UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from.............. to .............
Commission file number 0-22149
EDGE PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 76-0511037
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
(Address of principal executive offices)
(713) 654-8960
(Registrant's telephone number, including area code)
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding at May 11, 1999
------------ ------------------------------
Common Stock 7,758,667
<PAGE>
Edge Petroleum Corporation
Edge Petroleum Corporation here by amends its Quarterly Report on Form 10Q
for the Quarterly Period ended March 31, 1999 to include attached Exhibits that
were excluded in the orginal Quarterly Report on Form 10Q for the period ended
March 31, 1999. In order to facilitate the efficient review of this report, as
amended, all information included in the orginal Quarterly Report on Form 10Q
for the period ended March 31, 1999 is filed herewith.
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EDGE PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
March 31, December 31,
1999 1998
-------------- --------------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 259,652 $ 272,428
Accounts receivable, trade 3,297,701 2,237,113
Accounts receivable, joint interest owners, net 2,096,201 2,215,096
Receivable from related parties 204,740 228,922
Other current assets 280,213 313,631
------------ ------------
Total current assets 6,138,507 5,267,190
PROPERTY AND EQUIPMENT, Net - full cost method of accounting
for oil and natural gas properties 46,675,307 47,258,993
INVESTMENT IN FRONTERA 3,750,561 3,744,935
OTHER ASSETS 7,789 7,789
------------ ------------
TOTAL ASSETS $ 56,572,164 $ 56,278,907
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, trade $ 4,256,976 $ 2,948,791
Accrued liabilities 3,484,658 3,799,881
Accrued interst payable 95,687 93,880
Current portion of long-term debt 7,400,000 6,700,000
------------ -----------
Total current liabilities 15,237,321 13,522,552
------------ -----------
LONG-TERM DEBT 4,600,000 5,800,000
------------ -----------
Total liabilities 19,837,321 19,322,552
------------ -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01par value; 5,000,000 shares authorized; none outstanding
Common stock, $.01par value; 25,000,000 shares authorized; 7,758,667 shares
issued and outstanding at March 31, 1999 and December 31, 1998 77,586 77,586
Additional paid-in capital 47,769,159 47,769,159
Retained earnings (deficit) (9,703,898) (9,398,410)
Unearned compensation - restricted stock (1,408,004) (1,491,980)
------------ ------------
Total stockholders' equity 36,734,843 36,956,355
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 56,572,164 $ 56,278,907
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
EDGE PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31,
---------------------------
1999 1998
<S> <C> <C>
OIL AND NATURAL GAS REVENUES $ 3,542,188 $ 3,785,666
OPERATING EXPENSES:
Lifting Costs 479,128 370,059
Severance and ad valorem taxes 352,689 301,125
Depletion, depreciation and amortization 1,902,760 1,186,586
General and administrative expenses 1,001,819 866,311
Unearned compensation expense 83,976 155,052
----------- -----------
Total operating expenses 3,820,372 2,879,133
----------- -----------
OPERATING INCOME (LOSS) (278,184) 906,533
OTHER INCOME AND EXPENSE:
Interest expense (38,326)
Interest income 11,022 46,045
----------- -----------
NET INCOME BEFORE INCOME TAX EXPENSE AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (305,488) 952,578
INCOME TAX EXPENSE (333,881)
----------- -----------
NET INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (305,488) 618,697
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 1,780,835
----------- -----------
NET INCOME (LOSS) $ (305,488) $2,399,532
=========== ===========
BASIC EARNINGS(LOSS)PER SHARE:
Net income (loss) before cumulative effect of accounting change $(0.04) $ 0.08
Cumulative effect of accounting change 0.23
------ ------
Basic earnings(loss)per share $(0.04) $ 0.31
====== ======
DILUTED EARNINGS(LOSS)PER SHARE:
Net income (loss) before cumulative effect of accounting change $(0.04) $ 0.08
Cumulative effect of accounting change 0.23
------ ------
Diluted earnings (loss)per share $(0.04) $ 0.31
====== ======
BASIC WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,758,667 7,760,869
========= =========
DILUTED WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,758,667 7,794,098
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
EDGE PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
Unearned
Common Stock Additional Compensation- Total
------------------------- Paid-in Retained Restricted Stockholders'
Shares Amount Capital Earnings(Deficit) Stock Equity
---------- -------- ------------ ----------------- -------------- --------------
BALANCE,
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1999 7,758,667 $ 77,586 $ 47,769,159 $(9,398,410) $ (1,491,980) $36,956,355
Unearned compensation expense 83,976 83,976
Net loss (305,488) (305,488)
---------- --------- ------------ ----------- ------------- ------------
BALANCE,
MARCH 31, 1999 7,758,667 $ 77,586 $ 47,769,159 $(9,703,898) $ (1,408,004) $36,734,843
========== ========= ============ =========== ============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
EDGE PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31,
------------------------------
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ (305,488) $2,399,532
Adjustments to reconcile net income(loss)to net cash provided by operating
activities:
Cumulative effect of accouning change (1,780,835)
Depletion, depreciation and amortization 1,902,760 1,186,586
Deferred income taxes 333,881
Unearned compensation expense 83,976 155,052
Changes in assets and liabilities:
Accounts receivable, trade (1,060,588) (348,061)
Accounts receivable, joint interest owners, net 118,895 3,304,666
Receivable from related parties 24,182 63,269
Other current assets 33,418 48,950
Other assets (7,463)
Accounts payable, trade 1,308,185 (1,011,655)
Accounts payable, related party (40,000)
Accrued liabilities (295,223) (31,532)
Accrued interest payable 1,807
----------- -----------
Net cash provided by operating activities 1,811,924 4,272,390
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Oil and natural gas property and equipment purchases (2,967,791) (8,468,415)
Proceeds from the sale of oil and natural gas properties 1,648,717 1,783,124
Investment in Frontera (5,626)
----------- -----------
Net cash used in investing activities (1,324,700) (6,685,291)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on long-term debt (500,000)
----------- -----------
Net cash used in financing activities (500,000)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (12,776) (2,412,901)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 272,428 3,777,950
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 259,652 $ 1,365,049
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES - Cash paid for interest, net of amounts capitalized $ 38,305
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
EDGE PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements included herein have been prepared by Edge
Petroleum Corporation, a Delaware corporation (the "Company"), without audit
pursuant to the rules and regulations of the Securities and Exchange Commission,
and reflect all adjustments which are, in the opinion of management, necessary
to present a fair statement of the results for the interim periods on a basis
consistent with the annual audited consolidated financial statements. All such
adjustments are of a normal recurring nature. The results of operations for the
interim periods are not necessarily indicative of the results to be expected for
an entire year. Certain information, accounting policies and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. Certain prior year
amounts have been reclassified to conform to the current year presentation. Such
reclassifications do not affect net income (loss). These financial statements
should be read in conjunction with the Company's audited consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
Accounting Change - The Company uses the full-cost method of accounting
for its oil and natural gas properties. Under this method, all acquisition,
exploration and development costs that are directly attributable to the
Company's acquisition, exploration and development activities are capitalized in
a "full-cost pool" as incurred. In the second quarter of 1998 and effective
January 1, 1998, the Company changed its method of accounting for internal
geological and geophysical ("G&G") costs to one of capitalization of such costs,
which are directly attributable to acquisition, exploration and development
activities, to oil and natural gas properties. Prior to the change the Company
expensed these costs as incurred. The Company believes the accounting change
provides for a better matching of revenues and expenses and enhances the
comparability of it's financial statements with those of other companies that
follow the full-cost method of accounting. Accordingly, the financial results
for the period ended March 31, 1998 have been restated to give effect to the
change in accounting method effective January 1, 1998. The $1,780,835 cumulative
effect of the change in prior years (after reduction for income taxes of
$958,910) is included in income for the three months ended March 31, 1998. The
effect of the accounting change on the three months ended March 31, 1998 was to
increase net income by $2,041,066 or $0.26 basic and diluted earnings per share
($260,231 before cumulative effect of accounting change or $0.03 basic and
diluted earnings per share).
Accounting Pronouncements
Derivatives - In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activity" ("SFAS 133"). SFAS 133 establishes accounting
and reporting standards for derivative instruments and hedging activities that
require an entity to recognize all derivatives as an asset or liability measured
at fair value. Depending on the intended use of the derivatives, changes in its
fair value will be reported in the period of change as either a component of
earnings or a component of other comprehensive income.
SFAS 133 is effective for all fiscal quarters beginning after June 15, 1999.
Earlier application of SFAS 133 is encouraged, but not prior to the beginning of
any fiscal quarter that begins after issuance of the statement. Retroactive
application to periods prior to adoption is not allowed. The Company has not
quantified the impact of adoption on its financial statements or the date it
intends to adopt.
7
<PAGE>
2. LONG TERM DEBT
During July 1995, the Company entered into a revolving credit facility
(the "Revolving Credit Facility") with a bank to finance temporary working
capital requirements. The Revolving Credit Facility provided up to $20 million
in borrowings limited by a borrowing base, as defined by the Revolving Credit
Facility. The Revolving Credit Facility provided for interest at the lender's
prime rate plus 0.75%. The borrowing base was subject to review by the bank on a
quarterly basis and could be adjusted subject to the provisions of the Revolving
Credit Facility. Effective April 1, 1998, the Company amended and restated its
Revolving Credit Facility to provide a revolving line of credit of up to $100
million bearing interest at a rate equal to prime or LIBOR plus 1.5% - 2%
depending on the level of borrowing base utilization. The Company's initial
borrowing base authorized by the banks was approximately $15 million. The
Revolving Credit Facility is secured by substantially all the assets of the
Company.
Effective September 29, 1998, the Company had its borrowing base
redetermined and amended its Revolving Credit Facility. The initial borrowing
base authorized by the bank was $15 million. Beginning October 1, 1998, and on
the first day of each month thereafter, the borrowing base was required to be
reduced by $550,000.
The Revolving Credit Facility provides for certain restrictions, including
but not limited to, limitations on additional borrowings and issues of capital
stock, sales of its oil and natural gas properties or other collateral, engaging
in merger or consolidation transactions and prohibitions of dividends and
certain distributions of cash or properties and certain liens. The Revolving
Credit Facility also contains certain financial covenants.
Effective March 1, 1999, the Company and the Bank amended the Revolving
Credit Facility to include the following terms; 1),the initial borrowing base
is $12 million comprised of a two tranche financing of a $9 million Revolving
Credit Facility and a $3 million term facility, 2) Beginning May 1, 1999,
and on the first day of each month thereafter, the Revolving Credit Facility
borrowing base is required to be reduced by $400,000, 3) 75% of prospect sales
will be used to pay down the term facility with the remaining unpaid term
facility balance maturing on August 31, 1999. The Company and the Bank also
amended the Revolving CreditFacility to replace the financial covenants on a
go forward basis with a Tangible Net Worth Covenant and Fixed Charge Covenant.
TheTangible Net Worth Covenant requires that at the end of each quarter the
Company's Tangible Net Worth be at least 90% of the Company's actual tangible
networth as reported at December 31, 1998 (or $33,260,720) plus 50% of
positive net income and 100% of other increases in equity for all fiscal
quarters ending subsequent to December 31, 1998. The Fixed Charge Covenant
requires that at the end of each quarterbeginning June 30, 1999, the ratio of
annualized EBITDA (as defined) to the sum of annualized interest expense plus
50% of the quarter end loans outstanding must be at least 1.25 to 1.00.
Interest will accrue at a rate of LIBOR plus 1.75% - 2.75% depending on the
borrowing base utilization.
3. EARNINGS PER SHARE
The Company accounts for earnings per share in accordance with Statement of
Financial Accounting Standard No. 128 - "Earnings per Share," ("SFAS No. 128")
which establishes the requirements for presenting earnings per share ("EPS").
SFAS No. 128 requires the presentation of "basic" and "diluted" EPS on the face
of the income statement. Basic earnings per common share amounts are calculated
using the average number of common shares outstanding during each period.
Diluted earnings per share assumes the exercise of all stock options having
exercise prices less than the average market price of the common stock using the
treasury stock method.
8
<PAGE>
The following is presented as a reconciliation of the numerators
and denominators of basic and diluted earnings per share computations, in
accordance with SFAS No. 128.
<TABLE>
Three Months Ended
--------------------------------------------------------------------------------
March 31, 1999 March 31, 1998
------------------------------------- -------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
Basic EPS
Income (loss) available to
<S> <C> <C> <C> <C> <C> <C>
common stockholders $ (305,488) 7,758,667 $(0.04) $2,399,532 7,760,869 $ 0.31
Effect of Dilutive Securities
Common stock options 33,229
----------- --------- ------- ----------- --------- -------
Diluted EPS
Income (loss) available to
common stockholders $ (305,488) 7,758,667 $(0.04) $2,399,532 7,794,098 $ 0.31
=========== ========= ======= =========== ========= =======
</TABLE>
4. SUBSEQUENT EVENT
On May 6, 1999, the Company completed a private offering of 1,400,000
shares of common stock based on a market price of $5.3125 per common share. The
private offering also provides for warrants, which were purchased for $0.125 per
share, to acquire an additional 420,000 shares of common stock at $5.35 per
share. Total proceeds, net of offering costs, were approximately $7.4 million of
which $4.9 million was used to repay debt under the Revolving Credit Facility
with the remainder to be used to satisfy working capital requirements and fund a
portion of the Company's future exploration program. After the repayment of debt
the Company has available approximately $1.5 million under its Revolving Credit
Facility for future borrowings.
5. INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109 - "Accounting for Income Taxes," ("SFAS
No. 109") which provides for an asset and liability approach for accounting for
income taxes. Under this approach, deferred tax assets and liabilities are
recognized based on anticipated future tax consequences, using currently enacted
tax laws, attributable to differences between financial statement carrying
amounts of assets and liabilities and their respective tax bases. Due to the
Company incurring a net loss for the three months ended March 31, 1999 and due
to the Company having significant deferred tax assets, no tax benefit (expense)
was recorded. Due to the uncertainty of the Company's ability to become
profitable in the future an allowance has been provided to offset the tax
benefits of certain tax assets. Should the Company have net income in future
periods income tax expense will be recorded upon utilization of deferred tax
assets.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors that have affected certain aspects of the Company's
financial position and operating results during the periods included in the
accompanying unaudited condensed consolidated financial statements. This
discussion should be read in conjunction with the accompanying unaudited
condensed consolidated financial statements included elsewhere in this Form 10-Q
and with the Company's audited consolidated financial statements included in the
Company's annual report on Form 10-K for the year ended December 31, 1998.
Unless otherwise indicated by the context, references herein to the "Company"
mean Edge Petroleum Corporation, a Delaware corporation that is the registrant,
and its corporate subsidiaries .
Overview
Edge Petroleum Corporation is an independent energy company engaged in
the exploration, development and production of oil and natural gas. Edge
conducts its operations primarily along the onshore Gulf Coast with its primary
emphasis in South Texas and South Louisiana where it currently controls
interests in excess of 222,000 gross acres under lease and option. The Company
explores for oil and natural gas by emphasizing an integrated application of
highly advanced data visualization techniques and computerized 3-D seismic data
analysis to identify potential hydrocarbon accumulations. The Company believes
its approach to processing and analyzing geophysical data differentiates it from
other independent exploration and production companies and is more effective
than conventional 3-D seismic data interpretation methods. The Company also
believes it maintains one of the largest databases of onshore South Texas Gulf
Coast 3-D seismic data of any independent oil and natural gas company, and is
continuously acquiring additional data within this core region.
The Company acquires 3-D seismic data by organizing and designing
regional data acquisition surveys for its proprietary use, as well as through
selective participation in regional non-proprietary 3-D surveys. The Company
negotiates seismic options for a majority of the areas encompassed by its
proprietary surveys, thereby allowing it to secure identified prospect leasehold
interests on a non-competitive, pre-arranged basis. In the Company's
non-proprietary 3-D survey areas, the Company's technical capabilities allow it
to rapidly and comprehensively evaluate large volumes of regional 3-D seismic
data, facilitating its ability to identify attractive prospects within a
surveyed region and to secure the corresponding leasehold interests ahead of
other industry participants.
The Company's extensive technical expertise has enabled it to
internally generate substantially all of its 3-D prospects drilled to date and
to assemble a large portfolio of 3-D based prospects for future drilling. The
Company pursues drilling opportunities that include a blend of shallower,
normally pressured reservoirs that generally involve moderate costs and risks as
well as deeper, over-pressured reservoirs that generally involve greater costs
and risks, but have higher economic potential. During the past year, the Company
has expanded its relative focus to increase its exposure to exploration
opportunities in the deeper geological section. The Company mitigates its
exposure to exploration costs and risk by conducting its operations with
industry partners, including major oil companies and large independents, that
generally pay a disproportionately greater share of seismic acquisition and, in
many instances, leasing and drilling costs than the Company. The Company may
seek to participate in an increased number of externally generated prospects,
including those in which the Company pays a disproportionate share of the cost,
depending upon the quality, size, price and other factors relating to such
prospects.
The Company uses the full-cost method of accounting for its oil and
natural gas properties. Under this method, all acquisition, exploration and
development costs, including certain general and administrative costs that are
10
<PAGE>
directly attributable to the Company's acquisition, exploration and development
activities, are capitalized in a "full-cost pool" as incurred. The Company
capitalizes internal Geological and Geophysical ("G&G") costs that are directly
attributable to acquisition, exploration and development activities to oil and
natural gas properties. Total internal G&G costs capitalized during the three
months ended March 31, 1999 and 1998 were $563,592 and $539,965, respectively.
The Company records depletion of its full-cost pool using the unit of production
method. Investments in unproved properties are not subject to amortization until
the proved reserves associated with the projects can be determined or until
impaired. To the extent that capitalized costs subject to amortization in the
full-cost pool (net of depletion, depreciation and amortization and related
deferred taxes) exceed the present value (using a 10% discount rate) of
estimated future net after-tax cash flows from proved oil and natural gas
reserves, such excess costs are charged to operations. Once incurred, an
impairment of oil and natural gas properties is not reversible at a later date.
Impairment of oil and natural gas properties is assessed on a quarterly basis in
conjunction with the Company's quarterly filings with the Commission. At March
31, 1999, no full cost ceiling test write down of oil and natural gas properties
was necessary.
Due to the instability of oil and natural gas prices, the Company has
entered into, from time to time, price risk management transactions (e.g., swaps
and collars) for a portion of its natural gas production to achieve a more
predictable cash flow, as well as to reduce exposure from price fluctuations.
While the use of these arrangements limits the benefit to the Company of
increases in the price of natural gas it also limits the downside risk of
adverse price movements. The Company's hedging arrangements apply to only a
portion of its production and provide only partial price protection against
declines in natural gas prices and limits potential gains from future increases
in prices. The Company accounts for these transactions as hedging activities
and, accordingly, gains and losses are included in oil and natural gas revenues
during the period the hedged transactions occur. During December 1998, the
Company entered into a fixed price swap for $1.96 per MMbtu (delivered price
basis, Houston Ship Channel), with settlement for each calendar month occurring
five business days following the publishing of the Inside F.E.R.C. Gas Marketing
Report. This fixed price swap covers 13,000 MMbtu per day and is effective
beginning March 1, 1999 and expires on October 31, 1999. Total natural gas
production hedged under this arrangement was 403,000 MMbtu for the three months
ended March 31, 1999 or 21% of the current quarter's production. Existing swaps
currently cover approximately 68% of current daily production. During April
1999, the Company entered into a fixed price swap for $2.15 per MMbtu. This
fixed price swap covers 3,000 MMbtu per day and is effective beginning May 1,
1999 and expires on October 31, 1999. During the three months ended March 31,
1998, the Company had in place two natural gas commodity collars with a
financial institution one of which expired on January 31, 1998 with the other
expiring on April 30, 1998. These collars each covered 5,000 MMbtu per day, or
approximately 29% of the Company's daily production, with floating floor and
ceiling prices ranging between $2.25 MMbtu and $3.15 per MMbtu. Total natural
gas production hedged under these collars was 450,000 MMbtu for the three months
ended March 31, 1998 or 29% of production. Included within natural gas revenues
for the three month periods ended March 31, 1999 and 1998 was $142,346 and
$36,700, respectively, representing net gains from swap and collar activities.
The Company's revenue, profitability and future rate of growth and
ability to borrow funds or obtain additional capital, and the carrying value of
its properties, are substantially dependent upon prevailing prices for oil and
natural gas. These prices are dependent upon numerous factors beyond the
Company's control, such as economic, political and regulatory developments and
competition from other sources of energy. Oil prices have declined significantly
during the past year and more recently natural gas prices have shown similar
declines. Even though prices have shown signs of resent recovery since March 31,
1999, a substantial or extended decline in oil and natural gas prices could have
a material adverse effect on the Company's financial condition, results of
operation and access to capital, as well as the quantities of oil and natural
gas reserves that the Company may economically produce.
11
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended March 31, 1999 Compared to the Three Months Ended
March 31,1998
Revenue and Production
Oil and natural gas revenues for the three months ended March 31, 1999
decreased 6% from $3.8 million to $3.5 million, as compared to the three months
ended March 31, 1998. Production volumes for oil and condensate for the three
months ended March 31, 1999 decreased 11% from 42 MBbls to 37 MBbls, as compared
to the three months ended March 31, 1998. The decrease in oil and condensate
production during the three months ended March 31, 1999 decreased revenues by
$64,580 (based on 1998 comparable quarter average prices), further decreased by
a 26% decrease in the average oil and condensate sales price which decreased
revenues by $134,857 (based on current quarter production). Production volumes
for natural gas for the three months ended March 31, 1999 increased 26% from
1,323 MMcf to 1,668 MMcf, as compared to the three months ended March 31, 1998.
The increase in natural gas production during the three months ended March 31,
1999 increased revenues by $838,089, offset by a 22% decrease in the average
natural gas sales price which decreased revenues by $882,130. The increase in
oil and natural gas production was primarily due to 42 gross (16.94 net) new
successful exploratory and development wells being drilled and completed since
March 31, 1998 offset by normal production declines from existing wells. As
described above, included within natural gas revenues for the three months ended
March 31, 1999 and 1998 was $142,346 and $36,700, respectively, representing
gains from current swap and collar activity. Hedging activities increased the
effective natural gas sales price by approximately $0.09 per Mcf and $0.03 per
Mcf, respectively, or 5% and 1%, respectively, for the three-months ended March
31, 1999 and 1998.
The following table sets forth certain operational data of the Company
for the periods presented:
<TABLE>
Three Months Ended 1999 Period Compared
March 31, to 1998 Period
---------------------------- ------------------------
Increase % Increase
1999 1998 (Decrease) (Decrease)
Production volumes:
<S> <C> <C> <C> <C>
Oil and condensate (Bbls) 37,410 42,139 (4,729) (11)%
Natural gas (Mcf) 1,668,423 1,323,022 345,401 26 %
Natural gas equivalents (Mcfe) 1,892,883 1,575,856 317,027 20 %
Average sales prices:
Oil and condensate ($ per Bbl) $ 10.05 $ 13.66 $ (3.61) (26)%
Natural gas ($ per Mcf) $ 1.90 $ 2.43 $ (0.53) (22)%
Natural gas equivalent ($per Mcfe) $ 1.87 $ 2.40 $ (0.53) (22)%
Operating revenues:
Oil and condensate $ 376,019 $ 575,456 $ (199,437) (35)%
Natural gas 3,166,169 3,210,210 (44,041) (1)%
----------- ----------- ----------
Total $ 3,542,188 $ 3,785,666 $ (243,478) (6)%
=========== =========== ==========
</TABLE>
Costs and Operating Expenses
Lifting costs for the three months ended March 31, 1999 increased 29%
from $370,059 to $479,128 as compared to the three months ended March 31, 1998,
due primarily to increased oil and natural gas production. Lifting costs were
$0.25 per Mcfe and $0.24 per Mcfe for the three-month periods ended March 31,
1999 and 1998, respectively.
12
<PAGE>
Severance and ad valorem taxes for the three months ended March 31, 1999
increased 17% from $301,125 to $352,689 as compared to the three months ended
March 31, 1998, due primarily to increased ad valorem taxes. Severance and ad
valorem taxes were $0.19 per Mcfe for both three-month periods ended March 31,
1999 and 1998, respectively.
Depletion, depreciation and amortization expense ("DD&A") for the three
months ended March 31, 1999 increased 60% from $1.2 million to $1.9 million, as
compared to the three months ended March 31, 1998. Included within DD&A for the
three-month periods ended March 31, 1999 and 1998 was $1.7 million and $1
million, respectively, representing depletion expense of oil and natural gas
property, which increased by 67%. Increased oil and natural gas production
increased depletion expense by approximately $206,000 and a 39% increase in the
overall depletion rate further increased depletion expense by approximately
$494,000. The increase in the depletion rate was primarily attributable to
abandonments of certain projects, prospects and wells at December 31, 1998 and
dry holes drilled since March 31, 1998 contributing to an overall increase in
finding cost. Depletion expense on a unit of production basis for the
three-month periods ended March 31, 1999 and 1998 was $0.90 per Mcfe and $0.65
per Mcfe, respectively. The remaining increase in DD&A is due primarily to
depreciation of new computer hardware, software and office improvements
purchased since March 31, 1998 and the amortization of deferred loan cost on the
Credit Facility which was effective in April 1998.
General and administrative expenses ("G&A") for the three months ended
March 31, 1999 increased 16% from $866,311 to $1 million, as compared to the
three months ended March 31, 1998. The increase in G&A was primarily
attributable to a $144,000 decrease in overhead and management fees received
from various management, operating and seismic agreements during the three
months ended March 31, 1999. Total overhead and management fees are recorded as
a reduction of G&A and were approximately $54,000 and $200,000, respectively,
for the three months ended March 31, 1999 and 1998. G&A on a unit of production
basis for the three-month periods ended March 31, 1999 and 1998 was $0.53 per
Mcfe and $0.55 per Mcfe, respectively.
Unearned compensation expense for the three months ended March 31, 1999
decreased from $155,052 to $83,976, as compared to the three months ended March
31, 1998. The decrease is due to the resignation of the former CEO and Chairman
of the Board during November of 1998 whereby he vested in his remaining
restricted stock grant. The Company charged to expense his unamortized unearned
compensation upon his resignation.
Interest expense for the three months ended March 31, 1999 was $38,326
net of amounts capitalized of $225,597. The increase in interest expense is due
to increased borrowings under the Company's Credit Facility since March 31,
1998. The weighted average debt was $12 million for the three months ended March
31, 1999. There was no debt outstanding during the three-month period ended
March 31, 1998.
Interest income for the three months ended March 31, 1999 decreased from
$46,045 to $11,022, as compared to the three months ended March 31, 1998. The
decrease in interest income is due to the overall reduction in invested funds
during the comparable periods.
Due to the Company incurring a net loss for the three months ended March
31, 1999 and due to the Company having significant deferred tax assets, no tax
benefit (expense) was recorded. Due to the uncertainty of the Company's ability
to become profitable in the future an allowance has been provided to offset the
tax benefits of certain tax assets. Should the Company have net income in future
periods income tax expense will be recorded upon utlization of available tax
assets. Tax expense for the three months ended March 31, 1998 was $333,881.
13
<PAGE>
For the three months ended March 31, 1999, the Company had an operating
loss of $(278,184) compared to operating income of $906,533 for the three month
period ended March 31, 1998, primarily due to significantly lower natural gas
and oil and condensate prices, further reduced by increased operating expenses
and increased DD&A expense offset by increased oil and natural gas production.
Net loss was $(305,488) for the three months ended March 31, 1999, or $(0.04)
basic and diluted loss per share, as compared to net income of $2.4 million, or
$0.31 basic and diluted earnings per share, ($618,697 before cumulative effect
of accounting change or $0.08 basic and diluted earnings per share), for the
three-month period ended March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents at March 31, 1999 of $259,652
consisting primarily of short-term money market investments, as compared to
$272,428 at December 31, 1998. Working capital was $(9.1) million at March 31,
1999, as compared to $(8.3) million at December 31, 1998.
Operating cash flow was approximately $1.7 million and $2.3 million for
the three-month periods ended March 31, 1999 and 1998, respectively. Operating
cash flow, a measure of performance for exploration and production companies,
represents cash flows from operating activities prior to changes in assets and
liabilities. Operating cash flow should not be considered in isolation or as a
substitute for net income, operating income, cash flows from operating
activities or any other measure of financial performance presented in accordance
with generally accepted accounting principles or as a measure of profitability
or liquidity.
During the three months ended March 31, 1999, the Company continued to
reinvest a substantial portion of its cash flows to increase its 3-D project
portfolio, improve its 3-D seismic interpretation technology and fund its
drilling program. Capital expenditures during the three months ended March 31,
1999 were approximately $3 million as compared to $8.5 million during the same
period in 1998. The Company expended $1.3 million in its drilling operations
resulting in the drilling of 6 gross (2.53 net) wells during the three months
ended March 31, 1999 as compared to 22 gross (10.29 net) wells during the same
period in 1998. Two wells are currently drilling, the Varn #2 located in South
Louisiana and the Worsham/O'Conner #1 located in South Texas. Land and data
acquisition expenditures were $1.7 million and were largely attributable to its
Nodosaria Embayment 3-D Project Area in South Louisiana. Total capital
expenditures for 1999 are expected to be approximately $18 million.
Due to the Company's active exploration and development and technology
enhancement programs, the Company has experienced and expects to continue to
experience substantial working capital requirements. The Company intends to fund
its 1999 capital expenditures, commitments and working capital requirements
through cash flows from operations, available borrowings under its existing
Revolving Credit Facility, and to the extent necessary other financing
activities. To provide additional working capital the Company continues to
market a portion of its interest in various Company generated drill ready
prospects. Additionally, the Company is currently evaluating various financing
and refinancing options as well as divestitures of certain non-core and under
performing assets. The Company believes it will be able to generate capital
resources and liquidity sufficient to fund its capital expenditures and meet
such financial obligations as they come due. In the event such capital resources
are not available to the Company, its drilling and other activities may be
curtailed.
14
<PAGE>
Subsequent Event
On May 6, 1999, the Company completed a private offering of 1,400,000
shares of common stock based on a market price of $5.3125 per common share. The
private offering also provides for warrants, which were purchased for $0.125 per
share, to acquire an additional 420,000 shares of common stock at $5.35 per
share. Total proceeds, net of offering costs, were approximately $7.4 million of
which $4.9 million was used to repay debt under the Revolving Credit Facility
with the remainder to be used to satisfy working capital requirements and fund a
portion of the Company's future exploration program. After the repayment of debt
the Company has available approximately $1.5 million under its Revolving Credit
Facility for future borrowings.
Revolving Credit Facility
During July 1995, the Company entered into a revolving credit facility (the
"Revolving Credit Facility") with a bank to finance temporary working capital
requirements. The Revolving Credit Facility provided up to $20 million in
borrowings limited by a borrowing base, as defined by the Revolving Credit
Facility. The Revolving Credit Facility provided for interest at the lender's
prime rate plus 0.75%. The borrowing base was subject to review by the bank on a
quarterly basis and could be adjusted subject to the provisions of the Revolving
Credit Facility. Effective April 1, 1998, the Company amended and restated its
Revolving Credit Facility to provide a revolving line of credit of up to $100
million bearing interest at a rate equal to prime or LIBOR plus 1.5% - 2%
depending on the level of borrowing base utilization. The Company's initial
borrowing base authorized by the banks was approximately $15 million. The
Revolving Credit Facility is secured by substantially all the assets of the
Company.
Effective September 29, 1998, the Company had its borrowing base
redetermined and amended its Revolving Credit Facility. The initial borrowing
base authorized by the bank was $15 million. Beginning October 1, 1998, and on
the first day of each month thereafter, the borrowing base was required to be
reduced by $550,000.
The Revolving Credit Facility provides for certain restrictions, including
but not limited to, limitations on additional borrowings and issues of capital
stock, sales of its oil and natural gas properties or other collateral, engaging
in merger or consolidation transactions and prohibitions of dividends and
certain distributions of cash or properties and certain liens. The Revolving
Credit Facility also contains certain financial covenants.
Effective March 1, 1999, the Company and the Bank amended the Revolving
Credit Facility to include the following terms; 1),the initial borrowing base
is $12 million comprised of a two tranche financing of a $9 million Revolving
Credit Facility and a $3 million term facility, 2) Beginning May 1, 1999,
and on the first day of each month thereafter, the Revolving Credit Facility
borrowing base is required to be reduced by $400,000, 3) 75% of prospect sales
will be used to pay down the term facility with the remaining unpaid term
facility balance maturing on August 31, 1999. The Company and the Bank also
amended the Revolving CreditFacility to replace the financial covenants on a
go forward basis with a Tangible Net Worth Covenant and Fixed Charge Covenant.
TheTangible Net Worth Covenant requires that at the end of each quarter the
Company's Tangible Net Worth be at least 90% of the Company's actual tangible
networth as reported at December 31, 1998 (or $33,260,720) plus 50% of
positive net income and 100% of other increases in equity for all fiscal
quarters ending subsequent to December 31, 1998. The Fixed Charge Covenant
requires that at the end of each quarterbeginning June 30, 1999, the ratio of
annualized EBITDA (as defined) to the sum of annualized interest expense plus
50% of the quarter end loans outstanding must be at least 1.25 to 1.00.
Interest will accrue at a rate of LIBOR plus 1.75% - 2.75% depending on the
borrowing base utilization.
