As filed with the Securities and Exchange Commission on July 12, 2007
Registration No. 333-143474
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
EDGE PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | | 76-0511037 |
(State or other jurisdiction of | | (I.R.S. Employer Identification Number) |
incorporation or organization) | | |
Travis Tower
1301 Travis, Suite 2000
Houston, Texas 77002
(713) 654-8960
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Michael G. Long
Executive Vice President, Chief Financial Officer and Treasurer
Edge Petroleum Corporation
1301 Travis, Suite 2000
Houston, Texas 77002
(713) 654-8960
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copy to:
Gene J. Oshman
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002
(713) 229-1178
Exact Name of Additional Registrants | | Jurisdiction of Incorporation/Organization | | I.R.S. Employer Identification Number |
Edge Petroleum Operating Company, Inc. | | Delaware | | 20-0661275 |
Edge Petroleum Exploration Company | | Delaware | | 76-0538577 |
Edge Petroleum Production Company | | Delaware | | 75-3173050 |
Miller Exploration Company | | Delaware | | 38-3379776 |
Miller Oil Corporation | | Michigan | | 38-2607711 |
Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. o
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
Calculation of Registration Fee
Title of Each Class of Securities to be Registered | | Proposed Maximum Aggregate Offering Price (1)(2) | | Amount of Registration Fee | |
Senior Debt Securities and Subordinated Debt Securities | | — | | — | |
Common Stock, par value $.01 per share | | — | | — | |
Preferred Stock, par value $.01 per share | | — | | — | |
Warrants | | — | | — | |
Guarantees of Debt Securities (3) | | — | | — | |
Total | | $ | 500,000,000 | | $ | 15,350 | (4) |
| | | | | | | |
(1) Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(o) under the Securities Act and exclusive of accrued interest, distributions and dividends, if any. In no event will the aggregate initial offering price of all securities issued from time to time pursuant to this Registration Statement exceed $500,000,000 or the equivalent thereof in foreign currencies, foreign currency units or composite currencies. If any debt securities are issued at an original issue discount, then the offering price shall be in such greater principal amount as shall result in an aggregate initial offering price of up to $500,000,000 or the equivalent thereof in foreign currencies, foreign currency units or composite currencies, less the dollar amount of any securities previously issued hereunder. Any securities registered hereunder may be sold separately or as units with other securities registered hereunder.
(2) There is being registered hereunder such indeterminate number or amount of senior and subordinated debt securities, common stock, preferred stock, warrants and guarantees of debt securities as may from time to time be issued at indeterminate prices and as may be issuable upon conversion, redemption, exchange, exercise or settlement of any securities registered hereunder, including under any applicable antidilution provisions.
(3) Edge Petroleum Operating Company, Inc., Edge Petroleum Exploration Company, Edge Petroleum Production Company, Miller Exploration Company and Miller Oil Corporation may fully and unconditionally guarantee any series of debt securities of Edge Petroleum Corporation. Pursuant to Rule 457(n), no separate fee is payable with respect to the guarantees of the debt securities being registered.
(4) The aggregate amount of registration fee for this registration statement is $15,350. Pursuant to Rule 457(p) of the Securities Act, the aggregate amount of the registration fee to be paid is offset by (i) $3,070 representing a portion of the amount of the registration fee associated with unsold securities which registration fee was previously paid in connection with the filing of the Registration Statement (Registration No. 333-125677) filed on Form S-3 by Edge Petroleum Corporation on June 9, 2005 and (ii) $12,280 representing the amount of the registration fee previously paid in connection with this Registration Statement (Registration No. 333-143474) originally filed on Form S-3 by Edge Petroleum Corporation on June 1, 2007. As a result, no registration fee is owed pursuant to this Amendment No. 1 to this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JULY 12, 2007
PROSPECTUS
EDGE PETROLEUM CORPORATION
$500,000,000
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
WARRANTS
We will provide the specific terms of the securities in supplements to this prospectus. You should read this prospectus and any supplement carefully before you invest. Edge common stock is quoted on the NASDAQ Global Select Market under the symbol “EPEX.”
You should carefully consider each of the risk factors described under “Risk Factors” beginning on page 4 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined whether this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is .
TABLE OF CONTENTS
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with the U.S. Securities and Exchange Commission (the “SEC”) using a “shelf” registration process. Using this process, we may offer any combination of the securities described in this prospectus in one or more offerings with a total initial offering price of up to $500,000,000. This prospectus provides you with a general description of the securities we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement and, if applicable, a pricing supplement that will describe the specific terms of the offering. The prospectus supplement and any pricing supplement may also add to, update or change the information contained in this prospectus. Please carefully read this prospectus, the prospectus supplement and any pricing supplement, in addition to the information contained in the documents we refer to under the heading “Where You Can Find More Information.”
ABOUT EDGE PETROLEUM CORPORATION
Edge Petroleum Corporation (“Edge”) is an independent oil and natural gas company engaged in the exploration, development, acquisition and production of crude oil and natural gas properties in the United States. At year-end 2006, our net proved reserves were 102.1 Bcfe, comprised of 76.1 billion cubic feet of natural gas, 1.9 million barrels of natural gas liquids and 2.4 million barrels of crude oil and condensate. Approximately 77% of total proved reserves were developed as of year-end 2006, and they were all located onshore, in the United States. On January 31, 2007, we completed the purchase of certain oil and natural gas properties located in 13 counties in south and southeast Texas and other associated assets from Smith Production Inc. (“Smith”). As of December 31, 2006, the Smith assets contained approximately 123.0 Bcfe of proved reserves, which were 81% natural gas and 64% proved developed. In total, the Smith assets include approximately 150 gross producing wells (74 net) and an ownership interest in approximately 17,000 gross (12,250 net) developed acres and 56,000 gross (16,000 net) undeveloped acres of leasehold, all as of December 31, 2006.
Our principal executive offices are located at 1301 Travis, Suite 2000, Houston, Texas 77002, and our telephone number at that location is (713) 654-8960.
3
RISK FACTORS
The following should be considered carefully with the information provided elsewhere in this prospectus, the accompanying prospectus supplement and the documents we incorporate by reference in reaching a decision regarding an investment in the securities.
Risks Related to Our Business
Oil and gas drilling is a speculative activity and involves numerous risks and substantial and uncertain costs which could adversely affect us.
Our growth will be materially dependent upon the success of our future drilling program. Drilling for oil and gas involves numerous risks, including the risk that no commercially productive oil or natural gas reservoirs will be encountered. The cost of drilling, completing and operating wells is substantial and uncertain, and drilling operations may be curtailed, delayed or cancelled as a result of a variety of factors beyond our control, including unexpected drilling conditions, pressure or irregularities in formations, equipment failures or accidents, adverse weather conditions, compliance with governmental requirements and shortages or delays in the availability of drilling rigs or crews and the delivery of equipment. Our future drilling activities may not be successful and, if unsuccessful, such failure will have an adverse effect on our future results of operations and financial condition. Our overall drilling success rate or our drilling success rate for activity within a particular geographic area may decline. We may ultimately not be able to lease or drill identified or budgeted prospects within our expected time frame, or at all. We may not be able to lease or drill a particular prospect because, in some cases, we identify a prospect or drilling location before seeking an option or lease rights in the prospect or location. Similarly, our drilling schedule may vary from our capital budget. The final determination with respect to the drilling of any scheduled or budgeted wells will be dependent on a number of factors, including:
· the results of exploration efforts and the acquisition, review and analysis of the seismic data;
· the availability of sufficient capital resources to us and the other participants for the drilling of the prospects;
· the approval of the prospects by other participants after additional data has been compiled;
· economic and industry conditions at the time of drilling, including prevailing and anticipated prices for oil and natural gas and the availability of drilling rigs and crews;
· our financial resources and results; and
· the availability of leases and permits on reasonable terms for the prospects.
These projects may not be successfully developed and the wells, if drilled, may not encounter reservoirs of commercially productive oil or natural gas.
Oil and natural gas prices are highly volatile in general and low prices negatively affect our financial results.
Our revenue, profitability, cash flow, future growth and ability to borrow funds or obtain additional capital, as well as the carrying value of our properties, are substantially dependent upon prevailing prices of oil and natural gas. Our reserves are predominantly natural gas, therefore changes in natural gas prices may have a particularly large impact on our financial results. Lower oil and natural gas prices also may reduce the amount of oil and natural gas that we can produce economically. Historically, the markets for oil and natural gas have been volatile, and such markets are likely to continue to be volatile in the future. Prices for oil and natural gas are subject to wide fluctuation in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty and a variety of additional factors that are beyond our control. These factors include the level of consumer product demand, weather conditions, domestic and foreign governmental regulations, the price and availability of alternative fuels, political conditions, the foreign supply of oil and natural gas, the price of foreign imports and overall economic conditions. Declines in oil and natural gas prices may materially adversely affect our financial condition, liquidity, and ability to finance planned capital expenditures and results of operations.
We have in the past (most recently in the third quarter of 2006) and may in the future be required to write down the carrying value of our oil and natural gas properties when oil and natural gas prices are depressed or unusually volatile. Whether we will be required to take such a charge will depend on the prices for oil and natural gas at the end of any quarter and the effect
4
of reserve additions or revisions and capital expenditures during such quarter. If a write down is required, it would result in a charge to earnings, but would not impact cash flow from operating activities.
We have hedged and may continue to hedge a portion of our production, which may result in our making cash payments or prevent us from receiving the full benefit of increases in prices for oil and gas.
In order to reduce our exposure to short-term fluctuations in the price of oil and natural gas, we periodically enter into hedging arrangements. Our hedging arrangements apply to only a portion of our production and provide only partial price protection against declines in oil and natural gas prices. Such hedging arrangements may expose us to risk of financial loss in certain circumstances, including instances where production is less than expected, our customers fail to purchase contracted quantities of oil or natural gas or a sudden, unexpected event materially impacts oil or natural gas prices. In addition, our hedging arrangements may limit the benefit to us of increases in the price of oil and natural gas.
We depend on successful exploration, development and acquisitions to maintain reserves and revenue in the future.
In general, the volume of production from oil and natural gas properties declines as reserves are depleted, with the rate of decline depending on reservoir characteristics. Except to the extent we acquire properties containing proved reserves or conduct successful exploration and development activities, or both, our proved reserves will decline. Our future oil and natural gas production is, therefore, highly dependent upon our level of success in finding or acquiring additional reserves. In addition, we are dependent on finding partners for our exploratory activity. To the extent that others in the industry do not have the financial resources or choose not to participate in our exploration activities, we could be adversely affected.
We are subject to substantial operating risks that may adversely affect the results of our operations.
The oil and natural gas business involves certain operating hazards such as well blowouts, mechanical failures, explosions, uncontrollable flows of oil, natural gas or well fluids, fires, formations with abnormal pressures, pollution, releases of toxic gas and other environmental hazards and risks. We could suffer substantial losses as a result of any of these events. We are not fully insured against all risks incident to our business.
We are not the operator of some of our wells. As a result, our operating risks for those wells and our ability to influence the operations for these wells are less subject to our control. Operators of these wells may act in ways that are not in our best interests.
We cannot control the activities on properties we do not operate and are unable to ensure their proper operation and profitability.
We do not operate all of the properties in which we have an interest. As a result, we have limited ability to exercise influence over, and control the risks associated with, operations of these properties. The failure of an operator of our wells to adequately perform operations, an operator’s breach of the applicable agreements or an operator’s failure to act in ways that are in our best interest could reduce our production and revenues. The success and timing of our drilling and development activities on properties operated by others therefore depend upon a number of factors outside of our control, including the operator’s
· timing and amount of capital expenditures;
· expertise and financial resources;
· inclusion of other participants in drilling wells; and
· use of technology.
The loss of key personnel could adversely affect us.
We depend to a large extent on the services of certain key management personnel, including our executive officers and other key employees, the loss of any of which could have a material adverse effect on our operations. We do not maintain key-man life insurance with respect to any of our employees. We believe that our success is also dependent upon our ability to continue to employ and retain skilled technical personnel.
5
Our operations have significant capital requirements which, if not met, will hinder operations.
We have experienced and expect to continue to experience substantial working capital needs due to our active exploration, development and acquisition programs. Additional financing may be required in the future to fund our growth. We may not be able to obtain such additional financing and financing under existing or new credit facilities may not be available in the future. In the event such capital resources are not available to us, our drilling and other activities may be curtailed.
High demand for field services and equipment and the ability of suppliers to meet that demand may limit our ability to drill and produce our oil and natural gas properties.
Due to current industry demands, well service providers and related equipment and personnel are in short supply. This is causing escalating prices, delays in drilling and other exploration activities, the possibility of poor services coupled with potential damage to downhole reservoirs and personnel injuries. Such pressures will likely increase the actual cost of services, extend the time to secure such services and add costs for damages due to any accidents sustained from the over use of equipment and inexperienced personnel.
Government regulation and liability for environmental matters may adversely affect our business and results of operations.
Oil and natural gas operations are subject to various federal, state and local government regulations, which may be changed from time to time. Matters subject to regulation include discharge permits for drilling operations, drilling bonds, reports concerning operations, the spacing of wells, unitization and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and natural gas wells below actual production capacity in order to conserve supplies of oil and natural gas. There are federal, state and local laws and regulations primarily relating to protection of human health and the environment applicable to the development, production, handling, storage, transportation and disposal of oil and natural gas, by-products thereof and other substances and materials produced or used in connection with oil and natural gas operations. In addition, we may be liable for environmental damages caused by previous owners of property we purchase or lease. As a result, we may incur substantial liabilities to third parties or governmental entities. We are also subject to changing and extensive tax laws, the effects of which cannot be predicted. The implementation of new, or the modification of existing, laws or regulations could have a material adverse effect on us.
We may have difficulty managing any future growth and the related demands on our resources and may have difficulty in achieving future growth.
We have experienced growth in the past through the expansion of our drilling program and, more recently, acquisitions. This expansion was curtailed in 1998 and 1999, but resumed in 2000 and increased in subsequent years. Further expansion is anticipated in 2007 through increased drilling efforts and possible acquisitions. Any future growth may place a significant strain on our financial, technical, operational and administrative resources. In particular, the Smith acquisition, which was completed in January 2007, has resulted in a significant growth in our assets, reserves and revenues and may place a significant strain on our financial, technical, operational and administrative resources. We may not be able to integrate the operations of the acquired assets without increases in costs, losses in revenues or other difficulties. In addition, we may not be able to realize the operating efficiencies, synergies, costs savings or other benefits expected from the Smith acquisition. Any unexpected costs or delays incurred in connection with the integration could have an adverse effect on our business, results of operations or financial condition. We currently do not expect to hire any personnel associated with Smith. We have added to our staffing levels as a result of the Smith acquisition, and we intend to hire approximately five additional employees that we expect will be required to manage the increased scale of our business. However, we may experience difficulties in finding the additional qualified personnel. In an effort to stay on schedule with our planned activities in 2007, we intend to supplement our staff with contract and consultant personnel until we are able to hire new employees. Our ability to grow will depend upon a number of factors, including our ability to identify and acquire new exploratory prospects, our ability to develop existing prospects, our ability to continue to retain and attract skilled personnel, the results of our drilling program and acquisition efforts, hydrocarbon prices and access to capital. We may not be successful in achieving or managing growth and any such failure could have a material adverse effect on us.
