Table of Contents

** **

 

** **

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

# **Washington, D.C. 20549**

# ** **

#### **AmendmentNo. 1 to**

** **

#### **FORM 10-K**

#### ** **

#### **filedMarch 16, 2009**

#### ** **

**(MARK ONE)**

** **

| **x**                                                   | **ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**     |
|---------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
| ** **                                              | ** **                                                                                               |
| ***For the fiscal year ended  December 31, 2008*** |
| *** ***                                            | *** ***                                                                                             |
| **OR**                                                  |
| ** **                                              | ** **                                                                                               |
| **o**                                                   | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934** |

** **

##### **For the transition period from             to         **

##### ** **

**Commission file number:  0-22149**

 

#### **EDGEPETROLEUM CORPORATION**

(Exact Name of Registrant as Specified in Its Charter)

 

| **Delaware**                             | **76-0511037**      |
|------------------------------------------|---------------------|
| (State or Other Jurisdiction of          | (I.R.S. Employer    |
| Incorporation or Organization)           | Identification No.) |
| ** **                               |                |
| **1301 Travis, Suite 2000**         |                |
| **Houston, Texas**                       | **77002**           |
| (Address of Principal Executive Offices) | (Zip Code)          |

 

**713-654-8960**

(Registrant’s telephone number, including area code)

 

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Securities registered pursuant to Section 12(b) of the Act:

 

| **Title of each class**                              | ** ** | **Name of Each Exchange on Which Registered** |
|------------------------------------------------------|------------|-----------------------------------------------|
| Common Stock, Par Value $0.01 Per Share              |       | NASDAQ                                        |
| 5.75% Series A Cumulative Convertible Perpetual |       | NASDAQ                                        |
| Preferred Stock, Par Value $0.01 Per Share           |       |                                          |

 

Securities registered pursuant to Section 12(g) ofthe Act:  **None**

 

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Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act.   ̈Yes  xNo

 

Indicateby check mark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Act.  oYes  xNo

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.  xYes   ̈No

 

Indicateby check mark whether the registrant has submitted electronically and posted onits corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files).

xYes ̈No

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K (§229.405 of this chapter) is not contained herein, and will notbe contained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K.  o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinitions of “large accelerated filer,” “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act.
| o Large accelerated filer |   | xAccelerated Filer |   | o Non-accelerated filer                        |   | o Smaller reporting company |
|---------------------------|--------|--------------------|--------|------------------------------------------------|--------|-----------------------------|
|                      |   |               |   | (Do  not check if a smaller reporting company) |

 

Indicate bycheck mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).  oYes  xNo

 

As of June 30,2008, the aggregate market value of the voting stock held by non-affiliates ofthe registrant was $144.1 million (based on a value of $5.39 per share, theclosing price of the Common Stock as quoted by NASDAQ Global Select Market onsuch date).

 

As of  April 24,2009, 28,867,096 shares of Common Stock, par value $.01 per share, were outstanding.

 

**DOCUMENTS INCORPORATED BYREFERENCE**

***NONE.***

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***Tableof Contents***

*** ***

***TABLE OF CONTENTS***

*** ***
| ***PART III***                                         | *** ***                                                                                           | ***2***      |
|-------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|--------------|
| ***ITEM 10.***                                              | ***DIRECTORS,  EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE***                                          | ***2***      |
| *** ***                                                | ***Directors***                                                                                        | ***2***      |
| *** ***                                                | ***Executive Officers***                                                                               | ***3***      |
| *** ***                                                | ***Section 16(A) Beneficial  Ownership Reporting Compliance***                               | ***3***      |
| *** ***                                                | ***Corporate Governance***                                                                             | ***4***      |
| *** ***                                                | ***Corporate  Governance Guidelines***                                                                 | ***4***      |
| *** ***                                                | ***Director  Nomination Process***                                                                     | ***4***      |
| *** ***                                                | ***Securityholder  Communications with the Board***                                                    | ***5***      |
| *** ***                                                | ***Code of Ethics***                                                                                   | ***6***      |
| *** ***                                                | ***Meetings  and Committees of the Board***                                                            | ***6***      |
| *** ***                                                | ***The Board***                                                                                        | ***6***      |
| *** ***                                                | ***Committees of the  Board***                                                                         | ***6***      |
| *** ***                                                | *** ***                                                                                           | *** *** |
| ***ITEM  11.***                                             | ***EXECUTIVE  COMPENSATION***                                                                          | ***9***      |
| *** ***                                                | ***Compensation Discussion and Analysis***                                                             | ***9***      |
| *** ***                                                | ***Compensation Committee Report***                                                                    | ***21***     |
| *** ***                                                | ***Compensation Committee Interlocks and Insider  Participation***                                     | ***21***     |
| *** ***                                                | ***Summary Compensation Table***                                                                       | ***22***     |
| *** ***                                                | ***2008 Grants of Plan-Based Awards***                                                                 | ***24***     |
| *** ***                                                | ***Outstanding Equity Awards at Fiscal Year End 2008***                                                | ***25***     |
| *** ***                                                | ***2008 Option Exercises and Stock Vested***                                                           | ***26***     |
| *** ***                                                | ***Potential Payments Upon Change in Control or Termination***                                         | ***26***     |
| *** ***                                                | ***Director  Compensation***                                                                           | ***32***     |
| *** ***                                                | ***2008 Director Compensation Table***                                                                 | ***34***     |
| *** ***                                                | ***Stock Ownership Requirements for Directors***                                                       | ***34***     |
| *** ***                                                | *** ***                                                                                           | *** *** |
| ***ITEM  12.***                                             | ***SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER  MATTERS*** | ***34***     |
| *** ***                                                | ***Security Ownership of Certain  Beneficial Owners and Management***                                  | *** *** |
| *** ***                                                | ***Equity Compensation Plan Information***                                                             | ***36***     |
| *** ***                                                | *** ***                                                                                           | *** *** |
| ***ITEM  13.***                                             | ***CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE***                       | ***37***     |
| *** ***                                                | ***Director  Independence***                                                                           | ***37***     |
| *** ***                                                | ***Certain Relationships and Related Transactions***                                                   | ***38***     |
| *** ***                                                | ***Related Party Transaction Policies and Procedures***                                                | ***38***     |
| *** ***                                                | *** ***                                                                                           | *** *** |
| ***ITEM  14.***                                             | ***PRINCIPAL  ACCOUNTANT FEES AND SERVICES***                                                          | ***38***     |
| *** ***                                                | ***Independent Public Accounting Firm’s Fees***                                                   | *** *** |
| *** ***                                                | ***Policy on Audit Committee Pre-Approval of Audit and  Non-Audit Services***                          | ***39***     |
| *** ***                                                | *** ***                                                                                           | *** *** |
| ***PART IV***                                          | *** ***                                                                                           | ***39***     |
| ***ITEM  15.***                                             | ***EXHIBITS  AND FINANCIAL STATEMENT SCHEDULES***                                                      | ***39***     |
| *** ***                                                | *** ***                                                                                           | *** *** |
| ***Certification of CEO Pursuant to  Rule 13a-14(a)*** | *** ***                                                                                           |
| ***Certification of CFO Pursuant to  Rule 13a-14(a)*** | *** ***                                                                                           |

 

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##### **Tableof Contents**

 

##### **EXPLANATORY NOTE**

##### ** **

ThisAmendment No. 1 (“this Amendment”) to the Form 10-K of Edge PetroleumCorporation (“Edge”, the “Company”, “we”, “our” or “us”) for the year ended December 31,2008 (the “Form 10-K”), which was originally filed on March 16, 2009(the “Form 10-K/A”) is being filed to add the following items, as requiredby General Instruction G(3) to Form 10-K:

 
| ***ITEM NUMBER*** | *** *** | ***DESCRIPTION***                                                                                     | *** *** |
|-------------------|--------------|-------------------------------------------------------------------------------------------------------|--------------|
| *** ***      | *** *** | *** ***                                                                                          | *** *** | *** *** |
| ***ITEM 10.***    | *** *** | ***DIRECTORS, EXECUTIVE OFFICERS AND  CORPORATE GOVERNANCE***                                         | *** *** |
| *** ***      | *** *** | *** ***                                                                                          | *** *** |
| ***ITEM 11.***    | *** *** | ***EXECUTIVE COMPENSATION***                                                                          | *** *** |
| *** ***      | *** *** | *** ***                                                                                          | *** *** |
| ***ITEM 12.***    | *** *** | ***SECURITY OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS*** |
| *** ***      | *** *** | *** ***                                                                                          | *** *** |
| ***ITEM 13.***    | *** *** | ***CERTAIN RELATIONSHIPS AND RELATED  TRANSACTIONS, AND DIRECTOR INDEPENDENCE***                      |
| *** ***      | *** *** | *** ***                                                                                          | *** *** |
| ***ITEM 14.***    | *** *** | ***PRINCIPAL ACCOUNTANT FEES AND SERVICES***                                                          | *** *** |
|                   |              |                                                                                                       |              |  |

 

Wehereby amend Items 10 through 14 of Part III of our Form 10-K bydeleting the text of such Items 10 through 14 in their entirety and replacingthem with the information provided below under the respective headings, andItem 15 has been amended to reflect the filing of the relevant exhibits withthis Amendment.  This Amendment does not affect any other items in ourAnnual Report on Form 10-K.  Pursuant to Securities and ExchangeCommission (“SEC”) rules, currently dated certifications from our ChiefExecutive Officer and Chief Financial Officer required by Section 302 ofthe Sarbanes-Oxley Act of 2002 are filed herewith.

 

ThisAmendment does not affect the financial statements or footnotes as originallyfiled.  This Amendment does not reflectevents occurring after the original filing of the Form 10-K, and does notmodify or update the disclosures therein in any way other than as required toreflect the amendments as described above and set forth below. Accordingly,this Amendment should be read in conjunction with our Form 10-K and ourother filings made with the SEC subsequent to the filing of the Form 10-K.