Accounting Change
The Company uses the full-cost method of accounting for its oil and
natural gas properties. Under this method, all acquisition, exploration and
development costs that are directly attributable to the Company's acquisition,
exploration and development activities are capitalized in a "full-cost pool" as
incurred. In the second quarter of 1998 and effective January 1, 1998, the
Company changed its method of accounting for direct internal geological and
geophysical ("G&G") costs to one of capitalization of such costs, which are
directly attributable to acquisition, exploration and development activities, to
15
<PAGE>
oil and natural gas property. Accordingly, the financial results for the period
ended March 31, 1998 have been adjusted to give effect to the change in
accounting method effective January 1, 1998. Prior to the change the Company
expensed these costs as incurred. The Company believes the accounting change
provides for a better matching of revenues and expenses and enhances the
comparability of its results of operations with those of other oil and natural
gas companies that follow the full cost method of accounting (See note 1 to the
consolidated financial statements).
Year 2000
The Company has completed its assessment of the year 2000 processing
issues of its internal technology systems, considering current financial and
accounting, production, land and geological computer systems and software
utilized by the Company. Due to the need for improved management reporting, the
Company is in the process of replacing its existing financial and accounting,
production and land applications with new software which is year 2000 compliant.
Implementation is expected to be completed on or before September 30, 1999 at a
total cost of approximately $235,000. As of March 31, 1999, the Company has
incurred approximately $180,000 converting to its new financial and accounting
system and software with a majority of the remaining cost to be incurred prior
to June 30, 1999. Production and land applications will be operational on or
before June 30, 1999. These costs have been funded from cash flows from
operations and the cost of the new software and necessary hardware upgrades have
been capitalized. Based on assertions made by vendors, the Company believes its
geological systems and software are year 2000 compliant. In addition the Company
is performing other forms of due diligence to ensure that its geological systems
are compliant.
The Company is also in the process of evaluating the risk presented by
potential Year 2000 non-compliance by third parties. Because such risks vary
substantially, companies are being contacted based on the estimated magnitude of
risk posed to the Company by their year 2000 non-compliance. The Company
anticipates that these efforts will continue through 1999 and will not result in
significant costs to the Company.
The Company's assessment of its Year 2000 issues involves many
assumptions. There can be no assurance that the Company's assumptions will prove
accurate, and actual results could differ significantly from the assumptions. In
conducting its Year 2000 compliance efforts, the Company has relied primarily on
vendor representations with respect to internal computerized systems and
representations from third parties with which the Company has business
relationships and has not independently verified representations. There can be
no assurance that these representations will prove accurate. A Year 2000 failure
could result in a business interruption that adversely effects the Company's
business, financial condition or results of operations. Although it is not
currently aware of any likely business disruptions, the Company is developing a
contingency plan to address and assess the readiness of its material suppliers,
customers and other entities as it relates to year 2000 processing issues and
expects this work to be completed on or before June 30, 1999. The Company is not
insured for this type of loss should a loss occur.
Accounting Pronouncements
Derivatives - In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activity" ("SFAS 133"). SFAS 133 establishes accounting
and reporting standards for derivative instruments and hedging activities that
require an entity to recognize all derivatives as an asset or liability measured
at fair value. Depending on the intended use of the derivatives, changes in its
fair value will be reported in the period of change as either a component of
earnings or a component of other comprehensive income.
16
<PAGE>
SFAS 133 is effective for all fiscal quarters beginning after June 15,
1999. Earlier application of SFAS 133 is encouraged, but not prior to the
beginning of any fiscal quarter that begins after issuance of the statement.
Retroactive application to periods prior to adoption is not allowed. The Company
has not quantified the impact of adoption on its financial statements or the
date it intends to adopt.
FORWARD LOOKING STATEMENTS
The statements contained in all parts of this document, including, but
not limited to, those relating to the Company's drilling plans, its 3-D project
portfolio, capital expenditures, use of Offering proceeds, future capabilities,
the sufficiency of capital resources and liquidity to support working capital
and capital expenditure requirements, reinvestment of cash flows and any other
statements regarding future operations, financial results, business plans,
sources of liquidity and cash needs and other statements that are not historical
facts are forward looking statements. When used in this document, the words
"anticipate," "estimate," "expect," "may," "project," "believe" and similar
expressions are intended to be among the statements that identify forward
looking statements. Such statements involve risks and uncertainties, including,
but not limited to, those relating to the Company's dependence on its
exploratory drilling activities, the volatility of oil and natural gas prices,
the need to replace reserves depleted by production, operating risks of oil and
natural gas operations, the Company's dependence on its key personnel, the
Company's reliance on technological development and possible obsolescence of the
technology currently used by the Company, significant capital requirements of
the Company's exploration and development and technology development programs,
the potential impact of government regulations, litigation and environmental
matters, the Company's ability to manage its growth and achieve its business
strategy, competition, the uncertainty of reserve information and future net
revenue estimates, property acquisition risks and other factors detailed in the
Company's Form 10-K and other filings with the Securities and Exchange
Commission. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual outcomes may vary
materially from those indicated.
17
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings............................................... None
Item 2 - Changes in Securities and Use of Proceeds....................... None
Item 3 - Defaults Upon Senior Securities................................. None
Item 4 - Submission of Matters to a Vote of Security Holders - .......... None
Item 5 - Other Information............................................... None
Item 6 - Exhibits and Reports on Form 8-K................................
(A) EXHIBITS. The following exhibits are filed as part of this report:
INDEX TO EXHIBITS
Exhibit No.
- --------------
+2.1 -- Amended and Restated Combination Agreement by
and among (i) Edge Group II Limited Partnership, (ii)
Gulfedge Limited Partnership, (iii) Edge Group Partnership,
(iv) Edge Petroleum Corporation, (v) Edge Mergeco, Inc.
and (vi) the Company, dated as of January 13, 1997
(Incorporated by reference from exhibit 2.1 to the Company's
Registration Statement on Form S-4 (Registration No.333-17269)
+3.1 -- Restated Certificate of Incorporated of the Company,
as amended (Incorporated by reference from exhibit 3.1
to the Company's Registration Statement on Form S-4
(Registration No. 333-17269)).
+3.2 -- Bylaws of the Company (Incorporated by reference
from exhibit 3.2 to the Company's Registration Statement
on Form S-4 (Registration No. 333-17269)).
+4.1 -- Amended and Restated Credit Agreement, dated April 1, 1998,
by and between Edge Petroleum Corporation and Edge Petroleum
Exploration Company (collectively the "Borrower") and Compass
Bank, a Texas state chartered banking institution, as Agent
for itself and First National Bank of Chicago and other
lenders party thereto. (Incorporated by Reference to 4.1 to
the Company's Quarterly Report on Form 10-Q for, the quarterly
period ended March 31, 1998).
+4.2 -- First Amendment dated September 29, 1998 to the Amended and
Restated Credit Agreement, dated as of April 1, 1998, by and
between the Borrower and the First National Bank of Chicago as
agent and a Lender thereto (Incorporated by Reference to 4.1
to the Company's Quarterly Report on Form 10-Q for, the
quarterly period ended March 31, 1998).
+4.3 -- Security Agreement, dated as of April 1, 1998, by and
between the Borrower and Compass Bank, a Texas state chartered
banking institution, as Agent for itself and The First
National Bank of Chicago and other lenders party thereto the
Credit Agreement (Incorporated by Reference to 4.1 to the
Company's Quarterly Report on Form 10-Q for, the quarterly
period ended March 31, 1998).
18
<PAGE>
+4.4 -- Security Agreement (Stock Pledge), dated as of April 1,
1998, by and between Edge Petroleum Corporation and Compass
Bank, a Texas state chartered banking institution, as Agent
for itself and The First National Bank of Chicago and other
lenders party thereto the Credit Agreement (Incorporated by
Reference to 4.1 to the Company's Quarterly Report on Form
10-Q for, the quarterly period ended March 31, 1998).
The Company is a party to several debt instruments
under which the total amount of securities authorized does not
exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis. Pursuant to paragraph
4(iii)(A) of Item 601(b) of Regulation S-K, the Company agrees
to furnish a copy of such instruments to the Commission upon
request.
4.5 -- Common Stock Subscription Agreement(Subscription Agreement)
dated April 30, 1999 by and between Edge
Petroleum Corporation and Mark G. Eagn, The Private Investment
Fund, Special Situations Private Equity Fund, L.P., Special
Situations Fund III, L.P., Special Situations Cayman
Fund, L.P., and Fidelity management Trust C/F Rollover
F/B/O John W. Elais.
4.6 -- First Amendment dated March 1, 1999 to the Amended and
Restated Credit Agreement dated April 1, 1998 by and between
the Borrower and the First National Bank of Chicago as agent
and a Lender thereto (Incorporated by Reference to 4.1 to the
Company's Quarterly Report on Form 10-Q for, the quarterly
period ended March 31, 1998).
+10.1 -- Joint Venture Agreement between Edge Joint Venture II and
Essex Royalty Limited Partnership II, dated as of May 10, 1994
(Incorporated by reference from exhibit 10.2 to the Company's
Registration Statement on Form S-4 (Registration No.
333-17269)).
+10.2 -- Joint Venture Agreement between Edge Joint Venture II and
Essex Royalty Limited Partnership, dated as of April 11, 1992
Incorporated by reference from exhibit 10.3 to the Company's
Registration Statement on Form S-4 (Registration No.
333-17269)).
+10.3 -- Registration Rights Agreement between Edge Holding Company
Limited Partnership and the Company (Incorporated by reference
from exhibit 10.6 to the Company's Registration Statement on
Form S-4 (Registration No.
333-17269)).
+10.4 -- Form of Indemnification Agreement between the
Company and each of its directors (Incorporated by reference
from exhibit 10.7 to the Company's Registration Statement on
Form S-4 (Registration No. 333-17269)).
+10.5 -- Incentive Plan of Edge Petroleum Corporation
(Incorporated by reference from exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997).
+10.6 -- Employment Agreement dated February 25, 1997 between Edge
Petroleum Corporation and John E. Calaway (Incorporated by
reference from exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997).
19
<PAGE>
+10.7 -- Employment Agreement dated February 25, 1997 between Edge
Petroleum Corporation and James D. Calaway (Incorporated by
reference from exhibit 10.5 Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997).
+10.8 -- Employment Agreement dated as of December 19, 1996, by and
between the Company and Michael G. Long (Incorporated by
reference from exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended September 30,
1998).
+10.9 -- Purchase Agreement between the Company and James C.
Calaway dated as of December 2, 1996 (Incorporated by
reference from exhibit 10.11 to the Company's Registration
Statement on Form S-4 (Registration No. 333-17269)).
+10.10 -- Consulting Agreement of James C. Calaway dated March
18, 1989 (Incorporated by reference from exhibit 10.12
to the Company's Registration Statement on Form S-4
(Registration No. 333-17269)).
+10.11 -- Stock Option Plan of Edge Petroleum Corporation,
a Texas corporation (Incorporated by reference from
exhibit 10.13 to the Company's Registration Statement on Form
S-4 (Registration No. 333-17269)).
+10.12 -- Employment Agreement dated as of November 16, 1998,
by and between the Company and John W. Elias. (Incorporated by
reference from exhibit 10.12 in the Company's Annual Report
on Form 10K for the year ended December 31, 1998)
+10.13 -- Agreement dated as of November 16,1998 by and between
the Company and John E. Calaway. (Incorporated by reference
from exhibit 10.13 in the Company's Annual Report on Form 10K
for the year ended December 31, 1998)
10.14 -- Form of Non-Qualified Stock Option Agreement under
the Incentive Plan of Edge Petroleum Corporation.
10.15 -- Form of Employee Restricted Stock Award Agreement
under the Incentive Plan of Edge Petroleum Corporation.
10.16 -- Form of Director Restricted Stock Award Agreement
under the Incentive Plan of Edge Petroleum Corporation.
10.17 -- Non-Qualified Stock Option Agreement between the
Company and James D. Calaway under the Incentive Plan of
Edge Petroleum Corporation.
10.18 -- Restricted Stock Award Agreement between the
Company and James D. Calaway under the Incentive Plan of Edge
Petroleum Corporation.
10.19 -- Non-Qualified Stock Option Agreement between the
Company and Michael G. Long under the Incentive Plan of
Edge Petroleum Corporation.
11.1 -- Computation of Earnings Per Share.
27.1 -- Financial Data Schedule.
+ Incorporated by reference as indicated.
(B) Reports on Form 8-K.................................. None
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EDGE PETROLEUM CORPORATION,
A DELAWARE CORPORATION
(REGISTRANT)
Date 5/11/99 /S/ John W. Elias
- ----------------------- ------------------------------
John W. Elias
Chief Executive Officer and
Chairman of the Board
Date 5/11/99 /S/ James D. Calaway
- ----------------------- ------------------------------
James D. Calaway
Chief Operations Officer and
President and Director
Date 5/11/99 /S/ Michael G. Long
- ----------------------- -------------------------------
Michael G. Long
Senior Vice President and
Chief Financial Officer
Date 5/11/99 /S/ Brian C. Baumler
- ----------------------- -------------------------------
Brian C. Baumler
Controller and Treasurer
21
EXHIBIT 4.5
EDGE PETROLEUM CORPORATION
COMMON STOCK SUBSCRIPTION AGREEMENT
April 30, 1999
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 Authorization and Sale of Common Stock ........ 1
1.1 Authorization ........................................... 1
1.2 Sale of Securities ................................. 1
SECTION 2 Closing Date; Payment and Delivery ................. 1
2.1 Closing Date ........................................... 1
2.2 Payment and Delivery .................................. 1
SECTION 3 Representations and Warranties of the Company .... 2
3.1 Organization .......................................... 2
3.2 Capitalization ............................................ 3
3.3 Authorization ............................................ 3
3.4 Subsidiaries ............................................ 3
3.5 No Conflict ............................................ 3
3.6 Accuracy of Reports ................................... 4
3.7 Registration Rights ................................... 4
3.8 Governmental Consents, etc. ........................... 4
3.9 Litigation .......................................... 4
3.10 Investment Company.......................................... 4
3.11 Financial Statements. ................................... 4
3.12 Pension Plans. ............................................ 5
3.13 Environmental Condition ................................... 5
3.14 Business.................................................... 6
3.15 Gas Contracts ............................................ 6
3.16 Patents, Trademarks and Other Intangible Assets ......... 6
3.17 Title to Properties; Liens and Encumbrances................. 7
3.18 Reserve Report ......................................... 8
3.19 Taxes ................................................... 8
SECTION 4 Representations and Warranties of the Purchasers .. 9
4.1 Investment .......................................... 9
4.2 Accredited Investor ................................. 10
4.3 Authority .......................................... 10
4.4 Government Consents, etc.................................... 10
4.5 Investigation; No General Solicitation .................. 10
4.6 Short Selling ............................................ 11
4.7 Affiliate Status............................................ 11
SECTION 5 Conditions to Obligations of the Purchasers ....... 11
5.1 Conditions to Obligations of the Purchasers ................ 11
SECTION 6 Conditions to Obligations of Company .............. 12
6.1 Conditions to Obligations of Company ................. 12
SECTION 7 Definitions .................................. 12
7.1 Certain Definitions .................................. 12
SECTION 8 Covenants ................................ 14
8.1 Registration Rights .................................. 14
8.2 Disposition ........................................... 20
SECTION 9 Miscellaneous .................................. 21
9.1 Termination of Agreement ................................... 21
9.2 GOVERNING LAW .......................................... 21
9.3 Survival; Reliance .................................. 21
9.4 Successors and Assigns .................................. 21
9.5 Notices and Dates ........................................... 21
9.6 Specific Performance .................................. 22
9.7 Further Assurances .................................. 22
9.8 Counterparts ........................................... 22
9.9 Severability ........................................... 22
9.10 Captions .................................................... 23
9.11 Public Statements ........................................... 23
9.12 Brokers .................................................... 23
9.13 Costs and Expenses .................................. 23
9.14 No Third-Party Rights .................................. 23
9.15 Entire Agreement; Amendment .......................... 23
Exhibits
Exhibit A Schedule of Purchasers
Exhibit B Warrant Agreement
Exhibit C Schedule of Exceptions
Exhibit D Investor Questionnaire
2
<PAGE>
COMMON STOCK SUBSCRIPTION AGREEMENT
THIS COMMON STOCK SUBSCRIPTION AGREEMENT (the "Agreement") is made as
of April 30, 1999, by and among EDGE PETROLEUM CORPORATION, a Delaware
corporation (the "Company"), and those persons set forth on Exhibit A
(collectively the "Purchasers" and each individually a "Purchaser").
SECTION 1
Authorization and Sale of Common Stock
1.1 Authorization. The Company has authorized the sale and issuance of
up to 1,500,000 shares of its Common Stock, $.01 par value per share (the
"Common Stock") and up to 450,000 warrants to purchase Common Stock (the
"Warrants") and 450,000 shares of Common Stock to be issued pursuant to the
Warrants.
1.2 Sale of Securities. Subject to the terms and conditions hereof, the
Company will issue and sell to the Purchasers and the Purchasers severally will
buy from the Company the number of shares of Common Stock (the "Shares") in the
respective aggregate amounts set forth opposite each Purchaser's name on Exhibit
A (together with, in the case of each such Share, .3 of a Warrant for the
purchase of a share of Common Stock) at a per share purchase price set forth on
Exhibit A; provided that no fractional Warrants or Warrants for fractional
shares shall be issued and the respective amounts of Warrants being so purchased
in tandem with the Shares are set forth opposite each Purchaser's name on
Exhibit A. Each Warrant entitles the holder to purchase one share of Common
Stock and shall be in the form attached to the warrant agreement (the "Warrant
Agreement") set forth in Exhibit B. The Shares and the Warrants are together
referred to herein as "Securities."
SECTION 2
Closing Date; Payment and Delivery
2.1 Closing Date. The closing under this Agreement with respect to the
sale of the Securities pursuant to Section 1.2 hereof shall take place in
Houston, Texas at 11:00 a.m. (Houston time) on May 6, 1999 or at such other
times, dates and places upon which the Company and the Purchasers shall mutually
agree (the date of the Closing is hereinafter referred to as the "Closing
Date"). The Company may make individual and different arrangements separately
with each Purchaser as to Closing, including with respect to delivery of the
Shares and Warrants and transmittal of purchase price.
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2.2 Payment and Delivery. At the Closing, each Purchaser shall transmit
the aggregate purchase price set forth on Exhibit A opposite that Purchaser's
name in immediately available funds by wire transfer to the Company. At the
Closing the Company will deliver to the Purchasers certificates representing the
Shares and the Warrants. The certificates for Shares shall be subject to a
legend restricting transfer under the Securities Act of 1933, as amended (the
"Securities Act"), and referring to restrictions on transfer herein, such legend
to be substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
STATE SECURITIES LAW. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AS TO
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION THAT SUCH REGISTRATION IS NOT
REQUIRED AND THAT ANY PROSPECTUS DELIVERY REQUIREMENTS ARE NOT APPLICABLE. THE
SHARES WERE PURCHASED UNDER AN AGREEMENT THAT INCLUDES ADDITIONAL RESTRICTIONS
ON THEIR TRANSFER AND COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
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The Shares and the Warrants may also include any legend required under the laws
of any state or other jurisdiction. The certificates for Warrants and shares of
Common Stock issuable upon exercise of the Warrants (the "Warrant Shares") will
include such legend as is specified in the Warrant Agreement.
SECTION 3
Representations and Warranties of the Company
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit C, the Company hereby represents and warrants to the Purchasers as
follows:
3.1 Organization. The Company is a corporation duly organized and
validly existing under the laws of the State of Delaware and is in good standing
under such laws. The Company has requisite corporate power and authority to own,
lease and operate its properties and assets, and to carry on its business as
presently conducted and as proposed to be conducted. The Company is qualified to
do business as a foreign corporation in each jurisdiction in which the ownership
of its property or the nature of its business requires such qualification,
except where failure to so qualify would not have a material adverse effect on
the Company and its Subsidiaries (as defined herein), taken as a whole (a
"Material Adverse Effect"). As used in this Agreement, the word "Subsidiary"
means any corporation or other organization, whether incorporated or
unincorporated, of which the Company directly or indirectly owns or controls at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization, or any organization of which such party is a general partner.
3.2 Capitalization. The authorized capital stock of the Company
consists of 25,000,000 shares of Common Stock, $.01 par value per share, of
which 7,770,302 shares were issued and outstanding as of April 5, 1999, and
5,000,000 shares of Preferred Stock, $.01 par value per share, no shares of
which are issued and outstanding as of the date hereof. All such issued and
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable. As of December 31, 1998, the Company had
1,200,000 shares of Common Stock reserved for issuance under its Incentive Plan
and options to purchase 680,133 shares of Common Stock and 248,384 shares of
restricted Common Stock have been granted and are outstanding under its
Incentive Plan. Options for the purchase of an additional 48,922 shares and
200,000 shares of Common Stock are also outstanding and were issued to James D.
Calaway and John Elias, respectively. Except as described in this Agreement,
there are no other options, warrants, conversion privileges or other contractual
rights presently outstanding to purchase or otherwise acquire any authorized but
unissued shares of the Company's capital stock or other securities.
3.3 Authorization. The Company has all corporate right, power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance of this Agreement by the Company, the authorization, sale,
issuance and delivery of Securities and the Warrant Shares and the performance
of the Company's obligations hereunder has been taken. This Agreement has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy. Upon the issuance and delivery of the Shares as contemplated
by this Agreement, the Shares will be validly issued, fully paid and
nonassessable. Upon the issuance and delivery of the Warrant Shares upon
exercise of the Warrants in accordance with the Warrant Agreement, the Warrant
Shares will be validly issued, fully paid and nonassessable. The issuance and
sale of the Shares contemplated hereby and the Warrant Shares upon conversion of
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the Shares will not give rise to any preemptive rights or rights of first
refusal on behalf of any person.
3.4 Subsidiaries. Each Subsidiary is a corporation or partnership duly
organized and validly existing under the laws of its jurisdiction of
incorporation or organization and is in good standing under such laws. Each
Subsidiary has the requisite corporate or partnership power and authority to
own, lease and operate its properties and assets, and to carry on its business
as presently conducted and as proposed to be conducted. Each Subsidiary is duly
qualified to do business as a foreign corporation or partnership in each
jurisdiction in which the ownership of its property or the nature of its
business requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
3.5 No Conflict. Subject to compliance with such filings as may be
required to be made with the Securities and Exchange Commission (the "SEC"), any
state or foreign securities regulatory authority, and the Nasdaq National Market
System ("Nasdaq"), the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not result in any
violation of, or default (with or without notice or lapse of time, or both), or
give rise to a right of termination, cancellation or acceleration of any
material obligation or to a loss of a material benefit, under, any provision of
the Restated Certificate of Incorporation or Bylaws of the Company or any
mortgage, indenture, lease or other agreement or instrument, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or a Subsidiary, its properties or assets, the effect of which would
have a Material Adverse Effect on the financial condition, results of operation
or prospects of the Company and its Subsidiaries taken as a whole, or materially
impair or restrict the Company's power to perform its obligations as
contemplated hereby.
3.6 Accuracy of Reports. All reports required to be filed by the
Company since the beginning of the Company's current fiscal year under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), copies of
which have been furnished to the Purchasers (collectively, the "Reports"), have
been duly filed with the SEC, complied at the time of filing, in all material
respects with the requirements of their respective forms, and, except to the
extent updated or superseded by any materials supplied to the Purchasers or any
subsequently filed report, were complete and correct in all material respects as
of the dates at which the information was furnished, and contained (as of such
dates) no untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
3.7 Registration Rights. Except as set forth in this Agreement, the
Company is not under any obligation to register any of its presently outstanding
securities or any of its securities which may hereafter be issued.
3.8 Governmental Consents, etc. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the execution and delivery of
this Agreement, the offer, sale or issuance of the Shares, or the consummation
of any other transaction contemplated hereby, except such filings as may be
required to be made with the SEC and Nasdaq and with any state or foreign blue
sky or securities regulatory authority.
3.9 Litigation. There is no pending or, to the best of the Company's
knowledge, threatened lawsuit, administrative proceeding, arbitration, labor
dispute or governmental investigation ("Litigation") to which the Company or a
Subsidiary is a party or by which any material portion of its assets taken as a
whole may be bound, and which Litigation if adversely determined would have a
Material Adverse Effect; provided that the disclosure of litigation on Exhibit C
shall not be deemed an admission that such litigation is material.
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3.10 Investment Company. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the SEC thereunder.
3.11 Financial Statements. The audited consolidated balance sheet of
the Company at December 31, 1998, and the related audited consolidated
statements of operations, cash flows, and stockholders' equity of the Company
for the fiscal year then ended, copies of which have been furnished to
Purchasers, fairly present the financial condition of the Company at such dates
and the results of the operations of the Company for the periods ended on such
dates, and such consolidated balance sheets and consolidated statements of
operations, cash flows, and stockholders' equity were prepared in accordance
with United States generally accepted accounting principles ("GAAP") (and in
compliance with the regulations promulgated by the SEC). Since December 31,
1998, no event has occurred that would have a Material Adverse Effect except as
set forth in the Reports or on the exhibits or schedules hereto.
3.12 Pension Plans. All Plans (as defined herein) are in compliance
with all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended from time to time ("ERISA") and the Internal Revenue Code of
1986, as amended, and any successor statute (the "Code"), except to the extent
any noncompliance would not have a Material Adverse Effect. No Termination Event
(as defined herein) has occurred with respect to any Plan. No "accumulated
funding deficiency" (as defined in Section 302 of ERISA) has occurred with
respect to any Plan. Neither the Company nor any member of the Controlled Group
(as defined herein) has had a complete or partial withdrawal from any
Multiemployer Plan (as defined herein) for which there is any withdrawal
liability that could reasonably be expected to have a Material Adverse Effect.
As used in this Section, "Controlled Group" shall mean all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company, are treated
as a single employer under Section 414 of the Code; "Multiemployer Plan" shall
mean a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA; "Plan"
shall mean any employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Company or any member of the Controlled Group
and covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code; and "Termination Event" shall mean (a) a
Reportable Event (as defined in Title IV of ERISA) described in Section 4043 of
ERISA and the regulations issued thereunder (other than a Reportable Event not
subject to the provision for 30-day notice to the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its functions under ERISA
(the "PBGC") under such regulations), (b) the withdrawal of the Company from a
Plan during a plan year in which it was a "substantial employer" as defined in
Section 4001(a) (2) of ERISA, (c) the filing of a notice of intent to terminate
a Plan or the treatment of a Plan amendment as a termination under Section
4041(c) of ERISA, (d) the institution of proceedings to terminate a Plan by the
PBGC, or (e) any other event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan. As of the most recent valuation date applicable thereto,
neither the Company nor any member of the Controlled Group would become subject
to any liability under ERISA if the Company or any member of the Controlled
Group has received notice that any Multiemployer Plan is insolvent or in
reorganization.
3.13 Environmental Condition.
(a) Permits, Etc. The Company and the Subsidiaries (i) have
obtained all environmental permits necessary for the ownership and operation of
their properties and the conduct of their businesses, except where such failure
to obtain could not reasonably be expected to have a Material Adverse Effect;
(ii) are in compliance with all terms and conditions of such environmental
permits and with all other requirements of applicable environmental laws, except
where such failure to comply could not reasonably be expected to have a Material
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Adverse Effect; (iii) have not received notice of any violation or alleged
violation of any environmental law or environmental permit; and (iv) are not
subject to any actual or contingent environmental claim which could reasonably
be expected to have a Material Adverse Effect.
(b) Certain Liabilities. To the Company's best knowledge, none
of the present or previously owned or operated properties of the Company or of
any of its present or former Subsidiaries, wherever located, (i) has been placed
on or proposed to be placed on the National Priorities List, the Comprehensive
Environmental Response Compensation Liability Information System list, or their
state or local analogs; (ii) is subject to a lien, arising under or in
connection with any environmental laws, which could reasonably be expected to
have a Material Adverse Effect; or (iii) has been the site of any release of
hazardous substances or hazardous wastes from present or past operations which
has caused at the site or at any third-party site any condition that has
resulted in or could reasonably be expected to result in the need for Response
(as defined in the Comprehensive Environmental Response Compensation Liability
Act or other environmental law) that would have a Material Adverse Effect.
3.14 Business. The Company and the Subsidiaries have all franchises,
permits, licenses, patents and other rights and privileges necessary to permit
them to own their property and conduct their business, except for those, the
non-obtainment of which would not reasonably be expected to have a Material
Adverse Effect. The Company and the Subsidiaries manage and operate their
business in material compliance with all applicable legal requirements and in
accordance with good industry practices, except where such failure to manage or
operate would not reasonably be expected to have a Material Adverse Effect.
3.15 Gas Contracts. Neither the Company nor any Subsidiary is, as of
the date hereof, (a) obligated in any material respect by virtue of any
prepayment made under any contract containing a "take-or-pay" or "prepayment"
provision or under any similar agreement to deliver hydrocarbons produced from
or allocated to any of the Company's consolidated oil and gas properties at some
future date without receiving full payment therefor at the time of delivery, and
(b) has not produced gas, in any material amount, subject to, and none of the
Company's consolidated oil and gas properties is subject to, balancing rights of
third parties or subject to balancing duties under governmental requirements,
except as to such matters for which the Company has established monetary
reserves adequate in amount in accordance with GAAP to satisfy such obligations
and has segregated such reserves from its other accounts.
3.16 Patents, Trademarks and Other Intangible Assets. The Company and
its Subsidiaries own or possess adequate licenses or other valid rights to use
all patents, patent rights, trademarks, trademark rights and proprietary
information used or held for use in connection with their respective businesses
as currently being conducted, except where the failure to own or possess such
licenses and other rights would not have, individually or in the aggregate, a
Material Adverse Effect , and there are no assertions or claims challenging the
validity of any of the foregoing which are likely to have, individually or in
the aggregate, a Material Adverse Effect. The conduct of the Company's and its
Subsidiaries' respective businesses as currently conducted does not conflict
with any patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights or copyrights of others in any way likely to have,
individually or in the aggregate, a Material Adverse Effect. There is no
material infringement of any proprietary right owned by or licensed by or to the
Company or any of its Subsidiaries which is likely to have, individually or in
the aggregate, a Material Adverse Effect.
3.17 Title to Properties; Liens and Encumbrances. Except pursuant to
the Amended and Restated Credit Agreement to which the Company, Edge Petroleum
Exploration Company and First National Bank of Chicago are parties dated April
1, 1998, as amended (the "Credit Agreement") and as would not have, individually
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or in the aggregate, a Material Adverse Effect, the Company and its Subsidiaries
have defensible title to all of the properties and assets, both real and
personal, tangible and intangible, that they purport to own, including the
properties and assets reflected in the Reports and including the lands and
leases and associated net revenue interests reflected in the Reserve Reports (as
defined herein), other than dispositions or expirations since the date thereof,
and they are not subject to any mortgage, pledge, lien, security interest,
conditional sale agreement, encumbrance or charge ("Liens") except routine
statutory liens securing liabilities not yet due and payable and minor liens,
encumbrances, restrictions, exceptions, reservations, limitations and other
imperfections that do not materially detract from the value of the specific
asset affected or the present use of such asset and except (A) Liens for taxes
not yet delinquent or, if delinquent, that are being contested in good faith in
the ordinary course of business, (B) statutory Liens (including materialmen's,
mechanic's, repairmen's, landlord's, employee's operator's and other similar
liens) arising in the ordinary course of business to secure payments not yet
delinquent or, if delinquent, that are being contested in good faith in the
ordinary course of business, (C) such easements, restrictions, reservations or
other encumbrances, as well as imperfections or irregularities of title, if any,
as do not create a Material Adverse Effect, (D) obligations or duties to any
municipality or public authority with respect to any franchise, grant, license
or permit and all applicable laws, rules, regulations and orders of any
governmental authority, (E) all lessors' royalties, overriding royalties, net
profits interests, production payments, carried interests, reversionary
interests and other burdens on or deductions from the proceeds of production
that do not operate to (x) reduce the net revenue interest of the Company below
that purported to be owned by the Company as set forth in the Reserve Report,
(y) increase the proportionate share of costs and expenses of leasehold
operations attributable to or to be borne by the working interest of the Company
above that purported to be owned by the Company as set forth in the Reserve
Report without a proportionate increase in the net revenue interest of the
Company or (z) increase the working interest of the Company above that purported
to be owned by the Company as set forth in the Reserve Report without a
proportionate increase in the net revenue interest of the Company, (F) the terms
and conditions of (including certain Lien rights contained in and provided by)
joint operating agreements and other oil and gas contracts, (G) all rights to
consent by, required notices to, and filings with or other actions by
governmental or tribal entities, if any, in connection with the change of
ownership or control of an interest in federal, state, tribal or other domestic
governmental oil and gas leases, if the same are customarily obtained subsequent
to such change of ownership or control, but only insofar as such consents,
notices, filings and other actions relate to the transactions contemplated by
this Agreement, (H) any preferential purchase rights, (I) required third party
consents to assignment, (J) conventional rights of reassignment prior to
abandonment, (K) the terms and provisions of oil and gas leases, unit
agreements, pooling agreements, communication agreements and other documents
creating interests comprising the oil and gas properties, insofar and only
insofar as such terms and provisions do not operate to (x) reduce the net
revenue interest of the Company below that purported to be owned by the Company
as set forth in their Reserve Report, (y) increase the proportionate share of
costs and expenses of leasehold operations attributable to or to be borne by the
working interest of the Company above that purported to be owned by the Company
as set forth in the Reserve Report without a proportionate increase in the net
revenue interest of the Company or (z) increase the working interest of the
Company above that purported to be owned by the Company, and (L) calls on
production under existing agreements.