We face strong competition from larger oil and natural gas companies.
The oil and gas industry is highly competitive. We encounter competition from oil and natural gas companies in all areas of our operations, including the acquisition of exploratory prospects and productive oil and natural gas properties. Our competitors range in size from the major integrated oil and natural gas companies to numerous independent oil and natural gas companies, individuals and drilling and income programs. Many of these competitors are large, well-established companies
6
with substantially larger operating staffs and greater capital resources than ours. We may not be able to conduct our operations successfully, evaluate and select suitable properties, consummate transactions, and obtain technical, managerial and other professional personnel in this highly competitive environment. Specifically, these larger competitors may be able to pay more for exploratory prospects, productive oil and natural gas properties and competent personnel and may be able to define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. In addition, such competitors may be able to expend greater resources on the existing and changing technologies that we believe are and will be increasingly important to attaining success in the industry. Such competitors may also be in a better position to secure oilfield services and equipment on a timely basis or on favorable terms.
The oil and natural gas reserve data included in or incorporated by reference in this document are estimates based on assumptions that may be inaccurate and existing economic and operating conditions that may differ from future economic and operating conditions.
Reservoir engineering is a subjective and inexact process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner and is based upon assumptions that may vary considerably from actual results. Accordingly, reserve estimates may be subject to downward or upward adjustment. Actual production, revenue and expenditures with respect to our reserves will likely vary from estimates, and such variances may be material. The information regarding discounted future net cash flows included or incorporated by reference herein should not be considered as the current market value of the estimated oil and natural gas reserves attributable to our properties. As required by the SEC, the estimated discounted future net cash flows from proved reserves are based on prices and costs as of the date of the estimate, while actual future prices and costs may be materially higher or lower. Actual future net cash flows also will be affected by factors such as the amount and timing of actual production, supply and demand for oil and natural gas, increases or decreases in consumption, and changes in governmental regulations or taxation. In addition, the 10% discount factor, which is required by Financial Accounting Standards Board in Statement of Financial Accounting Standards No. 69, Disclosures About Oil and Natural Gas Producing Activities to be used in calculating discounted future net cash flows for reporting purposes, is not necessarily the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and natural gas industry in general.
Our credit facility has substantial operating restrictions and financial covenants and we may have difficulty obtaining additional credit, which could adversely affect operations.
Over the past few years, increases in commodity prices and increases in our proved reserve amounts and the resultant increase in estimated discounted future net revenue, have allowed us to increase our available borrowing amounts. In the future, commodity prices may decline, we may increase our borrowings or our borrowing base may be adjusted downward. Our credit facility is secured by a pledge of substantially all of our assets and has covenants that limit additional borrowings, sales of assets and the distributions of cash or properties and that prohibit the payment of dividends and the incurrence of liens. The credit facility also requires that specified financial ratios be maintained. The restrictions of our credit facility and the difficulty in obtaining additional debt financing may have adverse consequences on our operations and financial results, including our ability to obtain financing for working capital, capital expenditures, our drilling program, purchases of new technology or other purposes. In addition, such financing may be on terms unfavorable to us and we may be required to use a substantial portion of our cash flow to make debt service payments, which will reduce the funds that would otherwise be available for operations and future business opportunities. Further, a substantial decrease in our operating cash flow or an increase in our expenses could make it difficult for us to meet debt service requirements and require us to modify operations and we may become more vulnerable to downturns in our business or the economy generally.
Our ability to obtain and service indebtedness will depend on our future performance, including our ability to manage cash flow and working capital, which are in turn subject to a variety of factors beyond our control. Our business may not generate cash flow at or above anticipated levels or we may not be able to borrow funds in amounts sufficient to enable us to service indebtedness, make anticipated capital expenditures or finance our drilling program. If we are unable to generate sufficient cash flow from operations or to borrow sufficient funds in the future to service our debt, we may be required to curtail portions of our drilling program, sell assets, reduce capital expenditures, refinance all or a portion of our existing debt or obtain additional financing. We may not be able to refinance our debt or obtain additional financing, particularly in view of current industry conditions, the restrictions on our ability to incur debt under our existing debt arrangements, and the fact that substantially all of our assets are currently pledged to secure obligations under our bank credit facility.
7
We may not have enough insurance to cover all of the risks we face.
In accordance with customary industry practices, we maintain insurance coverage against some, but not all, potential losses in order to protect against the risks we face. We do not carry business interruption insurance. We may elect not to carry insurance if our management believes that the cost of available insurance is excessive relative to the risks presented. In addition, we cannot insure fully against pollution and environmental risks. The occurrence of an event not fully covered by insurance could have a material adverse effect on our financial condition and results of operations.
Our acquisition program may be unsuccessful.
Acquisitions have become increasingly important to our business strategy in recent years. The successful acquisition of producing properties requires an assessment of recoverable reserves, future oil and natural gas prices, operating costs, potential environmental and other liabilities and other factors. Such assessments, even when performed by experienced personnel, are necessarily inexact and their accuracy inherently uncertain. Our review of subject properties will not reveal all existing or potential problems, deficiencies and capabilities. We may not always perform inspections on every well, and may not be able to observe structural and environmental problems even when we undertake an inspection. Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of such problems. We may be required to assume the risk of the physical condition of the properties in addition to the risk that the properties may not perform in accordance with our expectations. We may be left with no recourse for liabilities and other problems associated with acquisitions that we do not discover prior to the closing date. Any acquisition of property interests by us may not be successful and, if unsuccessful, such failure may have an adverse effect on our future results of operations and financial condition.
Approximately 36% of the proved reserves associated with the Smith acquisition in January 2007 and approximately 23% of our proved reserves were undeveloped as of December 31, 2006, and those reserves may not ultimately be developed.
As of December 31, 2006, approximately 36% of the proved reserves associated with the Smith acquisition in January 2007 and approximately 23% of our proved reserves were undeveloped. Proved undeveloped reserves, by their nature, are less certain than other categories of proved reserves. Recovery of undeveloped reserves requires significant capital expenditures and successful drilling operations and involves greater risks. Our reserve data for the properties assumes that to develop our reserves we will make significant capital expenditures and conduct these operations successfully. Although we have prepared estimates of these natural gas and oil reserves and the costs associated with these reserves in accordance with industry standards and SEC requirements, the estimated costs may not be accurate, development may not occur as scheduled and actual results may not be as estimated.
Our reliance on third parties for gathering and distributing could curtail future exploration and production activities.
The marketability of our production depends upon the proximity of our reserves to, and the capacity of, third-party facilities and third-party services, including oil and natural gas gathering systems, pipelines, trucking or terminal facilities, and processing facilities. The unavailability or lack of capacity of such services and facilities could result in the shut-in of producing wells or the delay or discontinuance of development plans for properties. A shut-in or delay or discontinuance could adversely affect our financial condition. In addition, federal and state regulation of oil and natural gas production and transportation affect our ability to produce and market our oil and natural gas on a profitable basis.
Risks Related to Our Common Stock
The market price of our common stock is volatile.
The trading price of our common stock and the price at which we may sell common stock in the future are subject to large fluctuations in response to any of the following:
· limited trading volume in our common stock;
· quarterly variations in operating results;
· our involvement in litigation;
· general financial market conditions;
· the prices of natural gas and oil;
8
· announcements by us and our competitors;
· our liquidity;
· our ability to raise additional funds;
· changes in government regulations; and
· other events.
Sales of substantial amounts of shares of our common stock could cause the price of our common stock to decrease.
This prospectus covers the issuance by us of a substantial number of shares of our common stock. Our stock price may decrease due to the additional amount of shares available in the market.
We do not intend to pay dividends on our common stock and our ability to pay dividends on our common stock is restricted.
We have not historically paid a dividend on our common stock, cash or otherwise, and do not intend to in the foreseeable future. We are currently restricted from paying dividends on common stock by our existing credit facility agreement and, in some circumstances, by the terms of our Series A preferred stock. Any future dividends also may be restricted by our then-existing debt agreements.
Provisions of Delaware law and our charter and bylaws may delay or prevent transactions that would benefit stockholders.
Our certificate of incorporation and bylaws and the Delaware General Corporation Law contain provisions that may have the effect of delaying, deferring or preventing a change of control of the company. These provisions, among other things, provide for a classified Board of Directors with staggered terms, restrict the ability of stockholders to take action by written consent, authorize the Board of Directors to set the terms of preferred stock and restrict our ability to engage in transactions with stockholders with 15% or more of outstanding voting stock.
Because of these provisions, persons considering unsolicited tender offers or other unilateral takeover proposals may be more likely to negotiate with our board of directors rather than pursue non-negotiated takeover attempts. As a result, these provisions may make it more difficult for our stockholders to benefit from transactions that are opposed by an incumbent board of directors.
Risks Related to Our Debt Securities
A holder’s right to receive payments on the debt securities is effectively subordinate to the rights of our existing and future secured creditors. Further, any guarantee of senior debt securities by a subsidiary guarantor, if any, is effectively subordinated to the subsidiary guarantor’s existing and future secured indebtedness.
Holders of our secured indebtedness and the secured indebtedness of a subsidiary guarantor, if applicable, will have claims that are prior to the claims of holders of the senior debt securities to the extent of the value of the assets securing that other indebtedness. Notably, we are party to a credit facility that is secured by liens on substantially all of our assets and is guaranteed by our subsidiaries Edge Petroleum Operating Company, Inc., Edge Petroleum Exploration Company, Edge Petroleum Production Company, Miller Exploration Company and Miller Oil Corporation. The senior debt securities will be effectively subordinated to that secured indebtedness. In the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, reorganization or other bankruptcy proceeding, holders of secured indebtedness will have prior claim to our assets that constitute their collateral. Holders of the senior debt securities will participate ratably with all holders of our unsecured indebtedness that is deemed to be of the same class as the senior debt securities, and potentially with all of our other general creditors, based upon the respective amounts owed to each holder or creditor, in our remaining assets. In any of the foregoing events, we cannot assure you that there will be sufficient assets to pay amounts due on the senior debt securities. As a result, holders of senior debt securities may receive less, ratably, than holders of secured indebtedness.
Holders of debt securities may be structurally subordinated to the creditors of our subsidiaries.
We currently conduct substantially all of our operations through our subsidiaries, and those subsidiaries generate substantially all of our operating income and cash flow. Contractual provisions or laws, as well as our subsidiaries’ financial
9
condition and operating requirements, may limit our ability to obtain cash from our subsidiaries that we use to pay our debt service obligations, including payments on the debt securities. In addition, holders of the debt securities will have a junior position to the claims of creditors, including trade creditors and tort claimants, of any subsidiary of ours to the extent that the subsidiary does not guarantee such debt securities.
A holder’s right to receive payments on the debt securities could be adversely affected if a subsidiary of ours is not a guarantor of the debt securities and declares bankruptcy, liquidates or reorganizes.
If a subsidiary of ours is not a guarantor of the debt securities and declares bankruptcy, liquidates or reorganizes, holders of the subsidiary’s indebtedness and its trade creditors will generally be entitled to payment of their claims from the assets of the subsidiary before any assets are made available for distribution to us.
Federal and state statutes allow courts, under specific circumstances, to void guarantees and require holders of the debt securities to return payments received from guarantors.
Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee could be voided or claims in respect of a guarantee could be subordinated to all other debts of the applicable guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee and either:
· was insolvent or rendered insolvent by reason of such incurrence;
· was engaged or about to engage in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or
· intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor or to a fund for the benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, a guarantor would be considered insolvent if, at the relevant time, the sum of its debts and other liabilities, including contingent liabilities, was greater than the sum of its assets at a fair valuation, and a guarantor that was generally not then paying its debts as they became due would be presumed to be insolvent.
We may incur additional debt ranking equal to the debt securities.
If we incur additional debt that ranks equally with the debt securities, the holders of that debt will be entitled to share ratably with the holders of the debt securities in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution and other winding-up of us. This may have the effect of reducing the amount of proceeds paid to holders of debt securities.
10
WHERE YOU CAN FIND MORE INFORMATION
Edge files annual, quarterly and current reports, proxy statements and other information with the SEC. You can read and copy these materials at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information about the operation of the SEC’s public reference room by calling the SEC at l-800-SEC-0330. The SEC also maintains an Internet site that contains information we have filed electronically with the SEC, which you can access over the Internet at http://www.sec.gov. You can also obtain information about Edge at the offices of The Nasdaq Stock Market which are located at 1735 K Street N.W., Washington, D.C. 20006.
Our Internet website is located at http: //www.edgepet.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the SEC are available, free of charge, through our website, as soon as reasonably practicable after those reports or filings are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference in this prospectus and does not constitute a part of this prospectus.
This prospectus is part of a registration statement we have filed with the SEC relating to the securities we may offer. As permitted by SEC rules, this prospectus does not contain all of the information we have included in the registration statement and the accompanying exhibits and schedules we file with the SEC. You may refer to the registration statement, exhibits and schedules for more information about us and the securities. The registration statement, exhibits and schedules are available at the SEC’s public reference room or through its Internet website.
The SEC allows us to “incorporate by reference” the information we have filed with it, which means that we can disclose important information to you by referring you to those documents. The information we incorporate by reference is an important part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. Any statement contained in this prospectus or a document incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any other subsequently filed document that is incorporated by reference in this prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, as amended (excluding any information “furnished” but not “filed,” unless we specifically provide that such “furnished” information is to be incorporated by reference) after the date of this prospectus and until all the offered securities are sold. The documents we incorporate by reference are:
· Our Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 12, 2007;
· Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, as filed with the SEC on May 9, 2007;
· Our Current Reports on Form 8-K and Form 8-K/A as filed with the SEC on January 5, 2007, January 16, 2007, January 19, 2007, January 23, 2007, January 29, 2007, January 30, 2007, February 5, 2007, February 28, 2007, March 12, 2007 and July 11, 2007;
· The description of our common stock contained in our Registration Statement on Form 8-A as originally filed with the SEC on February 14, 1997, as amended by Amendment No. 1 filed with the SEC on June 9, 2005, and as such Registration Statement may be further amended from time to time for the purpose of updating, changing or modifying the description of our common stock; and
· The description of our 5.75% Series A Cumulative Convertible Perpetual Preferred Stock contained in our Registration Statement on Form 8-A as originally filed with the SEC on January 25, 2007, and as such Registration Statement may be amended from time to time for the purpose of updating, changing or modifying the description of our Series A Preferred Stock.
All filings filed by us pursuant to the Exchange Act after the date of the initial registration statement and prior to the effectiveness of the registration statement shall also be deemed to be incorporated by reference into this prospectus.
