents 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 Employee’s employment with the Company or, with the exception of
rights provided in any other written agreement between the Company and Employee,
the termination of such employment.

 

(j)                           Full Settlement.  If Employee 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 Employee
might otherwise assert against the Company on account of Employee’s termination
of employment, except such claims as may be asserted pursuant to any other
agreement between the Company and Employee.

 

(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 Employee at will, subject to the terms of any other agreement between
the Company (or its subsidiaries) and Employee, or (ii) the terms and conditions
of any other agreement between the Company and Employee 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)                       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 Employee to incur any additional tax
or interest under Code Section 409A and accompanying Treasury regulations and
guidance, Employer shall, after consulting with Employee, reform such provision
to comply

 

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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 Employee of the
applicable provision without violating the provisions of Code Section 409A. 
Notwithstanding any provision to the contrary in this Agreement, if Employee 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 Employee’s
Termination of employment or (ii) the date of Employee’s death (the “Delay
Period”).  Payments subject to the Delay Period shall be paid to Employee
without interest for such delay in payment.  Notwithstanding any provision of
this Agreement to the contrary, Employee 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 Employee related to or arising with respect to
any violation of Section 409A.

 

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

 

 

“Company”

 

 

 

EDGE PETROLEUM CORPORATION

 

 

 

 

 

By:

           /s/ John W. Elias

 

 

John W. Elias

 

 

Chairman, President and

 

 

Chief Executive Officer

 

 

 

 

 

“Employee”

 

 

 

 

 

By:

 

 

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