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3.18 Reserve Report. A true and correct copy of the estimates of the
reserves of the Company supplied by Company to Ryder Scott Company, independent
petroleum engineers (the "Petroleum Engineers"), dated December 31, 1998 (the
"Reserve Report"), has been provided to the Purchasers. All production history
data, data on operating cost history, the Company's working interest and net
revenue interest information contained in the Reserve Report is true and correct
in all material respects as of the date of such report, it being understood that
the Company does not warrant quantity of reserves, rate of recovery, productive
capacity, future prices, future operating costs, or other similar matters that
cannot be determined with certainty nor does it represent matters with respect
to title other than as specifically provided in Section 3.17.
3.19 Taxes.
(a The Company and its Subsidiaries have (i) duly filed (or
there has been filed on their behalf) on a timely basis with appropriate
governmental authorities all tax returns, statements, reports, declarations,
estimates and forms required to be filed by them, on or prior to the date
hereof, except to the extent that any failure to file would not have,
individually or in the aggregate, a Material Adverse Effect and (ii) duly paid
or deposited in full on a timely basis or made adequate provisions in accordance
with generally accepted accounting principles (or there has been paid or
deposited or adequate provision has been made on their behalf) for the payment
of all taxes required to be paid by the Company or its Subsidiaries for all
periods ending through the date hereof, except to the extent that any failure to
pay or deposit or make adequate provision for the payment of such taxes would
not have, individually or in the aggregate, a Material Adverse Effect.
(b (i) Except to the extent being contested in good faith, all
material deficiencies asserted as a result of examinations of the Company and
its Subsidiaries by any taxing authority have been paid, fully settled or
adequately provided for in the financial statements contained in the Reports;
(ii) except as adequately provided for in the Reports, no material federal,
state or local income or franchise tax audits or other administrative
proceedings or court proceedings are presently pending with regard to any
federal, state or local income or franchise taxes for which the Company or any
of its Subsidiaries would be liable, and no material deficiency for any such
income or franchise taxes has been proposed, asserted or assessed pursuant to
such examination against the Company or any of its Subsidiaries by any federal,
state or local taxing authority with respect to any period; (iii) as of the date
hereof, neither the Company nor any of its Subsidiaries has granted any
requests, agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any taxes with respect to any tax
returns of the Company or any of its Subsidiaries; and (iv) neither the Company
nor any of its Subsidiaries is a party to any tax sharing or tax indemnity
agreement.
(c Neither the Company nor any of its Subsidiaries has
executed or entered into (or prior to the close of business on the Closing Date
will execute or enter into) with the IRS or any taxing authority (i) any
agreement or other document extending or having the effect of extending the
period for assessments or collection of any federal, state or local income or
franchise taxes for which the Company or any of its Subsidiaries would be liable
or (ii) a closing agreement pursuant to Section 7121 of the Code, or any
predecessor provision thereof or any similar provision of state or local income
tax law that relates to the assets or operations of the Company or any of its
Subsidiaries.
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SECTION 4
Representations and Warranties of the Purchasers
Each Purchaser hereby represents and warrants to the Company as
follows:
4.1 Investment. The Purchaser is acquiring the Shares for investment
for its own account, not as a nominee or agent, and not with a view to, or for
resale in connection with, any distribution thereof. The Purchaser acknowledges
the Company's obligation to file a registration statement with respect to the
Shares as set forth in Section 8 of this Agreement, the effectiveness of which
registration statement may be required for the resale of the Shares. The
Purchaser has not offered or sold any portion of the Shares to be acquired by it
and has no present intention of reselling or otherwise disposing of any portion
of such Shares either currently or after the passage of a fixed or determinable
period of time or upon the occurrence or nonoccurrence of any predetermined
event or circumstance, and in particular the Purchaser has no current intention
to resell the Registrable Securities under such registration statement nor would
it have such intention if such registration statement were effective as of the
date of purchase. The Purchaser understands that investment in the Shares is
subject to a high degree of risk and that the Shares have not been registered
under the Securities Act, by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of Purchaser's investment intent and the accuracy
of the Purchaser's representations as expressed herein. The Purchaser
acknowledges and understands that it must bear the economic risk of this
investment for an indefinite period of time because the Shares must be held
indefinitely until subsequently registered under the Securities Act and
applicable state and other securities laws or unless an exemption from
registration is available. The Purchaser understands that any transfer agent of
the Company will be issued stop-transfer instructions with respect to the Shares
unless such transfer is subsequently registered under the Securities Act and
applicable state and other securities laws or unless an exemption from such
registration is available. The Purchaser has experience in analyzing and
investing in entities like the Company, it can bear the economic risk of its
investment, including the full loss of its investment, and by reason of its
business or financial experience or the business or financial experience of its
professional advisors has the capacity to evaluate the merits and risks of its
investment and protect its own interest in connection with the purchase of the
Shares from the Company at the Closing. The Purchaser is a resident of the State
set forth opposite such Purchaser's name on Exhibit A. If other than an
individual, the Purchaser was not organized for the purpose of acquiring the
Shares.
4.2 Accredited Investor. It is an "accredited investor" as such term is
defined in SEC Regulation D. It has accurately completed the questionnaire
attached hereto as Exhibit D.
4.3 Authority. The Purchaser has all right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Purchaser and
constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy. Subject to compliance
with such filings as may be required to be made with the SEC and Nasdaq, the
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation of any obligation under any provision of the charter documents,
limited liability company agreement, partnership agreement or Bylaws, if any, of
the Purchaser or any mortgage, indenture, lease or other agreement or
instrument, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Purchaser.
4.4 Government Consents, etc. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Purchaser is required in connection with the valid execution and
delivery of this Agreement, the purchase of the Shares, or the consummation of
any other transaction contemplated hereby, except such filings as may be
required to be made with the SEC.
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4.5 Investigation; No General Solicitation. The Purchaser has received
a copy of the Reports. The Purchaser has had a reasonable opportunity to ask
questions relating to and otherwise discuss the terms and conditions of the
offering and the other information set forth in the Reports and this Agreement
and the Company's business, management and financial affairs with the Company's
management, customers and other parties, and the Purchaser has received
satisfactory responses to the Purchaser's inquiries. The Purchaser has relied
solely upon the information provided by the Company in the Reports and this
Agreement in making the decision to invest in the Shares. To the extent
necessary, the Purchaser has retained, at the expense of the Purchaser, and
relied upon appropriate professional advice regarding the investment, tax and
legal merits and consequences of this Agreement and its purchase of the Shares
hereunder. The Purchaser disclaims and disavows any reliance upon Raymond James
& Associates Inc. in connection with the Purchaser's purchase of Shares and
Warrants. The Purchaser has relied solely on its own independent investigation
before deciding to enter into the purchase of Shares and Warrants contemplated
hereby.
4.6 Short Selling. Purchaser has not prior to the date hereof directly
or indirectly, through related parties, affiliates or otherwise (a) sold "short"
or "short against the box" (as those terms are generally understood) any equity
security of the Company; or (b) otherwise engaged in any transaction which
involves hedging of its position in, or reducing of its economic exposure to,
the securities of the Company, and it will not until the date the Registration
Statement (as defined herein) is declared effective by the SEC take any such
actions described in (a) or (b) of this Section 4.6.
4.7 Affiliate Status. Unless the Purchaser has otherwise notified the
Company in writing, the Purchaser is not, and has not been within the 90 days
prior to the Closing Date, an officer, director, employee, agent or affiliate of
the Company, or, to the Purchaser's knowledge, any other Purchaser. Unless the
Purchaser has otherwise notified the Company in writing, the Purchaser is not a
broker or dealer of securities, an employee, officer or director of the Company
nor prior to the Closing Date is the Purchaser the beneficial owner of 5% or
more of the Common Stock of the Company.
SECTION 5
Conditions to Obligations of the Purchasers
5.1 Conditions to Obligations of the Purchasers. The Purchasers'
obligation to purchase the Shares at the Closing is, at the option of each
Purchaser, which may waive any such conditions to the extent permitted by law,
subject to the fulfillment on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties Correct. The
representations and warranties made by the Company in Section 3 hereof shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date (except for
representations and warranties made as of a specified date, which need to be
true and correct in all material respects only as of the specified date), and
the foregoing shall be certified in writing by the Company.
(b) Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to such
purchase shall have been performed or complied with in all material respects,
and the foregoing shall be certified in writing by the Company.
(c) No Legal Order Pending. There shall not then be in effect
any legal or other order enjoining or restraining the transactions contemplated
by this Agreement.
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(d) No Law Prohibiting or Restricting Such Sale. There shall
not be in effect any law, rule or regulation prohibiting or restricting such
sale or requiring any consent or approval of any person which shall not have
been obtained to issue the Shares (except as otherwise provided in this
Agreement).
SECTION 6
Conditions to Obligations of Company
6.1 Conditions to Obligations of Company. The Company's obligation to
sell and issue the Shares at the Closing is, at the option of the Company, which
may waive any such conditions to the extent permitted by law, subject to the
fulfillment on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties Correct. The
representations and warranties made by the Purchasers in Section 4 hereof shall
be true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date (except for
representations and warranties made as of a specified date, which need to be
true and correct in all material respects only as of the specified date), and
the foregoing shall be certified in writing by each Purchaser.
(b) Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchasers on or prior to the
Closing Date shall have been performed or complied with in all material
respects, and the foregoing shall be certified in writing by each Purchaser.
(c) No Legal Order Pending. There shall not then be in effect
any legal or other order enjoining or restraining the transactions contemplated
by this Agreement.
(d) No Law Prohibiting or Restricting Such Sale. There shall
not be in effect any law, rule or regulation prohibiting or restricting such
sale or requiring any consent or approval of any person which shall not have
been obtained to issue the Shares (except as otherwise provided in this
Agreement).
(e) Nasdaq Approval Obtained. The approval by Nasdaq of the
transactions contemplated by this Agreement shall have been obtained (which
approval confirms that the transaction can be consummated without shareholder
approval).
SECTION 7
Definitions
7.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Affiliate" shall mean, with respect to any person, any
other person controlling, controlled by or under direct or indirect common
control with such person (for the purposes of this definition "control," when
used with respect to any specified person, shall mean the power to direct the
management and policies of such person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the
foregoing).
(b) "Business Day" shall mean a day Monday through Friday on
which banks are generally open for business in Texas.
(c) "Holders" shall mean the Purchasers and any person holding
Registrable Securities to whom the rights under Section 8.1 have been
transferred in accordance with Section 8.1(h) hereof.
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(d) "Person" shall mean any person, individual, corporation,
partnership, trust or other nongovernmental entity or any governmental agency,
court, authority or other body (whether foreign, federal, state, local or
otherwise).
(e) The terms "register," "registered" and "registration"
refer to the registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
(f ) "Registrable Securities" shall mean (A) the Shares, (B)
the Warrants and the Warrant Shares, and (C) any shares of Common Stock issued
as (or issuable upon the conversion of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to or in
replacement of the Shares; provided, however, that securities shall only be
treated as Registrable Securities if and only for so long as they are held by a
Holder or a permitted transferee pursuant to subsection 8.1(h) and (I) have not
been disposed of pursuant to a registration statement declared effective by the
SEC, (II) have not been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale, or (III) such Holder may sell under Rule 144 under
the Securities Act in a three-month period all Registrable Securities then held
by such Holder.
(g) "Registration Expenses" shall mean all expenses incurred
by the Company in complying with Section 8.1(a) hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and expenses of counsel for the Company, blue sky fees and
expenses (for a reasonable number of states) and the expense of any special
audits incident to or required by any such registration (but excluding the fees
of legal counsel for any Holder).
(h) "Registration Statement" shall have the meaning
ascribed to such term in Section 8.1(a).
(i) "Registration Period" shall have the meaning ascribed to
such term in Section 8.1(c).
(j) "Selling Expenses" shall mean all underwriting discounts
and selling commissions and similar fees applicable to the sale of Registrable
Securities and all fees and expenses of legal counsel for any Holder and all
transfer taxes.
SECTION 8
Covenants
8.1 Registration Rights.
(a) Registration. No later than 30 days following the Closing
Date, the Company will file a registration statement (the "Registration
Statement") on Form S-3 with the SEC and will use its reasonable best efforts
for such Registration Statement to be declared effective by the SEC. The Company
will use its reasonable best efforts to effect the registration, qualifications
or compliances (including, without limitation, the execution of any required
undertaking to file post-effective amendments, appropriate qualifications under
applicable blue sky or other state securities laws and appropriate compliance
with applicable securities laws, requirements or regulations) as may be so
reasonably requested and as would permit or facilitate the sale and distribution
of all Registrable Securities; provided that the Company shall not be obligated
to take any action to effect any such state registration, qualification or
compliance pursuant to this subsection 8.1(a) in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance unless the
Company is already subject to service or is required to qualify in such
jurisdiction, as the case may be, and except as may be required by the
Securities Act.
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(b) Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to subsection 8.1(a) shall be borne by the Company. All Selling
Expenses relating to the sale of securities registered by or on behalf of
Holders shall be borne by such Holders pro rata on the basis of the number of
securities so registered except to the extent such Selling Expense is
specifically attributable to one Holder, in which case it shall be borne by such
Holder.
(c) Registration Procedures. In the case of the registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will, upon reasonable request, inform each Holder as to the status
of such registration, qualification and compliance. At its expense the Company
will during such time as the Holder holds Registrable Securities:
(i) use its reasonable best efforts to keep
such registration, and any qualification or compliance under state
securities laws which the Company determines to obtain, effective until at
least the second anniversary of the Closing Date or until the Holders have
completed the distribution described in the registration statement relating
thereto, whichever first occurs;
(ii) furnish such number of prospectuses and
other documents incident thereto as the Holders from time to time may
reasonably request;
(iii) use its reasonable best efforts to register
or qualify such Registrable Shares under such other securities or blue sky laws
of such jurisdictions as any Holder reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition of the Registrable
Securities owned by such Holder in such jurisdictions; provided, that the
Company will not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 8.1(c), or(B subject itself to income taxation in any such jurisdiction;
(iv) notify each Holder of such Registrable
Securities, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such Holder, the
Company will prepare a supplement or amendment to such prospectus so that,
as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or
omit to state any fact necessary to make the
statements therein not misleading;
(v) cause all such Registrable Securities
to be listed or quoted on each securities exchange or automated quotation
system on which similar securities issued by the Company are then
listed or quoted; and
(vi) appoint a transfer agent and registrar for
all such Registrable Securities not later than the effective date of such
Registration Statement.
The period of time during which the Company is required hereunder to keep the
Registration Statement effective is referred to herein as "the Registration
Period."
(d) Delay of Registration. The Holders shall have no right to
take any action to restrain, enjoin or otherwise delay any registration pursuant
to subsection 8.1(a) hereof as a result of any controversy that may arise with
respect to the interpretation or implementation of this Agreement.
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(e) Indemnification.
(i) To the extent permitted by law, the Company
will indemnify each Holder and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which any
registration, qualification or compliance has been effected pursuant to this
Agreement, and each person who controls any underwriter within the meaning of
Section 15 of the Securities Act (each an "Indemnitee"), against all expenses,
claims, losses, damages and liabilities (or actions in respect thereof),
ncluding any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement of a
material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereof, incident to
any such registration, qualification or compliance, or based on any omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Indemnitee for
reasonable legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action; provided that the Company will not be liable to any Indemnitee in any
such case to the extent that any untrue statement or omission is made in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by or on behalf of such Indemnitee and
stated to be specifically for use in preparation of such registration statement,
prospectus, offering circular or other document; and provided that the Company
will not be liable in any such case where the expense, claim, loss, damage or
liability arises out of or is related to the failure of the Holder to comply
with the covenants and agreements contained in this Agreement respecting sales
of Registrable Securities; and, provided, further, that the indemnity with
respect to any preliminary prospectus shall not apply to the extent that any
such claim, loss, damage or liability results from the fact that a current copy
of the prospectus was not sent or given to the person asserting any such claims,
losses, damages or liabilities at or prior to the written confirmation of the
sale of the Registrable Securities confirmed to such person if such current copy
of the prospectus would have cured the defect giving rise to such claim, loss,
damage or liability.
(ii) To the extent permitted by law, each Holder
will severally, if Registrable
Securities held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company and each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereof, incident to any such registration,
qualification or compliance, or based on any omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any failure by a Holder to comply with the covenants
or agreements contained in this Agreement respecting the Registrable Securities
and will reimburse the Company, such directors, officers, employees, partners,
legal counsel and accountants for reasonable legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement or omission is made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by or on behalf of the Holder and stated to be
specifically for use in preparation of such registration statement, prospectus,
offering circular or other document; provided that the indemnity with respect to
any preliminary prospectus shall not apply to the extent that such claim, loss,
damage or liability results from the fact that a current copy of the prospectus
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was not sent or given to the person asserting any such claim, loss, damage or
liability at or prior to the written confirmation of the sale of the Registrable
Securities confirmed to such person if such current copy of the prospectus would
have cured the defect giving rise to such loss, claim, damage or liability.
Notwithstanding the foregoing, in no event shall a Holder be liable for any such
claims, losses, damages or liabilities in excess of the proceeds received by
such Holder in the offering, except in the event of fraud by such Holder.
(iii) Each party entitled to indemnification under
this subsection 8.1(e) (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement, unless such failure is prejudicial to the
Indemnifying Party in defending such claim or litigation. An Indemnifying Party
shall not be liable for any settlement of an action or claim effected without
its written consent (which consent will not be unreasonably withheld).
(iv) If the indemnification provided for in
this subsection 8.1(e) is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
thereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(f ) Covenants of Holders.
(i) Each Holder agrees that, upon receipt of
any notice from the Company of the
happening of any event requiring the preparation of a supplement or amendment to
a prospectus relating to Registrable Securities so that, as thereafter delivered
to the Holders, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, each Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement contemplated by subsection 8.1(a) until its receipt of
copies of the supplemented or amended prospectus from the Company and, if so
directed by the Company, each Holder shall deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
ii) Each Holder severally agrees for a period of
time (not to exceed 90 days) from
the effective date of any registration (other than a registration effected
solely to implement an employee benefit plan) of securities of the Company for
any underwritten offering in which securities of the Company are sold (upon
request of the Company or of the underwriters managing any underwritten offering
to the Company's securities) not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any Registrable
Securities or any other stock of the Company held by such Holder, other than
shares of Registrable Securities included in such registration, without the
prior written consent of the Company or such underwriters, as the case may be;
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provided that this obligation is subject to the condition that all executive
officers and directors of the Company shall enter into similar agreements. Each
Holder agrees to suspend, upon request of the Company, any disposition of
Registrable Securities pursuant to the Registration Statement and prospectus
contemplated by subsection 8.1(a) during any period, not to exceed one 45-day
period per circumstance or development and not to exceed 90 days in any 12-month
period, when the Company determines in good faith that offers and sales pursuant
thereto should not be made by reason of the presence of material, undisclosed
circumstances or developments with respect to which the disclosure that would be
required in such a prospectus is premature, would have an adverse effect on the
Company or is otherwise inadvisable. Any such request by the Company shall be
held confidential by the Holder.
(iii) Each Holder agrees to notify the Company,
at any time when a prospectus
relating to the registration statement contemplated by subsection 8.1(a) is
required to be delivered by it under the Securities Act, of the occurrence of
any event relating to the Holder which requires the preparation of a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading
relating to the Holder, and each Holder shall promptly make available to the
Company the information to enable the Company to prepare any such supplement or
amendment. Each Holder also agrees that, upon delivery of any notice by it to
the Company of the happening of any event of the kind described in the next
preceding sentence of this subsection, the Holder will forthwith discontinue
disposition of Registrable Securities pursuant to such registration statement
until its receipt of the copies of the supplemental or amended prospectus
contemplated by this subsection, which the Company shall promptly make available
to each Holder and, if so directed by the Company, each Holder shall deliver to
the Company all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice.
(iv) Each Holder shall promptly furnish to the
Company such information regarding
such Holder and the distribution proposed by such Holder as the Company may
request in writing or as shall be required in connection with any registration,
qualification or compliance referred to in this Section 8.1. The Holder will
promptly keep the Company informed as to all sales of Registerable Securities
made under the Registration Statement and assist the Company in updating such
information in the Registration Statement and any prospectus supplement relating
thereto.
(v) (a) Each Holder hereby covenants with the
Company (1) not to make any sale of
the Shares without effectively causing the prospectus delivery requirements
under the Securities Act to be satisfied, and (2) if such Shares are to be sold
by any method or in any transaction other than on a national securities
exchange, in the over-the-counter market, on the Nasdaq, in privately negotiated
transactions, or in a combination of such methods, to notify the Company at
least five business days prior to the date on which the Purchaser first offers
to sell any such Shares.
(vi) Each Holder acknowledges and agrees that
the Registrable Securities sold
pursuant to the registration statement described in this Section are not
transferable on the books of the Company unless the stock certificate submitted
to the transfer agent evidencing such Shares is accompanied by a certificate
reasonably satisfactory to the Company to the effect that (A) the Registrable
Securities have been sold in accordance with such registration statement and (B)
the requirement of delivering a current prospectus has been satisfied.
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(vii) Each Holder agrees that it will not effect
any disposition of the Registrable
Securities that would constitute a sale within the meaning of the Securities Act
except as contemplated in the registration statement referred to in this Section
8.1. Each Holder agrees not to take any action with respect to any distribution
deemed to be made pursuant to such registration statement that constitutes a
violation of Regulation M under the Exchange Act or any other applicable rule,
regulation or law.
(g) Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which at any
time permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its reasonable best efforts to:
(i) make and keep public information available,
as those terms are understood and
defined in Rule 144 under the Securities Act, at all times;
(ii) file with the SEC in a timely manner all
reports and other documents required
of the Company under the Exchange Act; and
(iii) so long as a Holder owns any unregistered
Registrable Securities, furnish to
such Holder upon any reasonable request a written statement by the Company as to
its compliance with Rule 144 under the Securities Act, and of the Exchange Act,
a copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as such Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing a Holder to
sell any such securities without registration.
(h) Transfer of Registration Rights. The rights to cause the
Company to register Registrable Securities granted to the Holders by the Company
under subsection 8.1(a) may be assigned in full by a Holder to an Affiliate of
such Holder; provided that: (i) such transfer may otherwise be effected in
accordance with applicable securities laws; (ii) such Holder gives prior written
notice to the Company; and (iii) such transferee agrees to comply with the terms
and provisions of this Agreement including, without limitation, the restrictions
in Section 4.6 and such transfer is otherwise in compliance with this Agreement.
Except as specifically permitted by this paragraph (h), the rights of a Holder
with respect to Registrable Securities as set out herein shall not be
transferable to any other Person, and any attempted transfer shall cause all
rights of such Holder therein to be forfeited.
(i) Waivers and Amendments. With the written consent of the
Company and the Holders holding at least a majority of the Registrable
Securities (including Registrable Securities issuable pursuant to the Warrants),
any provision of this Section 8.1 may be waived (either generally or in a
particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely) or amended. Upon the effectuation of
each such waiver or amendment, the Company shall promptly give written notice
thereof to the Holders, if any, who have not previously received notice thereof
or consented thereto in writing.
8.2 Disposition. The Purchaser has not and will not make any offer,
sale or other transfer of the Shares by any means which would not comply with
applicable law or this Agreement or which would otherwise impose upon the
Company any obligation to satisfy any public filing or registration requirement.
The Purchaser understands and agrees that any disposition of the Shares in
violation of this Agreement shall be null and void, and that no transfer of the
Shares shall be made by the Company or the transfer agent for the Shares upon
the Company's stock transfer books or records unless and until there has been
compliance with the terms of this Agreement, the Securities Act, any applicable
state and foreign securities law and any other laws. The Purchaser will not sell
or transfer the Shares unless:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
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(b) it shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and it shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company that such disposition is exempt from registration of such shares under
the Securities Act or any applicable state, foreign or other securities laws.
The Purchaser will not transfer the Shares, other than pursuant to the
Registration Statement or in a transaction that complies with Rule 144, unless
the transferee makes the representations and warranties to the Company contained
in this Agreement and agrees to be bound by the restrictions on transfer
(including the registration provisions) contained herein to the same extent as
if it were the original Purchaser. Without limiting the generality of any
provision contained herein, at any time it owns Shares the Purchaser and each
transferee must and does agree that it and its respective Affiliates will comply
with all provisions of Section 4.6.
SECTION 9
Miscellaneous
9.1 Termination of Agreement. The Company may terminate its obligation
to perform or observe any of its covenants and agreements hereunder to any
Purchaser if such Purchaser violates in a material respect any of the material
covenants or agreements of the Purchaser under this Agreement, and a Purchaser
may terminate its obligations to perform or observe any of its covenants and
agreements hereunder if the Company violates or fails to perform in any material
respect any of the material covenants or agreements of the Company under this
Agreement to such Purchaser; provided, however, that neither the Company nor the
Purchaser, as the case may be, may terminate any of its obligations under this
Agreement pursuant to this sentence unless it shall have delivered written
notice of such default to the other party and such default shall not have been
cured within 30 days after the delivery of such notice.
9.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY
THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS ENTERED INTO SOLELY
BETWEEN RESIDENTS OF, AND TO BE PERFORMED ENTIRELY WITHIN, SUCH STATE.
9.3 Survival; Reliance. The representations and warranties in Sections
3 and 4 of this Agreement shall survive any investigation made by the Purchasers
or the Company for a period of one year after the Closing in question.
Thereafter, such representations and warranties shall expire and be of no
further force and effect, and no cause of action may be brought with respect to
any breach thereof unless a written notice specifying the nature and the amount
of the claims shall have been delivered by the Company or the Purchasers, as the
case may be, with respect thereto, on or before one year after the Closing Date.
Any representation or warranty contained herein may be relied upon by counsel to
the Company in connection with any opinion delivered in connection with the
transactions contemplated hereby.
9.4 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns, provided, however that the obligations of the Company pursuant to
Section 8.1 shall not survive (as obligations of the Company or any other
entity) a merger involving the Company, in which the Company is not the
surviving entity or following which the Company is a wholly owned subsidiary of
another entity. Except as otherwise provided in this Agreement, this Agreement
may not be assigned by a party without the prior written consent of the other
party except by operation of law, in which case the assignee shall be subject to
all of the provisions of this Agreement.
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9.5 Notices and Dates. Any notice or other communication given under
this Agreement shall be sufficient if in writing and will be effective as of (a)
the date of receipt if delivered by hand, by messenger or by courier, or by
Federal Express or similar delivery service, or transmitted by facsimile, to a
party at its address set forth below (or at such other address as shall be
designated for such purpose by such party in a written notice to the other party
hereto) or (b) three days after the date when the same shall have been posted by
registered mail, return receipt requested, in any post office in the United
States of America, postage prepaid and addressed to the party at such address:
(i) if to the Company:
Edge Petroleum Corporation
1111 Bagby, Suite 2100
Houston, Texas 77002
Attn: Chief Financial Officer
(Facsimile) (713) 654-7722
(ii) if to Purchasers, then to the addresses set forth at
Exhibit A.
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered personally, by messenger or by courier, or, if sent by facsimile, upon
confirmation of receipt.
9.6 Specific Performance. The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached and that such damage would not be compensable in money
damages and that it would be extremely difficult or impracticable to measure the
resultant damages. It is accordingly agreed that any party hereto shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof,
in addition to any other remedy to which it may be entitled at law or in equity,
and such party that is sued for breach of this Agreement expressly waives any
defense that a remedy in damages would be adequate and expressly waives any
requirement in an action for specific performance for the posting of a bond by
the party bringing such action.
9.7 Further Assurances. The parties hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments or
documents as any other party may reasonably request from time to time in order
to carry out the intent and purposes of this Agreement and the consummation of
the transactions contemplated hereby.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by fewer than all of the parties,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
9.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic impact of this Agreement on any party.
9.10 Captions. Headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be relied upon in
construing this Agreement. Use of any gender herein to refer to any person shall
be deemed to comprehend masculine, feminine and neuter unless the context
clearly requires otherwise.
9.11 Public Statements. The Purchasers severally agree not to issue any
public statement with respect to the Purchasers' investment or proposed
investment in the Company or the terms of any agreement or covenant between them
and the Company without the Company's prior written consent, except such
disclosures as may be required under applicable law or under any applicable
order, rule or regulation.
20
<PAGE>
9.12 Brokers. Except as otherwise disclosed by the parties to one
another, each of the Company and the Purchasers severally represents and
warrants to the others that it has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. Each of the Company and the Purchasers hereby
severally agrees to indemnify and hold harmless the others from and against all
fees, commissions or other payments owing to any such person or firm acting on
behalf of such Person hereunder.
9.13 Costs and Expenses. Each party hereto shall pay its own costs and
expenses incurred in connection herewith, including the fees of its counsel,
auditors and other representatives, whether or not the transactions contemplated
herein are consummated.
9.14 No Third-Party Rights. Nothing in this Agreement shall create or
be deemed to create any rights in any person or entity not a party to this
Agreement except for such rights as may exist by virtue of any contract or other
agreement existing on the date hereof.
9.15 Entire Agreement; Amendment. Except any confidentiality agreements
entered into by the Company and any Purchaser, this Agreement and the other
documents delivered pursuant hereto (including the Warrant Agreement) constitute
the full and entire understanding and agreement between the parties with regard
to the subject matter hereof and thereof and supersede all prior agreements and
understandings among the parties relating to the subject matter hereof. No party
shall be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein. Neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided that any provision of this Agreement, other than Section 8.1 (waivers
and amendments of which are governed by Section 8.1(i)), may be waived or
modified on behalf of all of the Purchasers with the consent of those Purchasers
owning two-thirds of the Shares purchased hereunder and that are still held (at
the time of such waiver or modification) by any Purchaser.
21
<PAGE>
Signature Page
241,379
-------------------------------
Number of Shares Subscribed For
72,414
--------------------------------
Number of Warrants Subscribed For
Special Situations Fund III, L.P.
---------------------------------------------------------------
Names(s) Exactly as to Appear on Stock and Warrant Certificates
/s/ David Greenhouse
- --------------------
Signature Signature (if purchasing jointly)
David Greenhouse
- ---------------------
Name Typed or Printed Name Typed or Printed
153 East 53rd
- -----------------
Residence Address Residence Address
New York, NY 10022
- ------------------------
City, State and Zip Code City, State and Zip Code
(212) 832-5300
- -------------------
Telephone--Business Telephone--Business
- --------------------
Telephone--Residence Telephone--Residence
13-3737427
- -----------------------------------------
Tax Identification or Social Security No.
Tax Identification or Social Security No.
NASD Affiliation or Association, if any:
If None, check here: |X|
Name in which securities should be issued: Special Situations Funds III, L.P.
----------------------------------
Dated: April 30, 1999
- ----------------------
This Common Stock Subscription Agreement is agreed to and accepted as
of April 30, 1999.
EDGE PETROLEUM CORPORATION
/s/ Michael G. Long
--------------------
By: Michael G. Long
Its: Senior Vice President
and Chief Financial Officer
22
<PAGE>
Signature Page
80,460
-------------------------------
Number of Shares Subscribed For
24,138
---------------------------------
Number of Warrants Subscribed For
Special Situations Cayman Fund, L.P.
---------------------------------------------------------------
Names(s) Exactly as to Appear on Stock and Warrant Certificates
/s/ David Greenhouse
- --------------------
Signature Signature (if purchasing jointly)
David Greenhouse
- ---------------------
Name Typed or Printed Name Typed or Printed
153 East 53rd
- -----------------
Residence Address Residence Address
New York, NY 10022
- ------------------------
City, State and Zip Code City, State and Zip Code
(212) 832-5300
- ------------------
Telephone--Business Telephone--Business
- --------------------
Telephone--Residence Telephone--Residence
98-0132442
- ----------------------------------------
Tax Identification or Social Security No.
Tax Identification or Social Security No.
NASD Affiliation or Association, if any:
If None, check here: |X|
Name in which securities should be issued: Special Situations Cayman Fund, L.P.
Dated: April 30, 1999
This Common Stock Subscription Agreement is agreed to and accepted as
of April 30, 1999.
EDGE PETROLEUM CORPORATION
/s/ Michael G. Long
-------------------
By: Michael G. Long
Its: Senior Vice President
and Chief Financial Officer
23
<PAGE>
Signature Page
228,161
-------------------------------
Number of Shares Subscribed For
68,448
---------------------------------
Number of Warrants Subscribed For
Special Situations Private Equity Fund, L.P.
---------------------------------------------------------------
Names(s) Exactly as to Appear on Stock and Warrant Certificates
/s/ David Greenhouse
- --------------------
Signature Signature (if purchasing jointly)
David Greenhouse
- ---------------------
Name Typed or Printed Name Typed or Printed
153 East 53rd
- -----------------
Residence Address Residence Address
New York, NY 10022
- ------------------------
City, State and Zip Code City, State and Zip Code
) 832-5300
- -------------------
Telephone--Business Telephone--Business
- --------------------
Telephone--Residence Telephone--Residence
13-3916551
- -----------------------------------------
Tax Identification or Social Security No.
Tax Identification or Social Security No.
NASD Affiliation or Association, if any:
If None, check here: |X|
Name in which securities should be issued:
Special Situations Private Equity Fund, L.P.
Dated: April 30, 1999
This Common Stock Subscription Agreement is agreed to and accepted as
of April 30, 1999.
EDGE PETROLEUM CORPORATION
/s/ Michael G. Long
-------------------
By: Michael G. Long
Its: Senior Vice President
and Chief Financial Officer
24
<PAGE>
Signature Page
19,000
-------------------------------
Number of Shares Subscribed For
5,700
---------------------------------
Number of Warrants Subscribed For
Mark G. Egan
---------------------------------------------------------------
Names(s) Exactly as to Appear on Stock and Warrant Certificates
/s/ Mark G. Egan
- ----------------
Signature Signature (if purchasing jointly)
Mark G. Egan
- ---------------------
Name Typed or Printed Name Typed or Printed
730 Valley Road
- -----------------
Residence Address Residence Address
Glencoe, IL 60022
- ------------------------
City, State and Zip Code City, State and Zip Code
(312) 419-1880
- -------------------
Telephone--Business Telephone--Business
- --------------------
Telephone--Residence Telephone--Residence
###-##-####
- ----------------------------------------
Tax Identification or Social Security No.