 

**FORWARD LOOKINGINFORMATION**

** **

Theinformation contained in this Form 10-K/A includes certain forward-lookingstatements.  The words “may,” “will,” “expect,”“anticipate,” “believe,” “continue,” “estimate,” “project,” “intend,” andsimilar expressions used in this Form 10-K/A are intended to identifyforward-looking statements within the meaning of Section 27A of the U.S.Securities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended.  Youshould not place undue reliance on these forward-looking statements, whichspeak only as of the date made.  Weundertake no obligation to publicly release the result of any revision of theseforward-looking statements to reflect events or circumstances after the datethey are made or to reflect the occurrence of unanticipated events.  You should also know that such statements arenot guarantees of future performance and are subject to risks, uncertaintiesand assumptions.  Should any of theserisks or uncertainties materialize, or should any of our assumptions proveincorrect, actual results may differ materially from those included within theforward-looking statements.  For adiscussion of the risks which, among others, may affect our financial conditionand results of operations please see our risk factors set forth under Item 1Aof the Form 10-K.

 

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**PART III**

 

***ITEM 10.***   DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

*** ***

***DIRECTORS***

*** ***

***The Board of Directors currently has eight members and isdivided into three classes, with staggered terms of office.  The term for each class expires on the dateof the third annual stockholders’ meeting for the election of directorsfollowing the most recent election of directors for such class.  Each director holds office until the nextannual meeting of stockholders for the election of directors of his class anduntil his successor has been duly elected and qualified.***

*** ***

Thefollowing summaries set forth information concerning each of the eightdirectors, including such director’s age as of April 30, 2009, positionwith the Company (if any) and business experience during the past five years.

 

**ThurmonM. Andress**, age 75,****has served asa director of the Company since November 2002.  He has been Managing Director-Houston ofBreitburn Energy Co., LP since 1998.  Mr. Andressjoined Breitburn as a result of its merger with Andress Oil and Gas Company, aprivate company he founded in 1990, where he served as president and CEO priorto the merger.  Breitburn Energy Company,LP is engaged in oil and gas production, with operations primarily inCalifornia, Wyoming, Florida and Michigan. Prior to forming Andress Oil & Gas Company, Mr. Andresswas founder and Chairman of Bayou Resources, Inc., a publicly traded oiland gas company, from 1982-1987, when it was sold.  Since November 2006, Mr. Andresshas served on the board of directors of EPE Holdings, LLC, the general partnerof Enterprise GP Holdings, LP, a publicly-traded limited partnership, andserves on EPE Holdings’ audit, conflicts and governance board committee.  Mr. Andress is currently a member of theNational Petroleum Council and on the Board of Governors of Houston for theIndependent Petroleum Association of America and has over 45 years ofexperience in the oil and gas industry.  Mr. Andress’current term as a director expires in 2009.

 

**John W.Elias**, age 68, has served as the Chief Executive Officer andChairman of the Board of the Company since November 1998 and as Presidentsince January 2000. From April 1993 to September 1998, he servedin various senior management positions, including Executive Vice President ofSeagull Energy Corporation, a company engaged in oil and gas exploration,development and production and pipeline marketing. Prior to April 1993, Mr. Eliasserved in various positions for more than 30 years, including senior managementpositions with Amoco Corporation, a major integrated oil and gas company. Mr. Eliashas more than 45 years of experience in the oil and natural gas exploration andproduction business.  Mr. Elias’current term as a director expires in 2009.

 

**JohnSfondrini**, age 60,****has served asa director of the Company since December 1996 and prior to that he servedas director of the Company’s corporate predecessors from 1986, when he arrangedfor the capitalization of a predecessor partnership. For more than five years,he has been self-employed as a consultant that assists his clients in raisingand investing private capital for growth-oriented companies in multipleindustry segments, including oil and gas. Mr. Sfondrini’s current term as a director expires in 2009.

 

**Robert W.Shower**, age 71,****has served asa director of the Company since March 1997.  From December 1993 until his retirementin April 1996, Mr. Shower served as Executive Vice President and ChiefFinancial Officer of Seagull Energy Corporation, a company engaged in oil andgas exploration, development and production and pipeline marketing.  From March 1992 to December 1993,he served as such company’s Senior Vice President and Chief Financial Officer.  Until May 2002, Mr. Shower servedas a director of Lear Corporation and Nuevo Energy Company.  From November 2005 until February 2007,Mr. Shower served as a director of Regency GP, LLC, which is the generalpartner and manager of Regency Energy Partners LP, a publicly traded limitedpartnership engaged in midstream energy operations, including gathering,processing, marketing and transportation of natural gas and natural gasliquids.  Mr. Shower’s current termas a director expires in 2010.

 

**David F. Work**, age 63, hasserved as a director of the Company since November 2002. For more thanfive years prior to October 2000, he served in various managementcapacities with BP Amoco and BP, including 

 

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Houstonregional president of BP and Executive Vice President of Amoco. Since hisretirement from BP in 2000 and until October 2003, he served as the chairman ofEnergy Virtual Partners, Inc., a private company engaged in the businessof managing under-resourced oil and gas properties. Since 2004, Mr. Workhas served as a director of CGGVeritas (a French public company) and itscorporate predecessor and is a member of the CGGVeritas compensationcommittee.  Also, since 2002, Mr. Workhas served as director and the non-executive chairman of CrystaTech, Inc.,a private oil and gas service company.  Mr. Work’scurrent term as a director expires in 2010.

 

**VincentS. Andrews**, age 68,****has served asa director of the Company since December 1996 and served as a director ofthe Company’s corporate predecessor from April 1991 until the Company’sinitial public offering in March 1997. Mr. Andrews has been an active investor in the Company’s corporatepredecessor since 1988.  Mr. Andrewshas, for more than five years, served as president of Private Capital Advisors, Inc.and Vincent Andrews Management Corporation, privately-held management companiesprimarily involved in personal financial management.    Mr. Andrews’ current term as adirector expires in 2011.

 

**JonathanM. Clarkson**, age 59, was appointed by the Board of Directorsas a director of the Company on October 27, 2005.   Since 2003, Mr. Clarkson has served asPresident, Houston Region, of Texas Capital Bank.  From May 2001 to October 2002, Mr. Clarksonserved as President, Chief Financial Officer and a director of MissionResources Corp., an independent oil and gas exploration and productioncompany.  From 1999 through 2001, Mr. Clarksonserved as President, Chief Operating Officer and a director of Bargo EnergyCompany, a private company engaged in the acquisition and exploitation ofonshore oil and natural gas properties, which merged with Mission Resources in May 2001. Mr. Clarkson’s current term as adirector expires in 2011.

 

**MichaelA. Creel**, age 55, was appointed by the Board of Directors as adirector of the Company on October 27, 2005.  Since August 2007, Mr. Creel hasserved as the President & Chief Executive Officer of EnterpriseProducts GP, LLC, the general partner of Enterprise Products Partners L.P., apublicly traded limited partnership that owns and operates midstream energyassets.  Since February 2006, Mr. Creelhas also served as a director for Enterprise Products GP, LLC, and from 2001 toJuly 2007 served as its Executive Vice President and Chief FinancialOfficer.  From April 2005 to July 2007,he also served as the President and Chief Executive Officer and a director ofEPE Holdings, LLC, the general partner of Enterprise GP Holdings, L.P., apublicly traded limited partnership that owns and operates Enterprise ProductsGP, LLC. From February to December 2006, Mr. Creel served on theboard of Texas Eastern Products Pipeline Company, LLC, the general partner ofTEPPCO Partners, L.P.  From October 2006until August 2007, Mr. Creel served as Executive Vice President and ChiefFinancial Officer of DEP Holdings, LLC, the general partner of Duncan EnergyPartners, L.P., a publicly traded limited partnership that owns and operatesmidstream energy assets.  He has servedas a director of DEP Holdings, LLC since October 2006.  Mr. Creel’s current term as a directorexpires in 2011.

 

**EXECUTIVE OFFICERS**

 

Certain information required by this item concerningexecutive officers is set forth in Part I, Item 4, of our Form 10-Kfiled under the caption “Executive Officers of the Registrant” and isincorporated herein by reference.

 

**SECTION 16(A) BENEFICIAL OWNERSHIPREPORTING COMPLIANCE**

 

Section 16(a) ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”), requiresthe Company’s Directors, executive officers and persons who beneficially own10% or more of the Company’s Common Stock to file with the SEC initial reportsof ownership and reports of changes in ownership of Common Stock.  Based solely on a review of the copies ofsuch reports furnished to the Company and written representations that no otherreports were required, the Company believes that during 2008 all its Directorsand executive officers and 10% or greater holders complied on a timely basiswith all applicable filing requirements under Section 16(a) of theExchange Act.

 

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**CORPORATE GOVERNANCE**

 

**CorporateGovernance Guidelines**

 

In December 2003,the Corporate Governance/Nominating Committee recommended, and the full Boardapproved, a set of corporate****governanceguidelines for guiding the Board in fulfilling its duties to the Company,including:

 

·                  Guidelines for the size of the Board;

·                  Monitoring and safeguarding theindependence of the Board;

·                  Term limits;

·                  Mandatory retirement;

·                  Other directorships;

·                  Change in occupation or business of adirector;

·                  Recusal when conflicts of interestarise;

·                  Selection and qualification ofdirector candidates;

·                  Director continuing education;

·                  Board meetings;

·                  Executive sessions with onlynon-employee directors;

·                  Attendance;

·                  Committees;

·                  Board and committee evaluations;

·                  CEO evaluation (by the CompensationCommittee);

·                  Management succession;

·                  Procedures for communication byinterested parties with non-employee directors;

·                  Procedures for handling concernsregarding accounting;

·                  Controls over financial reporting orother audit matters;

·                  Non-employee director remuneration;

·                  Certain shareholder voting mattersand procedures for candidates recommended by stockholders;

 

and other matters (the “CorporateGovernance Guidelines”).  The CorporateGovernance Guidelines of the Company detail the methodology used by theCommittee to determine director independence, and a copy of those Guidelinescan be found on the Company’s website, http://www.edgepet.com, by firstclicking on “About Us” and then on “Corporate Governance.”