At your written or oral request, we will provide you with a free copy of any of these filings (except for exhibits, unless the exhibits are specifically incorporated by reference into the filing). You may request copies by writing or telephoning the Secretary of Edge at:
11
Edge Petroleum Corporation
1301 Travis, Suite 2000
Houston, Texas 77002
(713) 654-8960
You should rely only on the information contained or incorporated by reference in this prospectus, the prospectus supplement and any pricing supplement. We have not authorized any person, including any salesman or broker, to provide information other than that provided in this prospectus, the prospectus supplement or any pricing supplement. We have not authorized anyone to provide you with different information. We are not making an offer of the securities in any jurisdiction where the offer is not permitted. You should assume that the information in this prospectus, the prospectus supplement and any pricing supplement is accurate only as of the date on its cover page and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference.
12
FORWARD-LOOKING INFORMATION
This document and the documents incorporated by reference in this prospectus contain both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include the information concerning possible or assumed future results of operations of Edge, including statements about the following subjects:
· business strategy and future results or effects of any competitive strengths, | | · replacing production and managing our asset base, |
| | |
· drilling plans (including scheduled and budgeted wells), | | · future commodity price environment, |
| | |
· our 3-D project portfolio, | | · expectation or timing of reaching payout, |
| | |
· future general and administrative expenses on a per unit of production basis, | | · outcome, effects or timing of any legal proceedings or contingencies, |
| | |
· future growth and expansion, | | · the number, timing or results of any wells, |
| | |
· future exploration, | | · future production or reserves, |
| | |
· future seismic data (including timing and results), | | · future acquisition of leases, lease options or other land rights, |
| | |
· expansion of operations, | | · additional reserves and reserve increases, |
| | |
· future capital expenditures (or funding thereof) and working capital, | | · enhancement of visualization and interpretation strengths, |
| | |
· sufficiency of future working capital, | | · expansion and improvement of capabilities, |
| | |
· borrowings and capital resources and liquidity, | | · future compensation programs, |
| | |
· projected rates of return, | | · new focus on core areas, |
| | |
· retained earnings and dividend policies, | | · new prospects and drilling locations, |
| | |
· projected cash flows from operations, | | · impact of any change in accounting policies on our financial statements, and |
| | |
· redetermination of our borrowing base, | | · any other statements regarding future operations, financial results, opportunities, growth, business plans and strategy and other statements that are not historical facts. |
Forward-looking statements in this prospectus or in the documents incorporated by reference in this prospectus are identifiable by use of the following words and other similar expressions, among others:
· “anticipate,” | | · “may,” |
| | |
· “believe,” | | · “might,” |
| | |
· “budgeted,” | | · “plan,” |
| | |
· “could,” | | · “potential,” |
| | |
· “estimate,” | | · “predict,” |
13
· “expect,” | | · “project,” |
| | |
· “forecast,” | | · “should,” and |
| | |
· “intend,” | | · “try.” |
In addition to those factors discussed in this prospectus under “Risk Factors” and the documents that we include in or incorporate by reference into this prospectus, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and our other applicable SEC filings, the following factors could cause our future results of operations to differ materially from those expressed in the forward-looking statements included in this document or incorporated by reference:
· drilling plans (including scheduled and budgeted wells), | | · borrowings and capital resources and liquidity, |
| | |
· the number, timing or results of any wells, | | · changes in strategy and business discipline, |
| | |
· volatility and declines in oil and natural gas prices, | | · future tax matters, |
| | |
· changes in wells operated and reserves, | | · outcome, effects or timing of legal proceedings, |
| | |
· future growth and expansion, | | · any loss of key personnel, |
| | |
· future exploration, | | · attraction of new members to our technical team, |
| | |
· future seismic data (including timing and results), | | · the plans for timing, interpretation and results of new or existing seismic surveys or seismic data, |
| | |
· ability to generate additional prospects, | | · geopolitical events affecting oil and natural gas prices, |
| | |
· integration of new technologies into operations, | | · the effect of litigation and contingencies, |
| | |
· future capital expenditures (or funding thereof) and working capital, | | · credit facilities, and |
| | |
· review of outside generated prospects and acquisitions, | | · whether factors related to the contingent drilling program are satisfied, including drilling results, future leasing and the availability of future cash flow. |
The above factors are in addition to those factors discussed in this prospectus under “Risk Factors” and in the “Risk Factors” sections and other portions of documents that we include in or incorporate by reference into this prospectus, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and our other applicable SEC filings. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements.
14
USE OF PROCEEDS
Unless we inform you otherwise in the prospectus supplement, the net proceeds from the sale of the securities will be used for general corporate purposes, including repayment or refinancing of debt, acquisitions, working capital, capital expenditures and repurchases and redemptions of securities. Pending any specific application, we may initially invest funds in short-term marketable securities or apply them to the reduction of other short-term indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our ratio of earnings to fixed charges and ratio of earnings to fixed charges and preferred stock dividends for the periods indicated.
| | Year Ended December 31, | | Three Months Ended March 31, | |
| | 2002 | | 2003 | | 2004 | | 2005 | | 2006 (1) | | 2007 | |
Ratio of Earnings to Fixed Charges | | 1.59x | | 7.81x | | 18.22x | | 22.59x | | — | | | — | (2) | |
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends | | 1.59x | | 7.81x | | 18.22x | | 22.59x | | — | | | — | (3) | |
160;
(1) For the year ended December 31, 2006, earnings were inadequate to cover fixed charges and to cover combined fixed charges and preferred stock dividends by $68.1 million due to the $97 million impairment that we recorded in the third quarter of 2006.
(2) Earnings for the three months ended March 31, 2007 were inadequate to cover fixed charges by $10.8 million.
(3) Earnings for the three months ended March 31, 2007 were inadequate to cover fixed charges and preferred stock dividends by $12.9 million.
For purposes of this table, “earnings” consist of income before income taxes, extraordinary items and cumulative effect of accounting changes, plus fixed charges (excluding capitalized interest, but including amortization of amounts previously capitalized). “Fixed charges” consist of interest (including capitalized interest) on all debt, amortization of debt discounts and expenses incurred on issuance, and an estimate of the interest within rental expense.
15
DESCRIPTION OF THE DEBT SECURITIES
The debt securities of Edge covered by this prospectus will be Edge’s general unsecured obligations. Edge will issue senior debt securities on a senior unsecured basis under one or more separate indentures between us, one or more of our subsidiaries, if any, that may be guarantors (the “Subsidiary Guarantors”) and a trustee that we will name in the prospectus supplement. We refer to any such indenture as a senior indenture. Edge will issue subordinated debt securities under one or more separate indentures between us, the Subsidiary Guarantors, if any, and a trustee that we will name in the prospectus supplement. We refer to any such indenture as a subordinated indenture. We refer to the senior indentures and the subordinated indentures collectively as the indentures. The indentures will be substantially identical, except for provisions relating to subordination. The senior debt securities will constitute senior debt and will rank equally with all of Edge’s unsecured and unsubordinated debt. The subordinated debt securities will be subordinated to, and thus have a junior position to, the senior debt of Edge (as defined with respect to the series of subordinated debt securities) and may rank equally with or senior or junior to Edge’s other subordinated debt that may be outstanding from time to time.
We have summarized material provisions of the indentures, the debt securities and the guarantees below. This summary is not complete. We have incorporated by reference the form of senior indenture and the form of subordinated indenture with the SEC as exhibits to the registration statement, and you should read the indentures for provisions that may be important to you. Please read “Where You Can Find More Information.”
In this summary description of the debt securities, unless we state otherwise or the context clearly indicates otherwise, all references to Edge mean Edge Petroleum Corporation only.
Provisions Applicable to Each Indenture
General. The indentures do not limit the amount of debt securities that may be issued under that indenture, and do not limit the amount of other unsecured debt or securities that Edge may issue. Edge may issue debt securities under the indentures from time to time in one or more series, each in an amount authorized prior to issuance. The indentures also give us the ability to reopen a previous issue of a series of debt securities and issue additional debt securities of that series.
Edge conducts substantially all of its operations through subsidiaries, and those subsidiaries generate substantially all its operating income and cash flow. As a result, distributions or advances from those subsidiaries are the principal source of funds necessary to meet the debt service obligations of Edge. Contractual provisions or laws, as well as the subsidiaries’ financial condition and operating requirements, may limit the ability of Edge to obtain cash from its subsidiaries that it requires to pay its debt service obligations, including any payments required to be made under the debt securities. In addition, holders of the debt securities will have a junior position to the claims of creditors of the subsidiaries of Edge on their assets and earnings, to the extent Edge’s subsidiaries do not guarantee the debt securities.
The indentures do not contain any covenants or other provisions designed to protect holders of the debt securities in the event Edge participates in a highly leveraged transaction or upon a change of control. The indentures also do not contain provisions that give holders the right to require Edge to repurchase its securities in the event of a decline in Edge’s credit ratings for any reason, including as a result of a takeover, recapitalization or similar restructuring or otherwise.
Terms. The prospectus supplement relating to any series of debt securities being offered will include specific terms relating to the offering. These terms will include some or all of the following:
· whether the debt securities will be senior or subordinated debt securities;
· the title of the debt securities;
· the total principal amount of the debt securities;
· whether the debt securities will be issued in individual certificates to each holder or in the form of temporary or permanent global securities held by a depositary on behalf of holders;
· the date or dates on which the principal of and any premium on the debt securities will be payable;
· any interest rate, the date from which interest will accrue, interest payment dates and record dates for interest payments;
16
· any right to extend or defer the interest payment periods and the duration of the extension;
· whether and under what circumstances any additional amounts with respect to the debt securities will be payable;
· whether the debt securities are entitled to a guarantee of any Subsidiary Guarantors;
· the place or places where payments on the debt securities will be payable;
· any provisions for optional redemption or early repayment;
· any sinking fund or other provisions that would require the redemption, purchase or repayment of debt securities;
· the denominations in which the debt securities will be issued, if other than denominations of $1,000 and integral multiples thereof;
· whether payments on the debt securities will be payable in foreign currency or currency units or another form and whether payments will be payable by reference to any index or formula;
· the portion of the principal amount of debt securities that will be payable if the maturity is accelerated, if other than the entire principal amount;
· any additional means of defeasance of the debt securities, any additional conditions or limitations to defeasance of the debt securities or any changes to those conditions or limitations;
· any changes or additions to the events of default or covenants described in this prospectus;
· any restrictions or other provisions relating to the transfer or exchange of debt securities;
· any terms for the conversion or exchange of the debt securities for other securities of Edge or any other entity;
· with respect to any subordinated indenture, any changes to the subordination provisions for the subordinated debt securities; and
· any other terms of the debt securities not prohibited by the applicable indenture.
Edge may sell the debt securities at a discount, which may be substantial, below their stated principal amount. These debt securities may bear no interest or interest at a rate that at the time of issuance is below market rates. If Edge sells these debt securities, we will describe in the prospectus supplement any material United States federal income tax consequences and other special considerations.
If Edge sells any of the debt securities for any foreign currency or currency unit or if payments on the debt securities are payable in any foreign currency or currency unit, we will describe in the prospectus supplement the restrictions, elections, tax consequences, specific terms and other information relating to those debt securities and the foreign currency or currency unit.
Consolidation, Merger and Sale of Assets or any Subsidiary Guarantors. The indentures generally permit a consolidation or merger between Edge or any Subsidiary Guarantor and another entity. They also permit Edge or any Subsidiary Guarantors to sell, lease, convey, transfer or otherwise dispose of all or substantially all of their assets. Edge and any Subsidiary Guarantors have agreed, however, that they will not consolidate with or merge into any entity or sell, lease, convey, transfer or otherwise dispose of all or substantially all of their assets to any entity unless:
· immediately after giving effect to the transaction, no default or event of default would occur and be continuing or would result from the transaction; and
· if Edge or the Subsidiary Guarantor, as the case may be, is not the continuing entity, the resulting entity or transferee is organized and existing under the laws of any United States jurisdiction and assumes the due and punctual payments on the debt securities and the performance of its covenants and obligations under the indenture and the debt securities.
Upon any such consolidation or merger in which Edge is not the continuing entity or any such asset sale, lease, conveyance, transfer or disposition involving Edge, the resulting entity or transferee will be substituted for Edge under the
17
applicable indenture and debt securities. In the case of an asset sale, conveyance, transfer or disposition other than a lease, Edge will be released from the applicable indenture.
Events of Default. Unless we inform you otherwise in the applicable prospectus supplement, the following are events of default with respect to a series of debt securities:
· failure to pay interest when due on that series of debt securities for 30 days;
· failure to pay principal of or any premium on that series of debt securities when due;
· failure to make any sinking fund payment when required for that series for 30 days;
· failure to comply with any covenant or agreement in that series of debt securities or the applicable indenture (other than an agreement or covenant that has been included in the indenture solely for the benefit of one or more other series of debt securities) for 90 days after written notice by the trustee or by the holders of at least 25% in principal amount of the outstanding debt securities issued under that indenture that are affected by that failure;
· specified events involving bankruptcy, insolvency or reorganization of Edge Petroleum Corporation or any Subsidiary Guarantor, if such Subsidiary Guarantor is a guarantor with respect to that series of debt securities and it is a “significant subsidiary” as defined in Article I, Rule 1-02 of Regulation S-X promulgated under the Securities Act;
· specified events involving the guarantees; and
· any other event of default provided for that series of debt securities.
A default under one series of debt securities will not necessarily be a default under another series. The indentures provide that the trustee generally must mail notice of a default or event of default of which it has actual knowledge to the registered holders of the applicable debt securities within 90 days of occurrence. However, the trustee may withhold notice to the holders of the debt securities of any default or event of default (except in any payment on the debt securities) if the trustee considers it in the interest of the holders of the debt securities to do so.
If an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs, the principal of and interest on all the debt securities issued under the applicable indenture will become immediately due and payable without any action on the part of the trustee or any holder. If any other event of default for any series of debt securities occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the outstanding debt securities of the series affected by the default (or, in some cases, 25% in principal amount of all debt securities issued under the applicable indenture that are affected, voting as one class) may declare the principal of and all accrued and unpaid interest on those debt securities immediately due and payable. The holders of a majority in principal amount of the outstanding debt securities of the series affected by the event of default (or, in some cases, of all debt securities issued under the applicable indenture that are affected, voting as one class) may in some cases rescind this accelerated payment requirement.
A holder of a debt security of any series issued under an indenture may pursue any remedy under that indenture only if:
· the holder gives the trustee written notice of a continuing event of default for that series;
· the holders of at least 25% in principal amount of the outstanding debt securities of that series make a written request to the trustee to pursue the remedy;
· the holders offer to the trustee indemnity satisfactory to the trustee;
· the trustee fails to act for a period of 60 days after receipt of the request and offer of indemnity; and
· during that 60-day period, the holders of a majority in principal amount of the debt securities of that series do not give the trustee a direction inconsistent with the request.
This provision does not, however, affect the right of a holder of a debt security to sue for enforcement of any overdue payment.
