Exhibit 10.4
SEVERANCE AGREEMENT
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Agreement between Edge Petroleum Corporation, a Delaware Corporation (the
"Company"), and ___________________.
WITNESSETH:
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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 his 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;
NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the Company and Executive agree as follows:
1. Definitions
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(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:
(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 reduction in Executive's annual salary or target
opportunity under any applicable bonus or incentive
compensation plan from that provided to him immediately
prior to the date on which a Change of Control occurs;
(iii) Receipt of employee benefits (including, but not limited
to medical, dental, life insurance, accidental death, and
dismemberment, and long-term disability plans) and
perquisites by Executive that are materially inconsistent
with the employee benefits and perquisites provided by the
Company to executives with comparable duties;
(iv) 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 was principally employed immediately
prior to the date on which a Change of Control occurs, or
(v) A change encompassed by paragraph 2.3 (i)(c) of the
Employment Agreement dated November 16, 1998, between
Executive and the Company.
(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 annual salary plus his Targeted Incentive
Award immediately prior to the date on which a Change of
Control occurs, or
(ii) Executive's annual salary plus his Targeted Incentive Award
at the time of his Involuntary Termination.
(e) "Incentive Award" shall mean the amount of any award issued
pursuant to the Edge Petroleum Corporation Incentive Award Plan
or any plan or program successor thereto.
(f) "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 to Clause (ii) of this
paragraph (f)) or a resignation at the request of the
Company; or
(ii) results from a resignation by Executive on or before the
date which is sixty days after the date upon which
Executive receives notice of 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, or Retirement.
(g) "Retirement" shall mean Executive's voluntary resignation on
or after December 31, 2006 (other than a resignation within
sixty days after the date Executive receives notice of a
change in Duties or a resignation at the request of the
Company).
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(h) "Severance Amount" shall mean an amount equal to _______ times
Executive's Compensation, reduced by the present value of any
salary continuation payments payable to Executive under the
Employment Agreement between the Company and the Executive
effective as of November 16, 1998 or any successor thereto.
Such present value shall be determined using the rate of
interest referred to in Paragraph 4 hereof as of the last day
of Executive's employment with the Company.
(i) "Targeted Incentive Award" shall mean Executive's Incentive
Target, if any, as set forth under the Incentive Award Plan
effective for the year with respect to which such award is
being determined, if any, or for the last preceding year in
which an Incentive Award was in effect, expressed as a dollar
amount based on such Executive's annual salary for such year.
(j) "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.
(k) "Welfare Benefit Coverages" shall mean the medical, dental,
life, insurance, accidental death and dismemberment and
long-term disability 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:
(a) A lump sum cash payment in an amount equal to Executive's
Severance Amount.
(b) A lump sum cash payment in an amount equal to the remaining
portion of any award to Executive under any prior years'
Incentive Award. Further, if Executive's Involuntary
Termination occurs on or after the date an award has been
earned under the Incentive Award Plan, but prior to the date
such award is paid, Executive shall receive an additional lump
sum cash payment in an amount equal to his Target Incentive
Award.
(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.
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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.
(d) Executive shall be entitled to receive out-placement services
in connection with obtaining new employment up to a maximum
cost of $6,000, if Executive is seeking new employment.
(e) The severance benefits payable under this agreement shall be
paid to the Executive on or before the fifth day after the
last day of Executive'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 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 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. for successor thereto) at its principal office
in Houston, Texas and shall change when and as such change in such prime
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. 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
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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 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 is _______________.
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 Executive
a different agreement. The Board (excluding any member of the
Board who is covered by this Agreement or by a similar agreement
with the Company) will vote on whether to so extend, terminate,
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 Company. Failure of
the Board to take any action within said sixty-day time period
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 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 arrangement provided herein shall be absolute and
unconditional and shall not be affected by any
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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 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 unenforceable 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 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,
Xxxxxx County, Texas, and hereby waives his right to any pleas
regarding subject matter or personal jurisdiction and venue.
(i) Release. As a condition to the receipt of any benefit under
paragraph 3 hereof, Executive shall first execute a release, 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 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.
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(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.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT ON THE
_________ DAY OF ___________________, 19_____.
"Executive"
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Xxxx X. Xxxxx
"Company"
Edge Petroleum Corporation
By: ______________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman, Compensation Committee
of Board of Directors
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Agreements identical to the forgoing were entered into by and between Edge
Petroleum Corporation and Officers of the Company and differences are listed
within the following schedule:
Schedule
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Severance
Name Amount (per Sec. 1.h)
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Xxxx X. Xxxxx 2.99
Xxxxxxx X. Xxxx 2.00
Xxxxx X. Xxxxxxx 1.25