 

**DirectorNomination Process**

 

*Identifying Candidates*. TheCorporate Governance/Nominating Committee considers candidates for Boardmembership suggested by its members and other Board members, as well asmanagement and stockholders. The Committee may engage third parties to whom afee is paid to assist it in identifying or evaluating any potential nominee;however, no such third party was used in the past year.  All director nominations made by the Boardmust be recommended by the Corporate Governance/Nominating Committee andapproved by a majority of the non-employee Directors of the Board.  The Corporate Governance/Nominating Committee’spolicy is that it will consider candidates recommended by stockholders on thesame basis as other candidates, provided the recommended candidate meets all ofthe minimum requirements and qualifications for being a director as specifiedin the Company’s Corporate Governance Guidelines, the CorporateGovernance/Nominating Committee Charter and the Company’s Bylaws.  Any such recommendations should include thecandidate’s name and qualifications for Board membership and should be sent inwriting to the Corporate Secretary of the Company at Edge PetroleumCorporation, 1301 Travis, Suite 2000, Houston, Texas  77002.  In addition, the Company’s Bylaws permit stockholders to nominatepersons for election to the Board at an annual stockholders meeting, withoutregard to whether the stockholder has submitted a recommendation to theCorporate Governance/Nominating Committee as to such nominee. To nominate adirector using this process, the stockholder must follow the proceduresdescribed under “Additional Information” in this report.

 

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*Qualifications*. The CorporateGovernance/Nominating Committee Charter provides, among other things, that anycandidate for the Board nominated by the Board must meet the minimumqualifications specified in the Committee’s charter and in the Company’s CorporateGovernance Guidelines, including that the director candidate possess personaland professional integrity, has good business judgment, relevant experience andskills and will be an effective director in conjunction with the full Board incollectively serving the long-term interests of the Company’sstockholders.  In addition, for adirector to serve on the Audit Committee, Compensation Committee or CorporateGovernance/Nominating Committee, he or she must meet the independence standardsapplicable to such committees in accordance with Nasdaq, the Internal RevenueCode and SEC rules. The Company’s Bylaws provide that no person shall beeligible for nomination for election as a director if that person is or willbecome 70 years of age or older on or prior to the date of the annual meetingat which they would be considered for election. A director who becomes 70 yearsof age during his or her term may complete the term. The Company’s Bylaws alsoprovide that directors who are also employees of the Company are deemed toresign from the Board on their 65th birthday and may not thereafter be nominatedfor election.  The Board may waive eitheror both of these Bylaw provisions by majority vote if the Board in its judgmentdetermines that such waiver would be in the best interests of the Company.   Inasmuch as Mr. Elias turned 65 yearsof age in 2005, the Board considered and approved a resolution at its February 2005meeting waiving the employee-director age restriction as it relates to Mr. Eliasfor the remainder of his term and providing that Mr. Elias shall remaineligible to be nominated for election to the Board in the future until hereaches the age of 70. In December 2005, the Board also considered andapproved a resolution waiving the director age restriction as it relates to Mr. Andressto allow him to stand for re-election to the Board of Directors at the 2006Annual Meeting, at which time he was 72 years of age. The Board felt that eachof Messrs. Andress and Elias brings a level of experience, expertise andinvolvement within the industry that is a valuable and important component inthe continued execution of Edge’s strategic business plan and that thesewaivers were in the best interests of the Company.  The Board may, in the future, waive either orboth of these Bylaw provisions by majority vote if the Board, in its judgment,determines that such waiver would be in the best interests of the Company.

 

*CandidateSelection Process*. Once the Corporate Governance/Nominating Committee identifies a prospectivenominee, it will make an initial determination as to whether to conduct a fullevaluation of the prospective candidate. This initial determination will bebased on whatever information is provided to the CorporateGovernance/Nominating Committee concerning the prospective candidate, as wellas the Corporate Governance/Nominating Committee’s own knowledge of theprospective candidate, which may be supplemented by inquiries to the personmaking the recommendation or others. The initial determination will be basedprimarily on the need for Board members to fill vacancies or expand the size ofthe Board and the likelihood that the prospective nominee can satisfy theminimum qualifications described above. In addition, as the Company evolves,the experience and diversity required on its Board may change. Therefore, theexpertise that a prospective nominee possesses will be thoroughly examined todetermine whether there is an appropriate fit. If the initial determination indicates that the Corporate Governance/NominatingCommittee should further pursue the prospective nominee, the CorporateGovernance/Nominating Committee will evaluate the individual against theminimum qualifications in full and consider such other relevant factors as itdeems appropriate. In connection with this evaluation, one or more members ofthe Corporate Governance/Nominating Committee and others as appropriate, mayinterview the prospective nominee. After completing this evaluation, theCorporate Governance/Nominating Committee will determine whether to recommendthe individual for nomination by the Board. The Corporate Governance/Nominating Committee’s recommendations are notbinding on the Board.  The Board, actingon the recommendations of the Corporate Governance/Nominating Committee, willnominate a slate of director candidates for election at each annual meeting ofstockholders and will appoint directors to fill vacancies between annualmeetings, including vacancies created as a result of any increase in size ofthe Board.

 

**SecurityholderCommunications with the Board**

 

TheCompany’s Board of Directors has provided for a process for securityholders tosend communications to the Board of Directors. Any securityholder can sendcommunications to the Board by mail as follows:

 

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| * * | *Board of Directors of Edge  Petroleum Corporation* |
|----------|-----------------------------------------------------|
|     | *c/o Corporate Secretary*                           |
|     | *1301 Travis, Suite 2000*                      |
|     | *Houston, Texas 77002*                              |

 

All securityholdercommunications will be relayed to all Board members. Communications from anofficer or Director of the Company will not be viewed as securityholdercommunications for purposes of the procedure. Communications from an employeeor agent of the Company will be viewed as securityholder communications forpurposes of the procedure only if those communications are made solely in suchemployee’s or agent’s capacity as a securityholder.

 

**Code ofEthics**

 

The Company has adopted a code of ethics that appliesto all Company employees including executive officers, as well as each memberof the Company’s Board of Directors.  Thecode of ethics is available at the Company’s website athttp://www.edgepet.com.  The codeincludes policies on employment, conflicts of interest, and the protection ofconfidential information and requires adherence to all laws and regulationsapplicable to the conduct of the Company’s business.  Any waivers of, or amendments to, the code ofethics will be posted on the Company’s website.

 

**MEETINGS AND COMMITTEES OF THE BOARD**

 

**The Board**

 

TheCompany expects each Director to devote sufficient time, energy and attentionto ensure diligent performance of his or her duties and to make every effort toattend each Board meeting, each meeting of any committee on which he or shesits and the annual stockholder’s meeting. Attendance in person at Board and committee meetings is preferred, butattendance by teleconference is permitted, if necessary.  None of the Company’s non-employee Directorswho were serving as Directors at that time attended last year’s annual meetingof stockholders.

 

During2008, the Board of Directors held 16 meetings (seven of which were telephonic)and acted by written consent one time. All members of the Board of Directors attended at least 75% of themeetings of the Board and of the committees on which they served during 2008.In addition, the Company’s non-employee Directors meet at regularly scheduledexecutive sessions without management present. In 2008, the Board of Directors held six regularly scheduled executivesessions in which only the independent Directors were present. Historically,the chairmen of the standing Committees of the Board of Directors alternatedacting as presiding director at these executive sessions. Beginning in late2008, Mr. Work assumed responsibility as presiding director over executivesessions.

 

**Committeesof the Board**

 

The Board has a standing Audit Committee, CompensationCommittee and Corporate Governance/Nominating Committee to facilitate andassist it in the execution of its responsibilities.  Charters for each committee, as well as theCorporate Governance Guidelines, are available on the Company’s website at http://www.edgepet.comby first clicking on “About Us” and then “Corporate Governance.”  The charters, as well as the CorporateGovernance Guidelines, are also available in print upon request by anystockholder. We make our website content available for information purposesonly.  It should not be relied upon forinvestment purposes, nor is it incorporated by reference in this report.  The table below shows current membership foreach of these Board committees:

 

| **Audit**

**Committee** | ** ** | **Corporate Governance/**

**Nominating Committee** | ** ** | **Compensation**

**Committee** |
|--------------------------|------------|-----------------------------------------------------|------------|---------------------------------|
| Vincent S.  Andrews      |       | Thurmon M.  Andress                                 |       | Thurmon M.  Andress             |
| Jonathan M.  Clarkson*   |       | Vincent S.  Andrews                                 |       | Jonathan M.  Clarkson           |
| Michael A. Creel         |       | Michael A.  Creel*                                  |       | Robert W. Shower                |
| Robert W. Shower         |       | David F. Work                                       |       | David F. Work*                  |

 

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*Committee Chairman

 

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Mr. Sfondrini doesnot currently serve on any Board committees.

 

***Audit Committee.***** The Audit Committee has four members and metfour times in 2008.  Each of Messrs. Andrews,Clarkson, Creel and Shower has been determined to be independent within themeaning of Marketplace Rules 4200(a)(15) and 4350(d)(2)(A) of theNasdaq Stock Market.  In addition, theBoard has determined that at least three members of the Audit Committee, Messrs.Clarkson, Creel and Shower, are “audit committee financial experts.”  Each of them has experience as a principalfinancial officer, as described in their biographies earlier in thisreport.  Mr. Shower has also servedon the audit committees of other public companies and has experience as apublic accountant.