Tax Identification or Social Security No.
NASD Affiliation or Association, if any:
If None, check here: |X|
Name in which securities should be issued: Mark G. Egan
Dated: April 30, 1999
This Common Stock Subscription Agreement is agreed to and accepted as
of April 30, 1999.
EDGE PETROLEUM CORPORATION
/s/ Michael G. Long
By: Michael G. Long
Its: Senior Vice President
and Chief Financial Officer
25
<PAGE>
Signature Page
681,000
-------------------------------
Number of Shares Subscribed For
204,300
---------------------------------
Number of Warrants Subscribed For
The Private Investment Fund
---------------------------------------------------------------
Names(s) Exactly as to Appear on Stock and Warrant Certificates
/s/ Mark G. Egan
- ----------------
Signature Signature (if purchasing jointly)
Mark G. Egan President, Marlin Capital Corp.,
the general partner of The Private Investment
Fund, a limited partnership
- ---------------------------------------------
Name Typed or Printed Name Typed or Printed
11 S. LaSalle St., Suite 3310
- -----------------------------
Residence Address Residence Address
Chicago, IL 60603
- ------------------------
City, State and Zip Code City, State and Zip Code
(312) 419-1880
- -------------------
Telephone--Business Telephone--Business
- --------------------
Telephone--Residence Telephone--Residence
36-3666954
- ----------------------------------------
Tax Identification or Social Security No.
Tax Identification or Social Security No.
NASD Affiliation or Association, if any:
If None, check here: |X|
Name in which securities should be issued: The Private Investment Fund
Dated: April 30, 1999
This Common Stock Subscription Agreement is agreed to and accepted as
of April 30, 1999.
EDGE PETROLEUM CORPORATION
/s/ Michael G. Long
By: Michael G. Long
Its: Senior Vice President
and Chief Financial Officer
26
<PAGE>
Signature Page
150,000
-------------------------------
Number of Shares Subscribed For
45,000
---------------------------------
Number of Warrants Subscribed For
Fidelity Management Trust C/F IRA Rollover F/B/O John W. Elias
Account No. 103439037
---------------------------------------------------------------
Names(s) Exactly as to Appear on Stock and Warrant Certificates
Signature Signature (if purchasing jointly)
Fidelity Management Trust C/F IRA Rollover
F/B/O John W. Elias Account No. 103439037
- ------------------------------------------
Name Typed or Printed Name Typed or Printed
Fidelity Investments
One North Franklin, Suite 100
- -----------------------------
Residence Address Residence Address
Chicago, IL 60606
- ------------------------
City, State and Zip Code City, State and Zip Code
- ------------------------
Telephone--Business Telephone--Business
- ------------------------
Telephone--Residence Telephone--Residence
Tax Identification or Social Security No.
Tax Identification or Social Security No.
NASD Affiliation or Association, if any:
If None, check here: |_|
Name in which securities should be issued: Fidelity Management Trust
C/F IRA Rollover F/B/O John W. Elias Account No. 103439037
Dated: April 30, 1999
This Common Stock Subscription Agreement is agreed to and accepted as
of April 30, 1999.
EDGE PETROLEUM CORPORATION
/s/ Michael G. Long
By: Michael G. Long
Its: Senior Vice President
and Chief Financial Officer
27
<PAGE>
CERTIFICATE OF SIGNATORY
(To be completed if Shares are being subscribed for by an entity)
I, David Greenhouse, am the Managing Director of Special Situations Fund III,
L.P. (the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Common Stock Subscription Agreement and to purchase
and hold the Shares, and certify further that the Common Stock Subscription
Agreement has been duly and validly executed on behalf of the Entity and
constitutes a legal and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this 30th day of April, 1999.
/s/ David Greenhouse
--------------------
28
<PAGE>
CERTIFICATE OF SIGNATORY
(To be completed if Shares are being subscribed for by an entity)
I, David Greenhouse, am the Managing Director of Special Situations Cayman Fund,
L.P. (the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Common Stock Subscription Agreement and to purchase
and hold the Shares, and certify further that the Common Stock Subscription
Agreement has been duly and validly executed on behalf of the Entity and
constitutes a legal and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this 30th day of April, 1999.
/s/ David Greenhouse
29
<PAGE>
CERTIFICATE OF SIGNATORY
(To be completed if Shares are being subscribed for by an entity)
I, David Greenhouse, am the Managing Director of Special Situations Private
Equity Fund, L.P. (the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Common Stock Subscription Agreement and to purchase
and hold the Shares, and certify further that the Common Stock Subscription
Agreement has been duly and validly executed on behalf of the Entity and
constitutes a legal and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this 30th day of April, 1999.
/s/ David Greenhouse
--------------------
30
<PAGE>
CERTIFICATE OF SIGNATORY
(To be completed if Shares are being subscribed for by an entity)
I, Mark G. Egan, am the President of Marlin Capital Corp., the General Partner
of The Private Investment Fund (the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Common Stock Subscription Agreement and to purchase
and hold the Shares, and certify further that the Common Stock Subscription
Agreement has been duly and validly executed on behalf of the Entity and
constitutes a legal and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this 30th day of April, 1999.
/s/ Mark G. Egan
----------------
President
Marlin Capital Corp., the General Partner
of The Private Investment Fund
31
<PAGE>
CERTIFICATE OF SIGNATORY
(To be completed if Shares are being subscribed for by an entity)
I, _____________________, am the ____________________ of ___________________
(the "Entity"), which serves as custodian for IRA Rollover F/B/O John W. Elias
Account No. 103439037.
I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Common Stock Subscription Agreement and to purchase
and hold the Shares, and certify further that the Common Stock Subscription
Agreement has been duly and validly executed on behalf of the Entity and
constitutes a legal and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this 30th day of April, 1999.
------------------------------
32
<PAGE>
<TABLE>
EXHIBIT A
SCHEDULE OF PURCHASERS
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
Purchase Price (Per Principal Address and Telephone
Number Number of Share Number and
Name of Shares Warrants Plus .3 Warrant) Fax Number, if any
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
<S> <C> <C> <C> <C>
Mark G. Egan 19,000 5,700 $5.4375 730 Valley Road
Glencoe, IL 60022
312-419-1880
Fax: 312-419-6818
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
The Private Investment 681,000 204,300 $5.4375 11 S. LaSalle St.
Fund Suite 3310
Chicago, IL 60603
312-419-1880
Fax: 312-419-6818
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
Special Situations Private 228,161 68,448 $5.4375 153 East 53rd
Equity Fund, L.P. New York, NY 10022
212-832-5300
Fax: 212-832-6141
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
Special Situations 241,379 72,414 $5.4375 153 East 53rd
Fund III, L.P. New York, NY 10022
212-832-5300
Fax: 212-832-6141
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
Special Situations Cayman 80,460 24,138 $5.4375 153 East 53rd
Fund, L.P. New York, NY 10022
212-832-5300
Fax: 212-832-6141
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
Fidelity Management Trust 150,000 45,000 $5.4375 Fidelity Investments
C/F Rollover F/B/O John W. One North Franklin,
Elias Account No. 103439037 Suite 100
Chicago, IL 60606
Attn: Zack Marshall
- ------------------------------ -------------------- ------------------ ----------------------- ----------------------------------
</TABLE>
<PAGE>
EXHIBIT B
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement"), dated as of May 6,
1999, is made and entered into by and among Edge Petroleum Corporation, a
Delaware corporation (the "Company"), and those persons set forth on Schedule 1
hereto (collectively the "Warrantholders" and each individually a
"Warrantholder"). This Agreement is being executed in connection with the Common
Stock Subscription Agreement of even date herewith by and among the Company and
the Warrantholders (the "Purchase Agreement").
The Company agrees to issue and sell, and the Warrantholders
agree to severally purchase, for an agreed value of $.125 per warrant, the
warrants, as hereinafter described (the "Warrants"), to purchase up to an
aggregate of the number of shares set forth on Schedule 1 (the "Shares"), of the
Company's Common Stock, par value $.01 per share (the "Common Stock"). The
purchase and sale of the Warrants shall occur contemporaneous with, and is
subject to the closing of the Purchase Agreement.
In consideration of the foregoing and for the purpose of
defining the terms and provisions of the Warrants and the respective rights and
obligations thereunder, the Company and the Warrantholders, for value received,
hereby agree as follows:
Section 1. Transferability and Form of Warrants.
1.1 Registration. The Warrants shall be numbered and shall be
registered on the books of the Company when issued.
1.2 Limitations on Transfer. The Warrants and the Shares shall
not be sold, assigned, transferred or pledged except upon the conditions
specified in this Agreement. Each Warrantholder will cause any proposed
purchaser, assignee, transferee or pledgee of the Warrants or the Shares, except
for transferees in dispositions of Shares that are pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
or dispositions of Common Stock (but specifically including any transfer of
Warrants) pursuant to Rule 144 under the Act, to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement. The Warrants may be divided or combined, upon request to the Company
by a Warrantholder, into a certificate or certificates representing the right to
purchase the same aggregate number of Shares. Unless the context indicates
otherwise, the term "Warrantholder" shall include any transferee or transferees
of the Shares that is required to be bound by the terms hereof, and the term
"Warrants" shall include any and all warrants outstanding pursuant to this
Agreement, including those evidenced by a certificate or certificates issued
upon division, exchange or substitution pursuant to this Agreement. Each
Warrantholder by his receipt of a Warrant Certificate, agrees to be bound by and
comply with the terms of this Agreement. Each Warrantholder represents and
agrees that the Warrant (and Shares if the Warrant is exercised) is purchased
only for investment, for such Warrantholder's own account, and without any
present intention to sell, or with a view to distribution of, the Warrant or
Shares.
1.3 Form of Warrants. The text of the Warrants and of the form
of election to purchase Shares shall be substantially as set forth in Exhibit A
attached hereto. The number of Shares issuable upon exercise of the Warrants is
subject to adjustment upon the occurrence of certain events, all as hereinafter
provided. The Warrant shall be executed on behalf of the Company by its
President or by a Vice President, attested to by its Secretary or an Assistant
Secretary. A Warrant bearing the signature of an individual who was at any time
the proper officer of the Company shall bind the Company, notwithstanding that
such individual shall have ceased to hold such office prior to the delivery of
such Warrant or did not hold such office on the date of this Agreement.
1
<PAGE>
The Warrants shall be dated as of the date of signature
thereof by the Company either upon initial issuance or upon division, exchange
or substitution.
1.4 Legend on Warrants. Each Warrant Certificate shall bear
the following legend:
(a) "THE WARRANTS EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (I) AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDER,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED AND ANY PROSPECTUS DELIVERY REQUIREMENTS ARE
NOT APPLICABLE OR (III) RECEIPT OF NO-ACTION LETTERS FROM
THE APPROPRIATE GOVERNMENTAL AUTHORITIES. COPIES OF THE
WARRANT AGREEMENT AND THE PURCHASE AGREEMENT COVERING THE
PURCHASE OF THESE WARRANTS AND VARIOUS REQUIREMENTS,
INCLUDING WITHOUT LIMITATION PROVISIONS RESTRICTING THEIR
TRANSFER, MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE COMPANY."
2
<PAGE>
(b) any legend required by applicable state securities law.
(c) Any certificate issued at any time in exchange or
substitution for any certificate bearing such legends (except in the case of the
Shares, a new certificate issued upon completion of a public distribution
pursuant to a registration statement under the Act, or upon completion of a sale
under Rule 144 under the Act of the securities represented thereby) shall also
bear the above legends unless, in the opinion of the Company's counsel, the
securities represented thereby need no longer be subject to such restrictions.
Each Warrantholder consents to the Company making a notation on its records and
giving instructions to any registrar or transfer agent of the Warrants and the
Common Stock in order to implement the restrictions on transfer established in
this Agreement.
Section 2. Exchange of Warrant Certificate. Any Warrant
certificate may be exchanged for another certificate or certificates entitling a
Warrantholder to purchase a like aggregate number of Shares as the certificate
or certificates surrendered then entitled such Warrantholder to purchase. Any
Warrantholder desiring to exchange a Warrant certificate shall make such request
in writing delivered to the Company, and shall surrender, properly endorsed,
with signatures guaranteed, the certificate evidencing the Warrant to be so
exchanged. Thereupon, the Company shall execute and deliver to the person
entitled thereto a new Warrant certificate as so requested.
Section 3. Term of Warrants; Exercise of Warrants; Redemption.
(a) Subject to the terms of this Agreement, each Warrantholder
shall have the right, at any time and from time to time during the period
commencing on the date of this Agreement, and ending at 5:00 p.m., Houston,
Texas Time, on the fifth anniversary thereof (the "Termination Date"), to
purchase from the Company up to the number of fully paid and nonassessable
Shares to which such Warrantholder may at the time be entitled to purchase
pursuant to this Agreement, upon surrender to the Company, at its principal
office, of the certificate evidencing the Warrants to be exercised, together
with the purchase form on the reverse thereof duly filled in and signed, with
signatures guaranteed, and upon payment to the Company of the Warrant Price (as
defined in and determined in accordance with the provisions of this Section 3
and Sections 7 and 8 hereof), for the number of Shares in respect of which such
Warrants are then exercised, but in no event for less than 100 Shares for any
Warrantholder (unless less than an aggregate of 100 Shares are then purchasable
under all outstanding Warrants held by a Warrantholder).
(b) Payment by each Warrantholder of the aggregate Warrant
Price due from him shall be made in cash or by immediately available funds,
check or any combination thereof.
(c) Upon such surrender of the Warrants and payment of such
Warrant Price as aforesaid, the Company shall issue and cause to be delivered to
or upon the written order of the exercising Warrantholder and in such name or
names as the exercising Warrantholder may designate (which in no way shall limit
the transfer restrictions hereunder) a certificate or certificates for the
number of full Shares so purchased upon the exercise of his Warrant, together
with cash, as provided in Section 9 hereof, in respect of any fractional Shares
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such securities as of the
date of surrender of the Warrants and payment of the Warrant Price, as
aforesaid, notwithstanding that the certificate or certificates representing
such securities shall not actually have been delivered or that the stock
transfer books of the Company shall then be closed. The Warrants shall be
exercisable, at the election of a Warrantholder, either in full or from time to
time in part and, in the event that a certificate evidencing the Warrants is
exercised in respect of less than all of the Shares specified therein at any
time prior to the Termination Date, a new certificate evidencing the remaining
portion of the Warrants held by such Warrantholder will be issued by the
Company.
(d) The Warrant may be redeemed at the election of the
Company, as a whole but not in part, upon the terms and conditions set forth in
this Section 3(d). The Company may call the Warrant for redemption at any time
after such date (the "Redemption Event") at which the Trailing Price (as defined
herein) of the Common Stock exceeds $10.70. The price to be paid on redemption
shall be $.01 per Share for which the Warrant is exercisable, appropriately
adjusted in the same manner as adjustments to the Warrant Price (the "Redemption
Price"). The Redemption Price shall be paid by the Company by check; however, if
the Company is restricted by law or agreement from making such payment, the
Company may instead make such payment in shares of Common Stock, with such
Common Stock valued at the Trailing Price of the Common Stock on the fifth
business day prior to the date on which such payment is to be made.
(e) The Company shall give each Warrantholder notice of
redemption (in accordance with Section 12 hereof) mailed not less than 30
calendar days prior to the date set by the Company for redemption (the
"Redemption Date"). Such notice shall state: (i) the Redemption Date (ii) the
Redemption Price (iii) the date on which a Redemption Event occurred and (iv)
the Trailing Price of the Common Stock on such date.
(f) The Warrant shall continue to be exercisable in accordance
with the terms and conditions hereof until the Redemption Date. Following the
Redemption Date, the Warrant shall no longer be exercisable and instead shall
represent only the right to receive the Redemption Price. If the Warrant has not
been exercised as of the Redemption Date, the Company shall thereupon promptly
transmit to each Warrantholder funds in the amount of the Redemption Price.
(g) For purposes of this Agreement, the term the "Trailing
Price" shall mean (i) in the case of a security traded in the over-the-counter
market and not in the Nasdaq National Market System ("Nasdaq NMS") nor on any
national securities exchange, the average of the per share closing bid prices of
the Common Stock on the 20 consecutive trading days immediately preceding the
date in question, as reported by Nasdaq or an equivalent generally accepted
reporting service; (ii) in the case of a security trade in the Nasdaq NMS or on
a national securities exchange, the average for the 20 consecutive trading days
immediately preceding the date in question of the daily per share closing prices
of the Common Stock in the Nasdaq NMS or on the principal stock exchange on
which it is listed, as the case may be or (iii) if neither clause (i) or (ii)
above is applicable, then the fair value thereof as determined in good faith by
the Company's Board of Directors. For purposes of clause (i) above, if trading
3
<PAGE>
in the Common Stock is not reported by Nasdaq, the bid price referred to in said
clause shall be the lowest bid price as reported in the "pink sheets" published
by National Quotation Bureau, Incorporated. The closing price referred to in
clause (ii) above shall be the last reported sale price or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices, in either case in the Nasdaq NMS or on the national securities
exchange on which the Common Stock is then listed.
Section 4. Payment of Taxes. The Company will pay all
documentary stamp taxes, if any, attributable to the initial issuance of the
Warrants or the securities comprising the Shares; provided, however, the Company
shall not be required to pay any tax which may be payable in respect of any
secondary transfer of the Warrants or the securities comprising the Shares.
Section 5. Mutilated or Missing Warrants. In case the
certificate or certificates evidencing the Warrants shall be mutilated, lost,
stolen or destroyed, the Company shall, at the request of a Warrantholder, issue
and deliver in exchange and substitution for and upon cancellation of the
mutilated certificate or certificates, or in lieu of and substitution for the
certificate or certificates lost, stolen or destroyed, a new Warrant certificate
or certificates of like tenor and representing an equivalent right or interest,
but only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrant and a bond of indemnity, if requested, also
satisfactory in form and amount at the applicant's cost. Applicants for such
substitute Warrants certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
Section 6. Reservation of Shares. There has been reserved, and
the Company shall at all times keep reserved so long as the Warrants remain
outstanding, out of its authorized Common Stock, such number of shares of Common
Stock as shall be subject to purchase under the Warrants. Every transfer agent
for the Common Stock and other securities of the Company issuable upon the
exercise of the Warrants will be irrevocably authorized and directed at all
times to reserve such number of authorized shares and other securities as shall
be requisite for such purpose. The Company will keep a copy of this Agreement on
file with every transfer agent for the Common Stock and other securities of the
Company issuable upon the exercise of the Warrants. The Company will supply
every such transfer agent with duly executed stock and other certificates, as
appropriate, for such purpose and will provide or otherwise make available any
cash which may be payable as provided in Section 9 hereof. On or before taking
any action that would cause an adjustment pursuant to the terms of the Warrants
resulting in an increase in the number of shares of Common Stock deliverable
upon such conversion or exercise above the number thereof previously authorized,
reserved and available therefor, the Company shall take all such action so
required for compliance with this Section.
Section 7. Warrant Price. The price per Share at which Shares
shall be purchasable upon the exercise of the Warrants (the "Warrant Price")
shall be as set forth in the Warrant subject to further adjustment pursuant to
Section 8 hereof.
Section 8. Adjustment of Number of Shares. The number and kind
of securities purchasable upon the exercise of the Warrants and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
8.1 Adjustments. The number of Shares purchasable upon the
exercise of the Warrants shall be subject to adjustment as follows:
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(a) In case the Company shall (i) pay a dividend in Common
Stock or make a distribution in Common Stock, (ii) subdivide its outstanding
Common Stock, (iii) combine its outstanding Common Stock into a smaller number
of shares of Common Stock or (iv) issue by reclassification of its Common Stock
other securities of the Company, the number of Shares purchasable upon exercise
of the Warrants immediately prior thereto shall be adjusted so that a
Warrantholder shall be entitled to receive the kind and number of Shares or
other securities of the Company which it would have owned or would have been
entitled to receive immediately after the happening of any of the events
described above had the Warrants been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any adjustment
made pursuant to this subsection 8.1(a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event.
(b) In case the Company shall issue rights, options, warrants
or convertible securities to all or substantially all holders of its Common
Stock, without any charge to such holders, entitling them to subscribe for or
purchase Common Stock at a price per share which is lower at the record date
mentioned below than the then Fair Value (as defined in Section 9), the number
of Shares thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Shares theretofore purchasable upon
exercise of the Warrant by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately prior to the issuance
of such rights, options, warrants or convertible securities plus the number of
additional shares of Common Stock offered for subscription or purchase, and of
which the denominator shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants or
convertible securities plus the number of shares which the aggregate offering
price of the total number of shares offered would purchase at such Fair Value.
Such adjustment shall be made whenever such rights, options, warrants or
convertible securities are issued, and shall become effective immediately and
retroactive to the record date for the determination of shareholders entitled to
receive such rights, options, warrants or convertible securities.
(c) In case the Company shall distribute to all or
substantially all holders of its Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or rights,
options, warrants or convertible securities containing the right to subscribe
for or purchase Common Stock (excluding those referred to in subsection 8.1(b)
above), then in each case the number of Shares thereafter purchasable upon the
exercise of the Warrants shall be determined by multiplying the number of Shares
theretofore purchasable upon exercise of the Warrants by a fraction, of which
the numerator shall be the then Fair Value per share of Common Stock on the
record date for such distribution, and of which the denominator shall be such
Fair Value on such date minus the then Fair Value of the portion of the assets
or evidences of indebtedness so distributed or of such subscription rights,
options, warrants or convertible securities applicable to one share. Such
adjustment shall be made whenever any such distribution is made and shall become
effective on the date of distribution retroactive to the record date for the
determination of shareholders entitled to receive such distribution.
(d) No adjustment in the number of Shares purchasable pursuant
to the Warrants shall be required unless such adjustment would require an
increase or decrease of at least three percent in the number of Shares then
purchasable upon the exercise of the Warrants or, if the Warrants are not then
exercisable, the number of Shares purchasable upon the exercise of the Warrants
on the first date thereafter that the Warrants become exercisable; provided,
however, that any adjustments which by reason of this subsection 8.1(d) are not
required to be made immediately shall be carried forward and taken into account
in any subsequent adjustment.
(e) Whenever the number of Shares purchasable upon the
exercise of the Warrant is adjusted, as herein provided, the Warrant Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of the
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of Shares so purchasable immediately thereafter.
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(f) Whenever the number of Shares purchasable upon the
exercise of the Warrants is adjusted as herein provided, the Company shall cause
to be promptly mailed to each Warrantholder by first class mail, postage
prepaid, notice of such adjustment and a certificate of the chief financial
officer of the Company setting forth the number of Shares purchasable upon the
exercise of the Warrants after such adjustment, a brief statement of the facts
requiring such adjustment and the computation by which such adjustment was made.
(g) For the purpose of this subsection 8.1, the term "Common
Stock" shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Agreement, (ii) any other class of stock resulting
from successive change or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value or (iii) if the Company merges or consolidates with, or
sells all or substantially all of its property and assets to, another Person
(other than a subsidiary of the Company) and consideration other than Common
Stock is payable to holders of Common Stock in exchange for their Common Stock
in connection with such merger, consolidation or sale then "Common Stock" shall
thereafter mean (and the Warrants shall thereafter be exercisable for) such
other consideration. In the event that at any time, as a result of an adjustment
made pursuant to this Section 8, a Warrantholder shall become entitled to
purchase any securities of the Company other than Common Stock, (i) if the
Warrantholder's right to purchase is on any other basis than that available to
all holders of the Company's Common Stock, the Company shall obtain an opinion
of an independent investment banking firm or valuation firm valuing such other
securities and (ii) thereafter the number of such other securities so
purchasable upon exercise of the Warrants shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Shares contained in this Section 8.
(h) Upon the expiration of any rights, options, warrants or
conversion privileges, if such shall not have been exercised, the number of
Shares purchasable upon exercise of Warrants, to the extent the Warrants have
not then been exercised, shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally adjusted (or
had the original adjustment not been required, as the case may be) on the basis
of (i) the fact that Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion privileges, and (ii)
the fact that such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
consideration, if any, actually received by the Company for the issuance, sale
or grant of all such rights, options, warrants or conversion privileges whether
or not exercised; provided, however, that no such readjustment shall have the
effect of decreasing the number of Shares purchasable upon exercise of the
Warrants by an amount in excess of the amount of the adjustment initially made
in respect of the issuance, sale or grant of such rights, options, warrants or
conversion privileges.
8.2 No Adjustment for Certain Matters. During the term of the
Warrants or upon the exercise of the Warrants, no adjustment shall be made (i)
except as provided in subsection 8.1 in respect of any dividends or
distributions out of earnings or (ii) in respect of the consummation of any
action described in Section 10(b). Without limiting the generality of the
foregoing, the Company shall have no obligation to cause any purchaser or
successor by merger, sale of assets or similar business combination to assume
the obligations under this Agreement.
8.3 Par Value of Shares of Common Stock. Before taking any
action which would cause an adjustment effectively reducing the portion of the
Warrant Price allocable to each Share below the then par value per share of the
Common Stock issuable upon exercise of the Warrants, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Common Stock upon exercise of the Warrants.
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8.4 Independent Public Accountants. The Company may retain a
firm of independent public accountants of recognized national standing (which
may be any such firm regularly employed by the Company) to make any computation
required under this Section 8, and a certificate signed by such firm shall be
conclusive evidence of the correctness of any computation made under this
Section 8.
8.5 Statement on Warrant Certificates. Irrespective of any
adjustments in the number of securities issuable upon exercise of Warrants,
Warrant certificates theretofore or thereafter issued may continue to express
the same number of securities as are stated in the similar Warrant certificates
initially issuable pursuant to this Agreement. However, the Company may, at any
time in its sole discretion (which shall be conclusive), make any change in the
form of Warrant certificate that it may deem appropriate and that does not
affect the substance thereof; and any Warrant certificate thereafter issued,
whether upon registration of, or in exchange or substitution for, an outstanding
Warrant certificate, may be in the form so changed
Section 9. Fractional Interests; Fair Value. The Company shall
not be required to issue fractional Shares on the exercise of the Warrants. If
any fraction of a Share would, except for the provisions of this Section 9, be
issuable on the exercise of the Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the then Fair Value of the Common
Stock multiplied by such fraction. As used herein, the term "Fair Value" of the
Common Stock or other securities or other property shall mean the fair value as
determined in good faith by the Company's Board of Directors, which
determination shall be binding upon the Warrantholders; provided, however, that
Fair Value of the Common Stock for any day shall mean the last sales price,
regular way, on the day in question or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
in either case as reported in the principal transaction reporting system with
respect to securities listed or admitted to trading on the principal national
securities exchange on which such security is listed or admitted to trading, or,
if such security is not listed or admitted to trading on any national securities
exchange but sales price information is reported for such security, as reported
by the Nasdaq NMS or such other self-regulatory organization or registered
securities information processor (as such terms are used under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) that then reports
information concerning such security, or, if sales price information is not so
reported, the average of the high bid and low asked prices in the
over-the-counter market on such day, as reported by Nasdaq NMS or such other
entity, or, if on such day such security is not quoted by any such entity, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such security selected by the Board of Directors
of the Company. If on such day no market maker is making a market in such
security, the fair value of such security on such day as determined in good
faith by the Board of Directors of the Company shall be used.
Section 10. No Right as Stockholder; Notices to Warrantholder.
Nothing contained in this Agreement or in the Warrants shall be construed as
conferring upon any Warrantholder or its transferees any rights as a stockholder
of the Company, including the right to vote, receive dividends, call meetings,
consent or receive notices as a stockholder in respect of any meeting of
stockholders for the election of directors of the Company or any other matter or
imposing any fiduciary or other duty on the Company, its officers or directors,
in favor of any Warrantholder, all of which rights and duties owed to
stockholders are disclaimed and waived by each Warrantholder. If, however, at
any time prior to the expiration of the Warrants and prior to their exercise,
any one or more of the following events shall occur:
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(a) any action which would require an adjustment
pursuant to Section 8.1 (except subsections 8.1(e) and 8.1(g)); or
(b) a dissolution, liquidation or winding up of the Company or
a consolidation, merger or similar business combination or sale of its property,
assets and business as an entirety or substantially as an entirety shall be
proposed;
then the Company shall give notice in writing of such event to each
Warrantholder, as provided in Section 10 hereof, promptly prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to any relevant dividend,
distribution, subscription rights or other rights, or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to mail or receive such notice
or any defect therein shall not affect the validity of any action taken with
respect thereto.
Section 11. Securities Laws; Restrictions on Transfer of
Shares; Registration Rights.
11.1 Compliance with Securities Act. Each Warrantholder agrees
that this Warrant and the related Shares (each of the Warrant and the Shares
being referred to herein as a "Security" and together, "Securities") are being
acquired for investment and that such Warrantholder will not purchase, offer,
sell or otherwise dispose of any of the Securities except under circumstances
which will not result in a violation of the Act. In order to exercise this
Warrant, a Warrantholder must be able to confirm and shall confirm in writing,
by executing a certificate to be supplied by the Company, all of the
representations and other covenants contained in this Agreement, including that
the Securities so purchased are being acquired for investment and not with a
view toward distribution or resale. The Shares (unless registered under the Act)
shall be stamped or imprinted with, in addition to any other appropriate or
required legend, a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED AND ANY PROSPECTUS DELIVERY REQUIREMENTS ARE NOT
APPLICABLE OR (iii) RECEIPT OF NO-ACTION LETTERS FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITIES. COPIES OF THE AGREEMENT
COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING
THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE COMPANY."
(a) Warrantholder Representations. In addition, each
Warrantholder specifically represents to the Company both at the time of initial
purchase of the Warrant and at those future times as specified herein:
(1) The Warrantholder has experience in analyzing and investing in
companies like the Company and is capable of evaluating the merits and risks of
an investment in the Company and has the capacity to protect its own interests.
The Warrantholder is an "Accredited Investor" as that term is defined in Rule
501(a) promulgated under the Act. The Warrantholder is aware of the Company's
business affairs and financial condition, and has acquired information about the
Company sufficient to reach an informed and knowledgeable decision to acquire
the Securities. The Warrantholder is acquiring the Securities for its own
account for investment purposes only not as a nominee or agent and not with a
view to, or for the resale in connection with, any "distribution" thereof for
purposes of the Act. The Warrantholder is acquiring the Securities for
investment for its own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution thereof. The
Warrantholder acknowledges the Company's obligation to file a registration
statement with respect to the Shares as set forth in the Purchase Agreement, the
effectiveness of which registration statement may be required for the resale of
the Shares. The Warrantholder has not offered or sold any portion of the
Securities to be acquired by such Warrantholder and has no present intention of
reselling or otherwise disposing of any portion of such Securities either
currently or after the passage of a fixed or determinable period of time or upon
the occurrence or nonoccurrence of any predetermined event or circumstance, and
in particular the Warrantholder has no current intention to resell the Shares
8
<PAGE>
under such registration statement nor would it have such intention if such
registration statement were effective as of the date of purchase. The
Warrantholder understands that investment in the Securities is subject to a high
degree of risk. The Warrantholder can bear the economic risk of its investment,
including the full loss of its investment, and by reason of its business or
financial experience or the business or financial experience of its professional
advisors has the capacity to evaluate the merits and risks of its investment and
protect its own interest in connection with the purchase of the Securities. If
other than an individual, the Warrantholder also represents it has not been
organized for the purpose of acquiring the Securities.
(2) The Warrantholder understands that the Securities have not been and
except as provided in the Purchase Agreement with respect to the Shares will not
be registered under the Act or any applicable State securities law in reliance
upon a specific exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of the Warrantholder's investment intent and the
accuracy of the Warrantholder's representations as expressed herein and the
Warrantholder will furnish the Company with such additional information as is
reasonably requested by the Company in connection with such exemption.
(3) The Warrantholder further understands that the Securities must be
held indefinitely unless subsequently registered under the Act and any
applicable state securities laws, or unless exemptions from registration are
otherwise available. Moreover, the Warrantholder understands that the Company is
under no obligation to and does not expect to register the Securities except as
provided for in the Purchase Agreement with respect to the Shares.
4) The Warrantholder is aware of the provisions of Rule 144,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an Affiliate of such issuer), in a nonpublic offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: The availability of certain public information about the Company, the
resale occurring not less than one year after the party has purchased and paid
for the Securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein.
(5) The Warrantholder further understands that it may not transfer the
Warrants and that at the time it wishes to sell the Securities, it is possible
that there will be no public market upon which to make such a sale, and that,
even if such a public market then exists, the Company may not be satisfying the
current public information requirements of Rule 144, and that, in such event,
the Warrantholder may be precluded from selling the Securities under Rule 144
even if the one-year minimum holding period had been satisfied.
(6) The Warrantholder further understands that in the event all of the
requirements of Rule 144 are not satisfied, registration under the Act,
compliance with registration exemption will be required; and that,
notwithstanding the fact that Rule 144 is not exclusive, the Staff of the
Securities and Exchange Commission has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 will have a substantial burden
of proof in establishing that an exemption from registration is available for
such offers or sales, and that such persons and their respective brokers who
participate in such actions do so at their own risk.