18
In most cases, holders of a majority in principal amount of the outstanding debt securities of a series (or of all debt securities issued under the applicable indenture that are affected, voting as one class) may direct the time, method and place of:
· with respect to debt securities of a series, conducting any proceeding for any remedy available to the trustee and exercising any trust or power conferred on the trustee relating to or arising as a result of specified events of default; or
· with respect to all debt securities issued under the applicable indenture that are affected, conducting any proceeding for any remedy available to the trustee and exercising any trust or power conferred on the trustee relating to or arising other than as a result of such specified events of default.
The trustee, however, may refuse to follow any such direction that conflicts with law or the indentures, is unduly prejudicial to the rights of other holders of the debt securities, or would involve the trustee in personal liability. In addition, prior to acting at the direction of holders, the trustee will be entitled to be indemnified by those holders against any loss and expenses caused thereby.
The indentures require Edge to file each year with the trustee a written statement as to its compliance with the covenants contained in the applicable indenture.
Modification and Waiver. Each indenture may be amended or supplemented if the holders of a majority in principal amount of the outstanding debt securities of all series issued under that indenture that are affected by the amendment or supplement (acting as one class) consent to it. Without the consent of the holder of each debt security issued under the indenture and affected, however, no modification to that indenture may:
· reduce the amount of debt securities whose holders must consent to an amendment, supplement or waiver;
· reduce the rate of or change the time for payment of interest on the debt security;
· reduce the principal of the debt security or change its stated maturity;
· reduce any premium payable on the redemption of the debt security or change the time at which the debt security may or must be redeemed;
· change any obligation to pay additional amounts on the debt security;
· make payments on the debt security payable in currency other than as originally stated in the debt security;
· impair the holder’s right to institute suit for the enforcement of any payment on the debt security;
· make any change in the percentage of principal amount of debt securities necessary to waive compliance with certain provisions of the indenture or to make any change in the provision related to modification;
· with respect to the subordinated indenture, modify the provisions relating to the subordination of any subordinated debt security in a manner adverse to the holder of that security; or
· waive a continuing default or event of default regarding any payment on the debt securities.
Each indenture may be amended or supplemented or any provision of that indenture may be waived without the consent of any holders of debt securities issued under that indenture in certain circumstances, including:
· to cure any ambiguity, omission, defect or inconsistency;
· to provide for the assumption of the obligations under the indenture of Edge by a successor upon any merger or consolidation or asset sale, lease, conveyance, transfer or other disposition of all or substantially all of our assets, in each case as permitted under the indenture;
· to provide for uncertificated debt securities in addition to or in place of certificated debt securities or to provide for bearer debt securities;
· to provide any security for, any guarantees of or any additional obligors on any series of debt securities;
19
· to comply with any requirement to effect or maintain the qualification of that indenture under the Trust Indenture Act of 1939;
· to add covenants that would benefit the holders of any debt securities or to surrender any rights Edge has under the indenture;
· to add events of default with respect to any debt securities;
· to make any change that does not adversely affect any outstanding debt securities of any series issued under that indenture in any material respect; provided, that any change made solely to conform the provisions of the indenture to a description of debt securities in a prospectus supplement will not be deemed to adversely affect any outstanding debt securities of any series issued under that indenture in any material respect; and
· to supplement the provisions of an indenture to permit or facilitate defeasance or discharge of securities that does not adversely affect any outstanding debt securities of any series issued under that indenture in any material respect.
The holders of a majority in principal amount of the outstanding debt securities of any series (or, in some cases, of all debt securities issued under the applicable indenture that are affected, voting as one class) may waive any existing or past default or event of default with respect to those debt securities. Those holders may not, however, waive any default or event of default in any payment on any debt security or compliance with a provision that cannot be amended or supplemented without the consent of each holder affected.
Defeasance. When we use the term defeasance, we mean discharge from some or all of our obligations under an indenture. If any combination of funds or government securities are deposited with the trustee under an indenture sufficient to make payments on the debt securities of a series issued under that indenture on the dates those payments are due and payable, then, at Edge’s option, either of the following will occur:
· Edge and any Subsidiary Guarantors will be discharged from their obligations with respect to the debt securities of that series (“legal defeasance”); or
· Edge and any Subsidiary Guarantors will no longer have any obligation to comply with the consolidation, merger, and sale of assets covenant and other specified covenants relating to the debt securities of that series, and the related events of default will no longer apply (“covenant defeasance”).
If a series of debt securities is defeased, the holders of the debt securities of the series affected will not be entitled to the benefits of the applicable indenture, except for obligations to register the transfer or exchange of debt securities, replace stolen, lost or mutilated debt securities or maintain paying agencies and hold moneys for payment in trust. In the case of covenant defeasance, the obligation of Edge to pay principal, premium and interest on the debt securities and, if applicable, a Subsidiary Guarantor’s guarantee of the payments, will also survive.
Unless we inform you otherwise in the prospectus supplement, we will be required to deliver to the trustee an opinion of counsel that the deposit and related defeasance would not cause the holders of the debt securities to recognize income, gain or loss for U.S. federal income tax purposes. If we elect legal defeasance, that opinion of counsel must be based upon a ruling from the U.S. Internal Revenue Service or a change in law to that effect.
Governing Law. New York law will govern the indentures, the debt securities and the guarantees.
Trustee. If an event of default occurs under an indenture and is continuing, the trustee under that indenture will be required to use the degree of care and skill of a prudent person in the conduct of that person’s own affairs. The trustee will become obligated to exercise any of its powers under that indenture at the request of any of the holders of any debt securities issued under that indenture only after those holders have offered the trustee indemnity satisfactory to it.
Each indenture contains limitations on the right of the trustee, if it becomes a creditor of Edge or any Subsidiary Guarantor, if applicable, to obtain payment of claims or to realize on certain property received for any such claim, as security or otherwise. The trustee is permitted to engage in other transactions with Edge or any Subsidiary Guarantor, if applicable. If, however, it acquires any conflicting interest, it must eliminate that conflict or resign within 90 days after ascertaining that it has a conflicting interest and after the occurrence of a default under the applicable indenture, unless the default has been cured, waived or otherwise eliminated within the 90-day period.
20
Form, Exchange, Registration and Transfer. The debt securities will be issued in registered form, without interest coupons. There will be no service charge for any registration of transfer or exchange of the debt securities. However, payment of any transfer tax or similar governmental charge payable for that registration may be required.
Debt securities of any series will be exchangeable for other debt securities of the same series, the same total principal amount and the same terms but in different authorized denominations in accordance with the applicable indenture. Holders may present debt securities for registration of transfer at the office of the security registrar or any transfer agent Edge designates. The security registrar or transfer agent will effect the transfer or exchange if its requirements and the requirements of the applicable indenture are met.
The trustee will be appointed as security registrar for the debt securities. If a prospectus supplement refers to any transfer agents Edge initially designates, Edge may at any time rescind that designation or approve a change in the location through which any transfer agent acts. Edge is required to maintain an office or agency for transfers and exchanges in each place of payment. Edge may at any time designate additional transfer agents for any series of debt securities.
In the case of any redemption, Edge will not be required to register the transfer or exchange of:
· any debt security during a period beginning 15 business days prior to the mailing of any notice of redemption or mandatory offer to repurchase and ending on the close of business on the day of mailing of such notice; or
· any debt security that has been called for redemption in whole or in part, except the unredeemed portion of any debt security being redeemed in part.
Payment and Paying Agent. Unless we inform you otherwise in a prospectus supplement, payments on the debt securities will be made in U.S. dollars at the office of the trustee and any paying agent. At Edge’s option, however, payments may be made by wire transfer for global debt securities or by check mailed to the address of the person entitled to the payment as it appears in the security register. Unless we inform you otherwise in a prospectus supplement, interest payments will be made to the person in whose name the debt security is registered at the close of business on the record date for the interest payment.
Unless we inform you otherwise in a prospectus supplement, the trustee under the applicable indenture will be designated as the paying agent for payments on debt securities issued under that indenture. Edge may at any time designate additional paying agents or rescind the designation of any paying agent or approve a change in the office through which any paying agent acts.
If the principal of or any premium or interest on debt securities of a series is payable on a day that is not a business day, the payment will be made on the next succeeding business day as if made on the date that the payment was due and no interest will accrue on that payment for the period from and after the due date to the date of that payment on the next succeeding business date. For these purposes, unless we inform you otherwise in a prospectus supplement, a “business day” is any day that is not a Saturday, a Sunday or a day on which banking institutions in any of New York, New York; Houston, Texas or a place of payment on the debt securities of that series is authorized or obligated by law, regulation or executive order to remain closed.
Subject to the requirements of any applicable abandoned property laws, the trustee and paying agent will pay to us upon written request any money held by them for payments on the debt securities that remains unclaimed for two years after the date upon which that payment has become due. After payment to us, holders entitled to the money must look to us for payment. In that case, all liability of the trustee or paying agent with respect to that money will cease.
Notices. Any notice required by the indentures to be provided to holders of the debt securities will be given by mail to the registered holders at the addresses as they appear in the security register.
Replacement of Debt Securities. Edge will replace any debt securities that become mutilated, destroyed, stolen or lost at the expense of the holder upon delivery to the trustee of the mutilated debt securities or evidence of the loss, theft or destruction satisfactory to Edge and the trustee. In the case of a lost, stolen or destroyed debt security, indemnity satisfactory to the trustee and Edge may be required at the expense of the holder of the debt securities before a replacement debt security will be issued.
Book-Entry Debt Securities. The debt securities of a series may be issued in the form of one or more global debt securities that would be deposited with a depositary or its nominee identified in the prospectus supplement. Global debt securities may be issued in either temporary or permanent form. We will describe in the prospectus supplement the terms of any depositary arrangement and the rights and limitations of owners of beneficial interests in any global debt security.
21
Provisions Applicable Solely to Subordinated Debt Securities
Subordination. Under the subordinated indenture, payment of the principal of and any premium and interest on the subordinated debt securities will generally be subordinated and junior in right of payment to the prior payment in full of all Senior Debt, as described below. Unless we inform you otherwise in the prospectus supplement, Edge may not make any payment of principal of or any premium or interest on the subordinated debt securities if it fails to pay the principal, interest, premium or any other amounts on any Senior Debt when due.
The subordination does not affect Edge’s obligation, which is absolute and unconditional, to pay, when due, the principal of and any premium and interest on the subordinated debt securities. In addition, the subordination does not prevent the occurrence of any default under the subordinated indenture.
The subordinated indenture does not limit the amount of Senior Debt that Edge may incur. As a result of the subordination of the subordinated debt securities, if Edge becomes insolvent, holders of subordinated debt securities may receive less on a proportionate basis than other creditors.
Unless we inform you otherwise in a prospectus supplement, “Senior Debt” will mean all debt, including guarantees, of Edge, unless the debt states that it is not senior to the subordinated debt securities or other junior debt of Edge. Senior Debt with respect to a series of subordinated debt securities could include other series of debt securities issued under a subordinated indenture.
Guarantee
The Subsidiary Guarantors may fully and unconditionally guarantee on an unsecured basis the full and prompt payment of the principal of and any premium and interest on the debt securities issued by Edge when and as the payment becomes due and payable, whether at maturity or otherwise. The guarantee provides that in the event of a default in the payment of principal of or any premium or interest on a debt security, the holder of that debt security may institute legal proceedings directly against the applicable Subsidiary Guarantor to enforce the guarantee without first proceeding against Edge. If senior debt securities are so guaranteed, the guarantee will rank equally with all of the Subsidiary Guarantor’s other unsecured and unsubordinated debt from time to time outstanding and senior to any subordinated debt of the Subsidiary Guarantor. If subordinated debt securities are so guaranteed, the guarantee will be subordinated to all of the Subsidiary Guarantor’s other unsecured and unsubordinated debt from time to time outstanding.
The obligations of any Subsidiary Guarantor under the guarantee will be limited to the maximum amount that will not result in the obligations of the Subsidiary Guarantor under the guarantee constituting a fraudulent conveyance or fraudulent transfer under federal or state law, after giving effect to any other contingent and fixed liabilities of the Subsidiary Guarantor.
The guarantee may be released under certain circumstances. If Edge exercises its legal or covenant defeasance option with respect to debt securities of a particular series as described above in “―Defeasance,” then any Subsidiary Guarantor will be released with respect to that series. Further, if no default has occurred and is continuing under the indentures, and to the extent not otherwise prohibited by the indentures, any Subsidiary Guarantor will be unconditionally released and discharged from the guarantee:
· automatically upon any sale, exchange or transfer, whether by way of merger or otherwise, to any person that is not an affiliate of Edge, of all of Edge’s equity interests in the Subsidiary Guarantor;
· automatically upon the merger of the Subsidiary Guarantor into Edge or the liquidation and dissolution of the Subsidiary Guarantor; or
· following delivery of a written notice by Edge to the trustee, upon the release of all guarantees by the Subsidiary Guarantor of any debt of Edge’s for borrowed money, except for any series of debt securities.
22
DESCRIPTION OF CAPITAL STOCK
The following description of Edge’s capital stock, certificate of incorporation and bylaws is a summary only and is subject to the complete text of Edge’s certificate of incorporation (including the certificate of designations for 5.75% Series A Cumulative Convertible Perpetual Preferred Stock (the “Series A Preferred Stock”)) and bylaws, which we have filed as exhibits to the registration statement. You should read those documents for provisions that may be important to you.
In this summary description of capital stock, unless we state otherwise or the context clearly indicates otherwise, all references to Edge mean Edge Petroleum Corporation only.
Edge is authorized to issue 60 million shares of common stock, par value $0.01 per share, and five million shares of preferred stock, par value $0.01 per share. As of July 11, 2007, there were 28,515,245 shares of Edge common stock outstanding and 2,875,000 shares of Series A Preferred Stock outstanding.
Common Stock
The holders of the common stock have ordinary voting rights for the election of directors and for other corporate matters. Each share is entitled to one vote. Holders of common stock do not have cumulative voting rights. As a result, the holders of a majority of the shares voting for the election of directors can elect all the directors of Edge if they choose to do so. The holders of the common stock have no preemptive, conversion or redemptive rights, and are not entitled to the benefits of any sinking fund. The common stock is not assessable. The holders of the common stock are entitled to the dividends that may be declared from time to time by Edge’s board of directors out of funds legally available for dividends.
Edge common stock is quoted on the NASDAQ Global Select Market under the symbol “EPEX.” The transfer agent for the common stock is Computershare Trust Company, N.A.
Preferred Stock
Edge’s board of directors has the authority, without stockholder approval, to issue up to 5,000,000 shares of preferred stock (of which 2,875,000 shares are currently outstanding) in one or more series, and to determine the number of shares, powers, designations, preferences, voting powers, dividend rights, liquidation preferences or conversion or exchange rights, redemption provisions, sinking fund provisions and other terms of any such series. For a description of our existing Series A Preferred Stock, please read “—Series A Preferred Stock.”