** **

TheAudit Committee has direct responsibility for the appointment, retention,compensation and oversight of the independent registered public accounting firmfor the purpose of preparing the Company’s annual audit report or performingother audit, review or attest services for the Company. The Audit Committee hassole authority to approve all engagement fees and contractual terms of theindependent registered public accounting firm and to establish policies andprocedures for pre-approval of audit and non-audit services. The AuditCommittee conducts a review of the annual audit with management and theindependent registered public accounting firm prior to filing or distribution;reviews filings with the SEC and other published documents containing theCompany’s financial statements; and reviews with the Company’s legal counselany legal or regulatory matters that may have a material impact on the Company’sfinancial statements, related corporate compliance policies, and programs andreports received from regulators. The Audit Committee also reviews on an annualbasis, or more frequently as such Audit Committee may from time to time deemappropriate, the policies and practices of the Company dealing with variousmatters relating to the financial condition and auditing procedures of theCompany, including financial information to be provided to stockholders andothers, the Company’s systems of internal controls established by managementand oversight of the annual audit and review of the annual and quarterlyfinancial statements, as well as any duties that may be assigned by the Boardof Directors from time to time. The Audit Committee also reviews and approvesall related party transactions to the extent required by Nasdaq rules.  The Audit Committee operates under a writtencharter that was last amended by the Board of Directors in December 2003(as amended, the “Audit Committee Charter”), which is available on the Company’swebsite at http://www.edgepet.com, by first clicking on “About Us” and then “CorporateGovernance.”  The charter is alsoavailable in print to any stockholder who requests it.

 

*CompensationCommittee.***** The Compensation Committee has four membersand met two times in 2008.  TheCompensation Committee has regularly scheduled meetings throughout the year,but also meets telephonically and within scheduled Board meetings as necessaryto perform its duties and responsibilities. The Compensation Committee generally meets in executive session atregularly scheduled meetings.  TheCompensation Committee is comprised solely of non-employee Directors, all ofwhom the Board has determined are independent within the meaning of MarketplaceRule 4200(a)(15) of the Nasdaq Stock Market.  The Board of Directors adopted a charter forthe Compensation Committee effective January 1, 2004 (the “CompensationCommittee Charter”), which is available on the Company’s website at http://www.edgepet.com,by first clicking on “About Us” and then “Corporate Governance.”  The charter is also available in print to anystockholder who requests it.  The dutiesand functions performed by the Compensation Committee are:

 

·                  to review and recommend to the Boardof Directors for ratification or determine the annual salary, bonus, equityawards and other benefits, direct and indirect, of the executive officers;

·                  to review new executive compensationprograms and review on a periodic basis the operation of the Company’sexecutive compensation programs to determine whether they are properlycoordinated;

·                  to establish and periodically reviewpolicies for the administration of executive compensation programs, and takesteps, consistent with the contractual obligations of the Company, to modifyany executive compensation programs that yield payments and benefits that arenot reasonably related to executive performance;

·                  to establish and periodically reviewpolicies in the area of management perquisites; and

·                  to exercise all of the powers of theBoard of Directors with respect to any other matters involving the compensationof employees and the employee benefits of the Company as may be delegated tothe Compensation Committee from time to time.

 

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Theagenda for meetings of the Compensation Committee is prepared by Mr. Elias,the Company’s Chief Executive Officer, and Compensation Committee meetings areregularly attended by him.  Depending onthe agenda for the particular meeting, these materials may include:

 

·                  Company organizational charts,department job titles and grade levels;

·                  recommended salary rate ranges foreach job grade level;

·                  recommended performance and promotionbudget;

·                  recommended targeted bonusopportunities for each employee, including the executive officers other thanthe Chief Executive Officer;

·                  summary of severance obligations inevent of a change in control;

·                  summary of stock grants and optionsfor directors and employees;

·                  financial reports on year-to-dateperformance versus budget and compared to prior year performance; and

·                  performance reviews and other reportson levels of achievement of individual and corporate performance objectives.

 

TheCompensation Committee’s Chairman reports the Committee’s recommendations onexecutive compensation to the Board.  TheCompensation Committee may delegate authority to fulfill certain administrativeduties regarding the compensation programs and has delegated that authority tothe Company’s Human Resources Department and Mr. Elias.  Mr. Elias has also been delegatedauthority to grant certain performance and hiring equity grants under the EdgePetroleum Corporation Incentive Plan, as amended and restated (“Incentive Plan”)to, and adjust the salaries of, non-executive officers and other employees.  In addition, the Compensation Committee hasauthority under its charter to engage the services of outside advisors, expertsand others to assist the Committee.  Indetermining competitive compensation levels, the Company analyzes data thatincludes information regarding compensation levels and programs in the oil andnatural gas exploration and production industry provided by the Mercer EnergySurvey (described below in “Executive Compensation—Compensation Discussion andAnalysis—Role of Executive Officers in Compensation Decisions”).

 

Managementplays a significant role in the compensation-setting process by:

 

·                  evaluating employee performance;

·                  recommending Company performancetargets and objectives to the Committee; and

·                  recommending salary, bonus andrestricted stock grant levels to the Committee.

 

*CorporateGovernance/Nominating Committee.***** In 2008, the Corporate Governance/NominatingCommittee had four members and met one time. The Corporate Governance/Nominating Committee is currently comprised offour non-employee Directors, all of whom the Board has determined areindependent within the meaning of Marketplace Rule 4200(a)(15) of theNasdaq Stock Market.  In December 2003,the Board established a charter for the Corporate Governance/Nominating Committee(the “Corporate Governance/Nominating Committee Charter”) setting forth thepurpose, goals and responsibilities of the Corporate Governance/NominatingCommittee, which is available on the Company’s website at http://www.edgepet.comby first clicking on “About Us” and then “Corporate Governance.”  The charter is also available in print to anystockholder who requests it.  Thefunctions performed by the Corporate Governance/Nominating Committee are to:

 

·                  make non-binding recommendations withrespect to the nomination of directors to serve on the Board of Directors ofthe Company for the Board’s final determination and approval;

·                  review the Board’s corporategovernance guidelines annually;

·                  undertake CEO succession planning;

·                  make recommendations on directorcompensation to the Board; and

·                  perform any other duties that may beassigned by the Board from time to time.

 

In addition to our standing Committees of our Board,on April 21, 2008, our Board established a special committee of our Boardof Directors (the “Independent Committee”) to represent the interests of theholders of our 

 

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preferredstock in connection with possible strategic alternatives. Our Board ofDirectors appointed Messrs. Clarkson and Creel as members of theIndependent Committee, with Mr. Creel serving as chairman.  On December 4, 2008, our Board ofDirectors established a special committee of our Board (the “StrategicAlternatives Committee”) to formulate a strategic plan to reposition theCompany in the marketplace given the current financial challenges faced by theCompany and the industry and marketplace as a whole. Our Board of Directorsappointed Messrs. Andress, Clarkson, Creel and Work as members of theStrategic Alternatives Committee, with Mr. Work serving as chairman.

 

**ITEM 11.  EXECUTIVE COMPENSATION**

 

**Compensation Discussion and Analysis**

 

**Overviewof Compensation Program**

 

TheCompensation Committee, composed of Messrs. Andress, Clarkson, Shower andWork (Chairman), is responsible for reviewing and implementing the Company’sexecutive compensation program.  The roleof the Compensation Committee is to oversee our compensation and benefit plansand policies, administer the Incentive Plan (including reviewing and approvingequity grants to executive officers) and review and approve annually allcompensation decisions relating to the Chairman and CEO, the Chief FinancialOfficer and the other executive officer named in the Summary Compensation Table(the “executive officers”).  TheCompensation Committee submits its decisions regarding compensation for theexecutive officers to the Non-Employee Directors of the Board for ratification.

 

While this CompensationDiscussion and Analysis describes the Company’s historical compensationpractices, as previously announced the Company is exploring strategicalternatives, which could include a potential merger or sale of theCompany.  As a result, our compensationpractices, both pending the outcome of this process and going forward, maydiffer from those of the past.

 

**Philosophyand Objectives of the Executive Compensation Policy**

 

TheCompensation Committee, in establishing the components and levels ofcompensation for its executive officers, seeks:

 

·                  to enable us to attract and retainhighly qualified executives in key positions and ensure that compensation paidto key employees remains competitive relative to the compensation paid tosimilarly situated executives of peer companies;

·                  to provide compensation to theexecutive officers that both they and the stockholders perceive as fair andequitable;

·                  to provide financial incentives inthe form of cash bonuses and equity compensation in order to align theinterests of executive officers more closely with those of the stockholders ofthe Company;

·                  to reward performance as measuredagainst established objectives and goals; and

·                  to motivate our executives toincrease stockholder value by improving corporate performance andprofitability.

 

Fundamentally,we have in large part a pay-for-performance, at-risk compensation philosophy,and our short and long-term incentive compensation programs provide enoughflexibility for the Compensation Committee to appropriately reward ourexecutive officers when it believes the Company’s overall performance, as wellas the executives’ performances, justify doing so.  When our operating and financial performancesexceed expectations, the potential for significant rewards exists.  The Compensation Committee believes that compensationshould also be structured to ensure that a significant portion will be atrisk—that is, it will generally be earned or increased only when the Companyoverall or the executive officers are successful in ways that are aligned withand support stockholder interests.  Webelieve that this overall approach to executive compensation should beperceived as fair and equitable to both the executive officer and thestockholders.

 

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Historically,a significant portion of total potential compensation to our executive officershas been in the form of incentive compensation that is at-risk, comprised ofperformance-based cash bonus opportunities and grants of restricted stock.  For the fiscal year ended 2008, we paid noat-risk compensation;  there were nogrants of restricted stock or other long-term equity based compensation made,and no performance-based bonuses were awarded.

 
| **Executive Officer** | ** ** | **Percentage of Total Compensation  Received from 2008 Base Salary  and Other Benefits(1)(3)** | ** ** | **Percentage of Total   Compensation received from  At-Risk 2008   Compensation(2)(3)** | ** ** |
|-----------------------|------------|------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|
|                  |       |                                                                                           |       |                                                                                    |       |
| John W. Elias         |       | 100%                                                                                           |       | 0%                                                                                      |       |
| John O. Tugwell       |       | 100%                                                                                           |       | 0%                                                                                      |       |
| C.W. MacLeod          |       | 100%(4)                                                                                        |       | 0%                                                                                      |       |
| Michael G. Long(5)    |       | 100%                                                                                           |       | 0%                                                                                      |       |

 

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(1)          This percentage is based upon amounts received by the executive officers from base salary and the amounts setforth  under “All Other Compensation” inthe Summary Compensation Table appearing later in this report.