9
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(7) To the Warrantholder's knowledge, the Warrantholder has received
copies of the Company's reports filed under the Exchange Act since the beginning
of the Company's current fiscal year. The Warrantholder has had a reasonable
opportunity to ask questions relating to and otherwise discuss the Company's
business, management and financial affairs with the Company's management,
customers and other parties, and the Warrantholder has received satisfactory
responses to the Warrantholder's inquiries. The Warrantholder disclaims and
disavows any reliance upon Raymond James & Associates Inc. in connection with
the its purchase of Warrants. The Warrantholder has relied solely on its own
independent investigation before deciding to enter into the purchase of the
Warrants contemplated hereby. Unless the Warrantholder has otherwise notified
the Company in writing, the Warrantholder is not, and has not been within the
ninety (90) days prior to the closing date of the purchase of the Securities, a
broker or dealer of securities an officer, director, employee, agent or
Affiliate or the Company, or, to the Warrantholder's knowledge, any other
purchaser of Securities from the Company. Unless the Warrantholder has otherwise
notified the Company in writing, the Warrantholder is not an employee, officer
or director of the Company nor prior to the consummation of the actions
contemplated hereby, is the Warrantholder the beneficial owner of 5% or more of
the Common Stock of the Company.
(b) Disposition of Securities. With respect to any offer, sale
or other disposition of any Securities that is not registered under the Act,
each Warrantholder hereof agrees to give written notice to the Company prior
thereto, describing briefly the manner thereof, together with a written opinion
of such Warrantholder's counsel, if reasonably requested by the Company, to the
effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state law then in effect) of such Securities and indicating whether or not under
the Act, certificates for the Securities in question to be sold or otherwise
disposed of require any restrictive legend as to applicable restrictions on
transferability in order to ensure compliance with such law. Such opinion must
be satisfactory to the Company in its reasonable judgment and shall state that
it may be relied upon by counsel to the Company, and any stock exchange or
transfer agent. Promptly upon receiving such written notice and satisfactory
opinion, if so requested, the Company shall notify such Warrantholder that such
Warrantholder may sell or otherwise dispose of such Securities all in accordance
with the terms of the notice delivered to the Company. If a determination has
been made pursuant to this subsection (b) that the opinion of counsel for the
Warrantholder is not satisfactory to the Company, the Company shall so notify
such Warrantholder promptly after such determination has been made and shall
specify in detail the legal analysis supporting any such conclusion. Each
certificate representing the Securities thus transferred (except a transfer
registered under the Act or a transfer of Shares of Common Stock (but
specifically including transfers of Warrants) pursuant to Rule 144) shall bear a
legend as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
Warrantholder, such legend is not required in order to ensure compliance with
such laws. The Company may issue stop transfer instructions to its transfer
agent in connection with such restrictions.
(c) Transferees Bound. Prior to any transfer of the Securities
(except a transfer registered under the Act or a transfer of Shares of Common
Stock (but specifically including transfers of Warrants) pursuant to Rule 144),
the proposed transferee shall agree in writing with the Company to be bound by
the terms of this Agreement (whether or not the Warrant has been exercised or
otherwise outstanding) as if an original signatory hereto and the proposed
transferee must be able to and must make representations as set forth in this
Section 11.1.
Section 11.2 Certain Definitions. As used in this Section 11,
the following terms shall have the following meanings:
"Affiliate" shall mean, with respect to any person, any other
person controlling, controlled by or under direct or indirect common control
with such person (for the purposes of this definition "control," when used with
respect to any specified person, shall mean the power to direct the management
and policies of such person, directly or indirectly, whether through ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing).
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Section 12. Notices. Any notice pursuant to this Agreement by
the Company or by a Warrantholder or a holder of Shares shall be in writing and
shall be deemed to have been duly given if delivered or mailed by certified
mail, return receipt requested:
(a) If to the Warrantholders or holders of Shares addressed to
them it at the address set forth in Schedule 1.
If to the Company addressed to it at 1111 Bagby, Suite 2100, Houston, Texas,
77002, Attention: Chief Financial Officer.
Each party may from time to time change the address to which
notices to it are to be delivered or mailed hereunder by notice in accordance
herewith to the other party.
Section 13. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company, the Warrantholders or the
holders of Shares shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 14. Applicable Law. This Agreement shall be deemed to
be a contract made under the laws of the State of New York and for all purposes
shall be construed in accordance with the laws of said State.
Section 15. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrantholders and the holders of Shares any legal or equitable
right, remedy or claim under this Agreement. This Agreement shall be for the
sole and exclusive benefit of the Company, the Warrantholders and the holders of
Shares.
Section 16. Counterparts. This Agreement may be executed
in any number of counterparts each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
Section 17. Amendment. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that any provisions hereof may be amended, waived, discharged
or terminated upon the written consent of the Company and the then current
Warrantholders having the right to acquire by virtue of holding the Warrants at
least 50% of the Shares which are then issuable upon exercise of the then
outstanding Warrants.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed, all as of the day and year first above written.
EDGE PETROLEUM CORPORATION
By: /s/ Michael G. Long
----------------------
Name: Michael G. Long
Title: Senior Vice President
and Chief Financial Officer
[WARRANTHOLDER SIGNATURE PAGES FOLLOW]
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WARRANTHOLDER:
Name of Warrantholder: Fidelity Management Trust C/F IRA Rollover F/B/O
John W. Elias Account No. 103439037
By: _________________________
Name:_________________________
Title:_________________________
14
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WARRANTHOLDER:
/s/ Mark G. Egan
Mark G. Egan
15
<PAGE>
WARRANTHOLDER:
Name of Warrantholder: Special Situations Private Equity Fund, L.P.
By: /s/ David Greenhouse
Name: David Greenhouse
Title: Managing Director
16
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WARRANTHOLDER:
Name of Warrantholder: The Private Investment Fund
By: /s/ Mark G. Egan
-----------------
Name: Mark G. Egan
Title: President, Marlin Capital Corp., the
general partner of The Private Investment
Fund, a limited partnership
17
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WARRANTHOLDER:
Name of Warrantholder: Special Situations Fund III, L.P.
By: /s/ David Greenhouse
--------------------
Name: David Greenhouse
Title: Managing Director
18
<PAGE>
WARRANTHOLDER:
Name of Warrantholder: Special Situations Cayman Fund, L.P.
By: /s/ David Greenhouse
--------------------
Name: David Greenhouse
Title: Managing Director
19
<PAGE>
Exhibit A
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT (I) AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED AND
ANY PROSPECTUS DELIVERY REQUIREMENTS ARE NOT APPLICABLE OR (III)
RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL
AUTHORITIES. COPIES OF THE WARRANT AGREEMENT AND THE PURCHASE AGREEMENT
COVERING THE PURCHASE OF THESE WARRANTS AND VARIOUS REQUIREMENTS,
INCLUDING WITHOUT LIMITATION PROVISIONS RESTRICTING THEIR TRANSFER, MAY
BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD
OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY."
Warrant Certificate No. ___
WARRANTS TO PURCHASE
______________ SHARES OF COMMON STOCK
EDGE PETROLEUM CORPORATION
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
This certifies that, for value received, ___________, the
registered holder hereof (the "Warrantholder"), is entitled to purchase from
EDGE PETROLEUM CORPORATION (the "Company"), at any time during the period
commencing the date hereof and ending at 5:00 p.m., Houston, Texas Time, on the
fifth anniversary thereof at a purchase price per share of $5.35, the number of
shares of Common Stock of the Company set forth above (the "Shares"). The number
of shares of Common Stock of the Company purchasable upon exercise of each
Warrant evidenced hereby shall be subject to adjustment from time to time as set
forth in the Warrant Agreement. The Warrant may be redeemed by the Company as
set forth in the Warrant Agreement.
The Warrants evidenced hereby may be exercised in whole or in
part by presentation of this Warrant Certificate with the Purchase Form attached
hereto duly executed (with a signature guarantee as provided thereon) and
simultaneous payment of the Warrant Price at the principal office of the
Company. Payment of such price shall be made in immediately available funds.
The Warrants evidenced hereby represent the right to purchase
an aggregate of up to [__________] Shares and are issued under and in accordance
with a Warrant Agreement, dated as of May __, 1999 (the "Warrant Agreement"),
between the Company and certain Warrantholders (which Warrant Agreement
initially provides for Warrants to purchase up to [_________] shares) and are
subject to the terms and provisions contained in the Warrant Agreement, to all
of which the Warrantholder by acceptance hereof consents.
Upon any partial exercise of the Warrants evidenced hereby,
there shall be signed and issued to the Warrantholder a new Warrant Certificate
in respect of the Shares as to which the Warrants evidenced hereby shall not
have been exercised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed for one or
more new Warrants of the same aggregate number of Shares as here evidenced by
the Warrant or Warrants exchanged. No fractional shares of Common Stock will be
issued upon the exercise of rights to purchase hereunder, but the Company shall
pay the cash value of any fraction upon the exercise of one or more Warrants.
These Warrants are not transferrable and any attempted transfer shall be void.
2
<PAGE>
This Warrant Certificate does not entitle any Warrantholder to
any of the rights of a stockholder of the Company.
EDGE PETROLEUM CORPORATION
By:
---------------------------
Name:
-------------------
Title:
-------------------
Dated: May ___, 1999
ATTEST:
Secretary
<PAGE>
EDGE PETROLEUM CORPORATION
PURCHASE FORM
EDGE PETROLEUM CORPORATION
1111 Bagby, Suite 2100
Houston, Texas 77002
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, _____ shares of Common Stock (the "Shares") provided for therein,
and requests that certificates for the Shares be issued in the name of:
(Please Print or Type Name, Address and Social Security Number)
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant Certificate for the balance of the Shares purchasable under
the within Warrant Certificate be registered in the name of the undersigned
Warrantholder or his Assignee as below indicated and delivered to the address
stated below. The undersigned has also submitted to the Company a certificate in
which it has made the representations and covenants required in Section 11 of
the Warrant Agreement.
Dated:
Name of Warrantholder
or Assignee:
(Please Print)
Address:
Signature:
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
Signature Guaranteed:
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
<PAGE>
<TABLE>
SCHEDULE 1
SCHEDULE OF WARRANTHOLDERS
- ---------------------------------------- ------------------------------------- -------------------------------------
Principal Address
Number of and Telephone Number
Name Warrants and Fax Number, if any
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Mark G. Egan 5,700 730 Valley Road
Glencoe, IL 60022
312-419-6818
Fax: 312-419-6818
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
The Private Investment Fund 204,300 11 S. LaSalle St.
Suite 3310
Chicago, IL 60603
312-419-1880
Fax: 312-419-6818
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
Special Situations Private Equity 68,448 153 East 53rd
Fund, L.P. New York, NY 10022
212-832-5300
Fax: 212-832-6141
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
Special Situations Fund III, L.P. 72,414 153 East 53rd
New York, NY 10022
212-832-5300
Fax: 212-832-6141
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
Special Situations Cayman Fund, L.P. 24,138 153 East 53rd
New York, NY 10022
212-832-5300
Fax: 212-832-6141
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
Fidelity Management Trust C/F Rollover 45,000 Fidelity Investments
F/B/O John W. Elias Account No. One North Franklin, Suite 100
103439307 Chicago, IL 60606
Attn: Zach Marshall
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
<PAGE>
EXHIBIT C
SCHEDULE OF EXCEPTIONS
<PAGE>
EXHIBIT D
INVESTOR QUESTIONNAIRE
--------------------------------
Purchaser Name
The Purchaser represents and warrants that it comes within
each category marked below, and that for any category marked, it has truthfully
set forth the factual basis or reason the Purchaser comes within that category.
The undersigned agrees to furnish any additional information which the Company
deems necessary in order to verify the answers set forth below.
|_| (a) The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or joint net
worth with its spouse, presently exceeds $1,000,000.
Explanation. In calculating net worth you may include equity
in personal property and real estate, including your principal
residence, cash, short-term investments, stock and securities.
Equity in personal property and real estate should be based on
the fair market value of such property less debt secured by
such property.
|_| (b) The undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of $200,000 in
each of the two most recent years, or joint income with their
spouse in excess of $300,000 in each of those years (in each
case including foreign income, tax exempt income and full
amount of capital gains and loses but excluding any income of
other family members and any unrealized capital appreciation)
and has a reasonable expectation of reaching the same income
level in the current year.
|_| (c) The undersigned is a director or executive officer of the
Company which is issuing and selling the Securities.
|_| (d) The undersigned is a bank; a savings and loan association,
insurance company, registered investment company;
registered business development company; licensed small
business investment ("SBIC"); and employee benefit plan
within the meaning of Title 1 of ERISA and (a) the investment
decision is made by a plan fiduciary which is either a bank,
savings and loan association, insurance company or registered
investment advisor, or (b) the plan has total assets in excess
of $5,000,000 or is a self directed plan with investment
decisions made solely by persons that are accredited
investors.
-------------------------------------------------------------
-------------------------------------------------------------
(describe entity)
|_| (e) The undersigned is a private business development company
as defined in section 202(a)(22) of the Investment
Advisors Act of 1940;
-------------------------------------------------------------
-------------------------------------------------------------
(describe entity)
|_| (f) The undersigned is a corporation, partnership, or
non-profit organization within the meaning of Section
501(c)(3) of the Internal Revenue Code, in each case not
formed for the specific purpose of acquiring the Securities
and with total assets in excess of $5,000,000;
-------------------------------------------------------------
-------------------------------------------------------------
(describe entity)
|_| (g) The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring
the Securities, where the purchase is directed by a
"sophisticated person" as defined in Regulation 506(b)(2)(ii).
|_| (h) the undersigned is an entity all the equity owners of
which are "accredited investors" within one or more of the
above categories. If relying upon this Category alone, each
equity owner must complete a separate copy of this Agreement.
-------------------------------------------------------------
-------------------------------------------------------------
(describe entity)
THE UNDERSIGNED IS INFORMED OF THE SIGNIFICANCE TO YOU OF THE FOREGOING
REPRESENTATIONS, AND THEY ARE MADE WITH THE INTENTION THAT YOU WILL RELY ON
THEM.
B. MANNER IN WHICH TITLE TO BE HELD (check one)
1. |_| Individual Ownership
2. |_| Community Property
3. |_| JointTenant with Right of Survivorship(both parties must sign)
4. |_| Partnership*
5. |_| Tenants in Common
6. |_| Corporation*
7. |_| Trust*
8. |_| Other
* If Securities are being purchased by an entity, the Certificate of Signatory
attached to the Subscription Agreement must also be completed.
IN WITNESS WHEREOF, the undersigned has executed the
Questionnaire on April 30, 1999.
------------------------
(Signature)
------------------------
(Title for Entity)
EXHIBIT 4.6
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
between
EDGE PETROLEUM CORPORATION
and
EDGE PETROLEUM EXPLORATION COMPANY,
and
THE FIRST NATIONAL BANK OF CHICAGO,
AS AGENT AND A LENDER
AND
THE OTHER LENDERS SIGNATORY HERETO
Effective as of
March 1, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS .................................... 1
1.01 Terms Defined Above ................................ 1
1.02 Terms Defined in Agreement........................... 2
1.03 References ........................................ 2
1.04 Articles and Sections ............................... 2
1.05 Number and Gender ................................... 2
ARTICLE II. WAIVERS ............................................ 2
2.01 Waiver ........................................ 2
2.02 Limitation on Waiver .............................. 2
ARTICLE III. AMENDMENTS ....................................... 3
3.01 Amendment of Section 1.2 .......................... 3
3.02 Amendment of Section 2.1(a) ...................... 4
3.03 Addition of Section 2.5(a) ....................... 4
3.04 Amendment of Section 2.9(a ........................ 5
3.05 Amendment of Section 2.26 ......................... 5
3.06 Amendment of Section 5.2 .......................... 5
3.07 Amendment of Section 9.3(a) ....................... 6
3.08 Amendment of Section 6.14 .......................... 6
3.09 Deletion of Section 6.15 and 6.16 ................. 6
3.10 Addition of Section 6.17 ........................ 6
3.12 Global Deletion of EBIT .................. 6
3.13 Global Deletion of Index Rate .................. 7
3.14 Global Deletion of Compass Bank ................... 7
ARTICLE IV. CONDITIONS ...................................... 7
4.01 Receipt of Documents ............................. 7
4.02 Accuracy of Representations and Warranties ......... 7
4.03 Matters Satisfactory to Agent and the Lender ....... 7
ARTICLE V. REPRESENTATIONS AND WARRANTIES .................. 7
ARTICLE VI. RATIFICATION ........................................ 8
ARTICLE VII. MISCELLANEOUS ...................................... 8
7.01 Scope of Amendment .................................. 8
7.02 Agreement as Amended ................................ 8
7.03 Parties in Interest ................................. 8
7.04 Rights of Third Parties ............................. 8
7.05 ENTIRE AGREEMENT ................................... 8
7.06 GOVERNING LAW .................................... 9
7.07 JURISDICTION AND VENUE ............................ 9
LIST OF EXHIBITS
EXHIBIT I - Form of Promissory Note
EXHIBIT II - Form of Borrowing Request
EXHIBIT III - Form of Compliance Certificate
EXHIBIT IV - Form of Borrowing Base Utilization Certificate
2
<PAGE>
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "First Amendment") is made and entered into effective as of March 1, 1999,
between EDGE PETROLEUM CORPORATION, a Delaware corporation, and EDGE PETROLEUM
EXPLORATION COMPANY, a Delaware corporation (collectively, the "Borrower", but
with such entities constituting the Borrower being jointly and severally liable
for the Obligations and each reference herein to the Borrower being applicable
to each of such entities) and THE FIRST NATIONAL BANK OF CHICAGO, a national
banking association ("First Chicago"), and each other lender that becomes a
signatory hereto as provided in Section 9.1 (First Chicago and each such other
lender, together with its successors and assigns, individually a "Lender" and
collectively, the "Lenders"), and First Chicago, as agent for the Lenders
pursuant to the terms hereof (in such capacity, together with its successors in
such capacity pursuant to the terms hereof, (the "Agent").
W I T N E S S E T H:
WHEREAS, the above named parties together with Compass Bank
did execute and exchange counterparts of that certain Amended and Restated
Credit Agreement dated April 1, 1998 (the "Agreement"), to which reference is
here made for all purposes;
WHEREAS, Compass Bank assigned its interest to First Chicago
on September 29, 1998;
WHEREAS, the parties subject to and bound by the Agreement
are desirous of amending the Agreement in the particulars hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties to the Agreement, as set forth therein, and the mutual
covenants and agreements of the parties hereto, as set forth in this First
Amendment, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.01 Terms Defined Above. As used herein, each of the terms
"Agent," "Agreement," "Borrower," "First Amendment," "First Chicago," and
"Lender" or "Lenders" shall have the meaning assigned to such term hereinabove.
1.02 Terms Defined in Agreement. As used herein, each term
defined in the Agreement shall have the meaning assigned thereto in the
Agreement, unless expressly provided herein to the contrary.
1.03 References. References in this First Amendment to Article
or Section numbers shall be to Articles and Sections of this First Amendment,
unless expressly stated herein to the contrary. References in this First
Amendment to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow,"
"hereof," and "hereunder" shall be to this First Amendment in its entirety and
not only to the particular Article or Section in which such reference appears.
1.04 Articles and Sections. This First Amendment, for
convenience only, has been divided into Articles and Sections and it is
understood that the rights, powers, privileges, duties, and other legal
relations of the parties hereto shall be determined from this First Amendment as
an entirety and without regard to such division into Articles and Sections and
without regard to headings prefixed to such Articles and Sections.
2
<PAGE>
1.05 Number and Gender. Whenever the context requires,
reference herein made to the single number shall be understood to include the
plural and likewise the plural shall be understood to include the singular.
Words denoting sex shall be construed to include the masculine, feminine, and
neuter, when such construction is appropriate, and specific enumeration shall
not exclude the general, but shall be construed as cumulative. Definitions of
terms defined in the singular and plural shall be equally applicable to the
plural or singular, as the case may be.
ARTICLE II.
WAIVERS
. The Agent and Lender hereby waives any Default or Event of
Default arising under the Agreement or any other Loan Document solely as the
result of the breach of Sections 6.15 and 6.16 as a one-time waiver and refers
only to the breach which was made as of December 31, 1998. Furthermore, the
Agent and the Lender hereby waives any right to exercise any remedy available
under the provisions of any of the Loan Documents solely as a result of any
Default or Event of Default hereinabove waived.
2.02 Limitation on Waiver. The scope of the waiver set forth
in Section 2.1 is expressly limited to its terms and does not extend to any
other or future breaches, Defaults, violations or Events of Default under the
Agreement or any other Loan Document.
ARTICLE III.
AMENDMENTS
The Borrower and the Lender hereby amend the Agreement in the following
particulars:
3.01 Amendment of Section 1.2 Section 1.2 of the Agreement is hereby
amended as follows:
The following definitions are added or amended to read as follows:
"Applicable Margin" shall mean as to each LIBO Rate Loan, the following:
Borrowing Base LIBO Rate Loan LIBO Rate Loan
Utilization Applicable Margin Applicable Margin
(while Tranche B (without Tranche B)
is outstanding)
equal to or greater two and three-fourths two and one-fourth
than 75% of percent (2-3/4%) percent (2-1/4%)
Borrowing Base
less than 75% but greater two and three-fourths two percent (2%)
than 50% of Borrowing percent (2-3/4%)
Base
less than or equal to two and three-fourths one and three-fourths
50% of Borrowing Base percent (2-3/4%) percent (1-3/4%),
with the Borrowing Base Utilization and the corresponding LIBO
Rate being set at the close of each calendar quarter for the
next calendar quarter. The Borrower shall furnish to the
Agent, within five (5) days of the end of each calendar
quarter, a Borrowing Base Utilization Certificate,
substantially in the form attached as Exhibit IV to this
Agreement, which shall stipulate the Borrowing Base
Utilization level at the end of such quarter."
3
<PAGE>
"Base Rate" shall mean the interest rate announced or
published by the Lender from time to time as its general
reference rate of interest, which Base Rate shall change upon
any change in such announced or published general reference
interest rate and which Base Rate may not be the lowest
interest rate charged by the Lender.
"Commitment Amount" shall mean 100% as to First Chicago.
"EBITDA" shall mean, annualized on a quarterly basis, Net
Income for such period, plus Interest Expense, federal and
state income taxes, depreciation, amortization, and other
non-cash expenses, including non-cash unearned compensation
expenses for such period deducted in the determination of Net
Income for such period.
"Engineering Fee" shall mean each fee payable to the Agent by
the Borrower pursuant to Section 2.26.
"Floating Rate" shall mean an interest rate per annum equal to
the Base Rate from time to time in effect, plus one-half
percent (1/2%) so long as Tranche B is outstanding and Base
Rate when Tranche B has been paid in full, but in no event
exceeding the Highest Lawful Rate.
"Tranche A" shall mean the currently existing revolving line
of credit with a Borrowing Base of $9,000,000.
"Tranche B" shall mean a Loan of $3,000,000 with a maturity of
August 31, 1999.
3.02 Amendment of Section 2.1(a). Section 2.1(a) of
the Agreement is amended to add the following sentence:
"2.1 Revolving Line of Credit. (a).......... The Loans
made under this Section 2.1 are Tranche A Loans."
3.03 Addition of Section 2.5(a). Section 2.5(a)
shall be added to the Agreement as follows:
"2.5(a) Tranche B Loans. Tranche B is in the amount of
$3,000,000. Accrued and unpaid interest on the Tranche B Loans
shall bear interest at the same rate as Tranche A Loans and
shall be payable on the same dates as Tranche A Loans. The
Borrower shall pay to the Lender 75% of the proceeds of all
sales of Oil and Gas Properties to permanently reduce the
Tranche B Loan and such payments shall be made on the date the
sales of such Oil and Gas Properties are made. In addition,
any cash proceeds from the sale of equity, other refinancings
and other non-core asset sales will be required to permanently
reduce outstandings under Tranche B Loans. All accrued and
unpaid interest and all principal then due and owing shall be
due and payable on August 31, 1999."
3.04 Amendment of Section 2.9(a). Section 2.9(a) of
the Agreement is amended to read as follows:
"2.9 Borrowing Base Determinations. (a).The Borrowing Base
as of the date of this First Amendment is acknowledged by
the Borrower and the Lender to be $9,000,000. Commencing on
May 1, 1999, and continuing thereafter on the first day of
each calendar month until the date such amount is redetermined
or the Commitment Termination Date, the Scheduled Reduction
Amount shall be $400,000."
4
<PAGE>
3.05 Amendment of Section 2.26. Section 2.26 shall be
added to the Agreement to read as follows:
"2.26 Engineering Fee. In addition to interest on the Note as
provided herein and all other fees payable under and to
compensate the Agent for the costs of evaluating the Mortgaged
Properties and reviewing the Reserve Reports, the Borrower
shall pay to the Agent, in immediately available funds, on the
date of each redetermination of the Borrowing Base, an
engineering fee in the amount of $2,500."
3.06 Amendment of Section 5.2. Section 5.2(a) of the
Agreement is amended to read as follows:
5.2 Monthly Financial Statements; Compliance Certificates.
Commencing with the fiscal month beginning April 1, 1999,
deliver to the Agent and each Lender, (a) on or before the
30th day after the close of each monthly period of each fiscal
year of the Borrower, a copy of the unaudited consolidated and
consolidating Financial Statements of the Borrower and its
consolidated Subsidiaries as at the close of such monthly
period and from the beginning of such fiscal year to the end
of such period, such Financial Statements to be certified by a
Responsible Officer of the Borrower as having been prepared in
accordance with GAAP consistently applied and as a fair
presentation of the condition of the Borrower, subject to
changes resulting from normal year-end audit adjustments, and
(b) on or before the 30th day after the close of each monthly
period and on or before the 120th day after the close of each
fiscal year, a Compliance Certificate in the form of Exhibit
III hereto signed by a Responsible Officer of the Borrower."
3.07 Amendment of Section 9.3(a). Section 9.3(a) of
the Agreement is amended to read as follows:
"9.3 Notices and Other Communications.
(a) if to Agent or First Chicago in its capacity as a
Lender:
The First National Bank of Chicago
One First National Plaza
10th Floor, Suite 0634
Chicago, Illinois 60670-0634
Attention: John Bierne
Telecopy: (312) 732-4840
(b) with a copy to:
The First National Bank of Chicago/
Bank One, Texas, N.A.
910 Travis Street
Houston, Texas 77002
Attention: Jeff Dalton, Energy Group, 6th Floor
Telecopy: (713) 751-7894
3.08 Amendment of Section 6.14. Section 6.14 of the
Agreement is amended to read as follows:
5
"6.14 Tangible Net Worth. Permit Tangible Net Worth as of the
close of any fiscal quarter of Edge Petroleum Corporation to
be less than 90% of the Tangible Net Worth as of December 31,
1998, plus 50% of positive Net Income and 100% of other
increases in equity for all fiscal quarters ending subsequent
to December 31, 1998."
3.09 Deletion of Section 6.15 and 6.16. Section 6.15
Cash Flow Coverage and Section 6.16 EBIT to Interest Expense Ratio are hereby
deleted from the Agreement.
3.10 Addition of Section 6.17. Section 6.17 is added to
the Agreement to read as follows:
"6.17 Fixed Charge Coverage. Permit, as of the close of any
fiscal quarter beginning June 30, 1999, of Edge Petroleum
Corporation, the ratio of annualized EBITDA to annualized
Interest Expense, plus 50% of quarter end loan outstandings to
be less than 1.25 to 1.00."
3.11 Amendment of Exhibits to Agreement. (a) Exhibit I, i.e.
the Form of Promissory Note, is replaced by Exhibit I attached hereto and the
Promissory Note payable to Compass Bank is hereby deleted; (b) Exhibit II, i.e.
the Form of Borrowing Request, is replaced by Exhibit II attached hereto; (c)
Exhibit III, i.e. the Form of Compliance Certificate, is replaced by Exhibit III
attached hereto; and (d) Exhibit IV, i.e. the Form of Borrowing Base Utilization
Certificate, is replaced by Exhibit IV attached hereto.
3.12 Global Deletion of EBIT. The term "EBIT" is deleted from
the Agreement and in its place is substituted the term "EBITDA".
3.13 Global Deletion of Index Rate. The term "Index Rate" is
deleted from the Agreement and in its place is substituted the term "Base Rate".
3.14 Global Deletion of Compass Bank. The term
"Compass Bank" is deleted from the Agreement.
ARTICLE IV.
CONDITIONS
The obligation of the Agent and the Lender to amend the
Agreement as provided herein is subject to the fulfillment of the following
conditions precedent:
4.01 Receipt of Documents. The Lender shall have received,
reviewed, and approved the following documents and other items, appropriately
executed when necessary and in form and substance satisfactory to the Lender:
(a) multiple counterparts of this First Amendment and the
Note, as requested by the Agent;
(b) Notice of Final Agreement; and
(c) such other agreements, documents, items, instruments,
opinions, certificates, waivers, consents, and evidence as the
Lender may reasonably request.
4.02 Accuracy of Representations and Warranties. The
representations and warranties contained in Article IV of the Agreement and this
First Amendment shall be true and correct.
4.03 Matters Satisfactory to Agent and the Lender. All matters
incident to the consummation of the transactions contemplated hereby shall be
satisfactory to the Agent and the Lender.
6
<PAGE>
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby expressly re-makes, in favor of the Agent
and the Lender, all of the representations and warranties set forth in Article
IV of the Agreement, and represents and warrants that all such representations
and warranties remain true and unbreached.
ARTICLE VI.
RATIFICATION
Each of the parties hereto does hereby adopt, ratify, and
confirm the Agreement and the other Loan Documents, in all things in accordance
with the terms and provisions thereof, as amended by this First Amendment.
ARTICLE VII.
MISCELLANEOUS
7.01 Scope of Amendment. The scope of this First Amendment is
expressly limited to the matters addressed herein and this First Amendment shall
not operate as a waiver of any past, present, or future breach, Default, or
Event of Default under the Agreement, except to the extent, if any, that any
such breach, Default, or Event of Default is remedied by the effect of this
First Amendment.
7.02 Agreement as Amended. All references to the Agreement in
any document heretofore or hereafter executed in connection with the
transactions contemplated in the Agreement shall be deemed to refer to the
Agreement as amended by this First Amendment.
7.03 Parties in Interest. All provisions of this First
Amendment shall be binding upon and shall inure to the benefit of the Borrower,
the Lender and their respective successors and assigns.
7.04 Rights of Third Parties. All provisions herein are
imposed solely and exclusively for the benefit of the Lender and the Borrower,
and no other Person shall have standing to require satisfaction of such
provisions in accordance with their terms and any or all of such provisions may
be freely waived in whole or in part by the Lender at any time if in its sole
discretion it deems it advisable to do so.
7.05 ENTIRE AGREEMENT. THIS FIRST AMENDMENT CONSTITUTES THE
ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF
AND SUPERSEDES ANY PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, BETWEEN SUCH
PARTIES REGARDING THE SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS FIRST
AMENDMENT, THE AGREEMENT, THE NOTE, THE SECURITY INSTRUMENTS, AND THE OTHER
WRITTEN DOCUMENTS REFERRED TO IN THE AGREEMENT OR EXECUTED IN CONNECTION WITH OR
AS SECURITY FOR THE NOTE REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
7.06 GOVERNING LAW. THIS FIRST AMENDMENT, THE AGREEMENT AND
THE NOTE SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS. THE PARTIES
ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT AND THE NOTE AND THE TRANSACTIONS
CONTEMPLATED HEREBY BEAR A NORMAL, REASONABLE, AND SUBSTANTIAL RELATIONSHIP TO
THE STATE OF TEXAS.
7.07 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED
TO, OR FROM THIS FIRST AMENDMENT, THE AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY
BE LITIGATED IN COURTS HAVING SITUS IN HARRIS COUNTY, TEXAS. EACH OF THE
BORROWER AND THE LENDER HEREBY SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE,
OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS
IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION
BROUGHT AGAINST IT BY THE BORROWER OR THE LENDER IN ACCORDANCE WITH THIS
SECTION.
8
<PAGE>
IN WITNESS WHEREOF, this First Amendment to Credit Agreement
is executed effective the date first hereinabove written.
BORROWER:
EDGE PETROLEUM CORPORATION
By: /S/ Michael G. Long
---------------------
Michael G. Long
Chief Financial Officer
EDGE PETROLEUM EXPLORATION
COMPANY
By: /S/ Michael G. Long
---------------------
Michael G. Long
Chief Financial Officer
LENDER AND AGENT:
THE FIRST NATIONAL BANK OF CHICAGO
By: /S/ Ronald L. Dierker
----------------------
Ronald L. Dierker
Vice President
9
<PAGE>
EXHIBIT I
[FORM OF NOTE]
PROMISSORY NOTE
$100,000,000 Houston, Texas March 1, 1999
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned
("Maker", whether one or more, and if more than one, with the obligation of such
parties hereunder being joint and several in all respects) promises to pay to
the order of THE FIRST NATIONAL BANK OF CHICAGO ("Payee"), at the principal
banking quarters of The First National Bank of Chicago in Chicago, Cook County,
Illinois, the sum of ONE HUNDRED MILLION DOLLARS ($100,000,000), or so much
thereof as may be advanced against this Note pursuant to the Amended and
Restated Credit Agreement dated April 1, 1998 by and between Maker and Payee and
others (as amended, supplemented, restated or otherwise modified from time to
time, the "Credit Agreement"), together with interest at the rates and
calculated as provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters
governed thereby, including, without limitation, certain events which will
entitle the holder hereof to accelerate the maturity of all amounts due
hereunder. Capitalized terms used but not defined in this Note shall have the
respective meanings assigned to such terms in the Credit Agreement.
This Note is issued pursuant to, is a "Note" under, and is
payable as provided in the Credit Agreement. Subject to compliance with
applicable provisions of the Credit Agreement, Maker may at any time pay the
full amount or any part of this Note without the payment of any premium or fee,
but such payment shall not, until this Note is fully paid and satisfied, excuse
the payment as it becomes due of any payment on this Note provided for in the
Credit Agreement.