The prospectus supplement relating to any series of preferred stock Edge is offering will include specific terms relating to the offering and the name of any transfer agent for that series. Edge will file the form of the preferred stock with the SEC before we issue any of it, and you should read it for provisions that may be important to you. The prospectus supplement will include some or all of the following terms:
· the title of the preferred stock;
· the maximum number of shares of the series;
· the dividend rate or the method of calculating the dividend, the date from which dividends will accrue and whether dividends will be cumulative;
· any liquidation preference;
· any optional redemption provisions;
· any sinking fund or other provisions that would obligate us to redeem or purchase the preferred stock;
· any terms for the conversion or exchange of the preferred stock for other securities of us or any other entity;
· any voting rights; and
· any other preferences and relative, participating, optional or other special rights or any qualifications, limitations or restrictions on the rights of the shares.
23
The issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could be used by an incumbent board of directors to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable the holders to block such a transaction. Alternatively, such an issuance might facilitate a business combination by including voting rights that would provide a required percentage vote of the stockholders. The issuance of preferred stock could adversely affect the voting power of the common stockholders. It could also affect the likelihood that holders of the common stock will receive dividend payments and payments upon liquidation. Although the board of directors is required to make any determination to issue preferred stock based on its judgment as to the best interests of the stockholders, the board of directors could act in a manner that would discourage an acquisition attempt or other transaction that some or a majority of the stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then market price of such stock. The board of directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized stock, unless otherwise required by law or the rules of any market on which Edge securities are traded.
Series A Preferred Stock
General. The following is a summary of certain provisions of the certificate of designations for 5.75% Series A Cumulative Convertible Perpetual Preferred Stock, liquidation preference $50 per share.
The holders of the Series A Preferred Stock have no preemptive or preferential right to purchase or subscribe for stock, obligations, warrants or other securities of Edge of any class. The transfer agent, registrar, conversion and dividend disbursing agent for shares of both the Series A Preferred Stock and the shares of common stock issuable upon conversion is Computershare Trust Company, N.A.
Dividends. The Series A Preferred Stock will accumulate dividends at a rate of $2.875 for each share of Series A Preferred Stock per year. Dividends will be cumulative from the date of first issuance and, to the extent payment of dividends is not prohibited by Edge’s debt agreements, assets are legally available to pay dividends and Edge’s board of directors or an authorized committee of the board declares a dividend payable, Edge will pay dividends in cash, every quarter.
No dividends or other distributions (other than a dividend payable solely in shares of a like or junior ranking) may be paid or set apart for payment upon any shares ranking equally with the Series A Preferred Stock (“parity shares”) or shares ranking junior to the Series A Preferred Stock (“junior shares”), nor may any parity shares or junior shares be redeemed or acquired for any consideration by Edge (except by conversion into or exchange for shares of a like or junior ranking) unless all accumulated and unpaid dividends have been paid or funds therefor have been set apart on the Series A Preferred Stock and any parity shares.
Under Delaware law, Edge may pay dividends on the Series A Preferred Stock only to the extent that assets are legally available to pay such dividends. Legally available assets means the amount of Edge’s surplus. Edge’s surplus is the amount by which the fair value of Edge’s total assets exceeds the sum of:
· the fair value of Edge’s total liabilities, including Edge’s contingent liabilities, and
· the amount of Edge’s capital.
If there is no surplus, legally available assets will mean, in the case of a dividend, the amount of Edge’s net profits for the fiscal year in which the payment occurs and/or the preceding fiscal year. When the need to make a determination of legally available assets arises, the amount of the fair value of Edge’s total assets and liabilities and the amount of Edge’s capital will be determined by Edge’s board of directors in accordance with Delaware law.
Liquidation preference. In the event of Edge’s voluntary or involuntary liquidation, winding-up or dissolution, each holder of Series A Preferred Stock will be entitled to receive and to be paid out of Edge’s assets available for distribution to its stockholders, before any payment or distribution is made to holders of junior stock (including common stock), but after any distribution on any of Edge’s indebtedness or senior stock, a liquidation preference in the amount of $50 per share of the Series A Preferred Stock, plus accumulated and unpaid dividends on the shares to the date fixed for liquidation, winding-up or dissolution.
24
Ranking. The Series A Preferred Stock ranks:
· senior to all of the shares of Edge’s common stock and to all of Edge’s other capital stock issued in the future unless the terms of such capital stock expressly provide that it ranks senior to, or on a parity with, shares of the Series A Preferred Stock;
· on a parity with all of Edge’s other capital stock issued in the future the terms of which expressly provide that it will rank on a parity with the shares of the Series A Preferred Stock; and
· junior to all of Edge’s existing and future debt obligations and to all shares of Edge’s capital stock issued in the future the terms of which expressly provide that such shares will rank senior to the shares of the Series A Preferred Stock.
Mandatory conversion. On or after January 20, 2010, Edge may, at its option, cause shares of the Series A Preferred Stock to be automatically converted at the applicable conversion rate, but only if the closing sale price of Edge common stock for 20 trading days within a period of 30 consecutive trading days ending on the trading day immediately preceding the date Edge gives the conversion notice equals or exceeds 130% of the conversion price in effect on each such trading day.
Optional redemption. If fewer than 431,250 shares of Series A Preferred Stock are outstanding, Edge may, at any time on or after January 20, 2010, at its option, redeem for cash all such Series A Preferred Stock at a redemption price equal to the liquidation preference of $50 plus any accrued and unpaid dividends, if any, on a share of Series A Preferred Stock to, but excluding, the redemption date, for each share of Series A Preferred Stock.
Conversion rights. Each share of Series A Preferred Stock may be converted at any time, at the option of the holder, into approximately 3.0193 shares of common stock (which is based on an initial conversion price of $16.56 per share of common stock, subject to adjustment) plus cash in lieu of fractional shares, subject to Edge’s right to settle all or a portion of any such conversion in cash or shares of common stock. If Edge elects to settle all or any portion of its conversion obligation in cash, the conversion value and the number of shares of common stock Edge will deliver upon conversion (if any) will be based upon a 20 trading day averaging period.
Upon any conversion, the holder will not receive any cash payment representing accumulated and unpaid dividends on the Series A Preferred Stock, whether or not in arrears, except in limited circumstances. The conversion rate is equal to $50 divided by the conversion price at the time. The conversion price is subject to adjustment upon the occurrence of certain events. The conversion price on the conversion date and the number of shares of common stock, as applicable, to be delivered upon conversion may be adjusted if certain events occur.
Purchase upon fundamental change. If Edge becomes subject to a fundamental change (as defined herein), each holder of shares of Series A Preferred Stock will have the right to require Edge to purchase any or all of its shares at a purchase price equal to 100% of the liquidation preference, plus accumulated and unpaid dividends, to the date of the purchase. Edge will have the option to pay the purchase price in cash, shares of common stock or a combination of cash and shares. Edge’s ability to purchase all or a portion of the Series A Preferred Stock for cash is subject to its obligation to repay or repurchase any outstanding debt required to be repaid or repurchased in connection with a fundamental change and to any contractual restrictions then contained in its debt.
Conversion in connection with a fundamental change. If a holder elects to convert its shares of Series A Preferred Stock in connection with certain fundamental changes, Edge will in certain circumstances increase the conversion rate for such Series A Preferred Stock. Upon a conversion in connection with a fundamental change, the holder will be entitled to receive a cash payment for all accumulated and unpaid dividends.
A “fundamental change” will be deemed to have occurred upon the occurrence of any of the following:
1. a “person” or “group” subject to specified exceptions, disclosing that the person or group has become the direct or indirect ultimate “beneficial owner” of Edge’s common equity representing more than 50% of the voting power of Edge’s common equity other than a filing with a disclosure relating to a transaction which complies with the proviso in subsection 2 below;
2. consummation of any share exchange, consolidation or merger of Edge pursuant to which Edge’s common stock will be converted into cash, securities or other property or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Edge and its subsidiaries, taken as a whole, to any person other than one of Edge’s subsidiaries; provided, however, that a transaction where the holders of more than 50% of all classes of Edge’s common equity immediately prior to the transaction own, directly or indirectly, more than 50% of all classes of common equity of the
25
continuing or surviving corporation or transferee immediately after the event shall not be a fundamental change;
3. Edge is liquidated or dissolved or holders of Edge’s capital stock approve any plan or proposal for Edge’s liquidation or dissolution; or
4. Edge’s common stock is neither listed on a national securities exchange nor listed nor approved for quotation on an over-the-counter market in the United States.
However, a fundamental change will not be deemed to have occurred in the case of a share exchange, merger or consolidation, or in an exchange offer having the result described in subsection 1 above, if 90% or more of the consideration in the aggregate paid for common stock (and excluding cash payments for fractional shares and cash payments pursuant to dissenters’ appraisal rights) in the share exchange, merger or consolidation or exchange offer consists of common stock of a United States company traded on a national securities exchange (or which will be so traded or quoted when issued or exchanged in connection with such transaction).
Voting rights. The holders of the Series A Preferred Stock will have no voting rights except as set forth below or as otherwise required by Delaware law from time to time. If Edge fails to pay dividends for six quarterly dividend periods (whether or not consecutive) or if Edge fails to pay the purchase price on the purchase date for the Series A Preferred Stock following a fundamental change, holders of the Series A Preferred Stock will have voting rights to elect two directors to Edge’s board.
In addition, Edge may generally not, without the approval of the holders of at least 66 2/3% of the shares of the Series A Preferred Stock then outstanding:
· amend Edge’s restated certificate of incorporation, as amended, by merger or otherwise, if the amendment would alter or change the powers, preferences, privileges or rights of the holders of shares of the Series A Preferred Stock so as to adversely affect them;
· issue, authorize or increase the authorized amount of, or issue or authorize any obligation or security convertible into or evidencing a right to purchase, any senior stock; or
· reclassify any of Edge’s authorized stock into any senior stock of any class, or any obligation or security convertible into or evidencing a right to purchase any senior stock.
Provisions of Delaware Law and Edge’s Charter and Bylaws
Limitation of Liability of Directors
Delaware law authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breach of directors’ fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors must exercise an informed business judgment based on all material information reasonably available to them. Absent the limitations authorized by Delaware law, directors are accountable to corporations and their stockholders for monetary damages for conduct constituting gross negligence in the exercise of their duty of care. Delaware law enables corporations to limit available relief to equitable remedies such as injunction or rescission. Edge’s certificate of incorporation limits the liability of its directors to Edge or its stockholders to the fullest extent permitted by Delaware law. Specifically, Edge’s directors will not be personally liable for monetary damages for breach of a director’s fiduciary duty as a director, except for liability:
· for any breach of the director’s duty of loyalty to Edge or its stockholders;
· for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
· for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the General Corporation Law of the State of Delaware (the “DGCL”); or
· for any transaction from which the director derived an improper personal benefit.
26
This provision in the certificate of incorporation limiting the liability of directors may reduce the likelihood of derivative litigation against directors, and may discourage or deter stockholders or management from bringing a lawsuit against directors for breach of their duty of care, even though such an action, if successful, might otherwise have benefited Edge and its stockholders. Edge’s bylaws provide indemnification to its officers and directors, and Edge has entered into agreements with each of its directors providing for indemnification.
No Stockholder Action by Written Consent; Special Meetings of Stockholders; Advance Notice Provisions
Edge’s certificate of incorporation provides that stockholders may act only at an annual or special meeting of stockholders and may not act by written consent. Edge’s bylaws provide that special meetings of the stockholders can be called only by the chairman of the board, the president or a majority of the board of directors. Edge’s bylaws also require written notice to be delivered to the Secretary of Edge by a stockholder:
· in the event of business to be brought by a stockholder before an annual meeting, not less than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders of Edge (with certain exceptions if the date of the annual meeting is different by more than specified amounts from the anniversary date), and
· in the event of nominations of persons for election to the board of directors by any stockholder,
· with respect to an election to be held at the annual meeting of stockholders, not less than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders of Edge (with certain exceptions if the date of the annual meeting is different by more than specified amounts from the anniversary date), and
· with respect to an election to be held at a special meeting of stockholders for the election of directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed to stockholders or public disclosure of the date of the special meeting was made, whichever first occurs.
Such notice must set forth specific information regarding such stockholder and such business or director nominee, as described in Edge’s bylaws. Edge’s bylaws also provide for certain procedures to be followed by stockholders in nominating persons for election to the board of directors of Edge. These procedures may limit the ability of stockholders to nominate candidates for director and bring other business before a stockholder’s meeting, including the consideration of any transaction that could result in a change of control and that might result in a premium to Edge’s stockholders.
Staggered Board of Directors; Number and Removal of Directors
Edge’s certificate of incorporation provides that the board of directors consist of three classes of directors serving for staggered three-year terms. As a result, approximately one-third of the board of directors is elected each year. The classified board provision could prevent a party who acquires control of a majority of the outstanding voting stock from obtaining control of the board of directors until the second annual stockholders’ meeting following the date the acquiror obtains the controlling interest.
Edge’s certificate of incorporation provides that the number of directors will be no greater than 12 and no less than three. The certificate of incorporation further provides that directors may be removed only for cause, and then only by the affirmative vote of the holders of at least a majority of all outstanding voting stock entitled to vote. This provision, in conjunction with the provisions of the certificate of incorporation authorizing the board of directors to fill vacant directorships, will prevent stockholders from removing incumbent directors without cause and filling the resulting vacancies with their own nominees. Edge’s bylaws also provide that the board of directors will include at least a majority of directors who are not employees. In addition, the bylaws provide that Edge’s compensation committee consist solely of members who are not employees and the audit committee include at least a majority of members who are not employees.
Delaware Anti-Takeover Law
Section 203 of the DGCL applies to Edge. In general, Section 203 prevents an interested stockholder (defined generally as a person owning 15% or more of a corporation’s outstanding voting stock) from engaging in a “business combination” with a Delaware corporation for three years following the date that person became an interested stockholder unless one of the following applies:
27
· before such person became an interested stockholder, the board of directors approved the transaction in which the interested stockholder became an interested stockholder or approved the business combination;
· upon consummation of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding stock held by directors who are also officers of the corporation and by employee stock plans that do not provide employees with the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer); or
· following the transaction in which such person became an interested stockholder, the business combination was approved by the board of directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least two-thirds of the outstanding voting stock of the corporation not owned by the interested stockholder.
The restrictions also do not apply to certain business combinations if both of the following conditions are satisfied:
· the business combination is proposed by an interested stockholder following the announcement or notification of one of certain extraordinary transactions involving the corporation and a person who either:
· had not been an interested stockholder during the previous three years, or
· became an interested stockholder with the approval of a majority of the corporation’s directors; and
· the extraordinary transaction is approved or not opposed by a majority of the directors who were directors prior to any person becoming an interested stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors.
Section 203 may make it more difficult for a person who would be an interested stockholder to effect various business combinations with a corporation for a three-year period.
DESCRIPTION OF WARRANTS
Edge may issue warrants to purchase any combination of debt securities, common stock, preferred stock, rights or other securities of Edge or any other entity. Edge may issue warrants independently or together with other securities. Warrants sold with other securities may be attached to or separate from the other securities. Edge will issue warrants under one or more warrant agreements between it and a warrant agent that we will name in the prospectus supplement.