(2)          No restricted stock grants were made in 2008 and no amounts are includedin respect of the 2008 performance-based annual bonus plan, as no bonuses werepaid.  There have been no restrictedstock grants made thus far in 2009 to executive officers.

(3)          The percentages in this table are based on the market value of stockgrants on the grant date, unlike the Summary Compensation Table where value ofstock grants are based upon SFAS 123R expense; therefore, the percentages varyfrom those that would be obtained by using the values shown in the SummaryCompensation Table.

(4)          Mr. MacLeod participated in the Company’s Retention Bonus Planprior to becoming an executive officer and received $97,600.  This amount is reflected under the Bonuscolumn in the Summary Compensation Table.

(5)          Mr. Long resigned as Executive Vice President and Chief Financialand Accounting Officer effective May 30, 2008.

 

Inestablishing stock and bonus award levels, we generally do not consider theequity ownership levels of the executive officers or prior awards that arefully vested.  It is our belief thatcompetitors who might try to hire away these employees would not give creditfor equity ownership in the Company. Accordingly, to remain competitive we believe that we cannot afford togive credit to that factor either.

 

Thereis no pre-established policy or formula that controls our compensationdecisions including the allocation between cash and non-cash or short-term andlong-term incentive compensation. Rather, the Compensation Committee seeks to create what they believe isthe most appropriate allocation among the compensation components describedbelow in “—Executive Compensation Components.” When setting the executive officers’ compensation, the CompensationCommittee reviews information provided by the 2008 Mercer Total CompensationSurvey for the Energy Sector (the “Mercer Survey”) or other benchmark dataderived from information reported in publicly-available proxy statements orother sources.  The Mercer Survey isproduced by an independent consultant that surveys and compiles annual energysector compensation information, including salaries, bonuses and long-termequity-based awards, and, for its 2008 survey, contains information gathered fromover 262 companies in the energy sector.  The peer companies utilized in the Mercer Survey are not predeterminedby us and are broken down into categories according to industry segment,geographic area and annual revenues and sales. The peer companies’ annual revenue and sales range from less than $100million to $1.2 billion or more.  Wegenerally compare ourselves to the data applicable to companies in the $100million to $700 million range in annual revenues and sales.  We feel that in attracting and retainingwell-qualified and talented employees, we are competing against companies bothinside and outside the exploration and production segment of the oil and gasindustry, so we do not restrict our review to only the exploration andproduction category of energy companies. The independent compensation consultant from whom the survey is obtaineddoes not receive compensation from the Company other than a fee of less than$3,000 to provide the annual compensation survey information, and theconsultant does not attend the Compensation Committee meetings.  The Company, at the request of theCompensation Committee, purchases the Mercer Survey to assist the CompensationCommittee in its review of salaries, bonuses and equity-based awards.  The Compensation Committee does not retain aseparate outside advisor or purchase any other compensation survey or reportthat is specifically for executive compensation, although it does, on occasion,consider other benchmark data derived from other public and private sources.  While the Compensation Committee takes intoconsideration the Mercer Survey and other benchmark data, that information isjust one factor considered 

 

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by the CompensationCommittee, and the Compensation Committee does not adhere to any rigidguidelines regarding the use of benchmarks.

 

Inaddition to reviewing market analyses of pay levels and considering individualperformance related to each executive officer, the Compensation Committeeconsiders the total compensation of each executive officer relative to eachother executive officer and relative to other members of the management team.  All employees, including the executiveofficers, are assigned to pay grades, determined by comparing position-specificduties and responsibilities. Each pay grade has a salary range withcorresponding annual and long-term incentive award opportunities.  The pay grades range from 6 to 22.  Executive officers fall in grades 18 andabove, except Mr. MacLeod, who is a grade 17.  Although Mr. Elias’ position falls ingrade 22, the Compensation Committee, with which Mr. Elias concurred, haddetermined that for compensation purposes, he will be treated as if he were agrade 21 pay level.  Compensation paid toan employee generally must be within the parameters for his or her paygrade.  We feel this approach insuresmore consistent compensation opportunities for members of management withsimilar duties and responsibilities.

 

In thecase of Mr. Elias, his compensation is also determined in part by theterms of his employment agreement, which is discussed in more detail belowunder “—Other Benefits-*Employment Agreements*.”  His agreement provides for a minimum basesalary of $350,000, that his base salary may be increased, but not decreased,and minimal annual bonus plan opportunities of at least 50% of base salary fortarget performance and at least 100% of base salary at the maximum performancelevel.

 

**Role ofExecutive Officers in Compensation Decisions**

 

Equityawards, as well as bonuses and changes in salaries for all employees, includingthe executive officers, are individually determined and administered by theCompensation Committee and ratified by the non-employee Directors.  In the case of the executive officers otherthan the Chief Executive Officer, his recommendations are taken intoaccount.  The Chief Executive Officerassists the Compensation Committee by:

 

·                  preparing agendas for the meetings ofthe Compensation Committee;

·                  annually reviewing each of the otherexecutive officer’s performance with the Compensation Committee, as well asother key employees;

·                  recommending salary rate ranges andbonus target opportunities for the other executive officers and employees;

·                  recommending salary, bonus andlong-term incentive (stock)  awards forother executive officers and employees; and

·                  attending Compensation Committeemeetings, except during executive session.

 

TheChief Executive Officer’s participation is meant to provide the CompensationCommittee with input regarding the Company’s compensation philosophy, processand decisions, but all executive compensation decisions are made by theCompensation Committee and submitted to the non-employee Directors forratification.  In addition to providingfactual information as described above, Mr. Elias articulates management’sviews on current compensation programs and processes, recommends relevantperformance measures to be used for future awards and otherwise suppliesinformation to assist the Compensation Committee.  The Compensation Committee meets outside thepresence of all executive officers when analyzing the Chief Executive Officer’sperformance and considering his compensation. The Human Resources Department of the Company also supports theCompensation Committee in its work in determining competitive compensationlevels, including for executives, analyzing data regarding compensation levelsand programs specific to peer-group companies in the energy business asprovided by the Mercer Survey.

 

**ExecutiveCompensation Components**

 

Theprincipal components of compensation for the executive officers, as well asother employees, are:

 

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·                  Base Salary

·                  Performance-Based Cash Bonus

·                  Long-Term Equity-Based Compensation

·                  401(k) Employee Savings Plan

·                  Health and Welfare Benefits, such asmedical, dental, vision care, disability insurance, and life insurance

·                  Severance Benefits under Change ofControl Agreements

 

Each of these componentsis discussed in greater detail below, along with a description of ourphilosophy on achieving an appropriate balance between the same.  The Company paid no performance-based cashbonuses or long-term equity based compensation to executive officers for 2008performance.

 

*BaseSalary. *Base salariesof the executive officers (including that set forth in Mr. Elias’employment agreement as described below under “—Other Benefits—*Employment Agreements*”) are determined based on theCompensation Committee’s review of a number of factors, including comparableindustry data contained in the Mercer Survey and other sources and individualfactors such as an executive’s specific responsibilities, experience,individual performance and growth potential. In the case of the executive officers other than the Chief ExecutiveOfficer, the Compensation Committee also considers his recommendations.  Based on these factors, the CompensationCommittee establishes base salary rate ranges for each position that fallwithin the salary ranges established for individual pay grades, as discussedabove in “—Philosophy and Objectives of the Executive Compensation Policy.” TheCompensation Committee’s salary recommendations are subject to ratification bythe full Board in the case of executive officers other than the Chief ExecutiveOfficer and by the non-employee directors in the case of the Chief ExecutiveOfficer.  The base salary ranges were notchanged for any of the executive officer positions in 2006.  At their January 2007 meeting, afterreviewing the Mercer Survey and other studies of energy company salaries, theCompensation Committee recommended a 5% increase to the salary rate ranges forall pay grades, including those of executive officers.  The salaries are generally reviewed on anannual basis, as well as at the time of a promotion or other change inresponsibilities. Increases in salary are generally based on an evaluation ofthe individual’s performance and level of pay compared to the peer-groupcompanies, and can include merit increases or cost-of-living increases, or acombination of both.  As discussed belowin “—Other Benefits—*Employment Agreements*,”Mr. Elias’ employment agreement requires the Compensation Committee to annuallyreview his base salary and make a recommendation to the Board of Directorsregarding possible increases.  Under theterms of Mr. Elias’ employment agreement, the Board of Directors may, inits sole discretion, increase, but not decrease, his base salary.  In general, executive officers and otheremployees of the Company are reviewed for potential salary increases on orabout April 1 of each year.

 

Attheir March 2007 meeting, the Compensation Committee approved base salaryincreases as follows:  Mr. Elias’salary was increased from $350,000, the minimum salary provided for under hisemployment agreement, to $400,000, effective April 1, 2007; Mr. Tugwell’sbase salary was increased from $235,000 to $246,000; and Mr. Long’s basesalary was increased from $227,000 to $238,000, also effective April 1,2007.  The Compensation Committee basedits approval of these increases in base salaries upon general competitivecompensation levels, based on the Mercer Survey, and industry conditions.  The 2007 increases reflect a 4.7% increase inMr. Tugwell’s salary, a 4.8% increase in Mr. Long’s salary and a14.3% increase in Mr. Elias’ salary. In 2006, base salaries for Messrs. Tugwell and Long were increasedin April and October on the basis of similar factors as well as 2005performance.  The combined 2006 increasesreflected at 14.6% increase in Mr. Tugwell’s salary and a 13.5% increasein Mr. Long’s salary. In 2006, Mr. Elias declined an increase in basesalary recommended by the Compensation Committee.  After a review of all 2007 operating andfinancial results and performance factors, as compared with the goals andobjectives of the executive officers, the Compensation Committee at their March 2008meeting decided not to recommend an increase in the base salaries of theexecutive officers.  The non-employeeBoard ratified that decision at their March 2008 meeting.   After a review of all 2008 operating andfinancial results and performance factors, the Compensation Committee at their January 2009meeting decided not to recommend an increase in the base salaries of theexecutive officers; however, effective January 26, 2009, Mr. Tugwell’sbase salary was increased from $246,000 to $250,000, and the non-employee Boardratified that decision.  This slightincrease was to equalize his base salary with that of Gary L. Pittman, whojoined the Company as its new Executive Vice President and Chief FinancialOfficer on January 26, 2009.