Without being limited thereto or thereby, this Note is
secured by the Security Instruments.
This Note is given in part in renewal, extension, and
modification, but not in discharge or novation, of that certain Promissory Note
dated July 11, 1995 in the face amount of up to $20,000,000 made by Edge Joint
Venture II, predecessor to Edge Petroleum Exploration Company, and payable to
Compass Bank and Promissory Note dated April 1, 1998, in the face amount of up
to $25,000,000 made by Edge Petroleum Corporation and Edge Petroleum Exploration
Corporation and payable to The First National Bank of Chicago.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE
STATE OF TEXAS, WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE
5069, CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND
REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
MAKER:
EDGE PETROLEUM CORPORATION
By: /S/ Michael G. Long
----------------------
Michael G. Long
Chief Financial Officer
EDGE PETROLEUM EXPLORATION COMPANY
By: /S/ Michael G. Long
----------------------
Michael G. Long
Chief Financial Officer
<PAGE>
EXHIBIT II
[FORM OF BORROWING REQUEST]
-----------------, -------
The First National Bank of Chicago
One First National Plaza
Floor 10, Suite 0634
Chicago, Illinois 60670
Attention: Kathy Murphy
Re: Amended and Restated Credit Agreement dated as of April 1,
1998, as amended by First Amendment dated as of March 1, 1999,
by and among Edge Petroleum Corporation and Edge Petroleum
Exploration Company, as Borrower, The First National Bank of
Chicago, as Agent and a Lender, and the additional Lenders
party thereto from time to time (as amended, supplemented,
restated or otherwise modified from time to time, the "Credit
Agreement")
Ladies and Gentlemen:
Pursuant to the Credit Agreement, the Borrower hereby makes
the requests indicated below:
[ ] 1. Loans
(a) Amount of new Loan: $
(b) Requested funding date: , 19
(c) $ of such Loan is to be a Floating Rate Loan;
$________________ of such Loan is to be a LIBO Rate Loan.
(d) Requested Interest Period for LIBO Rate Loan: ____ months.
[ } 2. Continuation or conversion of LIBO Rate Loan maturing on :
(a) Amount to be continued as a LIBO Rate Loan is $__________,
with an Interest Period of months;
(b) Amount to be converted to a Floating Rate Loan is $_________;
and
[ ] 3. Conversion of Floating Rate Loan:
(a) Requested conversion date:_______, 19_____.
(b) Amount to be converted to a LIBO Rate Loan is $____________ ,
with an Interest Period of _____ months.
The undersigned certifies that [s]he is the [ ] of the
Borrower, has obtained all consents necessary, and as such [s]he is authorized
to execute this request on behalf of the Borrower. The undersigned further
certifies, represents, and warrants on behalf of the Borrower that the Borrower
is entitled to receive the requested borrowing, continuation, or conversion
under the terms and conditions of the Credit Agreement.
Each capitalized term used but not defined herein shall have
the meaning assigned to such term in the Credit Agreement.
Very truly yours,
EDGE PETROLEUM CORPORATION
By:________________________
Printed Name:______________
Title:_____________________
EDGE PETROLEUM EXPLORATION
COMPANY
By:________________________
Printed Name:______________
Title:_____________________
<PAGE>
EXHIBIT III
[FORM OF COMPLIANCE CERTIFICATE]
________, 19____
The First National Bank of Chicago
910 Travis
Houston, Texas 77002
Attention: Energy Group, 6th Floor
Re: Amended and Restated Credit Agreement dated as of April 1,
1998, as amended by First Amendment dated as of March 1, 1999,
by and among Edge Petroleum Corporation and Edge Petroleum
Exploration Company, as Borrower, The First National Bank of
Chicago, as Agent and a Lender, and the additional Lenders
party thereto from time to time (as amended, supplemented,
restated or otherwise modified from time to time, the "Credit
Agreement")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement,
the undersigned, as a Responsible Officer of the Borrower hereby certify to you
the following information as true and correct as of the date hereof or for the
period indicated, as the case may be:
[1. To the best of the knowledge of the undersigned, no Default
or Event of Default exists as of the date hereof or has occurred since
the date of our previous certification to you, if any.]
[1. To the best of the knowledge of the undersigned, the following
Defaults or Events of Default exist as of the date hereof or have
occurred since the date of our previous certification to you, if any,
and the actions set forth below are being taken to remedy such
circumstances:]
2. The compliance of the Borrower with the financial covenants of the
Credit Agreement, as of the close of business on , is evidenced by the
following:
[Set forth in reasonable detail the calculations required to establish
that Borrower was in compliance with the following Sections].
(a) Section 6.14 Tangible Net Worth. Permit Tangible Net Worth as of
the close of any fiscal quarter of Edge Petroleum Corporation to be
less than 90% of the Tangible Net Worth as of December 31, 1998, plus
50% of positive Net Income and 100% of other increases in equity for
all fiscal quarters ending subsequent to December 31, 1998.
Required Actual
-------- ------
Required as of the last quarter, Plus 100% of equity raised,
Plus 50% of Net Income equals current Required Tangible Net
Worth
(b) Section 6.17 Fixed Charge Coverage. Permit, as of the close of
any fiscal quarter of Edge Petroleum Corporation, the ratio of
EBITDA to Interest Expense, plus 50% of quarter end loan
outstandings to be less than 1.25 to 1.00.
Actual
------
3. No Material Adverse Effect has occurred since the date of the
Financial Statements dated as of_________.
Each capitalized term used but not defined herein shall have
the meaning assigned to such term in the Credit Agreement.
Very truly yours,
EDGE PETROLEUM CORPORATION
By:
Printed Name:
Title:
EDGE PETROLEUM EXPLORATION
COMPANY
By:
Printed Name:
Title:
<PAGE>
EXHIBIT IV
[FORM OF BORROWING BASE UTILIZATION CERTIFICATE]
The First National Bank of Chicago
910 Travis
Houston, Texas 77002
Attention: Energy Group, 6th Floor
Re: Amended and Restated Credit Agreement dated as of April 1,
1998, as amended by First Amendment dated as of March 1, 1999,
by and among Edge Petroleum Corporation and Edge Petroleum
Exploration Company, as Borrower, The First National Bank of
Chicago, as Agent and a Lender, and the additional Lenders
party thereto from time to time (as amended, supplemented,
restated or otherwise modified from time to time, the "Credit
Agreement")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as a Responsible Officer of the Borrower, hereby certify to you the
following information as true and correct as of the date hereof or for the
period indicated, as the case may be:
To the best knowledge of the undersigned, the Borrowing Base
Utilization, as described in the definition of Applicable Margin, for the
quarter ending __________, 19__, was as follows, and the LIBO Rate Loan
Applicable Margin for the following quarter is as follows:
Borrowing Base LIBO Rate Loan LIBO Rate Loan
Utilization Applicable Margin Applicable Margin
(while Tranche B (without Tranche B)
is outstanding)
equal to or greater two and three-fourths two and one-fourth
than 75% of percent (2-3/4%) percent (2-1/4%)
Borrowing Base
less than 75% but greater two and three-fourths two percent (2%)
than 50% of Borrowing percent (2-3/4%)
Base
less than or equal to two and three-fourths one and three-fourths
50% of Borrowing Base percent (2-3/4%) percent (1-3/4%)
[only one of the above categories to be shown]
<PAGE>
To the best knowledge of the undersigned, the Borrowing Base
Utilization for the quarter ending __________, 19__, was as follows and the
Commitment Fee, as described in Section 2.10 of the Credit Agreement for the
following quarter is as follows:
Borrowing Base
Utilization Commitment Fee
-------------- -----------------------
greater than 50% one-half percent (1/2%)
of Borrowing Base
less than or equal to 50% three-eighths percent (3/8%)
of Borrowing Base
[only one of the above categories to be shown]
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
EDGE PETROLEUM CORPORATION
By:_______________________
Printed Name:_____________
Title:____________________
EDGE PETROLEUM EXPLORATION
COMPANY
By:_______________________
Printed Name:_____________
Title:____________________
EXHIBIT 10.14
EDGE PETROLEUM CORPORATION
1997 INCENTIVE PLAN
STANDARD
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the _____ day of
__________________, ______ (the "Grant Date"), by and between Edge Petroleum
Corporation, a Delaware corporation (the "Company"), and
(the "Grantee").
The Company has adopted the Edge Petroleum Corporation 1997
Incentive Plan (the "Plan"), a copy of which is appended to this Agreement as
Exhibit A and by this reference made a part hereof, for the benefit of eligible
employees, directors and independent contractors of the Company and its
Subsidiaries. Capitalized terms used and not otherwise defined herein shall have
the meaning ascribed thereto in the Plan.
Pursuant to the Plan, the Committee, which has generally been
assigned responsibility for administering the Plan, has determined that it would
be in the interest of the Company and its stockholders to grant the options
provided herein in order to provide Grantee with additional remuneration for
services rendered, to encourage Grantee to remain in the employ of the Company
or its Subsidiaries and to increase Grantee's personal interest in the continued
success and progress of the Company.
The Company and Grantee therefore agree as follows:
1. Grant of Option. Subject to the terms and conditions herein, the
Company grants to the Grantee during the period commencing on ____________
_____, ______ and expiring at 5 p.m. Houston, Texas time ("Close of Business")
on ____________ _____, ______ (the "Option Term"), subject to earlier
termination pursuant to paragraph 6 below, an option to purchase from the
Company, at the price per share set forth on Schedule 1 hereto (the "Option
Price"), the number of shares of Company Common Stock ("Common Stock") set forth
on said Schedule 1 (the "Option Shares"). The Option Price and Option Shares are
subject to adjustment pursuant to paragraph 9 below. This option is as a
"Nonqualified Stock Option" and is hereinafter referred to as the "Option."
2. Conditions of Exercise. The Option is exercisable only in accordance
with the conditions stated in this paragraph.
(a) Except as otherwise provided in this subparagraph (a), the
Option may only be exercised to the extent the Option Shares have
become available for purchase in accordance with the following
schedule:
Percentage of Option
Date Shares Available for Purchase
____________ _____, ______ 20%
____________ _____, ______ 40%
____________ _____, ______ 60%
____________ _____, ______ 80%
____________ _____, ______ 100%
1
<PAGE>
Notwithstanding the foregoing, subject to the provisions of any
applicable written employment agreement between the Grantee and the
Company or any Subsidiary, no additional Option Shares shall become
available for purchase if Grantee has not remained in the continuous
employment of the Company and its Subsidiaries through the applicable
date; provided, however, that any Option Shares that would otherwise
become available for purchase pursuant to the foregoing schedule during
the 12-month period ending on the first anniversary of the date of
Grantee's termination of employment shall become available for purchase
on the specified date during such period if the Grantee's employment
was terminated for any reason other than (i) by the Company or any
Subsidiary for Cause (as defined in Section 6 below) or (ii)
voluntarily by the Grantee without Good Reason (as defined in Section 6
below). A change of employment is continuous employment within the
meaning of this paragraph 2 provided that, after giving effect to such
change, the Grantee continues to be an employee of the Company or any
Subsidiary.
(b) To the extent the Option becomes exercisable, such Option
may be exercised in whole or in part (at any time or from time to time,
except as otherwise provided herein) until expiration of the Option
Term or earlier termination thereof.
3. Manner of Exercise. The Option shall be considered exercised (as to
the number of Option Shares specified in the notice referred to in subparagraph
(a) below) on the latest of (i) the date of exercise designated in the written
notice referred to in subparagraph (a) below, (ii) if the date so designated is
not a business day, the first business day following such date or (iii) the
earliest business day by which the Company has received all of the following:
(a) Written notice, in such form as the Committee may require,
designating, among other things, the date of exercise and the number of
Option Shares to be purchased;
(b) If the Option is to be exercised, payment of the Option
Price for each Option Share to be purchased in cash, Common Stock or in
such other form (or combination of forms) of payment contemplated by
Section 11 of the Plan as the Committee or the provisions of Section 11
of the Plan may permit; provided, however, that any shares of Common
Stock delivered in payment of the Option Price that are or were the
subject of an Employee Award must be shares that the Grantee has owned
for a period of at least six months prior to the date of exercise; and
(c) Any other documentation that the Committee may reasonably
require.
4. Mandatory Withholding for Taxes. Grantee acknowledges and agrees
that the Company shall deduct from the cash and/or shares of Common Stock
otherwise payable or deliverable upon exercise of the Option an amount of cash
and/or number of shares of Common Stock (valued at their Fair Market Value on
the date of exercise) that is equal to the amount of all federal, state and
local taxes required to be withheld by the Company upon such exercise, as
determined by the Committee.
5. Delivery by the Company. As soon as practicable after receipt of all
items referred to in paragraph 3, and subject to the withholding referred to in
paragraph 4, the Company shall deliver to the Grantee certificates issued in
Grantee's name for the number of Option Shares purchased by exercise of the
Option. If delivery is by mail, delivery of shares of Common Stock shall be
deemed effected for all purposes when a stock transfer agent of the Company
shall have deposited the certificates in the United States mail, addressed to
the Grantee, and any cash payment shall be deemed effected when a Company check,
payable to Grantee and in an amount equal to the amount of the cash payment,
shall have been deposited in the United States mail, addressed to the Grantee.
2
<PAGE>
6. Termination of Employment. Unless otherwise determined by the
Committee in its sole discretion, the Option shall terminate, prior to the
expiration of the Option Term, at the time specified below:
(a) If Grantee terminates employment with the Company and its
Subsidiaries voluntarily without Good Reason (as defined below), then
the Option shall terminate at the Close of Business on the first
business day following the expiration of the 90-day period which began
on the date of termination of Grantee's employment; or
(b) If Grantee's employment with the Company and its
Subsidiaries is terminated by the Company or a Subsidiary for Cause (as
defined below), then the Option shall terminate immediately upon such
termination of Grantee's employment.
In any event in which the Option remains exercisable for a
period of time following the date of termination of Grantee's employment, the
Option may be exercised during such period of time only to the extent it is or
becomes exercisable as provided in paragraph 2. Notwithstanding any period of
time referenced in this paragraph 6 or any other provision of this paragraph
that may be construed to the contrary, the Option shall in any event terminate
upon the expiration of the Option Term.
"Cause" for purposes of the Agreement shall mean cause as
defined in any written employment agreement between the Grantee and the Company
or a Subsidiary in effect at the time of the Grantee's termination of employment
or, in the absence of any such employment agreement, any of the following: (a)
conviction of the Grantee by a court of competent jurisdiction of any felony or
a crime involving moral turpitude; (b) the Grantee's knowing failure or refusal
to follow reasonable instructions of the Board or reasonable policies, standards
and regulations of the Company or its Subsidiaries; (c) the Grantee's continued
failure or refusal to faithfully and diligently perform the usual, customary
duties of his employment with the Company or a Subsidiary; (d) the Grantee
continuously conducting himself in an unprofessional, unethical, immoral or
fraudulent manner; or (e) the Grantee's conduct discredits the Company or a
Subsidiary or is detrimental to the reputation, character and standing of the
Company or a Subsidiary.
"Good Reason" for purposes of the Agreement shall mean good
reason as defined in any written employment agreement between the Grantee and
the Company or a Subsidiary in effect at the time of the Grantee's termination
of employment or, in the absence of any such employment agreement, shall be
deemed to have occurred upon the happening of any of the following:
(i) any reduction in Grantee's annual rate of salary;
(ii) either (x) a failure of the Company to continue in effect
any employee benefit plan in which Grantee was participating or (y) the
taking of any action by the Company that would adversely affect
Grantee's participation in, or materially reduce Grantee's benefits
under, any such employee benefit plan, unless such failure or such
taking of any action adversely affects the senior members of the
corporate management of the Company generally;
(iii) the assignment to Grantee of duties and responsibilities
that are materially more oppressive or onerous than those attendant to
Grantee's position immediately after the date hereof;
(iv) the relocation of the office location as assigned to
Grantee by the Company to a location more than 20 miles from Grantee's
current location without Grantee's consent; or
3
<PAGE>
(v) the failure of the Company to obtain, prior to the time of any
reorganization, merger, consolidation, disposition of all or substantially all
of the assets of the Company or similar transaction effective after the date
hereof, in which the Company is not the surviving person, the unconditional
assumption in writing or by operation of law of the Company's obligations to
Grantee under this Agreement by each direct successor to the Company in any such
transaction.
7. Nontransferability of Option. During Grantee's lifetime, the Option
is not transferable (voluntarily or involuntarily) other than pursuant to a
domestic relations order and, except as otherwise required pursuant to a
domestic relations order, is exercisable only by the Grantee or Grantee's court
appointed legal representative. The Grantee may designate a beneficiary or
beneficiaries to whom the Option shall pass upon Grantee's death and may change
such designation from time to time by filing a written designation of
beneficiary or beneficiaries with the Committee on the form annexed hereto as
Exhibit B or such other form as may be prescribed by the Committee, provided
that no such designation shall be effective unless so filed prior to the death
of Grantee. If no such designation is made or if the designated beneficiary does
not survive the Grantee's death, the Option shall pass by will or the laws of
descent and distribution. Following Grantee's death, the Option, if otherwise
exercisable, may be exercised by the person to whom such option passes
accordingly to the foregoing and such person shall be deemed the Grantee for
purposes of any applicable provisions of this Agreement.
8. No Stockholder Rights. The Grantee shall not be deemed for any
purpose to be, or to have any of the rights of, a stockholder of the Company
with respect to any shares of Common Stock as to which this Agreement relates
until such shares shall have been issued to Grantee by the Company. Furthermore,
the existence of this Agreement shall not affect in any way the right or power
of the Company or its stockholders to accomplish any corporate act, including,
without limitation, the acts referred to in Section 15 of the Plan.
9. Adjustments. As provided in Section 15 of the Plan, certain
adjustments may be made to the Option upon the occurrence of events or
circumstances described in Section 15 of the Plan.
10. Restrictions Imposed by Law. Without limiting the generality of
Section 16 of the Plan, the Grantee agrees that Grantee will not exercise the
Option and that the Company will not be obligated to deliver any shares of
Common Stock, if counsel to the Company determines that such exercise, or
delivery would violate any applicable law or any rule or regulation of any
governmental authority or any rule or regulation of, or agreement of the Company
with, any securities exchange or association upon which the Common Stock is
listed or quoted. The Company shall in no event be obligated to take any
affirmative action in order to cause the exercise of the Option or the resulting
delivery of shares of Common Stock to comply with any such law, rule, regulation
or agreement.
11. Notice. Unless the Company notifies the Grantee in writing of a
different procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be (a) delivered
personally to the following address:
Edge Petroleum Corporation
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
or (b) sent by first class mail, postage prepaid and addressed as follows:
Edge Petroleum Corporation c/o Corporate
Secretary Texaco Heritage Plaza 1111 Bagby,
Suite 2100 Houston, Texas 77002.
4
<PAGE>
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by first
class mail, postage prepaid, to Grantee's address as listed in the records of
the Company on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
12. Amendment. Notwithstanding any other provisions hereof,
this Agreement may be supplemented or amended from time to time as approved
by the Committee as contemplated by Section 6 of the Plan. Without
limiting the generality of the foregoing, without the consent of the Grantee,
(a) this Agreement may be amended or supplemented (i) to cure
any ambiguity or to correct or supplement any provision herein which
may be defective or inconsistent with any other provision herein, or
(ii) to add to the covenants and agreements of the Company for the
benefit of Grantee or surrender any right or power reserved to or
conferred upon the Company in this Agreement, subject, however, to any
required approval of the Company's stockholders and, provided, in each
case, that such changes or corrections shall not adversely affect the
rights of Grantee with respect to the Award evidenced hereby without
the Grantee's consent, or (iii) to make such other changes as the
Company, upon advice of counsel, determines are necessary or advisable
because of the adoption or promulgation of, or change in or of the
interpretation of, any law or governmental rule or regulation,
including any applicable federal or state securities laws; and
(b) subject to Section 6 of the Plan and any required approval
of the Company's stockholders, the Award evidenced by this Agreement
may be canceled by the Committee and a new Award made in substitution
therefor, provided that the Award so substituted shall satisfy all of
the requirements of the Plan as of the date such new Award is made and
no such action shall adversely affect the Option to the extent then
exercisable without the Grantee's consent.
13. Grantee Employment. Nothing contained in this Agreement, and no
action of the Company or the Committee with respect hereto, shall confer or be
construed to confer on the Grantee any right to continue in the employ of the
Company or any of its Subsidiaries or interfere in any way with the right of the
Company or any employing Subsidiary to terminate the Grantee's employment at any
time, with or without cause; subject, however, to the provisions of any
employment agreement between the Grantee and the Company or any Subsidiary.
14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware.
15. Construction. References in this Agreement to "this Agreement" and
the words "herein," "hereof," "hereunder" and similar terms include all Exhibits
and Schedules appended hereto, including the Plan. This Agreement is entered
into, and the Award evidenced hereby is granted, pursuant to the Plan and shall
be governed by and construed in accordance with the Plan and the administrative
interpretations adopted by the Committee thereunder. All decisions of the
Committee upon questions regarding the Plan or this Agreement shall be
conclusive. Unless otherwise expressly stated herein, in the event of any
inconsistency between the terms of the Plan and this Agreement, the terms of the
Plan shall control. The headings of the paragraphs of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
16. Duplicate Originals. The Company and the Grantee may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement.
17. Rules by Committee. The rights of the Grantee and obligations of
the Company hereunder shall be subject to such reasonable rules and regulations
as the Committee may adopt from time to time hereafter.
18. Entire Agreement. Subject to the provisions of any applicable
written employment agreement between the Grantee and the Company or any
Subsidiary, Grantee and the Company hereby declare and represent that no promise
or agreement not herein expressed has been made and that this Agreement contains
the entire agreement between the parties hereto with respect to the Option and
replaces and makes null and void any prior agreements, oral or written, between
Grantee and the Company regarding the Option.
5
<PAGE>
19. Grantee Acceptance. Grantee shall signify acceptance of the terms
and conditions of this Agreement by signing in the space provided at the end
hereof and returning a signed copy to the Company.
ATTEST: EDGE PETROLEUM CORPORATION
____________________ By:______________________
Secretary Name:____________________
Title:___________________
ACCEPTED:________________
Name:____________________
6
<PAGE>
Schedule 1 to Non-Qualified Stock Option Agreement dated as
of ____________ _____, ______
Edge Petroleum Corporation 1997 Incentive Plan
Grantee: ________________
Grant Date: ____________ _____, ______
Option Price: $________ per share
Option Shares: __________ shares of Common Stock, $.01 par value per share.
<PAGE>
Exhibit B to Non-Qualified Stock Option Agreement
dated as of ____________ _____, ______
Edge Petroleum Corporation 1997 Incentive Plan
Designation of Beneficiary
I, ___________________________________________ (the "Grantee"), hereby
declare that upon my death __________________________________________ (the
Name
"Beneficiary") of _____________________________________________________________,
Street Address City state Zip Code
who is my _________________________________________________, shall be entitled
Relationship to Grantee
to the Option and all other rights accorded the Grantee by the above-referenced
agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated herein, including the
Beneficiary's survival of the Grantee's death. If any such condition is not
satisfied, such rights shall devolve according to the Grantee's will or the laws
of descent and distribution.
It is further understood that all prior designations of beneficiary
under the Agreement are hereby revoked and that this Designation of Beneficiary
may only be revoked in writing, signed by the Grantee, and filed with the
Company prior to the Grantee's death.
__________________________________
Date Grantee
EXHIBIT 10.15
EDGE PETROLEUM CORPORATION
1997 INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the _____ day of
__________, _____ (the "Grant Date"), by and between Edge Petroleum Corporation,
a Delaware corporation (the "Company"), and ___________________ (the "Grantee").
The Company has adopted the Edge Petroleum Corporation 1997
Incentive Plan (the "Plan"), a copy of which is appended to this Agreement as
Exhibit A and by this reference made a part hereof, for the benefit of eligible
employees, directors and independent contractors of the Company and its
Subsidiaries. Capitalized terms used and not otherwise defined herein shall have
the meaning ascribed thereto in the Plan.
Pursuant to the Plan, the Committee, which has generally been
assigned responsibility for administering the Plan, has determined that it would
be in the interest of the Company and its stockholders to grant the restricted
stock award provided herein in order to provide Grantee with additional
remuneration for services rendered, to encourage Grantee to remain in the employ
of the Company or its Subsidiaries and to increase Grantee's personal interest
in the continued success and progress of the Company.
The Company and Grantee therefore agree as follows:
1. Grant of Restricted Stock. In order to encourage the
Grantee's contribution to the successful performance of the Company, and in
consideration of the covenants and promises of the Grantee herein contained, the
Company hereby awards to the Grantee as of March 3, 1997 (the "Date of Grant") a
total of _______ shares of Common Stock pursuant to the Plan, upon the Date of
Grant, subject to the conditions and restrictions set forth below and in the
Plan ("Restricted Stock").
2. Restrictions. The shares of Restricted Stock granted
hereunder to the Grantee may not be sold, assigned, transferred, pledged or
otherwise encumbered from the Date of Grant until the date that the Grantee
obtains a vested right to the shares (and the restrictions thereon terminate) in
accordance with the provisions of this Section 2 or as otherwise provided in
Section 6 below. (The period of time between the Date of Grant and the date that
the Grantee obtains a vested right to shares of Restricted Stock shall be
referred to herein as the "Restricted Period" as to those shares of stock.) In
the event that any day on which the Grantee would otherwise obtain a vested
right to additional shares of Restricted Stock is a Saturday, Sunday or holiday,
the Executive shall instead obtain that vested right on the first business day
immediately following such date. The Grantee shall have a vested right to the
number of shares of Restricted Stock indicated below as of the dates set forth
below:
Date Number of Shares
First Vested
---------------- -------------------------
---------------- -------------------------
---------------- -------------------------
1
<PAGE>
All of the foregoing provisions of this Section 2 are subject
to (A) the provisions of Section 6 below, addressing events that may result in
early termination of the Restricted Period or forfeiture of the Grantee's
interest in all or part of the Restricted Shares and (B) the provisions of any
written employment agreement between the Grantee and the Company or a Subsidiary
that applies, by its terms, to this Agreement and that is in effect at the time
its provisions would become operative with respect to this Agreement.
3. No Code Section 83(b) Election. The Grantee shall not make
an election, under Code Section 83(b), to include an amount in income in respect
of Restricted Stock.
4. Sale of Restricted Stock. Grantee agrees that Grantee shall
not sell the Restricted Stock and that the Company shall not be obligated to
deliver any shares of Common Stock if counsel to the Company determines that
such sale or delivery would violate any applicable law or any rule or regulation
of any governmental authority or any rule or regulation of, or agreement of the
Company with, any securities exchange or association upon which the Common Stock
is listed or quoted. The Company shall in no event be obligated to take any
affirmative action in order to cause the delivery of shares of Common Stock to
comply with any such law, rule, regulation or agreement.
5. Escrow of Shares. Shares of Restricted Stock shall be, at
the election of the Committee, either (a) registered in book entry form, (b)
registered in the name of the Grantee and deposited with the Secretary of the
Company or (c) held in nominee name for the benefit of the Grantee during the
Restricted Period, in any case, if the Company requests, together with a stock
power endorsed by the Grantee in blank. Any certificate shall bear a legend as
provided by the Company, conspicuously referring to the terms, conditions and
restrictions described in the Plan and in this Agreement. Upon termination of
the Restricted Periods with respect to shares of Restricted Stock, a certificate
representing such shares shall be delivered upon written request to the Grantee
as promptly as practicable following such termination.
6. Accelerated Vesting of Restricted Stock; Forfeiture.
(a) If Grantee's employment with the Company and its
Subsidiaries (i) shall terminate by reason of (x) termination by the
Company without Cause (as defined below), (y) termination by Grantee
for Good Reason (as defined below) or (z) Disability (as defined below)
or (ii) if Grantee dies while employed by the Company or a Subsidiary,
then the Restricted Periods set forth in Section 2 above shall
terminate and the Grantee's right to the Restricted Stock shall become
fully vested, to the extent not previously vested pursuant to Section 2
above, and nonforfeitable, and all restrictions thereon shall
terminate.
(b) If Grantee's employment with the Company and its
Subsidiaries is terminated by the Company for Cause (as defined below)
or voluntarily by the Grantee other than as provided in Section 6(a),
then all Restricted Stock awarded to the Grantee that has not
previously vested in accordance with Sections 2 or 6(a) above shall be
forfeited.
"Cause" for purposes of the Agreement shall mean cause as
defined in any written employment agreement between the Grantee and the Company
or a Subsidiary in effect at the time of the Grantee's termination of employment
or, in the absence of any such employment agreement, any of the following: (a)
conviction of the Grantee by a court of competent jurisdiction of any felony or
a crime involving moral turpitude; (b) the Grantee's knowing failure or refusal
to follow reasonable instructions of the Board or reasonable policies, standards
and regulations of the Company or its Subsidiaries; (c) the Grantee's continued
failure or refusal to faithfully and diligently perform the usual, customary
duties of his employment with the Company or a Subsidiary; (d) the Grantee
continuously conducting himself in an unprofessional, unethical, immoral or
fraudulent manner; or (e) the Grantee's conduct discredits the Company or a
Subsidiary or is detrimental to the reputation, character and standing of the
Company or a Subsidiary.
2
<PAGE>
"Disability" for purposes of the Agreement shall mean
disability as defined in any written employment agreement between the Grantee
and the Company or a Subsidiary in effect at the time of the Grantee's
termination of employment or, in the absence of any such employment agreement,
as determined by the Committee in good faith and/or pursuant to any long-term
disability plan sponsored by the Company or applicable Subsidiary.
"Good Reason" for purposes of the Agreement shall mean (a)
good reason as defined in any written employment agreement between the Grantee
and the Company or a Subsidiary in effect at the time of the Grantee's
termination of employment, (b) if such an agreement is then in effect and does
not define "good reason" but contains a provision permitting the Grantee to
voluntarily terminate employment, upon the occurrence of certain events, on
terms substantially equal to those applicable to an involuntary termination
without cause, "Good Reason" shall mean any of those events or (c) in the
absence of any such employment agreement definition or provision, "Good Reason"
shall be deemed to have occurred upon the happening of any of the following:
(i) any reduction in Grantee's annual rate of salary;
(ii) either (x) a failure of the Company to continue in effect
any employee benefit plan in which Grantee was participating or (y) the
taking of any action by the Company that would adversely affect
Grantee's participation in, or materially reduce Grantee's benefits
under, any such employee benefit plan, unless such failure or such
taking of any action adversely affects the senior members of the
corporate management of the Company generally;
(iii) the assignment to Grantee of duties and responsibilities
that are materially more oppressive or onerous than those attendant to
Grantee's position immediately after the date hereof;
(iv) the relocation of the office location as assigned to
Grantee by the Company to a location more than 20 miles from Grantee's
current location without Grantee's consent; or
(v) the failure of the Company to obtain, prior to the time of
any reorganization, merger, consolidation, disposition of all or
substantially all of the assets of the Company or similar transaction
effective after the date hereof, in which the Company is not the
surviving person, the unconditional assumption in writing or by
operation of law of the Company's obligations to Grantee under this
Agreement by each direct successor to the Company in any such
transaction.
All of the foregoing provisions of this Section 6 are subject
to the provisions of any written employment agreement between the Grantee and
the Company or a Subsidiary that is in effect at the time of the Grantee's
termination of employment and that applies, by its terms, to this Agreement.
7. Withholding for Taxes. Grantee acknowledges and agrees that
the Company may, at its option, deduct from the shares of Common Stock otherwise
payable or deliverable upon expiration of the Restricted Period a number of
shares of Common Stock (valued at their Fair Market Value on the date of
exercise) that is equal to the amount of all federal, state and local taxes
required to be withheld by the Company upon such exercise, as determined by the
Committee.
3
<PAGE>
8. Beneficiary Designations. The Grantee shall file with the
Secretary of the Company on the form annexed hereto as Exhibit B or such other
form as may be prescribed by the Company, a designation of one or more
beneficiaries (each, a "Beneficiary") to whom shares otherwise due the Grantee
shall be distributed in the event of the death of the Grantee while serving as a
Director of the Company. The Grantee shall have the right to change the
Beneficiary or Beneficiaries from time to time; provided, however, that any
change shall not become effective until received in writing by the Secretary of
the Company. If any designated Beneficiary survives the Grantee but dies before
receiving all of the Grantee's benefits hereunder, any remaining benefits due
the Grantee shall be distributed to the deceased Beneficiary's estate. If there
is no effective Beneficiary designation on file at the time of the Grantee's
death, or if the designated Beneficiary or Beneficiaries have all predeceased
such Grantee, the payment of any remaining benefits shall be made to the
Grantee's estate.
9. Nonalienation of Benefits. Except as contemplated by
Section 8 above, and other than pursuant to a qualified domestic relations
order, no right or benefit under this Agreement shall be subject to transfer,
anticipation, alienation, sale, assignment, pledge, encumbrance or charge,
whether voluntary, involuntary or by operation of law, and any attempt to
transfer, anticipate, alienate, sell, assign, pledge, encumber or charge the
same shall be void. No right or benefit hereunder shall in any manner be liable
for or subject to any debts, contracts, liabilities or torts of the person
entitled to such benefits. If the Grantee or the Grantee's Beneficiary hereunder
shall become bankrupt or attempt to transfer, anticipate, alienate, assign,
sell, pledge, encumber or charge any right or benefit hereunder, other than as
contemplated by Section 8 above or other than pursuant to a qualified domestic
relations order, or if any creditor shall attempt to subject the same to a writ
of garnishment, attachment, execution, sequestration or any other form of
process or involuntary lien or seizure, then such right or benefit shall cease
and terminate.