The prospectus supplement relating to any warrants Edge is offering will include specific terms relating to the offering. We will file the form of any warrant agreement with the SEC, and you should read the warrant agreement for provisions that may be important to you. The prospectus supplement will include some or all of the following terms:
· the title of the warrants;
· the aggregate number of warrants offered;
· the designation, number and terms of the debt securities, common stock, preferred stock, rights or other securities purchasable upon exercise of the warrants, and procedures by which the number of securities purchasable may be adjusted;
· the exercise price of the warrants;
· the dates or periods during which the warrants are exercisable;
· the designation and terms of any securities with which the warrants are issued;
· if the warrants are issued as a unit with another security, the date, if any, on and after which the warrants and the other security will be separately transferable;
· if the exercise price is not payable in U.S. dollars, the foreign currency, currency unit or composite currency in which the exercise price is denominated;
28
· any minimum or maximum amount of warrants that may be exercised at any one time; and
· any terms, procedures and limitations relating to the transferability, exchange or exercise of the warrants.
29
PLAN OF DISTRIBUTION
We may sell the securities in and outside the United States through underwriters or dealers, directly to purchasers or through agents. The prospectus supplement will include the following information:
· the terms of the offering;
· the names of any underwriters or agents;
· the purchase price of the securities from us and, if the purchase price is not payable in U.S. dollars, the currency or composite currency in which the purchase price is payable;
· the net proceeds to us from the sale of the securities;
· any delayed delivery arrangements;
· any underwriting discounts, commissions and other items constituting underwriters’ compensation;
· the initial public offering price;
· any discounts or concessions allowed or reallowed or paid to dealers; and
· any commissions paid to agents.
Sale Through Underwriters or Dealers
If we use underwriters in the sale of securities, the underwriters will acquire the securities for their own account. The underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Underwriters may offer securities to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. Unless we inform you otherwise in the prospectus supplement, the obligations of the underwriters to purchase the securities will be subject to conditions, and the underwriters will be obligated to purchase all the securities if they purchase any of them. The underwriters may change from time to time any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers.
During and after an offering through underwriters, the underwriters may purchase and sell the securities in the open market. These transactions may include overallotment and stabilizing transactions and purchases to cover syndicate short positions created in connection with the offering. The underwriters may also impose a penalty bid, whereby selling concessions allowed to syndicate members or other broker-dealers for the offered securities sold for their account may be reclaimed by the syndicate if such offered securities are repurchased by the syndicate in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the offered securities, which may be higher than the price that might otherwise prevail in the open market. If commenced, these activities may be discontinued at any time.
If we use dealers in the sale of securities, we will sell the securities to them as principals. They may then resell those securities to the public at varying prices determined by the dealers at the time of resale. The dealers participating in any sale of the securities may be deemed to be underwriters within the meaning of the Securities Act of 1933 with respect to any sale of those securities. We will include in the prospectus supplement the names of the dealers and the terms of the transaction.
Direct Sales and Sales Through Agents
We may sell the securities directly. In that event, no underwriters or agents would be involved. We may also sell the securities through agents we designate from time to time. In the prospectus supplement, we will name any agent involved in the offer or sale of the securities, and we will describe any commissions payable by us to the agent. Unless we inform you otherwise in the prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act of 1933 with respect to any sale of those securities. We will describe the terms of any such sales in the prospectus supplement.
30
Delayed Delivery Contracts
If we so indicate in the prospectus supplement, we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities from us at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future. The contracts would be subject only to those conditions described in the prospectus supplement. The prospectus supplement will describe the commission payable for solicitation of those contracts.
Remarketing
We may offer and sell any of the securities in connection with a remarketing upon their purchase, in accordance with a redemption or repayment by their terms or otherwise, by one or more remarketing firms acting as principals for their own accounts or as our agents. We will identify any remarketing firm, the terms of any remarketing agreement and the compensation to be paid to the remarketing firm in the prospectus supplement. Remarketing firms may be deemed underwriters under the Securities Act.
Derivative Transactions
We may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third parties may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock.
We or one of our affiliates may loan or pledge securities to a financial institution or other third party that in turn may sell the securities using this prospectus. Such financial institution or third party may transfer its short position to investors in our securities or in connection with a simultaneous offering of other securities offered by this prospectus or otherwise.
The third parties in any of the sale transactions described above will be underwriters and will be identified in the applicable prospectus supplement or in a post-effective amendment to the registration statement of which this prospectus forms a part.
General Information
We may have agreements with the agents, dealers and underwriters to indemnify them against civil liabilities, including liabilities under the Securities Act of 1933, or to contribute with respect to payments that the agents, dealers or underwriters may be required to make. Agents, dealers and underwriters may engage in transactions with us or perform services for us in the ordinary course of their businesses.
The securities may or may not be listed on a national securities exchange. We cannot assure you that there will be a market for the securities.
31
LEGAL MATTERS
The validity of the offered securities and other matters in connection with any offering of the securities will be passed upon for us by Baker Botts L.L.P., Houston, Texas. Any underwriters will be advised about legal matters relating to any offering by their own legal counsel.
EXPERTS
The consolidated financial statements of Edge Petroleum Corporation as of December 31, 2006 and 2005 and for each of the three years in the period ended December 31, 2006 and Edge Petroleum Corporation’s management’s report on the effectiveness of internal control over financial reporting as of December 31, 2006 incorporated by reference herein have been audited by BDO Seidman, LLP, an independent registered public accounting firm, as set forth in their reports included therein and incorporated herein by reference and have been so incorporated by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
The statements of revenues and direct operating expenses of the oil and natural gas properties acquired from Smith Production Inc. for each of the years in the three-year period ended December 31, 2006 have been audited by BDO Seidman, LLP, an independent registered public accounting firm, as set forth in their report included therein and incorporated herein by reference and have been so incorporated by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The letter reports of Ryder Scott Company, L.P. and W.D. Von Gonten & Co., each independent consulting petroleum engineers, and certain information as of December 31, 2004, 2005 and 2006 with respect to the oil and natural gas reserves associated with our oil and natural gas properties derived from such reports has been incorporated herein by reference upon the authority of each such firm as experts with respect to matters covered by such reports and in giving such reports. Certain information with respect to the oil and natural gas reserves as of December 31, 2006 associated with the Smith acquisition has been the subject of an oversight review letter by Ryder Scott Company, L.P., which has been incorporated herein by reference upon the authority of said firm as experts with respect to matters covered by such review letter and in giving such review letter.
32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth expenses payable by Edge in connection with the issuance and distribution of the securities being registered. All the amounts shown are estimates, except for the SEC registration fee.
SEC registration fee | | $ | 15,350 | |
Printing expenses | | 10,000 | |
Legal fees and expenses | | 30,000 | |
Accounting fees and expenses | | 25,000 | |
Fees and expenses of trustee and counsel | | 25,000 | |
Miscellaneous | | 4,650 | |
Total | | $ | 110,000 | |
Item 15. Indemnification of Directors and Officers
Delaware General Corporation Law
Section 145(a) of the General Corporation Law of the State of Delaware (the “DGCL”) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
Section 145(b) of the DGCL states that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and except that no indemnification shall be made in respect of any claim issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the Court of Chancery or such other court shall deem proper.
Section 145(c) of the DGCL provides that to the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
Section 145(d) of the DGCL states that any indemnification under subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a
II-1
determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in subsections (a) and (b). Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by the board of directors by a majority vote of the directors who were not parties to such action, suit or proceeding, even though less than a quorum or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum or (3) if such quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs by independent legal counsel in a written opinion or (4) by the stockholders.
Section 145(e) of the DGCL provides that expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it ultimately is determined that such person is not entitled to be indemnified by the corporation as authorized in Section 145. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
Section 145(f) of the DGCL states that the indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of Section 145 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.
Section 145(g) of the DGCL provides that a corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of Section 145.
Section 145(j) of the DGCL states that the indemnification and advancement of expenses provided by, or granted pursuant to, Section 145 shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Edge (Delaware)
Certificate of Incorporation
The Restated Certificate of Incorporation of Edge provides that a director of Edge shall not be personally liable to Edge or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to Edge or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of Edge, in addition to the limitation on personal liability described above, shall be limited to the fullest extent permitted by the amended DGCL. Further, any repeal or modification of such provision of the Restated Certificate of Incorporation by the stockholders of Edge shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of Edge existing at the time of such repeal or modification.
Bylaws
The Bylaws of Edge provide that each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was or has agreed to become a director or officer of Edge or is or was serving or has agreed to serve at the request of Edge as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving or having agreed to serve as a director or officer, shall be indemnified and held harmless by Edge to the fullest extent authorized by the DGCL, as the same exists or may
II-2
thereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits Edge to provide broader indemnification rights than said law permitted Edge to provide prior to such amendment) against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to serve in the capacity which initially entitled such person to indemnity thereunder, and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that Edge shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the board of directors of Edge.
The Bylaws further provide that the right to indemnification conferred thereby shall be a contract right and shall include the right to be paid by Edge the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that the payment of such expenses incurred by a current, former or proposed director or officer (and not in any other capacity in which service was or is or has been agreed to be rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to Edge of an undertaking, by or on behalf of such indemnified person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified person is not entitled to be indemnified under the Bylaws or otherwise. In addition, the Bylaws provide that Edge may, by action of its board of directors, provide indemnification to employees and agents of Edge, individually or as a group, with the same scope and effect as the indemnification of directors and officers provided for in the Bylaws.
The Bylaws include related provisions meant to facilitate the indemnitee’s receipt of such benefits. The provisions cover, among other things: (i) specification of the method of determining entitlement to indemnification and the selection of independent counsel that will in some cases make such determination; (ii) specification of certain time periods by which certain payments or determinations must be made and actions must be taken; and (iii) the establishment of certain presumptions in favor of an indemnitee. The benefits of certain of these provisions are available to an indemnitee only if there has been a change in control (as defined therein).
Edge Petroleum Operating Company (Delaware)
Certificate of Incorporation
The Certificate of Incorporation of Edge Petroleum Operating Company, Inc. (“EPOC”) provides that no director of EPOC shall be personally liable to EPOC or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of such director’s duty of loyalty to EPOC or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transactions from which such director derived an improper personal benefit. If the DGCL is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of EPOC, in addition to the limitation on personal liability described above, shall be limited to the fullest extent permitted by the amended DGCL. Any amendment, repeal or modification to this provision in the Certificate of Incorporation by the stockholders of EPOC shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of EPOC existing at the time of such amendment, repeal or modification.
Bylaws
The Bylaws of EPOC provide that each officer and director of EPOC and, upon the approval of EPOC’s board of directors, each employee or agent of EPOC or of another corporation or of a partnership, joint venture, trust, employee benefit plan or other enterprise nonprofit entity for which such person is or was serving at the request of EPOC, shall be indemnified and held harmless by EPOC to the fullest extent authorized by the DGCL, as the same exists or may thereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits EPOC to provide broader indemnification rights than said law permitted EPOC to provide prior to such amendment) against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to serve in the capacity which initially entitled such person to indemnity thereunder, and shall inure to the benefit of his or her heirs, executors and administrators.
II-3
The Bylaws further provide that the right to indemnification conferred thereby shall include the right to be paid by EPOC the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that the payment of such expenses incurred by an indemnified person in advance of the final disposition of a proceeding, shall be made only upon delivery to EPOC of an undertaking, by or on behalf of such indemnified person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified person is not entitled to be indemnified under the Bylaws or otherwise. In addition, the Bylaws provide that EPOC may, by action of its board of directors, provide indemnification to employees and agents of EPOC, individually or as a group, with the same scope and effect as the indemnification of directors and officers provided for in the Bylaws.
The Bylaws include related provisions meant to facilitate the indemnitee’s receipt of such benefits. The provisions cover, among other things: (i) specification of the method of determining entitlement to indemnification and the selection of independent counsel that will in some cases make such determination; (ii) specification of certain time periods by which certain payments or determinations must be made and actions must be taken; and (iii) the establishment of certain presumptions in favor of an indemnitee.
Edge Petroleum Exploration Company (Delaware)
Certificate of Incorporation
The Certificate of Incorporation of Edge Petroleum Exploration Company (“EPEC”) provides that no director of EPEC shall be personally liable to EPEC or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of such director’s duty of loyalty to EPEC or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transactions from which such director derived an improper personal benefit. If the DGCL is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of EPEC, in addition to the limitation on personal liability described above, shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this provision in the Certificate of Incorporation by the stockholders of EPEC shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of EPEC existing at the time of such repeal or modification.
Bylaws
The Bylaws of EPEC provide that each officer and director of EPEC and, upon the approval of EPEC’s board of directors, each employee or agent of EPEC or of another corporation or of a partnership, joint venture, trust, employee benefit plan or other enterprise nonprofit entity for which such person is or was serving at the request of EPEC, shall be indemnified and held harmless by EPEC to the fullest extent authorized by the DGCL, as the same exists or may thereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits EPEC to provide broader indemnification rights than said law permitted EPEC to provide prior to such amendment) against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to serve in the capacity which initially entitled such person to indemnity thereunder, and shall inure to the benefit of his or her heirs, executors and administrators.
The Bylaws further provide that the right to indemnification conferred thereby shall include the right to be paid by EPEC the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that the payment of such expenses incurred by an indemnified person in advance of the final disposition of a proceeding, shall be made only upon delivery to EPEC of an undertaking, by or on behalf of such indemnified person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified person is not entitled to be indemnified under the Bylaws or otherwise. In addition, the Bylaws provide that EPEC may, by action of its board of directors, provide indemnification to employees and agents of EPEC, individually or as a group, with the same scope and effect as the indemnification of directors and officers provided for in the Bylaws.
The Bylaws include related provisions meant to facilitate the indemnitee’s receipt of such benefits. The provisions cover, among other things: (i) specification of the method of determining entitlement to indemnification and the selection of independent counsel that will in some cases make such determination; (ii) specification of certain time periods by which certain payments or determinations must be made and actions must be taken; and (iii) the establishment of certain presumptions in favor of an indemnitee.
II-4
Edge Petroleum Production Company (Delaware)
Certificate of Incorporation
The Certificate of Incorporation of Edge Petroleum Production Company (“EPPC”) provides that no director of EPPC shall be personally liable to EPPC or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of such director’s duty of loyalty to EPPC or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transactions from which such director derived an improper personal benefit. If the DGCL is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of EPPC, in addition to the limitation on personal liability described above, shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this provision in the Certificate of Incorporation by the stockholders of EPPC shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of EPPC existing at the time of such repeal or modification.