 

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* *

*Performance-BasedCash Bonus*.   TheCompany also offers each of its executive officers an opportunity to earnadditional cash compensation in the form of annual cash bonuses followingattainment of specified Company performance objectives established by theCompensation Committee and certain individual performance objectivesestablished at the beginning of the year. The Compensation Committee believes that making a significant portion ofexecutive officer compensation subject to the Company attaining specifiedperformance objectives and strategic goals and the individual meeting certainindividual objectives motivates the executive officers to increase theirrespective individual efforts on behalf of the Company. The CompensationCommittee believes that it is appropriate that the Company’s executive officers’compensation be more heavily weighted as to whether the Company attains itsspecified performance objectives and strategic goals and less dependent on theexecutive’s attainment of individual goals. For pay grades lower than 15, which does not include executive officers,the Company’s performance is weighted less heavily, and the individual’sperformance is weighted more heavily. The objectives and goals are specifically set to be challenging, yetachievable, with strong performance from the executive officers and theemployees of the Company as a whole.

 

Underthe Company’s bonus program, the Compensation Committee uses discretion indetermining each executive officer’s annual bonus, after reviewing the Companyperformance objectives, individual performance objectives, overall financialand operational performance of the Company, compensation survey data andrecommendations of the Chief Executive Officer with respect to the otherexecutive officers.  These determinationsare submitted to the non-employee Directors for ratification. The amount ofbonus that may be earned is based on a targeted percentage of the individual’sannual salary, subject to a maximum-targeted percentage, and is subject toadjustment by the Compensation Committee. Total bonus opportunities for 2006,2007 and 2008 performance for Mr. Tugwell ranged from 0% to 120% of basesalary, with a target payout of 60%; for Mr. Long from 0% to 110% of basesalary, with a target payout of 55%(1); for Mr. MacLeod from 0% to 100% ofbase salary, with a target payout of 50%; and for Mr. Elias from 0% to130% of base salary, with a target payout of 65%.  The bonuses of the executive officers for 2006,2007 and 2008 performance were based 80% on Company performance and 20% onachievement of the individual’s performance objectives.  Because of the Company’s decision in December 2007to explore strategic alternatives, including a possible sale or merger of theCompany, the Company announced a retention bonus plan for 2008 as discussedbelow under “Other Benefits” and, as a result, did not establish aperformance-based bonus award program for 2008.

 

CompanyPerformance.  For 2007,the Company performance component of the bonus was based on:

 

·                  achievement of performance objectivesas established by the Compensation Committee,

·                  subject to adjustment at thediscretion of the Compensation Committee based achievement of overall Companyfinancial goals.

 

TheCompany performance objectives for 2007 consisted of:

 

·                  specified annual increases inreserves (weighted 40%);

·                  specified annual increases inproduction (weighted 30%);

·                  competitive finding and developmentcosts (“F&D”) (weighted 15%);

·                  lease operating expense (“LOE”)(weighted 7.5%); and

·                  control of general and administrativeexpenses (“G&A”) (weighted 7.5%).

 

TheCompensation Committee establishes the Company performance objectives annuallybased on those projected in the Company’s annual budget and plan, as revised,for the applicable period, approved by management and reviewed and ratified bythe Board of Directors.  The targetlevels for performance objectives may differ from the budget and plan in agiven year, but are intended to reflect planned performance over the course ofa full annual business cycle. Accordingly, the target levels for the performance objectives areestablished with the expectation of paying out bonuses approximately at target,with a low probability of either failing to reach the minimum threshold levelor reaching the maximum level. Both the LOE and G&A measures are calculatedon a unit-of-production basis.  

 

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(1) Mr. Longresigned as Executive Vice President and Chief Financial and Accounting Officereffective May 30, 2008.

 

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G&Aexcludes capitalized costs and restricted stock grants.  In addition, the F&D objective iscalculated as a three-year moving average obtained by dividing capitalexpenditures by new reserves net of revisions without including acquisitions.This is the only category of the performance objectives where acquisitions areexcluded.  The objectives for reserve growth,production growth and competitive F&D costs are the major components of theCompany’s bonus program.

 

The bonus components described above are basedgenerally upon specific performance criteria for each component.  Payouts can range from 0% to 200% of targetbonuses.  The minimum thresholds ofperformance to begin earning a payout for each component are established by theCompensation Committee.  Payout isprorated based on actual performance for each objective, subject to a maximumpayout level of 200%.

 

For2007, the Company did not achieve its minimum thresholds to earn a payout inany area of the Company’s performance objectives.  For 2006, the Company did not achieve itsminimum thresholds in the areas of reserve growth, F&D costs and G&Aexpense.  Production growth was slightlyabove the minimum threshold required to earn a payout but well belowexpectations, and LOE expense was significantly better than the minimumthreshold required to earn a payout. However, no bonuses were paid with regard to the Company performancecomponent of the bonus program for 2006 because the Company did not achievecertain of its overall financial goals. In addition, the Compensation Committee wanted to wait and determinewhat the financial and operating results were from the January 2007acquisition of properties.  Based on theCompany’s decision in December 2007 to explore strategic alternatives, theCompany did not establish a performance-based bonus award program for 2008 and,consequently, in 2008, no award thresholds or targets were established and noperformance-based bonuses were paid out. The Company did, however, establish a retention bonus plan for 2008 asdiscussed below under “—*Other Benefits—RetentionBonus Plan.*”

 

OverallFinancial Goals.  Withrespect to the bonus for the executive officers, the Compensation Committeeconsiders, but does not rely solely on, the above predetermined formulas whenevaluating achievement of the Company’s performance objectives. In thisrespect, the Compensation Committee also considers whether the Company was successfulin meeting its overall financial goals. This is a subjective assessment, withno particular weighting given, but this objective is considered by theCompensation Committee in determining executive officer bonuses.  The financial goals for the Company for 2006and 2007 were:

 

·                  to ensure that funds are available toexecute the Company’s overall recommended capital expenditure program asprojected in its annual approved budget and plan while maintaining a prudentfinancial structure with a debt-to-total-capital ratio of less than 30%(however, it is recognized that from time to time this ratio will be exceededdue to acquisitions);

·                  to fund the approved capitalexpenditure program, excluding acquisitions, from internal cash flow ratherthan taking on additional debt; and

·                  building pre-tax cash flow fromexploration and production activities to a level sufficient to provide thenecessary funds to conduct a program that will provide consistent physical(reserve and production) and fiscal (cash flow and net income) growth for the Company.

 

The CompensationCommittee, in its judgment, recognized that the Company was able to maintain arelatively conservative balance sheet in 2007 when measured against theseoverall financial goals.  Nevertheless,the Compensation Committee found that:

 

·                  the Company exceeded itsdebt-to-total-capital ratio of 30%; and

·                  the Company borrowed approximately$18.4 million to fund its capital spending program (excluding acquisitions)because cash flow was less than expected for the full year.

 

Withrespect to 2007, the Compensation Committee noted that the Company exceeded itsdebt-to-total-capital ratio during the fiscal year and had to borrow money tofund its capital spending program, and therefore recommended, with Mr. Elias’concurrence, that no bonus payout of the Company performance portion of thebonus program be made to any employees, including the executive officers, for2007.  The non-employee directorsratified 

 

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this decision at their March 2008meeting.  With respect to 2006, theCompensation Committee noted the Company’s increase in overall debt levelduring 2006, and recommended, with Mr. Elias’ concurrence, that no bonuspayout of the Company performance portion be paid.  Because of the Company’s decision to explorestrategic alternatives, including a possible sale or merger of the Company, theCompany announced a retention bonus plan for 2008 as discussed below under “OtherBenefits” and, as a result, did not establish a performance-based award programfor 2008.

 

IndividualPerformance.  Inevaluating an executive officer’s performance towards his or her individualobjectives (weighted at 20% of total bonus target), the Compensation Committeeuses its discretion and assesses performance by the executive officer againstmutually defined expectations.  Theprocess includes individual appraisal components that are both objective andsubjective.  This includes an assessmentof how the executive performed relative to defined roles and accountabilities,quantifiable objectives such as meeting the Company’s specific fiscal orphysical targets, overall performance of the Company, and a more subjectiveassessment of a number of performance attributes such as teamwork,communication, participation leadership, decision making,creativity/innovation, planning and organization and performancemanagement.  With regard to individualobjectives, there are no specific formulas. The Compensation Committee makes an assessment, in its judgment, of thedegree to which individual objectives have been satisfied.  Individual performance of the executiveofficers, except the Chief Executive Officer, is first assessed by the ChiefExecutive Officer, who makes recommendations to the Compensation Committee forits consideration.

 

Historically,in the case of Messrs. Tugwell and MacLeod, as part of their individualobjectives, they are expected to ensure that attractive investment opportunitiesare identified on an ongoing basis and ultimately added to the company’sportfolio in order to provide opportunities for future growth.  These opportunities can take on many formssuch as seismic options, new acreage leases, farm-ins and/or farm-outs, jointexploration ventures, and acquisitions of producing properties that have upsidepotential.  In doing so, Messrs. Tugwelland MacLeod are expected to apply the most appropriate technology in aneffective manner while ensuring that constant attention is given to managingcosts effectively.  The Company’s totalexpenses (i.e. LOE, production and ad valorem taxes, G&A and net interestand dividends) on a dollar per unit-of-production basis are expected to be inthe lowest quartile of our peer group. They are expected to make intelligent and timely hedging decisions tohelp mitigate the adverse impact commodity price volatility can have on cashflow and the Company’s ability to continue expanding its program.  Messrs. Tugwell and MacLeod also have essentiallythe same roles and accountabilities as Mr. Elias, as discussed below,except they are applicable to their specified functional areas ofresponsibilities.