10. Prerequisites to Benefits. Neither the Grantee, nor any
person claiming through the Grantee, shall have any right or interest in
Restricted Stock awarded hereunder, unless and until all the terms, conditions
and provisions of this Agreement and the Plan which affect the Grantee or such
other person shall have been complied with as specified herein.
11. Rights as a Stockholder. Subject to the limitations and
restrictions contained herein, the Grantee (or Beneficiary) shall have all
rights as a stockholder with respect to the shares of Restricted Stock once such
shares have been registered in the Grantee's name or issued for the benefit of
Grantee hereunder.
12. Adjustments. As provided in Section 15 of the Plan,
certain adjustments may be made to the Restricted Stock upon the occurrence of
events or circumstances described in Section 15 of the Plan.
13. Notice. Unless the Company notifies the Grantee in writing
of a different procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be:
(a) delivered personally to the following address:
Edge Petroleum Corporation
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
or
(b) sent by first class mail, postage prepaid and addressed as
follows:
Edge Petroleum Corporation
c/o Corporate Secretary
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
4
<PAGE>
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by first
class mail, postage prepaid, to Grantee's address as listed in the records of
the Company on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
14. Amendment. Notwithstanding any other provisions
hereof, this Agreement may be supplemented or amended from time to time as
approved by the Committee as contemplated by Section 6 of the Plan. Without
limiting the generality of the foregoing, without the consent of the Grantee,
(a) this Agreement may be amended or supplemented (i) to cure
any ambiguity or to correct or supplement any provision herein which
may be defective or inconsistent with any other provision herein, or
(ii) to add to the covenants and agreements of the Company for the
benefit of Grantee or surrender any right or power reserved to or
conferred upon the Company in this Agreement, subject, however, to any
required approval of the Company's stockholders and, provided, in each
case, that such changes or corrections shall not adversely affect the
rights of Grantee with respect to the Award evidenced hereby without
the Grantee's consent, or (iii) to make such other changes as the
Company, upon advice of counsel, determines are necessary or advisable
because of the adoption or promulgation of, or change in or of the
interpretation of, any law or governmental rule or regulation,
including any applicable federal or state securities laws; and
(b) subject to Section 6 of the Plan and any required approval
of the Company's stockholders, the Award evidenced by this Agreement
may be canceled by the Committee and a new Award made in substitution
therefor, provided that the Award so substituted shall satisfy all of
the requirements of the Plan as of the date such new Award is made.
15. Grantee Employment. Nothing contained in this Agreement,
and no action of the Company or the Committee with respect hereto, shall confer
or be construed to confer on the Grantee any right to continue in the employ of
the Company or any of its Subsidiaries or interfere in any way with the right of
the Company or any employing Subsidiary to terminate the Grantee's employment at
any time, with or without cause; subject, however, to the provisions of any
employment agreement between the Grantee and the Company or any Subsidiary.
16. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of Delaware.
17. Construction. References in this Agreement to "this
Agreement" and the words "herein," "hereof," "hereunder" and similar terms
include all Exhibits and Schedules appended hereto, including the Plan. This
Agreement is entered into, and the Award evidenced hereby is granted, pursuant
to the Plan and shall be governed by and construed in accordance with the Plan
and the administrative interpretations adopted by the Committee thereunder. All
decisions of the Committee upon questions regarding the Plan or this Agreement
shall be conclusive. Unless otherwise expressly stated herein, in the event of
any inconsistency between the terms of the Plan and this Agreement, the terms of
the Plan shall control. The headings of the Sections of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
18. Duplicate Originals. The Company and the Grantee may sign
any number of copies of this Agreement. Each signed copy shall be an original,
but all of them together represent the same agreement.
19. Rules by Committee. The rights of the Grantee and
obligations of the Company hereunder shall be subject to such reasonable rules
and regulations as the Committee may adopt from time to time hereafter.
5
<PAGE>
20. Entire Agreement. Subject to the provisions of any
applicable written employment agreement between the Grantee and the Company or
any Subsidiary, Grantee and the Company hereby declare and represent that no
promise or agreement not herein expressed has been made and that this Agreement
contains the entire agreement between the parties hereto with respect to the
Option and replaces and makes null and void any prior agreements, oral or
written, between Grantee and the Company regarding the Restricted Stock award.
21. Grantee Acceptance. Grantee shall signify acceptance of
the terms and conditions of this Agreement by signing in the space provided at
the end hereof and returning a signed copy to the Company.
EDGE PETROLEUM CORPORATION
By:_______________________
Name:_____________________
Title:____________________
ACCEPTED:_________________
<PAGE>
Exhibit B to Restricted Stock Award
Agreement dated as of ________ ___, _____
EDGE PETROLEUM CORPORATION 1997 INCENTIVE PLAN
Designation of Beneficiary
I, the "Grantee"), hereby declare
that upon my death _______________________________________(the "Beneficiary") of
Name
______________________________________________________________________________,
Street Address City State Zip Code
who is my _________________________________________________, shall be entitled
Relationship to Grantee
to the Restricted Stock and all other rights accorded the Grantee
by the above-referenced grant agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated therein, including the
Beneficiary's survival of the Grantee's death. If any such condition is not
satisfied, such rights shall devolve according to the Grantee's will or the laws
of descent and distribution.
It is further understood that all prior designations of beneficiary
under the Agreement are hereby revoked and that this Designation of Beneficiary
may only be revoked in writing, signed by the Grantee and filed with the Company
prior to the Grantee's death.
_______________ _____________________________
Date Grantee
EXHIBIT 10.16
EDGE PETROLEUM CORPORATION
1997 INCENTIVE PLAN
DIRECTOR'S RESTRICTED STOCK AWARD AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the ____ day of
_____________, _______ (the "Date of Grant"), by and between Edge Petroleum
Corporation, a Delaware corporation (the "Company"), and
___________________________ (the "Grantee").
The Company has adopted the Edge Petroleum Corporation 1997
Incentive Plan (the "Plan"), a copy of which is appended to this Agreement as
Exhibit A and by this reference made a part hereof, for the benefit of eligible
employees, directors and independent contractors of the Company and its
Subsidiaries. Capitalized terms used and not otherwise defined herein shall have
the meaning ascribed thereto in the Plan. This Agreement documents the automatic
award made to the Grantee pursuant to Section 9(b) of the Plan on the Date of
Grant.
The Company and Grantee therefore agree as follows:
1. Grant of Restricted Stock. Effective as of the Date of
Grant, pursuant to Section 9(b) of the Plan, the Company has awarded to the
Grantee a total of ______ shares of Common Stock, subject to the conditions and
restrictions set forth below and in the Plan (the "Restricted Stock").
2. Restrictions. The shares of Restricted Stock granted
hereunder to the Grantee may not be sold, assigned, transferred, pledged or
otherwise encumbered from the Date of Grant until the date that the Grantee
obtains a vested right to the shares (and the restrictions thereon terminate) in
accordance with the provisions of this Section 2 or as otherwise provided in
Section 6 below. (The period of time between the Date of Grant and the date that
the Grantee obtains a vested right to shares of Restricted Stock shall be
referred to herein as the "Restricted Period" as to those shares of stock.) In
the event that any day on which the Grantee would otherwise obtain a vested
right to additional shares of Restricted Stock is a Saturday, Sunday or holiday,
the Grantee shall instead obtain that vested right on the first business day
immediately following such date. The Grantee shall have a vested right to the
number of shares of Restricted Stock indicated below as of the dates set forth
below, provided that the Grantee has been in continuous service as a Director of
the Company since the Date of Grant:
Date Number of Shares
First Vested
------------ -------------------------
------------ -------------------------
------------ -------------------------
All of the foregoing provisions of this Section 2 are subject to the provisions
of Section 6 below, addressing events that may result forfeiture of the
Grantee's interest in all or part of the Restricted Shares.
3. No Code Section 83(b) Election. The Grantee shall not make
an election, under Code Section 83(b), to include an amount in income in respect
of Restricted Stock.
1
<PAGE>
4. Sale of Restricted Stock. Grantee agrees that Grantee shall
not sell the Restricted Stock and that the Company shall not be obligated to
deliver any shares of Common Stock if counsel to the Company determines that
such sale or delivery would violate any applicable law or any rule or regulation
of any governmental authority or any rule or regulation of, or agreement of the
Company with, any securities exchange or association upon which the Common Stock
is listed or quoted. The Company shall in no event be obligated to take any
affirmative action in order to cause the delivery of shares of Common Stock to
comply with any such law, rule, regulation or agreement.
5. Escrow of Shares. Shares of Restricted Stock shall be
registered in the name of the Grantee and deposited with the Secretary of the
Company, together with a stock power endorsed by the Grantee in blank. Any
certificate shall bear a legend as provided by the Company, conspicuously
referring to the terms, conditions and restrictions described in the Plan and in
this Agreement. Upon termination of the Restricted Periods with respect to
shares of Restricted Stock, a certificate representing such shares shall be
delivered upon written request to the Grantee as promptly as practicable
following such termination.
6. Forfeiture. If Grantee's service as a Director shall
terminate for any reason prior to all shares of Restricted Stock having become
vested pursuant to the provisions of Section 2 hereof, the Grantee shall forfeit
all right to those unvested shares of Restricted Stock unless otherwise decided
by the Board.
7. Withholding for Taxes. Grantee acknowledges and agrees that
the Company may, at its option, deduct from the shares of Common Stock otherwise
payable or deliverable upon expiration of the Restricted Period a number of
shares of Common Stock (valued at their Fair Market Value on the date of
exercise) that is equal to the amount of all federal, state and local taxes
required to be withheld by the Company, if any, upon such exercise, as
determined by the Committee.
8. Beneficiary Designations. The Grantee shall file with the
Secretary of the Company on the form annexed hereto as Exhibit B or such other
form as may be prescribed by the Company, a designation of one or more
beneficiaries (each, a "Beneficiary") to whom shares otherwise due the Grantee
shall be distributed in the event of the death of the Grantee while serving as a
Director of the Company. The Grantee shall have the right to change the
Beneficiary or Beneficiaries from time to time; provided, however, that any
change shall not become effective until received in writing by the Secretary of
the Company. If any designated Beneficiary survives the Grantee but dies before
receiving all of the Grantee's benefits hereunder, any remaining benefits due
the Grantee shall be distributed to the deceased Beneficiary's estate. If there
is no effective Beneficiary designation on file at the time of the Grantee's
death, or if the designated Beneficiary or Beneficiaries have all predeceased
such Grantee, the payment of any remaining benefits shall be made to the
Grantee's estate.
9. Nonalienation of Benefits. Except as contemplated by
Section 8 above, and other than pursuant to a qualified domestic relations
order, no right or benefit under this Agreement shall be subject to transfer,
anticipation, alienation, sale, assignment, pledge, encumbrance or charge,
whether voluntary, involuntary or by operation of law, and any attempt to
transfer, anticipate, alienate, sell, assign, pledge, encumber or charge the
same shall be void. No right or benefit hereunder shall in any manner be liable
2
<PAGE>
for or subject to any debts, contracts, liabilities or torts of the person
entitled to such benefits. If the Grantee or the Grantee's Beneficiary hereunder
shall become bankrupt or attempt to transfer, anticipate, alienate, assign,
sell, pledge, encumber or charge any right or benefit hereunder, other than as
contemplated by Section 8 above or other than pursuant to a qualified domestic
relations order, or if any creditor shall attempt to subject the same to a writ
of garnishment, attachment, execution, sequestration or any other form of
process or involuntary lien or seizure, then such right or benefit shall cease
and terminate.
10. Prerequisites to Benefits. Neither the Grantee, nor any
person claiming through the Grantee, shall have any right or interest in
Restricted Stock awarded hereunder, unless and until all the terms, conditions
and provisions of this Agreement and the Plan which affect the Grantee or such
other person shall have been complied with as specified herein.
11. Rights as a Stockholder. Subject to the limitations and
restrictions contained herein, the Grantee (or Beneficiary) shall have all
rights as a stockholder with respect to the shares of Restricted Stock once such
shares have been registered in the Grantee's name or issued for the benefit of
Grantee hereunder.
12. Adjustments. As provided in Section 15 of the Plan,
certain adjustments may be made to the Restricted Stock upon the occurrence of
events or circumstances described in Section 15 of the Plan.
13. Notice. Unless the Company notifies the Grantee in writing
of a different procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be:
(a) delivered personally to the following address:
Edge Petroleum Corporation
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
or
(b) sent by first class mail, postage prepaid and addressed as
follows:
Edge Petroleum Corporation
c/o Corporate Secretary
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by first
class mail, postage prepaid, to Grantee's address as listed in the records of
the Company on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
14. Amendment. Without the consent of the Grantee, this
Agreement may be amended or supplemented (i) to cure any ambiguity or to correct
or supplement any provision herein which may be defective or inconsistent with
any other provision herein, or (ii) to add to the covenants and agreements of
the Company for the benefit of Grantee or surrender any right or power reserved
to or conferred upon the Company in this Agreement, subject, however, to any
required approval of the Company's stockholders and, provided, in each case,
that such changes or corrections shall not adversely affect the rights of
Grantee with respect to the Award evidenced hereby without the Grantee's
consent, or (iii) to make such other changes as the Company, upon advice of
counsel, determines are necessary or advisable because of the adoption or
promulgation of, or change in or of the interpretation of, any law or
governmental rule or regulation, including any applicable federal or state
securities laws.
3
<PAGE>
15. Grantee Service. Nothing contained in this Agreement, and
no action of the Company or the Committee with respect hereto, shall confer or
be construed to confer on the Grantee any right to continue in the service of
the Company as a Director.
16. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of Delaware.
17. Construction. References in this Agreement to "this
Agreement" and the words "herein," "hereof," "hereunder" and similar terms
include all Exhibits and Schedules appended hereto, including the Plan. This
Agreement is entered into, and the Award evidenced hereby is granted, pursuant
to the Plan. The headings of the Sections of this Agreement have been included
for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
18. Duplicate Originals. The Company and the Grantee may sign
any number of copies of this Agreement. Each signed copy shall be an original,
but all of them together represent the same agreement.
19. Entire Agreement. Grantee and the Company hereby declare
and represent that no promise or agreement not herein expressed has been made
and that this Agreement contains the entire agreement between the parties hereto
with respect to the Option and replaces and makes null and void any prior
agreements, oral or written, between Grantee and the Company regarding the
Restricted Stock award.
20. Grantee Acceptance. Grantee shall signify acceptance of
the terms and conditions of this Agreement by signing in the space provided at
the end hereof and returning a signed copy to the Company.
EDGE PETROLEUM CORPORATION
By:______________________
Name:____________________
Title:___________________
ACCEPTED:________________
Name of Grantee:_________
4
<PAGE>
Exhibit B to Restricted Stock Award
Agreement dated as of ___________ ___, _____
EDGE PETROLEUM CORPORATION 1997 INCENTIVE PLAN
Designation of Beneficiary
I, (the "Grantee"), hereby declare
that upon my death _______________________________________(the "Beneficiary") of
Name
______________________________________________________________________________,
Street Address City State Zip Code
who is my _________________________________________________, shall be entitled
Relationship to Grantee
to the Restricted Stock and all other rights accorded the Grantee by the
above-referenced grant agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated therein, including the
Beneficiary's survival of the Grantee's death. If any such condition is not
satisfied, such rights shall devolve according to the Grantee's will or the laws
of descent and distribution.
It is further understood that all prior designations of beneficiary
under the Agreement are hereby revoked and that this Designation of Beneficiary
may only be revoked in writing, signed by the Grantee and filed with the Company
prior to the Grantee's death.
- ---------- ----------------------------------
Date Grantee
EXHIBIT 10.17
EDGE PETROLEUM CORPORATION
1997 INCENTIVE PLAN
SPECIAL
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 3rd day of
March, 1997 (the "Grant Date"), by and between EDGE PETROLEUM CORPORATION, a
Delaware corporation (the "Company"), and JAMES D. CALAWAY (the "Grantee").
The Company has adopted the Edge Petroleum Corporation 1997
Incentive Plan (the "Plan"), a copy of which is appended to this Agreement as
Exhibit A and by this reference made a part hereof, for the benefit of eligible
employees, directors and independent contractors of the Company and its
Subsidiaries. Capitalized terms used and not otherwise defined herein shall have
the meaning ascribed thereto in the Plan.
Pursuant to the Plan, the Committee, which has generally been
assigned responsibility for administering the Plan, has determined that it would
be in the interest of the Company and its stockholders to grant the options
provided herein in order to provide Grantee with additional remuneration for
services rendered, to encourage Grantee to remain in the employ of the Company
or its Subsidiaries and to increase Grantee's personal interest in the continued
success and progress of the Company.
The Company and Grantee therefore agree as follows:
1. Grant of Option. Subject to the terms and conditions herein, the
Company grants to the Grantee during the period commencing on March 3, 1997 and
expiring at 5 p.m. Houston, Texas time ("Close of Business") on March 3, 2007
(the "Option Term"), subject to earlier termination pursuant to Section 6 below,
an option to purchase from the Company, at the price per share set forth on
Schedule 1 hereto (the "Option Price"), the number of shares of Company Common
Stock ("Common Stock") set forth on said Schedule 1 (the "Option Shares"). The
Option Price and Option Shares are subject to adjustment pursuant to Section 9
below. This option is as a "Nonqualified Stock Option" and is hereinafter
referred to as the "Option".
2. Conditions of Exercise. The Option is exercisable only in accordance
with the conditions stated in this Section.
(a) Except as otherwise provided in this Subsection (a), the
Option may only be exercised to the extent the Option Shares have
become available for purchase in accordance with the following
schedule:
Percentage of Option
Date Shares Available for Purchase
------------ -----------------------------
March 3, 1998 20%
March 3, 1999 40%
March 3, 2000 60%
March 3, 2001 80%
March 3, 2002 100%
Notwithstanding the foregoing, all Option Shares shall become available
for purchase if Grantee's employment with the Company and its
Subsidiaries (i) shall terminate by reason of (x) termination by the
Company without Cause (as defined in Section 6 below), (y) termination
by Grantee for Good Reason (as defined in Section 6 below) or (z)
Disability (as defined in Section 6 below) or (ii) if Grantee dies
while employed by the Company or a Subsidiary.
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<PAGE>
(b) To the extent the Option becomes exercisable, such Option
may be exercised in whole or in part (at any time or from time to time,
except as otherwise provided herein) until expiration of the Option
Term or earlier termination thereof.
(c) All of the foregoing provisions of this Section 2 are
subject to (i) the provisions of Section 6 below, addressing events
that may result in early termination of the Option and (ii) the
provisions of any written employment agreement between the Grantee and
the Company or a Subsidiary that applies, by its terms, to this
Agreement and that is in effect at the time its provisions would become
operative with respect to this Agreement.
3. Manner of Exercise. The Option shall be considered exercised (as to
the number of Option Shares specified in the notice referred to in Subsection
(a) below) on the latest of (i) the date of exercise designated in the written
notice referred to in Subsection (a) below, (ii) if the date so designated is
not a business day, the first business day following such date or (iii) the
earliest business day by which the Company has received all of the following:
(a) Written notice, in such form as the Committee may require,
designating, among other things, the date of exercise and the number of
Option Shares to be purchased;
b) If the Option is to be exercised, payment of the Option
Price for each Option Share to be purchased in cash, Common Stock or in
such other form (or combination of forms) of payment contemplated by
Section 11 of the Plan as the Committee or the provisions of Section 11
of the Plan may permit; provided, however, that any shares of Common
Stock delivered in payment of the Option Price that are or were the
subject of an Employee Award must be shares that the Grantee has owned
for a period of at least six months prior to the date of exercise; and
(c) Any other documentation that the Committee may
reasonably require.
4. Mandatory Withholding for Taxes. Grantee acknowledges and agrees
that the Company shall deduct from the cash and/or shares of Common Stock
otherwise payable or deliverable upon exercise of the Option an amount of cash
and/or number of shares of Common Stock (valued at their Fair Market Value on
the date of exercise) that is equal to the amount of all federal, state and
local taxes required to be withheld by the Company upon such exercise, as
determined by the Committee.
5. Delivery by the Company. As soon as practicable after receipt of all
items referred to in Section 3, and subject to the withholding referred to in
Section 4, the Company shall deliver to the Grantee certificates issued in
Grantee's name for the number of Option Shares purchased by exercise of the
Option. If delivery is by mail, delivery of shares of Common Stock shall be
deemed effected for all purposes when a stock transfer agent of the Company
shall have deposited the certificates in the United States mail, addressed to
the Grantee, and any cash payment shall be deemed effected when a Company check,
payable to Grantee and in an amount equal to the amount of the cash payment,
shall have been deposited in the United States mail, addressed to the Grantee.
6. Termination of Employment. Unless otherwise determined by the
Committee in its sole discretion, the Option shall terminate, prior to the
expiration of the Option Term, at the time specified below:
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(a) If Grantee terminates employment with the Company and its
Subsidiaries voluntarily without Good Reason (as defined below), then
the Option shall terminate at the Close of Business on the first
business day following the expiration of the 90-day period which began
on the date of termination of Grantee's employment; or
(b) If Grantee's employment with the Company and its
Subsidiaries is terminated by the Company or a Subsidiary for Cause (as
defined below), then the Option shall terminate immediately upon such
termination of Grantee's employment.
In any event in which the Option remains exercisable for a
period of time following the date of termination of Grantee's employment, the
Option may be exercised during such period of time only to the extent it was
exercisable as provided in Section 2 on such date of termination of Grantee's
employment. A change of employment is not a termination of employment within the
meaning of this Section 6 provided that, after giving effect to such change, the
Grantee continues to be an employee of the Company or any Subsidiary.
Notwithstanding any period of time referenced in this Section 6 or any other
provision of this Section that may be construed to the contrary, the Option
shall in any event terminate upon the expiration of the Option Term.
"Cause" for purposes of the Agreement shall mean cause as
defined in any written employment agreement between the Grantee and the Company
or a Subsidiary in effect at the time of the Grantee's termination of employment
or, in the absence of any such employment agreement, any of the following: (a)
the Grantee is convicted of a felony involving moral turpitude, (b) the Grantee
commits a willful serious act intending to enrich himself at the expense of the
Company or any affiliated entity, or (c) the Grantee, in carrying out his duties
and responsibilities under this Agreement, (i) is guilty of willful gross
neglect, or (ii) voluntarily engages in conduct that results in material harm to
the Company or any affiliated entity, unless such conduct was reasonably
believed by the Grantee in good faith to be in the best interests of the
Company.
"Disability" for purposes of the Agreement shall mean
disability as defined in any written employment agreement between the Grantee
and the Company or a Subsidiary in effect at the time of the Grantee's
termination of employment or, in the absence of any such employment agreement,
as determined by the Committee in good faith and/or pursuant to any long-term
disability plan sponsored by the Company or applicable Subsidiary.
"Good Reason" for purposes of the Agreement shall mean (a)
good reason as defined in any written employment agreement between the Grantee
and the Company or a Subsidiary in effect at the time of the Grantee's
termination of employment, (b) if such an agreement is then in effect and does
not define "good reason" but contains a provision permitting the Grantee to
voluntarily terminate employment, upon the occurrence of certain events, on
terms substantially equal to those applicable to an involuntary termination
without cause, "Good Reason" shall mean any of those events or (c) in the
absence of any such employment agreement definition or provision, "Good Reason"
shall be deemed to have occurred upon the happening of any of the following:
(i) any reduction in Grantee's annual rate of salary;
(ii) either (x) a failure of the Company to continue in effect
any employee benefit plan in which Grantee was participating or (y) the
taking of any action by the Company that would adversely affect
Grantee's participation in, or materially reduce Grantee's benefits
under, any such employee benefit plan, unless such failure or such
taking of any action adversely affects the senior members of the
corporate management of the Company generally;
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(iii) the assignment to Grantee of duties and responsibilities
that are materially more oppressive or onerous than those attendant to
Grantee's position immediately after the date hereof;
(iv) the relocation of the office location as assigned to
Grantee by the Company to a location more than 20 miles from Grantee's
current location without Grantee's consent; or
(v) the failure of the Company to obtain, prior to the time of
any reorganization, merger, consolidation, disposition of all or
substantially all of the assets of the Company or similar transaction
effective after the date hereof, in which the Company is not the
surviving person, the unconditional assumption in writing or by
operation of law of the Company's obligations to Grantee under this
Agreement by each direct successor to the Company in any such
transaction.
All of the foregoing provisions of this Section 6 are subject
to the provisions of any written employment agreement between the Grantee and
the Company or a Subsidiary that is in effect at the time of the Grantee's
termination of employment and that applies, by its terms, to this Agreement.
7. Nontransferability of Option. During Grantee's lifetime, the Option
is not transferable (voluntarily or involuntarily) other than pursuant to a
domestic relations order and, except as otherwise required pursuant to a
domestic relations order, is exercisable only by the Grantee or Grantee's court
appointed legal representative. The Grantee may designate a beneficiary or
beneficiaries to whom the Option shall pass upon Grantee's death and may change
such designation from time to time by filing a written designation of
beneficiary or beneficiaries with the Committee on the form annexed hereto as
Exhibit B or such other form as may be prescribed by the Committee, provided
that no such designation shall be effective unless so filed prior to the death
of Grantee. If no such designation is made or if the designated beneficiary does
not survive the Grantee's death, the Option shall pass by will or the laws of
descent and distribution. Following Grantee's death, the Option, if otherwise
exercisable, may be exercised by the person to whom such option passes
accordingly to the foregoing and such person shall be deemed the Grantee for
purposes of any applicable provisions of this Agreement.
8. No Stockholder Rights. The Grantee shall not be deemed for any
purpose to be, or to have any of the rights of, a stockholder of the Company
with respect to any shares of Common Stock as to which this Agreement relates
until such shares shall have been issued to Grantee by the Company. Furthermore,
the existence of this Agreement shall not affect in any way the right or power
of the Company or its stockholders to accomplish any corporate act, including,
without limitation, the acts referred to in Section 15 of the Plan.
9. Adjustments. As provided in Section 15 of the Plan, certain
adjustments may be made to the Option upon the occurrence of events or
circumstances described in Section 15 of the Plan.
10. Restrictions Imposed by Law. Without limiting the generality of
Section 16 of the Plan, the Grantee agrees that Grantee will not exercise the
Option and that the Company will not be obligated to deliver any shares of
Common Stock, if counsel to the Company determines that such exercise, or
delivery would violate any applicable law or any rule or regulation of any
governmental authority or any rule or regulation of, or agreement of the Company
with, any securities exchange or association upon which the Common Stock is
listed or quoted. The Company shall in no event be obligated to take any
affirmative action in order to cause the exercise of the Option or the resulting
delivery of shares of Common Stock to comply with any such law, rule, regulation
or agreement.
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<PAGE>
11. Notice. Unless the Company notifies the Grantee in writing of a
different procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be (a) delivered
personally to the following address:
Edge Petroleum Corporation
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
or (b) sent by first-class mail, postage prepaid and addressed as follows:
Edge Petroleum Corporation
c/o Corporate Secretary
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by first
class mail, postage prepaid, to Grantee's address as listed in the records of
the Company on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
12. Amendment. Notwithstanding any other provisions hereof, this
Agreement may be supplemented or amended from time to time as approved by the
Committee as contemplated by Section 6 of the Plan. Without limiting the
generality of the foregoing, without the consent of the Grantee,
(a) this Agreement may be amended or supplemented (i) to cure
any ambiguity or to correct or supplement any provision herein which
may be defective or inconsistent with any other provision herein, or
(ii) to add to the covenants and agreements of the Company for the
benefit of Grantee or surrender any right or power reserved to or
conferred upon the Company in this Agreement, subject, however, to any
required approval of the Company's stockholders and, provided, in each
case, that such changes or corrections shall not adversely affect the
rights of Grantee with respect to the Award evidenced hereby without
the Grantee's consent, or (iii) to make such other changes as the
Company, upon advice of counsel, determines are necessary or advisable
because of the adoption or promulgation of, or change in or of the
interpretation of, any law or governmental rule or regulation,
including any applicable federal or state securities laws; and
(b) subject to Section 6 of the Plan and any required approval
of the Company's stockholders, the Award evidenced by this Agreement
may be canceled by the Committee and a new Award made in substitution
therefor, provided that the Award so substituted shall satisfy all of
the requirements of the Plan as of the date such new Award is made and
no such action shall adversely affect the Option to the extent then
exercisable without the Grantee's consent.
13. Grantee Employment. Nothing contained in this Agreement, and no
action of the Company or the Committee with respect hereto, shall confer or be
construed to confer on the Grantee any right to continue in the employ of the
Company or any of its Subsidiaries or interfere in any way with the right of the
Company or any employing Subsidiary to terminate the Grantee's employment at any
time, with or without cause; subject, however, to the provisions of any
employment agreement between the Grantee and the Company or any Subsidiary.
14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware.
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<PAGE>
15. Construction. References in this Agreement to "this Agreement" and
the words "herein," "hereof," "hereunder" and similar terms include all Exhibits
and Schedules appended hereto, including the Plan. This Agreement is entered
into, and the Award evidenced hereby is granted, pursuant to the Plan and shall
be governed by and construed in accordance with the Plan and the administrative
interpretations adopted by the Committee thereunder. All decisions of the
Committee upon questions regarding the Plan or this Agreement shall be
conclusive. Unless otherwise expressly stated herein, in the event of any
inconsistency between the terms of the Plan and this Agreement, the terms of the
Plan shall control. The headings of the Sections of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
16. Duplicate Originals. The Company and the Grantee may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement.
17. Rules by Committee. The rights of the Grantee and obligations of
the Company hereunder shall be subject to such reasonable rules and regulations
as the Committee may adopt from time to time hereafter.
18. Entire Agreement. Subject to the provisions of any applicable
written employment agreement between the Grantee and the Company or any
Subsidiary, Grantee and the Company hereby declare and represent that no promise
or agreement not herein expressed has been made and that this Agreement contains
the entire agreement between the parties hereto with respect to the Option and
replaces and makes null and void any prior agreements, oral or written, between
Grantee and the Company regarding the Option.
19. Grantee Acceptance. Grantee shall signify acceptance of the terms
and conditions of this Agreement by signing in the space provided at the end
hereof and returning a signed copy to the Company.
ATTEST: EDGE PETROLEUM CORPORATION
By: /S/Robert Thomas
- --------------------------
Secretary Name: /S/ John E. Calaway
-------------------
Title: Chief Executive Officer
ACCEPTED:
/S/ James D. Calaway
---------------------
James D. Calaway
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Schedule 1 to Non-Qualified Stock Option
Agreement dated as of March 3, 1997
Edge Petroleum Corporation 1997 Incentive Plan
Grantee: James D. Calaway
Grant Date: March 3, 1997
Option Price: $16.50 per share
Option Shares: 116,940 shares of Common Stock, $.01 par value per share.
<PAGE>
Exhibit B to Non-Qualified Stock Option Agreement
dated as of March 3, 1997
Edge Petroleum Corporation 1997 Incentive Plan
Designation of Beneficiary
I, James D. Calaway (the "Grantee"), hereby declare
that upon my death ____________________________________ (the "Beneficiary") of
Name
______________________________________________________________________________,
Street Address City State Zip Code
who is my _________________________________________________, shall be entitled
Relationship to Grantee
to the Option and all other rights accorded the Grantee by the
above-referenced agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated herein, including the
Beneficiary's survival of the Grantee's death. If any such condition is not
satisfied, such rights shall devolve according to the Grantee's will or the laws
of descent and distribution.
It is further understood that all prior designations of beneficiary
under the Agreement are hereby revoked and that this Designation of Beneficiary
may only be revoked in writing, signed by the Grantee, and filed with the
Company prior to the Grantee's death.
Date /S/ James D. Calaway
-----------------------------
James D. Calaway, Grantee
EXHIBIT 10.18
EDGE PETROLEUM CORPORATION
1997 INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 3rd day of
March, 1997 (the "Grant Date"), by and between Edge Petroleum Corporation, a
Delaware corporation (the "Company"), and James D. Calaway (the "Grantee").
The Company has adopted the Edge Petroleum Corporation 1997
Incentive Plan (the "Plan"), a copy of which is appended to this Agreement as
Exhibit A and by this reference made a part hereof, for the benefit of eligible
employees, directors and independent contractors of the Company and its
Subsidiaries. Capitalized terms used and not otherwise defined herein shall have
the meaning ascribed thereto in the Plan.
Pursuant to the Plan, the Committee, which has generally been
assigned responsibility for administering the Plan, has determined that it would
be in the interest of the Company and its stockholders to grant the restricted
stock award provided herein in order to provide Grantee with additional
remuneration for services rendered, to encourage Grantee to remain in the employ
of the Company or its Subsidiaries and to increase Grantee's personal interest
in the continued success and progress of the Company.
The Company and Grantee therefore agree as follows:
1. Grant of Restricted Stock. In order to encourage the
Grantee's contribution to the successful performance of the Company, and in
consideration of the covenants and promises of the Grantee herein contained, the
Company hereby awards to the Grantee as of March 3, 1997 (the "Date of Grant")
(a) a total of 58,470 shares of Common Stock pursuant to the Plan, upon the Date
of Grant, subject to the conditions and restrictions set forth below and in the
Plan ("Scheduled Stock"), and (b) a total of 58,470 shares of Common Stock,
pursuant to the Plan, upon the Date of Grant, subject to the conditions and
restrictions set forth below and in the Plan ("Performance Stock") (the
Scheduled Stock and the Performance Stock together, the "Restricted Stock").