The Certificate of Incorporation of EPPC provides that (i) each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of EPPC, or serves, in any capacity, any corporation, partnership or other entity in which EPPC has a partnership or other interest, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by EPPC to the fullest extent authorized by the DGCL, as the same exists or may thereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits EPPC to provide broader indemnification rights than said law permitted EPPC to provide prior to such amendment) against all expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators and (ii) EPPC shall indemnify and hold harmless in such manner any person designated by the board of directors, or any committee thereof, as a person subject to indemnification, and who was or is made a party or is threatened to be made a party to a proceeding by reason of the fact that he, she or a person of whom he or she is the legal representative, is or was serving at the request of the board of directors as a director, officer, employee or agent of another corporation or a partnership, joint venture, trust or other enterprise whether such request is made before or after the acts taken or allegedly taken or events occurring or allegedly occurring which give rise to such proceeding; provided, however, that EPPC shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the board of directors of EPPC.
The Certificate of Incorporation further provides that the right to indemnification conferred thereby shall be a contract right and shall include the right to be paid by EPPC the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that the payment of such expenses incurred by a director or officer in his or her capacity as the director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to EPPC of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under the Certificate of Incorporation or otherwise. In addition, the Certificate of Incorporation provides that EPPC may, by action of its board of directors, provide indemnification to employees and agents of EPPC with the same scope and effect as the indemnification of directors and officers.
Bylaws
The Bylaws include, in addition to certain indemnification provisions set forth in the Certificate of Incorporation, related provisions meant to facilitate the indemnitee’s receipt of such benefits. The provisions cover, among other things: (i) specification of the method of determining entitlement to indemnification and the selection of independent counsel that will in some cases make such determination; (ii) specification of certain time periods by which certain payments or determinations must be made and actions must be taken; and (iii) the establishment of certain presumptions in favor of an indemnitee.
II-5
Miller Exploration Company (Delaware)
Certificate of Incorporation
The Amended and Restated Certificate of Incorporation of Miller Exploration Company (“Miller Exploration”) provides that no director of Miller Exploration shall be personally liable to Miller Exploration or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of such director’s duty of loyalty to Miller Exploration or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transactions from which such director derived an improper personal benefit. If the DGCL is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of Miller Exploration, in addition to the limitation on personal liability described above, shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this provision in the Certificate of Incorporation by the stockholders of Miller Exploration shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of Miller Exploration existing at the time of such repeal or modification.
Bylaws
The Bylaws of Miller Exploration provide that any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of Miller Exploration) by reason of the fact that such person is or was a director or executive officer of Miller Exploration, or is or was serving at the request of Miller Exploration as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise, whether for profit or not, shall be indemnified by Miller Exploration against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of Miller Exploration and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of Miller Exploration and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
The Bylaws of Miller Exploration also provide that any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of Miller Exploration to procure a judgment in its favor by reason of the fact that such person is or was a director or executive officer of Miller Exploration, or is serving at the request of Miller Exploration as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise, whether for profit or not, shall be indemnified by Miller Exploration against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of Miller Exploration; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to Miller Exploration unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the Court of Chancery or such other court shall deem proper.
The Bylaws provide that persons who are not directors or executive officers of Miller Exploration may be similarly indemnified in respect of such service to the extent authorized at any time by the board of directors, except as otherwise provided by law.
The Bylaws of Miller Exploration further provide that to the extent that a present or former director, officer or other person whose indemnification is authorized by the board of directors, has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in the Bylaws, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith. Expenses (including attorneys’ fees) incurred in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by Miller Exploration in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director,
II-6
officer, employee or agent to repay such amount unless it ultimately is determined that such person is entitled to be indemnified. Indemnification and advancement of expenses shall continue to a person who has ceased to serve in the capacity which initially entitled such person to indemnity, and shall inure to the benefit of such person’s heirs, executors and administrators.
The Bylaws include related provisions meant to facilitate the indemnitee’s receipt of such benefits. The provisions cover, among other things, specification of the method of determining entitlement to indemnification and the selection of independent counsel that will in some cases make such determination.
Michigan Business Corporation Act
Section 561 of the Business Corporation Act of the State of Michigan (the “MBCA”) provides that a corporation may indemnify a person who was or is a party or is threatened to be made a party to a threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, other than an action by or in the right of the corporation, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, whether for profit or not, against expenses, including attorneys’ fees, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with the action, suit or proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation or its shareholders, and with respect to a criminal action or proceeding, if such person had no reasonable cause to believe such person’s conduct was unlawful. The termination of an action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that such person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation or its shareholders, and, with respect to a criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
Section 562 of the MBCA states that a corporation may indemnify a person who was or is a party or is threatened to be made a party to a threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, whether for profit or not, against expenses, including attorneys’ fees and amounts paid in settlement actually and reasonably incurred by such person in connection with the action or suit, if the person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation or its shareholders. Indemnification shall not be made for a claim, issue or matter in which such person has been found liable to the corporation except to the extent authorized in Section 564c.
Section 563 of the MBCA provides that to the extent that a director or officer of a corporation has been successful on the merits or otherwise in defense of an action, suit, or proceeding referred to in Section 561 or 562, or in defense of a claim, issue or matter in the action, suit or proceeding, the corporation shall indemnify such person against actual and reasonable expenses, including attorneys’ fees, incurred by such person in connection with the action, suit or proceeding and an action, suit or proceeding brought to enforce the mandatory indemnification provided in Section 563.
Section 564a(1) of the MBCA states that, except as otherwise provided in Section 564a(5), an indemnification under Section 561 or 562, unless ordered by the court, shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in Sections 561 and 562 and upon an evaluation of the reasonableness of expenses and amounts paid in settlement. This determination and evaluation shall be made:
(a) by a majority vote of a quorum of the board consisting of directors who are not parties or threatened to be made parties to the action, suit, or proceeding;
II-7
(b) if a quorum cannot be obtained under subdivision (a), by majority vote of a committee duly designated by the board and consisting solely of 2 or more directors not at the time parties or threatened to be made parties to the action, suit, or proceeding;
(c) by independent legal counsel in a written opinion, which counsel shall be selected (i) by the board or its committee in the manner prescribed in subdivision (a) or (b), or (ii) if a quorum of the board cannot be obtained under subdivision (a) and a committee cannot be designated under subdivision (b), by the board;
(d) by all independent directors who are not parties or threatened to be made parties to the action, suit or proceeding; or
(e) by the shareholders, but shares held by directors, officers, employees, or agents who are parties or threatened to be made parties to the action, suit, or proceeding may not be voted.
Section 564a(2) of the MBCA states that in the designation of a committee under Section 564a(1)(b) or in the selection of independent legal counsel under Section 564a(1)(c)(ii), all directors may participate.
Section 564a(3) of the MBCA states that if a person is entitled to indemnification under Section 561 or 562 for a portion of expenses, including reasonable attorneys’ fees, judgments, penalties, fines and amounts paid in settlement, but not for the total amount, the corporation may indemnify such person for the portion of the expenses, judgments, penalties, fines or amounts paid in settlement for which such person is entitled to be indemnified.
Section 564a(5) of the MBCA states that to the extent that the articles of incorporation include a provision eliminating or limiting the liability of a director pursuant to Section 209(1)(c) of the MBCA, a corporation may indemnify a director for the expenses and liabilities described in Section 564a(5) without a determination that the director has met the standard of conduct set forth in Sections 561 and 562, but no indemnification may be made except to the extent authorized in Section 564c if the director received a financial benefit to which such director was not entitled, intentionally inflicted harm on the corporation or its shareholders, violated Section 551 of the MBCA or intentionally committed a criminal act. In connection with an action or suit by or in the right of the corporation as described in Section 562, indemnification under Section 564a(5) may be for expenses, including attorneys’ fees, actually and reasonably incurred. In connection with an action, suit or proceeding other than an action, suit or proceeding by or in the right of the corporation, as described in Section 561, indemnification under Section 564a(5) may be for expenses, including attorneys’ fees, actually and reasonably incurred, and for judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred.
Section 564b of the MBCA states that a corporation may pay or reimburse the reasonable expenses incurred by a director, officer, employee or agent who is a party or threatened to be made a party to an action, suit or proceeding in advance of final disposition of the proceeding if the person furnishes the corporation a written undertaking, executed personally or on such person’s behalf, to repay the advance if it is ultimately determined that such person did not meet the applicable standard of conduct, if any, required by the MBCA for the indemnification of a person under the circumstances. The undertaking must be an unlimited general obligation of the person but need not be secured and may be accepted without reference to the financial ability of the person to make repayment. An evaluation of reasonableness under Section 564b shall be made in the manner specified in Section 564a(1) for an evaluation of reasonableness of expenses, and an authorization shall be made in the manner specified in Section 564a(4) unless an advance is mandatory. A provision in the articles of incorporation or bylaws, a resolution of the board or shareholders, or an agreement making indemnification mandatory shall also make the advancement of expenses mandatory unless the provision, resolution, or agreement specifically provides otherwise.
Section 564c of the MBCA provides that a director, officer, employee or agent of the corporation who is a party or threatened to be made a party to an action, suit or proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court after giving any notice it considers necessary may order indemnification if it determines that the person is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not such person met the applicable standard of conduct set forth in Sections 561 and 562 or was adjudged liable as described in Section 562, but if such person was adjudged liable, such person’s indemnification is limited to reasonable expenses incurred.
II-8
Section 565(1) of the MBCA states that the indemnification or advancement of expenses provided under Sections 561 to 564c is not exclusive of other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation, bylaws or a contractual agreement. The total amount of expenses advanced or indemnified from all sources combined shall not exceed the amount of actual expenses incurred by such person seeking indemnification or advancement of expenses. Section 565(2) of the MBCA provides that the indemnification provided for in Sections 561 to 565 continues as to a person who ceases to be a director, officer, employee or agent and shall inure to the benefit of the heirs, personal representatives, and administrators of the person.
Section 567(1) of the MBCA states that a corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or who is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the corporation would have power to indemnify such person against liability under Sections 561 to 565.
Miller Oil Corporation (Michigan)
Articles of Incorporation
The Articles of Incorporation of Miller Oil Corporation (“Miller Oil”) are silent with respect to indemnification.
Bylaws
The Bylaws of Miller Oil provide that Miller Oil shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of Miller Oil) by reason of the fact that such person is or was a director or officer of Miller Oil, or is or was serving at the request of Miller Oil as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of Miller Oil or its shareholders, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of Miller Oil or its shareholders, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
The Bylaws provide that Miller Oil shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of Miller Oil to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of Miller Oil, or is or was serving at the request of Miller Oil as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of Miller Oil or its shareholders; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to Miller Oil unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that such court shall deem proper.
The Bylaws further provide that to the extent that a present or former director, officer or other person whose indemnification is authorized by the board of directors has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in the Bylaws, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith. Expenses incurred by an officer or director in defending any civil or criminal action, suit or proceeding may be paid by Miller Oil in advance of the final disposition of such action, suit or proceeding upon receipt
II-9
of an undertaking by or on behalf of such director or officer to repay such amount unless it ultimately is determined that such person is entitled to be indemnified. Indemnification and advancement of expenses shall continue to a person who has ceased to serve in the capacity which initially entitled such person to indemnity, and shall inure to the benefit of such person’s heirs, executors and administrators.
The Bylaws include related provisions meant to facilitate the indemnitee’s receipt of such benefits. The provisions cover, among other things, specification of the method of determining entitlement to indemnification and the selection of independent counsel that will in some cases make such determination.
Indemnification Agreements
Edge has entered into Indemnification Agreements with each of its directors. The Indemnification Agreements provide that Edge shall indemnify the director and hold him harmless from any losses and expenses which, in type or amount, are not insured under the directors and officers’ liability insurance maintained by Edge, and generally indemnifies the director against losses and expenses as a result of a claim or claims made against him for any breach of duty, neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted by the director or any of the foregoing alleged by any claimant or any claim against the director solely by reason of him being a director or officer of Edge, subject to certain exclusions. The Indemnification Agreements also provide certain procedures regarding the right to indemnification and for the advancement of expenses.
Insurance
Edge has a policy of liability insurance to insure its officers and directors against losses resulting from certain acts committed by them in their capacities as officers and directors of Edge.