 

Aftera review of all 2008 operating and financial results and performance factors,as compared with the goals and objectives of Messrs. Tugwell and MacLeod,the Compensation Committee determined at its January 2009 meeting thatthese individual objectives were not reached with respect to 2008.   For the reasons discussed above, at their January 2009meeting, the Compensation Committee recommended to the Board of Directors thatno payout of the individual portion (20%) of the bonus program be made for Messrs. Tugwelland MacLeod for 2008.

 

Withrespect to the individual performance of Messrs. Long and Tugwell in 2007,the Compensation Committee recommended to the Board of Directors that no payoutof the individual portion (20%) of the bonus program be made for Messrs. Tugwelland Long for 2007.  With respect to theindividual performance of Messrs. Long and Tugwell in 2006, theCompensation Committee approved the full amount of potential bonus paymentsunder the individual performance component (20%) of their bonus program basedon achievement of the objectives discussed above and also taking into accountthe effort involved in connection with acquisitions.  Due to the Company’s decision to explorestrategic alternatives, including a possible sale or merger of the Company, theCompensation Committee did not establish individual performance objectives for Messrs. Long,Tugwell and MacLeod for 2008, and the non-employee Directors of the Boardratified this decision at their March 2008 meeting.

 

Withrespect to Mr. Elias, the 20% of his bonus based on individual performancehas historically been based on achievement of individual roles andaccountabilities, achievement of short-term objectives and progress towardachievement of long-term goals.  For2007, the roles and accountabilities for Mr. Elias included:

 

·                  providing overall leadership for allaspects of the Company;

 

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·                  overseeing, developing andimplementing the Company’s budget, plan, objectives and goals;

·                  monitoring and directing progress inachieving the Company’s budget, plan, objectives and goals;

·                  ensuring legitimate interests of theBoard, shareholders, management and others are considered;

·                  reviewing and approving operating,financial and personnel matters; and

·                  building and maintaining an industrynetwork in order to help achieve the Company’s goals and objectives.

 

Theshort-term individual objectives for Mr. Elias for 2007 included:

 

·                  achieving a consistent pattern ofreserve growth at a competitive finding and development cost;

·                  achieving a consistent pattern ofproduction increases in a cost-effective manner;

·                  maintaining a prudent financialstructure that provides the flexibility to effectively execute the Company’sbusiness plan (a debt-to-total capital of less than 30% and internal cash flowsufficient to fund the Company’s desired program);

·                  expanding and/or increasing theCompany’s reserve base and production via an acquisition or merger that is notdetrimental to the Company’s financial structure; and

·                  expanding and/or increasing theCompany’s reserve base and production in the immediate and longer-term throughorganic growth in new grass root exploration and/or exploitation plays.

 

Inaddition, beginning in 2006, the Committee and Mr. Elias focused oncertain longer term (three-year) goals for the Company. Specifically, theCompensation Committee and Mr. Elias agreed on the following long-termgoals for the Company:

 

·                  growing year-endreserves to the range of 200 to 250 Bcfe by year-end 2008;

·                  obtaining areserve-to-production (R/P) ratio of 10 years by year-end 2008; and

·                  growing annualproduction to the range of 20 to 25 Bcfe by year-end 2008 (which represents asustained producing rate of 54.8 to 68.5 MMcfe per day).

 

These three-year goals and other goals and targetsdescribed herein are aspirational in nature and are forward-lookingstatements.  As was noted in last year’sproxy and 10-K/A, we cannot assure you that they will be achieved and actualoutcomes may vary materially.  Thesegoals involve risks and uncertainties, including, but not limited to, those setforth under *ITEM 1A. “RISK FACTORS”* and otherfactors detailed in our Annual Report on Form 10-K and our other filingswith the SEC.  The Committee and Mr. Eliasagreed that the above longer term goals are to be achieved on a cost-effectivebasis and not at the expense of the long-term viability of the Company.

 

Due tothe Company’s ongoing strategic alternatives process, including the possiblesale or merger of the Company, the Compensation Committee recommended, and Mr. Eliasagreed, that no individual performance objectives for Mr. Elias would beestablished for 2008, and no bonus would be made to Mr. Elias for theindividual performance component of the bonus program.  The non-employee Directors of the Boardratified this decision at their March 2008 meeting.  No bonus was paid to Mr. Elias under theindividual performance component with regard to 2007 or 2006, including on thebasis of 2007 and 2006 operating and financial results, respectively.

 

*Long-TermEquity-Based Compensation*.  The Company has relied on grants of stock options and grants ofrestricted stock under its Incentive Plan and, in the past, in the case of Mr. Elias,outside of the Incentive Plan, to provide long-term incentive-basedcompensation.  There were no equitygrants made in 2008 and all equity grants made in 2006 and 2007 were pursuantto the Incentive Plan.

 

***In recent years, we have relied primarilyon restricted stock, as opposed to stock option, awards.  A restricted stock award is a grant of aright to receive shares that vest over time. As the stock award vests, the shares are owned outright.  Such awards are made at the discretion of theCompensation Committee and are ratified by the non-employee Directors. Relevantfactors in the determination of grants, which are not subject to any particularweighting, are:***

 

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*** ***

***·***                  the impact the executive’sperformance had on the Company and what impact the executive is expected tohave in the future;

***·***                  the desire to retain the executivein the employ of the Company;

***·***                  data regarding stock grants atcomparable companies, including the Mercer Survey;

***·***                  the relative grade level of theofficers;

***·***                  length of service with theCompany;

***·***                  the executive officers’ basesalary;

***·***                  in the case of other executiveofficers, recommendations of the Chief Executive Officer; and

***·***                  performance evaluation of eachexecutive officer with respect to the prior fiscal year.

*** ***

***Awards of restricted stock are designed to encourageexecutive officers to retain an ownership interest in the Company, to aligntheir interests with those of stockholders and to reward increases in theCompany’s share price over time.***

*** ***

***Historically, we awarded restricted stockthat vested and was issued in equal one-third increments on the first, secondand third anniversary of the date of grant. However, the Compensation Committee and the Board of Directors havedetermined that restricted stock grants, beginning with those made in October 2006,should vest over a longer period of time than previous grants.  We feel that a longer vesting schedule notonly more closely aligns the executives’ (and other employees’) interests withthose of the stockholders, it also encourages retention of highly qualified andtalented employees whose abilities help the Company achieve its long-termgoals.  Accordingly, since August 2006,the Company has shifted to awarding restricted stock that vests 20% on thesecond anniversary of the grant date and vests 40% on each of the third andfourth anniversaries of the grant date.***

*** ***

***At its March 2008 meeting, the Compensation Committeerecommended that, due to the Company’s failure to meet its long-term financialgoals and objectives for 2007, no restricted stock grants would be made toemployees, including executive officers, and the non-employee members of theBoard of Directors ratified this decision at their March 2008meeting.  In addition, at its January 2009meeting, the Compensation Committee recommended, after a review of all 2008operating and financial results and performance factors, that no restrictedstock grants would be made to employees, including executive officers, and thenon-employee members of the Board of Directors ratified this decision at their January 2009meeting.***

*** ***

***At their March 2007 meeting, the Compensation Committeeapproved restricted stock grants for Messrs. Elias, Tugwell and Long in theamounts of 20,000 shares, 10,000 shares and 10,000 shares, respectively.  The grant date for this award was April 1,2007.***

*** ***

***In March 2006, restricted stock grants were made toMessrs Elias, Tugwell and Long in the amounts of 12,000 shares, 5,400 sharesand 5,400 shares, respectively.  In August 2006supplemental, one-time restricted stock grants were made to each of Messrs. Tugwelland Long in the amount of 30,000 shares, in recognition of the officers’performance and the competitive compensation market and other industryconditions.***

*** ***

Grantsof stock options to executive officers may be made by the CompensationCommittee although none have been granted since 2003 except for a grant to Mr. Eliasin 2004 pursuant to the terms of his employment agreement.  Since inception of the Incentive Plan, optionsunder the Incentive Plan have been granted to 56 current and former employeesand Directors, at exercise prices ranging from $2.11 per share to $13.99 pershare.  For a discussion of the Company’sphilosophy on its shift away from granting stock options to employees,including the executive officers, in favor of awarding restricted stock grants,see “—Certain Policies of Executive Compensation Program—*CompanyShift Away from Issuing Stock Options in Favor of Restricted Stock Grants*”below.

 

***Other Benefits***

*** ***

TheCompany provides a competitive benefits package to all full-time employees,which includes health and welfare benefits, such as medical, dental, visioncare, disability insurance, life insurance benefits, a 401(k) 

 

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savings plan, educationalreimbursement, and severance benefits under change in control agreements.  The Company has no other executive perquisitebenefits (e.g. club memberships or company vehicles) for any executive officerwith an incremental cost to the Company in excess of $10,000, and does notprovide any deferred compensation programs or supplemental pensions to anyemployees, including the executive officers. The Company provides supplemental life insurance for Mr. Elias, inaccordance with his employment agreement. The cost to the Company of Mr. Elias’ supplemental life insuranceis reflected in the “Summary Compensation Table” below.

 

*401(k) SavingsPlan*.  The Company hasa tax-qualified 401(k) Employee Savings Plan (the “401(k) Plan”) forits employees generally, in which the executive officers also participate.Under the 401(k) Plan, eligible employees are permitted to defer receiptof their compensation up to the maximum amount allowed by law, with theemployee’s contribution not to exceed $15,500 for 2008 (subject to certainlimitations and exceptions imposed under the Internal Revenue Code of 1986, asamended (the “Code”)). The 401(k) Plan provides that a discretionary matchof employee deferrals may be made by the Company in cash or stock. Pursuant tothe 401(k) Plan, in 2008 the Company elected to match 100% of the first 8%of employee deferral, subject to limitations imposed by the Internal RevenueService.  The amounts held under the 401(k) Plan(except for any matching contributions made by the Company in Common Stock) areinvested among various investment funds maintained under the 401(k) Planin accordance with the directions of each participant. Except for customary “blackout”periods imposed from time to time by the Company on all employees includingexecutive officers, the 401(k) Plan does not restrict employees fromselling vested shares of the Company’s Common Stock held in the plan. Salarydeferral contributions by employees under the 401(k) Plan are 100% vested.Company contributions vest 50% at the completion of the first year ofemployment with the remaining 50% vesting at the completion of the second yearof employment. All Company contributions after the completion of the secondyear of employment are fully vested. Participants or their beneficiaries areentitled to payment of vested benefits upon termination of employment.  The Company contributions to the executiveofficers, except in the case of Mr. Elias, as he does not participate inthe 401(k) Plan, are shown below on the Summary Compensation Table.