2. Restrictions. The shares of Restricted Stock granted
hereunder to the Grantee may not be sold, assigned, transferred, pledged or
otherwise encumbered from the Date of Grant until the date that the Grantee
obtains a vested right to the shares (and the restrictions thereon terminate) in
accordance with the provisions of this Section 2 or as otherwise provided in
Section 6 below. (The period of time between the Date of Grant and the date that
the Grantee obtains a vested right to shares of Restricted Stock shall be
referred to herein as the "Restricted Period" as to those shares of stock.) In
the event that any day on which the Grantee would otherwise obtain a vested
right to additional shares of Restricted Stock is a Saturday, Sunday or holiday,
the Executive shall instead obtain that vested right on the first business day
immediately following such date.
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(a) Scheduled Stock: The Grantee shall have a vested right to
the number of shares of Scheduled Stock indicated below as of the dates
set forth below:
Number of Shares
Date First Vested
---- ----------------
March 3, 1998 11,694
- ------------------------------------- -------------------------
March 3, 1999 11,694
- ------------------------------------- -------------------------
March 3, 2000 11,694
- ------------------------------------- -------------------------
March 3, 2001 11,694
- ------------------------------------- -------------------------
March 3, 2002 11,694
- ------------------------------------- -------------------------
(b) Performance Stock: As of March 3, 2007, the Grantee shall
have a vested right to all 58,470 shares of Performance Stock awarded
hereunder. Notwithstanding the foregoing, if any calendar year starting
with 1997 and ending with 2006 is an "Achieving Year," as of the next
January 1, the Grantee shall have a vested right to (i) 11,694 shares
of Performance Stock for that Achieving Year and (ii) 11,694 shares of
Performance Stock for each consecutive "NonAchieving Year" immediately
preceding the Achieving Year; provided, however, that the aggregate
number of shares of Performance Stock to which the Grantee obtains a
vested right shall never exceed 58,470.
For this purpose, the following definitions shall apply:
"Achieving Year" means a calendar year for which the Actual
Price equals or exceeds the Target Price.
"Target Price" means (x) for 1997, $19.94 (representing a 25%
annual increase over the Initial Public Offering (IPO) price
of $16.50, prorated to reflect the lapse of approximately 10
months between the IPO and December 31, 1997) and (y) for any
calendar year subsequent to 1997, 125% of the greater of the
Target Price for the preceding calendar year or the Actual
Price for the preceding calendar year.
"Actual Price" means, for any calendar year, the actual
average closing price per share of the Common Stock for the
month of December.
"NonAchieving Year" means a calendar year from 1997 through
2006 that is notan Achieving Year.
All of the foregoing provisions of this Section 2 are subject
to (A) the provisions of Section 6 below, addressing events that may result in
early termination of the Restricted Period or forfeiture of the Grantee's
interest in all or part of the Restricted Shares and (B) the provisions of any
written employment agreement between the Grantee and the Company or a Subsidiary
that applies, by its terms, to this Agreement and that is in effect at the time
its provisions would become operative with respect to this Agreement.
3. No Code Section 83(b) Election. The Grantee shall not make
an election, under Code Section 83(b), to include an amount in income in respect
of Restricted Stock.
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<PAGE>
4. Sale of Restricted Stock. Grantee agrees that Grantee shall
not sell the Restricted Stock and that the Company shall not be obligated to
deliver any shares of Common Stock if counsel to the Company determines that
such sale or delivery would violate any applicable law or any rule or regulation
of any governmental authority or any rule or regulation of, or agreement of the
Company with, any securities exchange or association upon which the Common Stock
is listed or quoted. The Company shall in no event be obligated to take any
affirmative action in order to cause the delivery of shares of Common Stock to
comply with any such law, rule, regulation or agreement.
5. Escrow of Shares. Shares of Restricted Stock shall be, at
the election of the Committee, either (a) registered in book entry form, (b)
registered in the name of the Grantee and deposited with the Secretary of the
Company or (c) held in nominee name for the benefit of the Grantee during the
Restricted Period, in any case, if the Company requests, together with a stock
power endorsed by the Grantee in blank. Any certificate shall bear a legend as
provided by the Company, conspicuously referring to the terms, conditions and
restrictions described in the Plan and in this Agreement. Upon termination of
the Restricted Periods with respect to shares of Restricted Stock, a certificate
representing such shares shall be delivered upon written request to the Grantee
as promptly as practicable following such termination.
6. Accelerated Vesting of Restricted Stock; Forfeiture.
or Death (except during a Window Period). If, during the
Employment Period, the Company shall terminate the Grantee's employment
other than for Cause, including a termination by reason of Disability
(but not by reason of death), or the Grantee shall terminate employment
for Good Reason or his employment shall be terminated during a Window
Period by the Company for Cause, by the Grantee without any reason, or
by reason of death, effective as of the Date of Termination, (1) each
and every share of Restricted Stock shall immediately vest and become
exercisable and any restrictions on sale or transfer (other than any
such restriction arising by operation of law) shall terminate, except
that previously unvested shares of the Performance Stock shall vest
only if termination is by the Company without Cause or by Grantee for
Good Reason or in a Window Period and either (A) termination occurs in
the first year of the Employment Period in which event the unvested
portion shall be 100% vested, (B) termination occurs in the second year
of the Employment Period in which event 80% of the unvested portion
shall be vested, (C) termination occurs in the third year of the
Employment Period in which event 60% of the unvested portion shall be
vested or (D) termination occurs after the third year of the Employment
Period and the performance goals have been met in each of the first
three years of the Employment Period in which event all unvested shares
shall be vested, and (2) at the sole election of Grantee, in exchange
for any or all Restricted Stock, the Company shall pay an amount in
cash equal to the Highest Price Per Share.
If the Grantee's employment is terminated by reason of the
Grantee's death during the Employment Period and other than during a
Window Period in which event the provisions of Section 6(a) shall
govern, effective as of the Date of Termination, (1) each and every
share of Restricted Stock shall immediately vest and become exercisable
and any restrictions on sale or transfer (other than any such
restriction arising by operation of law) shall terminate, except that
previously unvested shares of the Performance Stock shall vest only if
either (A) death occurs in the first year of the Employment Period in
which event the unvested portion shall be 100% vested, (B) death occurs
in the second year of the Employment Period in which event 80% of the
unvested portion shall be vested, (C) death occurs in the third year of
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<PAGE>
the Employment Period in which event 60% of the unvested portion shall
be vested or (D) death occurs after the third year of the Employment
Period and the performance goals have been met in each of the first
three years of the Employment Period in which event all unvested shares
shall be vested, and (2) at the sole election of the Grantee's legal
representative, in exchange for any or all Restricted Stock, the
Company shall pay an amount in cash equal to the Highest Price Per
Share.
(c) Cause; Other than for Disability, Good Reason or During a
Window Period. If the Grantee's employment shall be terminated for
Cause during the Employment Period and other than during a Window
Period, in which event the provisions of Section 6(a) shall govern, all
Restricted Stock awarded to the Grantee that has not previously vested
in accordance with Sections 2 or 6(a) above shall be forfeited. If the
Grantee terminates employment during the Employment Period, excluding a
termination for any of Disability, Good Reason or without any reason
during a Window Period, in which event the provisions of Section 6(a)
shall govern, all Restricted Stock awarded to the Grantee that has not
previously vested in accordance with Sections 2 or 6(a) above shall be
forfeited.
Capitalized terms used and not otherwise defined in this
Section 6 shall have the meaning ascribed thereto in the Employment Agreement
dated as of March 3, 1997 by and between the Company and the Grantee (the
"Employment Agreement"). All of the foregoing provisions of this Section 6 are
subject to the provisions of the Employment Agreement.
7. Withholding for Taxes. Grantee acknowledges and agrees that
the Company may, at its option, deduct from the shares of Common Stock otherwise
payable or deliverable upon expiration of the Restricted Period a number of
shares of Common Stock (valued at their Fair Market Value on the date of
exercise) that is equal to the amount of all federal, state and local taxes
required to be withheld by the Company upon such exercise, as determined by the
Committee.
8. Beneficiary Designations. The Grantee shall file with the
Secretary of the Company on the form annexed hereto as Exhibit B or such other
form as may be prescribed by the Company, a designation of one or more
beneficiaries (each, a "Beneficiary") to whom shares otherwise due the Grantee
shall be distributed in the event of the death of the Grantee while serving as a
Director of the Company. The Grantee shall have the right to change the
Beneficiary or Beneficiaries from time to time; provided, however, that any
change shall not become effective until received in writing by the Secretary of
the Company. If any designated Beneficiary survives the Grantee but dies before
receiving all of the Grantee's benefits hereunder, any remaining benefits due
the Grantee shall be distributed to the deceased Beneficiary's estate. If there
is no effective Beneficiary designation on file at the time of the Grantee's
death, or if the designated Beneficiary or Beneficiaries have all predeceased
such Grantee, the payment of any remaining benefits shall be made to the
Grantee's estate.
9. Nonalienation of Benefits. Except as contemplated by
Section 8 above, and other than pursuant to a qualified domestic relations
order, no right or benefit under this Agreement shall be subject to transfer,
anticipation, alienation, sale, assignment, pledge, encumbrance or charge,
whether voluntary, involuntary or by operation of law, and any attempt to
transfer, anticipate, alienate, sell, assign, pledge, encumber or charge the
same shall be void. No right or benefit hereunder shall in any manner be liable
for or subject to any debts, contracts, liabilities or torts of the person
entitled to such benefits. If the Grantee or the Grantee's Beneficiary hereunder
shall become bankrupt or attempt to transfer, anticipate, alienate, assign,
sell, pledge, encumber or charge any right or benefit hereunder, other than as
contemplated by Section 8 above or other than pursuant to a qualified domestic
relations order, or if any creditor shall attempt to subject the same to a writ
of garnishment, attachment, execution, sequestration or any other form of
process or involuntary lien or seizure, then such right or benefit shall cease
and terminate.
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<PAGE>
10. Prerequisites to Benefits. Neither the Grantee, nor any
person claiming through the Grantee, shall have any right or interest in
Restricted Stock awarded hereunder, unless and until all the terms, conditions
and provisions of this Agreement and the Plan which affect the Grantee or such
other person shall have been complied with as specified herein.
11. Rights as a Stockholder. Subject to the limitations and
restrictions contained herein, the Grantee (or Beneficiary) shall have all
rights as a stockholder with respect to the shares of Restricted Stock once such
shares have been registered in the Grantee's name or issued for the benefit of
Grantee hereunder.
12. Adjustments. As provided in Section 15 of the Plan,
certain adjustments may be made to the Restricted Stock upon the occurrence of
events or circumstances described in Section 15 of the Plan.
13. Notice. Unless the Company notifies the Grantee in writing
of a different procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be:
(a) delivered personally to the following address:
Edge Petroleum Corporation
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
or
(b) sent by first class mail, postage prepaid and addressed as
follows:
Edge Petroleum Corporation
c/o Corporate Secretary
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by first
class mail, postage prepaid, to Grantee's address as listed in the records of
the Company on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
14. Amendment. Notwithstanding any other provisions
hereof, this Agreement may be supplemented or amended from time to time as
approved by the Committee as contemplated by Section 6 of the Plan. Without
limiting the generality of the foregoing, without the consent of the Grantee,
(a) this Agreement may be amended or supplemented (i) to cure
any ambiguity or to correct or supplement any provision herein which
may be defective or inconsistent with any other provision herein, or
(ii) to add to the covenants and agreements of the Company for the
benefit of Grantee or surrender any right or power reserved to or
conferred upon the Company in this Agreement, subject, however, to any
required approval of the Company's stockholders and, provided, in each
case, that such changes or corrections shall not adversely affect the
rights of Grantee with respect to the Award evidenced hereby without
5
<PAGE>
the Grantee's consent, or (iii) to make such other changes as the
Company, upon advice of counsel, determines are necessary or advisable
because of the adoption or promulgation of, or change in or of the
interpretation of, any law or governmental rule or regulation,
including any applicable federal or state securities laws; and
(b) subject to Section 6 of the Plan and any required approval
of the Company's stockholders, the Award evidenced by this Agreement
may be canceled by the Committee and a new Award made in substitution
therefor, provided that the Award so substituted shall satisfy all of
the requirements of the Plan as of the date such new Award is made.
15. Grantee Employment. Nothing contained in this Agreement,
and no action of the Company or the Committee with respect hereto, shall confer
or be construed to confer on the Grantee any right to continue in the employ of
the Company or any of its Subsidiaries or interfere in any way with the right of
the Company or any employing Subsidiary to terminate the Grantee's employment at
any time, with or without cause; subject, however, to the provisions of any
employment agreement between the Grantee and the Company or any Subsidiary.
16. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of Delaware.
17. Construction. References in this Agreement to "this
Agreement" and the words "herein," "hereof," "hereunder" and similar terms
include all Exhibits and Schedules appended hereto, including the Plan. This
Agreement is entered into, and the Award evidenced hereby is granted, pursuant
to the Plan and shall be governed by and construed in accordance with the Plan
and the administrative interpretations adopted by the Committee thereunder. All
decisions of the Committee upon questions regarding the Plan or this Agreement
shall be conclusive. Unless otherwise expressly stated herein, in the event of
any inconsistency between the terms of the Plan and this Agreement, the terms of
the Plan shall control. The headings of the Sections of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
18. Duplicate Originals. The Company and the Grantee may sign
any number of copies of this Agreement. Each signed copy shall be an original,
but all of them together represent the same agreement.
19. Rules by Committee. The rights of the Grantee and
obligations of the Company hereunder shall be subject to such reasonable rules
and regulations as the Committee may adopt from time to time hereafter.
20. Entire Agreement. Subject to the provisions of any
applicable written employment agreement between the Grantee and the Company or
any Subsidiary, Grantee and the Company hereby declare and represent that no
promise or agreement not herein expressed has been made and that this Agreement
contains the entire agreement between the parties hereto with respect to the
Option and replaces and makes null and void any prior agreements, oral or
written, between Grantee and the Company regarding the Restricted Stock award.
6
<PAGE>
21. Grantee Acceptance. Grantee shall signify acceptance of
the terms and conditions of this Agreement by signing in the space provided at
the end hereof and returning a signed copy to the Company.
EDGE PETROLEUM CORPORATION
By: /S/ John E. Calaway
______________________
Name: JohnE. Calaway
_____________________
Title: Chief Executive Officer
______________________
ACCEPTED: JamesD. Calaway
____________________
/S/ James D. Calaway
---------------------
James D. Calaway
<PAGE>
Exhibit B to Restricted Stock Award
Agreement dated as of March 3, 1997
EDGE PETROLEUM CORPORATION 1997 INCENTIVE PLAN
Designation of Beneficiary
I, James D.Calaway (the"Grantee"), hereby declare
that upon my death _____________________________________ (the "Beneficiary") of
Name
______________________________________________________________________________,
Street Address City State Zip Code
who is my _________________________________________________, shall be entitled
Relationship to Grantee
to the Restricted Stock and all other rights accorded the Grantee by the
above-referenced grant agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated therein, including the
Beneficiary's survival of the Grantee's death. If any such condition is not
satisfied, such rights shall devolve according to the Grantee's will or the laws
of descent and distribution.
It is further understood that all prior designations of beneficiary
under the Agreement are hereby revoked and that this Designation of Beneficiary
may only be revoked in writing, signed by the Grantee and filed with the Company
prior to the Grantee's death.
_____________________ /S/ James D. Calaway
Date --------------------
Grantee
EXHIBIT 10.19
EDGE PETROLEUM CORPORATION
1997 INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 3rd day of
March, 1997 (the "Grant Date"), by and between EDGE PETROLEUM CORPORATION, a
Delaware corporation (the "Company"), and MICHAEL G. LONG (the "Grantee").
The Company has adopted the Edge Petroleum Corporation 1997
Incentive Plan (the "Plan"), a copy of which is appended to this Agreement as
Exhibit A and by this reference made a part hereof, for the benefit of eligible
employees, directors and independent contractors of the Company and its
Subsidiaries. Capitalized terms used and not otherwise defined herein shall have
the meaning ascribed thereto in the Plan.
Pursuant to the Plan, the Committee, which has generally been
assigned responsibility for administering the Plan, has determined that it would
be in the interest of the Company and its stockholders to grant the options
provided herein in order to provide Grantee with additional remuneration for
services rendered, to encourage Grantee to remain in the employ of the Company
or its Subsidiaries and to increase Grantee's personal interest in the continued
success and progress of the Company.
The Company and Grantee therefore agree as follows:
1. Grant of Option. Subject to the terms and conditions herein, the
Company grants to the Grantee during the period commencing on March 3, 1997 and
expiring at 5 p.m. Houston, Texas time ("Close of Business") on March 3, 2007
(the "Option Term"), subject to earlier termination pursuant to Section 6 below,
an option to purchase from the Company, at the price per share set forth on
Schedule 1 hereto (the "Option Price"), the number of shares of Company Common
Stock ("Common Stock") set forth on said Schedule 1 (the "Option Shares"). The
Option Price and Option Shares are subject to adjustment pursuant to Section 9
below. This option is as a "Nonqualified Stock Option" and is hereinafter
referred to as the "Option."
2. Conditions of Exercise. The Option is exercisable only in accordance
with the conditions stated in this Section.
(a) Except as otherwise provided in this Subsection (a), the
Option may only be exercised to the extent the Option Shares have
become available for purchase in accordance with the following
schedule:
1
<PAGE>
Perentage of Option
Date Shares Available for Purchase
March 3, 1998 20%
March 3, 1999 40%
March 3, 2000 60%
March 3, 2001 80%
March 3, 2002 100%
Notwithstanding the foregoing, no additional Option Shares shall become
available for purchase if Grantee has not remained in the continuous
employment of the Company and its Subsidiaries through the applicable
date; provided, however, that any Option Shares that would otherwise
become available for purchase pursuant to the foregoing schedule during
the 12-month period ending on the first anniversary of the date of
Grantee's termination of employment shall become available for purchase
on the specified date during such period if the Grantee's employment
was terminated for any reason other than (i) by the Company or any
Subsidiary for Cause (as defined in Section 6 below) or (ii)
voluntarily by the Grantee without Good Reason (as defined in Section 6
below). A change of employment is continuous employment within the
meaning of this Section 2 provided that, after giving effect to such
change, the Grantee continues to be an employee of the Company or any
Subsidiary.
(b) To the extent the Option becomes exercisable, such Option
may be exercised in whole or in part (at any time or from time to time,
except as otherwise provided herein) until expiration of the Option
Term or earlier termination thereof.
(c) All of the foregoing provisions of this Section 2 are
subject to (i) the provisions of Section 6 below, addressing events
that may result in early termination of the Option and (ii) the
provisions of any written employment agreement between the Grantee and
the Company or a Subsidiary that applies, by its terms, to this
Agreement and that is in effect at the time its provisions would become
operative with respect to this Agreement.
3. Manner of Exercise. The Option shall be considered exercised (as to
the number of Option Shares specified in the notice referred to in Subsection
(a) below) on the latest of (i) the date of exercise designated in the written
notice referred to in Subsection (a) below, (ii) if the date so designated is
not a business day, the first business day following such date or (iii) the
earliest business day by which the Company has received all of the following:
(a) Written notice, in such form as the Committee may require,
designating, among other things, the date of exercise and the number of
Option Shares to be purchased;
2
<PAGE>
(b) If the Option is to be exercised, payment of the Option
Price for each Option Share to be purchased in cash, Common Stock or in
such other form (or combination of forms) of payment contemplated by
Section 11 of the Plan as the Committee or the provisions of Section 11
of the Plan may permit; provided, however, that any shares of Common
Stock delivered in payment of the Option Price that are or were the
subject of an Employee Award must be shares that the Grantee has owned
for a period of at least six months prior to the date of exercise; and
(c) Any other documentation that the Committee may reasonably
require.
4. Mandatory Withholding for Taxes. Grantee acknowledges and agrees
that the Company shall deduct from the cash and/or shares of Common Stock
otherwise payable or deliverable upon exercise of the Option an amount of cash
and/or number of shares of Common Stock (valued at their Fair Market Value on
the date of exercise) that is equal to the amount of all federal, state and
local taxes required to be withheld by the Company upon such exercise, as
determined by the Committee.
5. Delivery by the Company. As soon as practicable after receipt of all
items referred to in Section 3, and subject to the withholding referred to in
Section 4, the Company shall deliver to the Grantee certificates issued in
Grantee's name for the number of Option Shares purchased by exercise of the
Option. If delivery is by mail, delivery of shares of Common Stock shall be
deemed effected for all purposes when a stock transfer agent of the Company
shall have deposited the certificates in the United States mail, addressed to
the Grantee, and any cash payment shall be deemed effected when a Company check,
payable to Grantee and in an amount equal to the amount of the cash payment,
shall have been deposited in the United States mail, addressed to the Grantee.
6. Termination of Employment. Unless otherwise determined by the
Committee in its sole discretion, the Option shall terminate, prior to the
expiration of the Option Term, at the time specified below:
(a) If Grantee terminates employment with the Company and its
Subsidiaries voluntarily without Good Reason (as defined below), then
the Option shall terminate at the Close of Business on the first
business day following the expiration of the 90-day period which began
on the date of termination of Grantee's employment; or
(b) If Grantee's employment with the Company and its
Subsidiaries is terminated by the Company or a Subsidiary for Cause (as
defined below), then the Option shall terminate immediately upon such
termination of Grantee's employment.
In any event in which the Option remains exercisable for a
period of time following the date of termination of Grantee's employment, the
Option may be exercised during such period of time only to the extent it was
exercisable as provided in Section 2 on such date of termination of Grantee's
employment. A change of employment is continuous employment within the meaning
of this Section 6 provided that, after giving effect to such change, the Grantee
continues to be an employee of the Company or any Subsidiary. Notwithstanding
any period of time referenced in this Section 6 or any other provision of this
Section that may be construed to the contrary, the Option shall in any event
terminate upon the expiration of the Option Term.
3
<PAGE>
"Cause" for purposes of the Agreement shall mean cause as
defined in any written employment agreement between the Grantee and the Company
or a Subsidiary in effect at the time of the Grantee's termination of employment
or, in the absence of any such employment agreement, any of the following: (a)
the Grantee is convicted of a felony involving moral turpitude, (b) the Grantee
commits a willful serious act intending to enrich himself at the expense of the
Company or any affiliated entity, or (c) the Grantee, in carrying out his duties
and responsibilities under this Agreement, (i) is guilty of willful gross
neglect, or (ii) voluntarily engages in conduct that results in material harm to
the Company or any affiliated entity, unless such conduct was reasonably
believed by the Grantee in good faith to be in the best interests of the
Company.
"Good Reason" for purposes of the Agreement shall mean (a)
good reason as defined in any written employment agreement between the Grantee
and the Company or a Subsidiary in effect at the time of the Grantee's
termination of employment, (b) if such an agreement is then in effect and does
not define "good reason" but contains a provision permitting the Grantee to
voluntarily terminate employment, upon the occurrence of certain events, on
terms substantially equal to those applicable to an involuntary termination
without cause, "Good Reason" shall mean any of those events or (c) in the
absence of any such employment agreement definition or provision, "Good Reason"
shall be deemed to have occurred upon the happening of any of the following:
(i) any reduction in Grantee's annual rate of salary;
(ii) either (x) a failure of the Company to continue in effect
any employee benefit plan in which Grantee was participating or (y) the
taking of any action by the Company that would adversely affect
Grantee's participation in, or materially reduce Grantee's benefits
under, any such employee benefit plan, unless such failure or such
taking of any action adversely affects the senior members of the
corporate management of the Company generally;
(iii) the assignment to Grantee of duties and responsibilities
that are materially more oppressive or onerous than those attendant to
Grantee's position immediately after the date hereof;
(iv) the relocation of the office location as assigned to
Grantee by the Company to a location more than 20 miles from Grantee's
current location without Grantee's consent; or
(v) the failure of the Company to obtain, prior to the time of
any reorganization, merger, consolidation, disposition of all or
substantially all of the assets of the Company or similar transaction
effective after the date hereof, in which the Company is not the
surviving person, the unconditional assumption in writing or by
operation of law of the Company's obligations to Grantee under this
Agreement by each direct successor to the Company in any such
transaction.
All of the foregoing provisions of this Section 6 are subject
to the provisions of any written employment agreement between the Grantee and
the Company or a Subsidiary that is in effect at the time of the Grantee's
termination of employment and that applies, by its terms, to this Agreement.
7. Nontransferability of Option. During Grantee's lifetime, the Option
is not transferable (voluntarily or involuntarily) other than pursuant to a
domestic relations order and, except as otherwise required pursuant to a
domestic relations order, is exercisable only by the Grantee or Grantee's court
appointed legal representative. The Grantee may designate a beneficiary or
beneficiaries to whom the Option shall pass upon Grantee's death and may change
such designation from time to time by filing a written designation of
beneficiary or beneficiaries with the Committee on the form annexed hereto as
Exhibit B or such other form as may be prescribed by the Committee, provided
that no such designation shall be effective unless so filed prior to the death
of Grantee. If no such designation is made or if the designated beneficiary does
not survive the Grantee's death, the Option shall pass by will or the laws of
descent and distribution. Following Grantee's death, the Option, if otherwise
exercisable, may be exercised by the person to whom such option passes
accordingly to the foregoing and such person shall be deemed the Grantee for
purposes of any applicable provisions of this Agreement.
4
<PAGE>
8. No Stockholder Rights. The Grantee shall not be deemed for any
purpose to be, or to have any of the rights of, a stockholder of the Company
with respect to any shares of Common Stock as to which this Agreement relates
until such shares shall have been issued to Grantee by the Company. Furthermore,
the existence of this Agreement shall not affect in any way the right or power
of the Company or its stockholders to accomplish any corporate act, including,
without limitation, the acts referred to in Section 15 of the Plan.
9. Adjustments. As provided in Section 15 of the Plan, certain
adjustments may be made to the Option upon the occurrence of events or
circumstances described in Section 15 of the Plan.
10. Restrictions Imposed by Law. Without limiting the generality of
Section 16 of the Plan, the Grantee agrees that Grantee will not exercise the
Option and that the Company will not be obligated to deliver any shares of
Common Stock, if counsel to the Company determines that such exercise, or
delivery would violate any applicable law or any rule or regulation of any
governmental authority or any rule or regulation of, or agreement of the Company
with, any securities exchange or association upon which the Common Stock is
listed or quoted. The Company shall in no event be obligated to take any
affirmative action in order to cause the exercise of the Option or the resulting
delivery of shares of Common Stock to comply with any such law, rule, regulation
or agreement.
11. Notice. Unless the Company notifies the Grantee in writing of a
different procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be (a) delivered
personally to the following address:
Edge Petroleum Corporation
Texaco Heritage Plaza
1111 Bagby, Suite 2100
Houston, Texas 77002
or (b) sent by first-class mail, postage prepaid and addressed as follows:
Edge Petroleum Corporation c/o Corporate
Secretary Texaco Heritage Plaza 1111 Bagby,
Suite 2100 Houston, Texas 77002.
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by first
class mail, postage prepaid, to Grantee's address as listed in the records of
the Company on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
12. Amendment. Notwithstanding any other provisions hereof,
this Agreement may be supplemented or amended from time to time as approved
by the Committee as contemplated by Section 6 of the Plan. Without
limiting the generality of the foregoing, without the consent of the Grantee,
5
<PAGE>
(a) this Agreement may be amended or supplemented (i) to cure
any ambiguity or to correct or supplement any provision herein which
may be defective or inconsistent with any other provision herein, or
(ii) to add to the covenants and agreements of the Company for the
benefit of Grantee or surrender any right or power reserved to or
conferred upon the Company in this Agreement, subject, however, to any
required approval of the Company's stockholders and, provided, in each
case, that such changes or corrections shall not adversely affect the
rights of Grantee with respect to the Award evidenced hereby without
the Grantee's consent, or (iii) to make such other changes as the
Company, upon advice of counsel, determines are necessary or advisable
because of the adoption or promulgation of, or change in or of the
interpretation of, any law or governmental rule or regulation,
including any applicable federal or state securities laws; and
(b) subject to Section 6 of the Plan and any required approval
of the Company's stockholders, the Award evidenced by this Agreement
may be canceled by the Committee and a new Award made in substitution
therefor, provided that the Award so substituted shall satisfy all of
the requirements of the Plan as of the date such new Award is made and
no such action shall adversely affect the Option to the extent then
exercisable without the Grantee's consent.
13. Grantee Employment. Nothing contained in this Agreement, and no
action of the Company or the Committee with respect hereto, shall confer or be
construed to confer on the Grantee any right to continue in the employ of the
Company or any of its Subsidiaries or interfere in any way with the right of the
Company or any employing Subsidiary to terminate the Grantee's employment at any
time, with or without cause; subject, however, to the provisions of any
employment agreement between the Grantee and the Company or any Subsidiary.
14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware.
15. Construction. References in this Agreement to "this Agreement" and
the words "herein," "hereof," "hereunder" and similar terms include all Exhibits
and Schedules appended hereto, including the Plan. This Agreement is entered
into, and the Award evidenced hereby is granted, pursuant to the Plan and shall
be governed by and construed in accordance with the Plan and the administrative
interpretations adopted by the Committee thereunder. All decisions of the
Committee upon questions regarding the Plan or this Agreement shall be
conclusive. Unless otherwise expressly stated herein, in the event of any
inconsistency between the terms of the Plan and this Agreement, the terms of the
Plan shall control. The headings of the Sections of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
16. Duplicate Originals. The Company and the Grantee may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement.
17. Rules by Committee. The rights of the Grantee and obligations of
the Company hereunder shall be subject to such reasonable rules and regulations
as the Committee may adopt from time to time hereafter.
18. Entire Agreement. Subject to the provisions of any applicable
written employment agreement between the Grantee and the Company or any
Subsidiary, Grantee and the Company hereby declare and represent that no promise
or agreement not herein expressed has been made and that this Agreement contains
the entire agreement between the parties hereto with respect to the Option and
replaces and makes null and void any prior agreements, oral or written, between
Grantee and the Company regarding the Option.
6
<PAGE>
19. Grantee Acceptance. Grantee shall signify acceptance of the terms
and conditions of this Agreement by signing in the space provided at the end
hereof and returning a signed copy to the Company.
ATTEST: EDGE PETROLEUM CORPORATION
/S/ Robert Thomas By: /S/ James D. Calaway
- ----------------- ---------------------
Secretary Name: Jame D. Calaway
Title: President
ACCEPTED:
/S/ Michael G. Long
--------------------
Michael G. Long
<PAGE>
Schedule 1 to Non-Qualified Stock Option Agreement
dated as of March 3, 1997
Edge Petroleum Corporation 1997 Incentive Plan
Grantee: Michael G. Long
Grant Date: March 3, 1997
Option Price: $16.50 per share
Option Shares: 35,507 shares of Common Stock, $.01 par value per share.
<PAGE>
Exhibit B to Non-Qualified Stock Option Agreement
dated as of March 3, 1997
Edge Petroleum Corporation 1997 Incentive Plan
Designation of Beneficiary
I, Michael G. Long (the "Grantee"), hereby declare
that upon my death _____________________________________ (the "Beneficiary") of
Name
______________________________________________________________________________,
Street Address City State Zip Code
who is my _________________________________________________, shall be entitled
Relationship to Grantee
to the Option and all other rights accorded the Grantee by the
above-referenced agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated herein, including the
Beneficiary's survival of the Grantee's death. If any such condition is not
satisfied, such rights shall devolve according to the Grantee's will or the laws
of descent and distribution.
It is further understood that all prior designations of beneficiary
under the Agreement are hereby revoked and that this Designation of Beneficiary
may only be revoked in writing, signed by the Grantee, and filed with the
Company prior to the Grantee's death.
/S/ Michael G. Long
--------- -----------------------
Date Michael G. Long, Grantee
<PAGE>
EXHIBIT - 11.1
EDGE PETROLEUM CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31,
--------------------------------
1999 1998
Basic common and common equivalent shares outstanding,
<S> <C> <C>
beginning of period 7,510,283 7,510,283
Weighted average shares and equivalent shares outstanding:
Issued in connection with the public offering
Restricted stock 248,384 250,586
Basic weighted average common and common equivalent --------- ---------
shares outstanding, end of period 7,758,667 7,760,869
Dilutive common stock options 33,229
--------- ---------
Diluted weighted average common and common equivalent
shares outstanding 7,758,667 7,794,098
========= =========
Net Income before cumulative effect of accounting change $ (305,488) $ 618,697
Cumulative effect of accounting change 1,780,835
----------- -----------
Net Income $ (305,488) $2,399,532
=========== ===========
BASIC EARNINGS PER SHARE:
Net income before cumulative effect of accounting change $(0.04) $ 0.08
Cumulative effect of accounting change - 0.23
------- -------
Basic earnings per share $(0.04) $ 0.31
======= =======
DILUTED EARNINGS PER SHARE:
Net income before cumulative effect of accounting change $(0.04) $ 0.08
Cumulative effect of accounting change - 0.23
------- -------
Diluted earnings per share $(0.04) $ 0.31
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Mar-31-1999
<CASH> 259,652
<SECURITIES> 0
<RECEIVABLES> 5,393,902
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,138,507
<PP&E> 76,068,460
<DEPRECIATION> 29,393,153
<TOTAL-ASSETS> 56,572,164
<CURRENT-LIABILITIES> 15,237,321
<BONDS> 0
0
0
<COMMON> 77,586
<OTHER-SE> 36,657,257
<TOTAL-LIABILITY-AND-EQUITY> 56,572,164
<SALES> 3,542,188
<TOTAL-REVENUES> 3,542,188
<CGS> 0
<TOTAL-COSTS> 3,820,372
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (38,326)
<INCOME-PRETAX> (305,488)
<INCOME-TAX> 0
<INCOME-CONTINUING> (305,488)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (305,488)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