II-10
Item 16. Exhibits†
Exhibit No. | | | | Description |
| | | | |
*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) Edge Petroleum Corporation (“Edge”), dated as of January 13, 1997 (incorporated by reference from Exhibit 2.1 to Edge’s Registration Statement on Form S-4/A filed on January 31, 1997 (Registration No. 333-17269)). |
| | | | |
*2.2 | | — | | Agreement and Plan of Merger dated as of May 28, 2003 among Edge, Edge Delaware Sub Inc. and Miller Exploration Company (incorporated by reference from Annex A to the Joint Proxy Statement/Prospectus included in the Registration Statement on Form S-4 (File No. 333-106484) filed by Edge on October 31, 2003). |
| | | | |
*2.3 | | — | | Purchase and Sale Agreement between Kerr McGee Oil & Gas Onshore, L.P., as seller, and Edge Petroleum Production Company, as purchaser, and Edge Petroleum Corporation, as additional purchaser dated December 12, 2006 (incorporated by reference from Exhibit 2.1 to Edge’s Current Report on Form 8-K filed December 18, 2006). |
| | | | |
*2.4 | | — | | Purchase and Sale Agreement between Smith Production Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated November 16, 2006 (incorporated by reference from Exhibit 10.1 to Edge’s Current Report on Form 8-K filed January 16, 2007). |
| | | | |
*2.5 | | — | | Purchase and Sale Agreement between Smith Production Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated November 16, 2006 (incorporated by reference from Exhibit 10.2 to Edge’s Current Report on Form 8-K filed January 16, 2007). |
| | | | |
*2.6 | | — | | First Amendment of Purchase and Sale Agreement between Smith Production, Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated December 16, 2006 (incorporated by reference from Exhibit 10.3 to Edge’s Current Report on Form 8-K filed January 16, 2007). |
| | | | |
*2.7 | | — | | Second Amendment of Purchase and Sale Agreement between Smith Production Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated January 15, 2007 (incorporated by reference from Exhibit 10.1 to Edge’s Current Report on Form 8-K filed January 19, 2007). |
| | | | |
*2.8 | | — | | First Amendment of Purchase and Sale Agreement between Smith Production Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated January 15, 2007 (incorporated by reference from Exhibit 10.2 to Edge’s Current Report on Form 8-K filed January 19, 2007). |
| | | | |
*3.1 | | — | | Restated Certificate of Incorporation of Edge (incorporated by reference from Exhibit 3.1 to Edge’s Current Report on Form 8-K filed April 29, 2005). |
| | | | |
*3.2 | | — | | Certificate of Amendment to the Restated Certificate of Incorporation of Edge (incorporated by reference from Exhibit 3.2 to Edge’s Current Report on Form 8-K filed April 29, 2005). |
| | | | |
*3.3 | | — | | Certificate of Amendment to the Restated Certificate of Incorporation of Edge (incorporated by reference from Exhibit 3.3 to Edge’s Current Report on Form 8-K filed April 29, 2005). |
| | | | |
*3.4 | | — | | Bylaws of Edge (incorporated by reference from Exhibit 3.3 to Edge’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1999). |
| | | | |
*3.5 | | — | | First Amendment to Bylaws of Edge (incorporated by reference from Exhibit 3.2 to Edge’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1999). |
| | | | |
*3.6 | | — | | Second Amendment to Bylaws of Edge (incorporated by reference from Exhibit 3.4 to Edge’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003). |
| | | | |
*3.7 | | — | | Form of Stock Certificate (incorporated by reference from Exhibit 4.1 to Edge’s Registration Statement on Form S-4 (Registration No. 333-17269)). |
| | | | |
*3.8 | | — | | Certificate of Designations establishing the 5.75% Series A cumulative convertible perpetual preferred stock, dated January 25, 2007 (incorporated by reference from Exhibit 3.1 to Edge’s Current Report on Form 8-K filed January 30, 2007). |
II-11
**3.9 | | — | | Certificate of Incorporation of Edge Petroleum Operating Company, Inc. |
| | | | |
**3.10 | | — | | Certificate of Ownership and Merger Merging Edge Petroleum Operating Company, Inc. (a Texas corporation) into Edge Petroleum Operating Company, Inc. (a Delaware corporation). |
| | | | |
**3.11 | | — | | Amended and Restated Bylaws of Edge Petroleum Operating Company, Inc. |
| | | | |
**3.12 | | — | | Certificate of Incorporation of Edge Petroleum Exploration Company. |
| | | | |
**3.13 | | — | | Certificate of Amendment to the Certificate of Incorporation of Edge Petroleum Exploration Company. |
| | | | |
**3.14 | | — | | Amended and Restated Bylaws of Edge Petroleum Exploration Company. |
| | | | |
**3.15 | | — | | Certificate of Incorporation of Edge Petroleum Production Company. |
| | | | �� |
**3.16 | | — | | Certificate of Amendment of Certificate of Incorporation of Edge Petroleum Production Company. |
| | | | |
**3.17 | | — | | Amended and Restated Bylaws of Edge Petroleum Production Company. |
| | | | |
**3.18 | | — | | Amended and Restated Certificate of Incorporation of Miller Exploration Company. |
| | | | |
**3.19 | | — | | Bylaws of Miller Exploration Company. |
| | | | |
**3.20 | | — | | Articles of Incorporation of Miller Oil Corporation. |
| | | | |
**3.21 | | — | | Bylaws of Miller Oil Corporation |
| | | | |
**4.1 | | — | | Form of Indenture relating to the senior debt securities of Edge. |
| | | | |
**4.2 | | — | | Form of Indenture relating to the subordinated debt securities of Edge. |
| | | | |
*4.3 | | — | | Fourth Amended and Restated Credit Agreement dated January 31, 2007 among Edge Petroleum Corporation, as borrower, the lenders thereto and Union Bank of California, N.A., a national banking association, as Agent (incorporated by reference from Exhibit 4.1 to Edge’s Current Report on Form 8-K filed February 5, 2007). |
| | | | |
5.1 | | — | | Opinion of Baker Botts L.L.P. with respect to the legality of the securities offered hereby. |
| | | | |
**12.1 | | — | | Computation of ratio of earnings to fixed charges for the three month period ended March 31, 2007 and for each of the years in the five-year period ended December 31, 2006. |
| | | | |
**12.2 | | — | | Computation of ratio of earnings to fixed charges and preferred stock dividends for the three month period ended March 31, 2007 and for each of the years in the five-year period ended December 31, 2006. |
| | | | |
23.1 | | — | | Consent of BDO Seidman, LLP. |
| | | | |
**23.2 | | — | | Consent of Ryder Scott Company, LLP. |
| | | | |
**23.3 | | — | | Consent of W.D. Von Gonten & Co. |
| | | | |
23.4 | | — | | Consent of Baker Botts L.L.P. (included in Exhibit 5.1). |
| | | | |
**24.1 | | — | | Power of Attorney. |
† Edge will file as an exhibit to a Current Report on Form 8-K (i) any underwriting, remarketing or agency agreement relating to the securities offered hereby, (ii) the instruments setting forth the terms of any debt securities, preferred stock or warrants, (iii) any additional required opinions of counsel with respect to legality of the securities offered hereby, (iv) any required opinion of counsel to Edge as to certain tax matters relative to the securities offered hereby or (v) any Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of the applicable trustee.
* Incorporated by reference as indicated.
** Previously filed.
II-12
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the Registration Statement as of the date the filed prospectus was deemed part of and included in the Registration Statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the Registration Statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
II-13
or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5) That, for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the securities:
The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee under an Indenture to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939 (the “Act”) in accordance with the rules and regulations prescribed by the SEC under Section 305(b)(2) of the Act.
II-14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the each of the undersigned Registrants certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on July 12, 2007.
| | EDGE PETROLEUM CORPORATION |
| | |
| | By: | | /s/ Michael G. Long |
| | | | Michael G. Long |
| | | | Executive Vice President, Chief Financial Officer and Treasurer |
| | | | |
| | EDGE PETROLEUM OPERATING COMPANY, INC. |
| | |
| | By: | | /s/ Michael G. Long |
| | | | Michael G. Long |
| | | | Executive Vice President, Chief Financial Officer and Treasurer |
| | | | |
| | EDGE PETROLEUM EXPLORATION COMPANY |
| | |
| | By: | | /s/ Michael G. Long |
| | | | Michael G. Long |
| | | | Executive Vice President, Chief Financial Officer and Treasurer |
| | | | |
| | EDGE PETROLEUM PRODUCTION COMPANY |
| | |
| | By: | | /s/ Michael G. Long |
| | | | Michael G. Long |
| | | | Executive Vice President, Chief Financial Officer and Treasurer |
| | | | |
| | MILLER EXPLORATION COMPANY |
| | |
| | By: | | /s/ Michael G. Long |
| | | | Michael G. Long |
| | | | Executive Vice President, Chief Financial Officer and Treasurer |
| | | | |
| | MILLER OIL CORPORATION |
| | |
| | By: | | /s/ Michael G. Long |
| | | | Michael G. Long |
| | | | Executive Vice President, Chief Financial Officer and Treasurer |
Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to Registration Statement has been signed below by the following persons in the capacities indicated on July 12, 2007.
EDGE PETROLEUM CORPORATION
SIGNATURE | | TITLE |
| | |
* | | Chief Executive Officer, President and Chairman of the Board |
John W. Elias | | (Principal Executive Officer) |
| | |
/s/ Michael G. Long | | Executive Vice President, Chief Financial Officer and Treasurer |
Michael G. Long | | (Principal Financial and Principal Accounting Officer) |
| | |
* | | Director |
Thurmon M. Andress | | |
| | |
* | | Director |
Vincent S. Andrews | | |
| | |
* | | Director |
Jonathan M. Clarkson | | |
| | |
* | | Director |
Michael A. Creel | | |
| | |
* | | Director |
John Sfondrini | | |
| | |
* | | Director |
Robert W. Shower | | |
| | |
* | | Director |
David F. Work | | |
EDGE PETROLEUM OPERATING COMPANY, INC.
EDGE PETROLEUM EXPLORATION COMPANY
EDGE PETROLEUM PRODUCTION COMPANY
MILLER EXPLORATION COMPANY
MILLER OIL CORPORATION
SIGNATURE | | TITLE |
| | |
* | | Chief Executive Officer, President and Chairman of the Board |
John W. Elias | | (Principal Executive Officer) |
| | |
/s/ Michael G. Long | | Executive Vice President, Chief Financial Officer, Treasurer and |
Michael G. Long | | Director (Principal Financial and Principal Accounting Officer) |
| | |
* | | Executive Vice President, Chief Operating Officer and Director |
John O. Tugwell | | |
*By: | | /s/ Michael G. Long | |
| | Michael G. Long | |
| | (Attorney-in-Fact) | |
EXHIBIT INDEX
Exhibit No. | | | | Description |
| | | | |
*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) Edge Petroleum Corporation (“Edge”), dated as of January 13, 1997 (incorporated by reference from Exhibit 2.1 to Edge’s Registration Statement on Form S-4/A filed on January 31, 1997 (Registration No. 333-17269)). |
| | | | |
*2.2 | | — | | Agreement and Plan of Merger dated as of May 28, 2003 among Edge, Edge Delaware Sub Inc. and Miller Exploration Company (incorporated by reference from Annex A to the Joint Proxy Statement/Prospectus included in the Registration Statement on Form S-4 (File No. 333-106484) filed by Edge on October 31, 2003). |
| | | | |
*2.3 | | — | | Purchase and Sale Agreement between Kerr McGee Oil & Gas Onshore, L.P., as seller, and Edge Petroleum Production Company, as purchaser, and Edge Petroleum Corporation, as additional purchaser dated December 12, 2006 (incorporated by reference from Exhibit 2.1 to Edge’s Current Report on Form 8-K filed December 18, 2006). |
| | | | |
*2.4 | | — | | Purchase and Sale Agreement between Smith Production Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated November 16, 2006 (incorporated by reference from Exhibit 10.1 to Edge’s Current Report on Form 8-K filed January 16, 2007). |
| | | | |
*2.5 | | — | | Purchase and Sale Agreement between Smith Production Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated November 16, 2006 (incorporated by reference from Exhibit 10.2 to Edge’s Current Report on Form 8-K filed January 16, 2007). |
| | | | |
*2.6 | | — | | First Amendment of Purchase and Sale Agreement between Smith Production, Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated December 16, 2006 (incorporated by reference from Exhibit 10.3 to Edge’s Current Report on Form 8-K filed January 16, 2007). |
| | | | |
*2.7 | | — | | Second Amendment of Purchase and Sale Agreement between Smith Production Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated January 15, 2007 (incorporated by reference from Exhibit 10.1 to Edge’s Current Report on Form 8-K filed January 19, 2007). |
| | | | |
*2.8 | | — | | First Amendment of Purchase and Sale Agreement between Smith Production Inc., as seller, and Edge Petroleum Exploration Company, as purchaser, dated January 15, 2007 (incorporated by reference from Exhibit 10.2 to Edge’s Current Report on Form 8-K filed January 19, 2007). |
| | | | |
*3.1 | | — | | Restated Certificate of Incorporation of Edge (incorporated by reference from Exhibit 3.1 to Edge’s Current Report on Form 8-K filed April 29, 2005). |
| | | | |
*3.2 | | — | | Certificate of Amendment to the Restated Certificate of Incorporation of Edge (incorporated by reference from Exhibit 3.2 to Edge’s Current Report on Form 8-K filed April 29, 2005). |
| | | | |
*3.3 | | — | | Certificate of Amendment to the Restated Certificate of Incorporation of Edge (incorporated by reference from Exhibit 3.3 to Edge’s Current Report on Form 8-K filed April 29, 2005). |
| | | | |
*3.4 | | — | | Bylaws of Edge (incorporated by reference from Exhibit 3.3 to Edge’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1999). |
| | | | |
*3.5 | | — | | First Amendment to Bylaws of Edge (incorporated by reference from Exhibit 3.2 to Edge’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1999). |
| | | | |
*3.6 | | — | | Second Amendment to Bylaws of Edge (incorporated by reference from Exhibit 3.4 to Edge’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003). |
| | | | |
*3.7 | | — | | Form of Stock Certificate (incorporated by reference from Exhibit 4.1 to Edge’s Registration Statement on Form S-4 (Registration No. 333-17269)). |
| | | | |
*3.8 | | — | | Certificate of Designations establishing the 5.75% Series A cumulative convertible perpetual preferred stock, dated January 25, 2007 (incorporated by reference from Exhibit 3.1 to Edge’s Current Report on Form 8-K filed January 30, 2007). |
**3.9 | | — | | Certificate of Incorporation of Edge Petroleum Operating Company, Inc. |
| | | | |
**3.10 | | — | | Certificate of Ownership and Merger Merging Edge Petroleum Operating Company, Inc. (a Texas corporation) into Edge Petroleum Operating Company, Inc. (a Delaware corporation). |
| | | | |
**3.11 | | — | | Amended and Restated Bylaws of Edge Petroleum Operating Company, Inc. |
| | | | |
**3.12 | | — | | Certificate of Incorporation of Edge Petroleum Exploration Company. |
| | | | |
**3.13 | | — | | Certificate of Amendment to the Certificate of Incorporation of Edge Petroleum Exploration Company. |
| | | | |
**3.14 | | — | | Amended and Restated Bylaws of Edge Petroleum Exploration Company. |
| | | | |
**3.15 | | — | | Certificate of Incorporation of Edge Petroleum Production Company. |
| | | | |
**3.16 | | — | | Certificate of Amendment of Certificate of Incorporation of Edge Petroleum Production Company. |
| | | | |
**3.17 | | — | | Amended and Restated Bylaws of Edge Petroleum Production Company. |
| | | | |
**3.18 | | — | | Amended and Restated Certificate of Incorporation of Miller Exploration Company. |
| | | | |
**3.19 | | — | | Bylaws of Miller Exploration Company. |
| | | | |
**3.20 | | — | | Articles of Incorporation of Miller Oil Corporation. |
| | | | |
**3.21 | | — | | Bylaws of Miller Oil Corporation |
| | | | |
**4.1 | | — | | Form of Indenture relating to the senior debt securities of Edge. |
| | | | |
**4.2 | | — | | Form of Indenture relating to the subordinated debt securities of Edge. |
| | | | |
*4.3 | | — | | Fourth Amended and Restated Credit Agreement dated January 31, 2007 among Edge Petroleum Corporation, as borrower, the lenders thereto and Union Bank of California, N.A., a national banking association, as Agent (incorporated by reference from Exhibit 4.1 to Edge’s Current Report on Form 8-K filed February 5, 2007). |
| | | | |
5.1 | | — | | Opinion of Baker Botts L.L.P. with respect to the legality of the securities offered hereby. |
| | | | |
**12.1 | | — | | Computation of ratio of earnings to fixed charges for the three month period ended March 31, 2007 and for each of the years in the five-year period ended December 31, 2006. |
| | | | |
**12.2 | | — | | Computation of ratio of earnings to fixed charges and preferred stock dividends for the three month period ended March 31, 2007 and for each of the years in the five-year period ended December 31, 2006. |
| | | | |
23.1 | | — | | Consent of BDO Seidman, LLP. |
| | | | |
**23.2 | | — | | Consent of Ryder Scott Company, LLP. |
| | | | |
**23.3 | | — | | Consent of W.D. Von Gonten & Co. |
| | | | |
23.4 | | — | | Consent of Baker Botts L.L.P. (included in Exhibit 5.1). |
| | | | |
**24.1 | | — | | Power of Attorney. |
† Edge will file as an exhibit to a Current Report on Form 8-K (i) any underwriting, remarketing or agency agreement relating to the securities offered hereby, (ii) the instruments setting forth the terms of any debt securities, preferred stock or warrants, (iii) any additional required opinions of counsel with respect to legality of the securities offered hereby, (iv) any required opinion of counsel to Edge as to certain tax matters relative to the securities offered hereby or (v) any Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of the applicable trustee.
* Incorporated by reference as indicated.
** Previously filed.