 

*Change inControl Severance Agreements. *TheCompany has entered into a severance agreement with each employee of theCompany, including the executive officers. These agreements grant severance benefits in the event of a qualifiedtermination of employment within two years of a change of control.  The oil and gas industry is constantlyevolving and changing, including through acquisitions and mergers.  The Company has chosen to enter into changeof control agreements with all of its employees, including the executiveofficers, to promote stability and continuity of management and personnel. TheCompany feels that by protecting employees from any potential economic upheavalin their personal lives at the time of a change in control, employees will bebetter able to focus on the work at hand. The severance agreements executed by the executive officers are “doubletrigger” agreements, not “single trigger.” In other words, benefits are payable following a change of control onlyif the executive is terminated without cause or resigns for good reason.  The Company feels that linking severancebenefits to a change of control will eliminate, or at least reduce, anyreluctance of senior management to pursue potential change in controltransactions that may be in the best interests of the stockholders.  Information regarding applicable payments andother benefits under such agreements for the executive officers is providedunder the heading “—Potential Payments Upon Change in Control or Termination”below.   The severance agreements of allof the Company’s employees were amended and restated in April 2008 to makethem exempt from or conform to the requirements of Section 409A of theInternal Revenue Code of 1986, as amended and the final and transitionalguidance promulgated thereunder (collectively, “Section 409A”).  The amendments change the timing of certainpayments under the severance agreements of the executive officers in accordancewith the requirements of 409A, but do not change the amount of such payments.  In the case of Mr. Elias’ severanceagreement, the amendment also clarifies that in the event severance benefitswould otherwise be payable under both the severance agreement and any otherplan or agreement, including the employment agreement described below, Mr. Eliashas agreed that he will receive only the benefits specified under his severanceagreement and the continuation of certain term life insurance as provided forunder his employment agreement.

 

Theseverance agreements of all of the Company’s employees, were amended in July 2008to provide for, in the case of all executive officers, (1) continuedmedical, dental and vision coverage for 18 months following termination atactive employee premium rates and (2) a cash lump sum payment in an amountestimated to be sufficient, taking into account estimated active employeepremium rates, to purchase equivalent medical, dental and 

 

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vision coverage in theperiod extending from the 19th through 36th months following termination.  In the case of all employees except Mr. Elias,this amendment also provided for a lump sum payment to help defray the employee’scost of obtaining post-termination life and accidental death and dismembermentinsurance.

 

*RetentionBonus Plan.  *In May 2008,following discussion and approval by the Board of Directors, a retention bonusplan was announced and put in place for all Company employees except executiveofficers.  The retention bonus planprovided for a payment of three (3) months salary for all full-timeemployees (excluding executive officers) who remained an active employee of theCompany through October 1, 2008.  Upon further discussion with the Board of Directors, a decision was madeto offer an additional three (3) months of salary for certain keyemployees of the Company (excluding executive officers). C.W. MacLeod was notan executive officer at the time the retention bonus plan was announced and wastherefore eligible to receive a retention amount of $97,600.  Theretention bonus payment to Mr. MacLeod was paid in October 2008.

 

In January 2009,the Company’s Board of Directors, on the recommendation of the CompensationCommittee, approved cash retention bonuses totaling $105,000 for Messrs. Tugwell($90,000) and MacLeod ($15,000). Approval of the cash retention bonuses was given as an incentive for thecontinued employment of executive officers through the Company’s strategic alternativeevaluation process in 2009.  These cashretention bonuses are payable on the earlier of (i) December 31, 2009or (ii) the consummation of a merger or sale of the Company.  A decision was made to award C.W. MacLeod anadditional $25,000 retention payment for assuming the role of acting CFO of theCompany following the resignation of Mr. Long effective May 30, 2008,and this payment was made in February 2009.

 

*EmploymentAgreements*.  Inaddition to the components of executive compensation described above, Mr. Eliasis a party to an employment agreement originally dated effective November 16,1998 with the Company, which agreement was approved by the Board as a whole andthe Compensation Committee.  In doing so,the Board and Compensation Committee considered a variety of factors, includinga review of comparable industry data, the compensation package of Mr. Elias’predecessor at the Company and negotiations between Mr. Elias and theCompensation Committee. The Company entered into an employment agreement with Mr. Eliasin order to induce and retain the employment of Mr. Elias and to stimulatehis active interest in the development and financial success of the Company andthe term of the agreement was designed to give the Company the ability to retainMr. Elias’ services until his retirement. The Employment Agreement had an initial term of three years from January 1,1999, and is extended automatically for successive one-year periods on eachanniversary of the effective date unless either Mr. Elias or the Companyprovides the other with advance notice of non-renewal.  If either the Company or Mr. Elias givesnotice of non-renewal, no automatic extension shall occur and Mr. Elias’employment will terminate on the third November 16th to occur following thatnotice; that is, his employment may continue for a period of up to three yearsfollowing the notice.  Most recently, theagreement was renewed on November 16, 2007, based on largely the sameconsiderations as when originally entered into.

 

Theemployment contract of Mr. Elias provided for an initial minimum salary of$350,000, and requires the Compensation Committee to annually review his basesalary and make a recommendation to the Board of Directors regarding possibleincreases. Such recommendations are made on or about April 1 of each yearafter careful review of the Company’s and Mr. Elias’ performance. Underthe terms of Mr. Elias’ employment agreement, the Board of Directors may,in its sole discretion, increase but not decrease his base salary.  As discussed above under “—ExecutiveCompensation Components-*Base Salary*,”the Committee recommended and the Board awarded an increase in base salary for Mr. Eliasof $50,000, effective April 1, 2007. Mr. Elias’ employment agreement also provides that he have annualbonus plan opportunities of at least 50% of base salary for target performanceand at least 100% of base salary at the maximum performance level.  His employment agreement also provided forawards of non-qualified stock options in the past, the final grant being 50,000shares on April 1, 2004. No further stock options will be granted underhis employment agreement.  Mr. Eliasis the only employee with which the Company has entered into an employmentagreement.  Mr. Elias’ employmentagreement also entitles him to certain benefits upon a termination ofemployment.  See “—Potential PaymentsUpon Change in Control or Termination” below for information about Mr. Elias’employment agreement and the potential payments and benefits to Mr. Eliasupon termination of his employment with the Company.  The employment agreement was amended andrestated in April 2008 in connection with the amendment and restatement ofMr. Elias’ severance agreement for purposes of Section 409A.

 

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*OtherPaid Time-Off Benefits*.  The Company provides vacationand other paid holidays to all employees, including the named officers, whichare comparable to those provided at other companies in a similar industry.

 

**CertainPolicies of Executive Compensation Program**

 

*Timing ofEquity-Based Compensation*.  Stock option grants andrestricted stock grants are effective as of the grant date, and options arepriced at “fair market value” on the date of the grant.  The Incentive Plan defines “fair market value”as the mean between the high and low price of the Company’s stock on the grantdate or, if the grant date is not a day when the stock market is open, the lastpreceding date for which trading data is reported by the market.  Equity grants are only made to executiveofficers during the normal annual compensation-setting cycle (on or about April 1of each year) except under circumstances discussed under the heading “—*Exceptions to Usual Procedures*” below and except in the caseof new hires that begin employment outside the time of the annualcompensation-setting cycle.

 

*CompanyShift Away from Granting Stock Options In Favor of Restricted Stock Grants*. In the last four years, the Compensation Committee has approved theaward of restricted stock instead of stock options because, in the view of theCompensation Committee:

 

·                  restricted stock is a better way toprovide significant equity compensation that can generate more predictablelong-term rewards than stock options; and

·                  restricted stock, as opposed to stockoptions, more closely aligns the interests of the executive officers and otheremployees with those of the stockholders in seeking consistent long-termperformance of the Company.

 

*Exceptionsto Usual Procedures*.  The Compensation Committee may from time totime approve (subject to ratification by the Board) the payment of special cashcompensation or the grant of special equity-based awards to one or more of theexecutive officers, as it did in August 2006, in addition to payments andgrants approved during the normal annual compensation-setting cycle.  The Compensation Committee might make such arecommendation if it believes it would be appropriate to reward one or moreexecutive officers in recognition of contributions to a particular project, orin response to competitive and other factors that were not addressed during thenormal annual compensation-setting cycle. The Compensation Committee mayalso  recommend adjustments to the annualperformance-based objectives to take into consideration extraordinary, unusualor other occurrences that may happen during a fiscal year that cause theCompensation Committee and the Board of Directors to conclude that the measureor measures as so established do not in fact achieve the Company’s overallintended goals.

 

***Overriding Royalty Interests***.Since the Company’s initial public offering, certain non-executive employees ofthe Company received grants of overriding royalty interests in oil and gasprospects of the Company where such interests had been earned pursuant toemployment agreements between such employees and the Company. Effective June 1,1999, all employment agreements which provided for overriding royalty interestswere terminated. Pursuant to a policy adopted as of that date, no employee ofthe Company is entitled to an overriding royalty interest on any prospect thatis defined and leased after July 1, 2000. Overrides which were earned inprospects prior to July 1, 2000 or assigned of record remain valid.Executive officers of the Company have not been entitled to receive overridingroyalty grants since the Company’s initial public offering. Prior to becomingan executive officer, Mr. Tugwell received overriding royalty interestsunder the Company’s prior practice and has, and will in the future, receivepayments pursuant to such interests.

*** ***

*SecurityOwnership Requirement for Executive Officers*.  The Companyhas not established any formal policies or guidelines addressing expectedlevels of stock ownership for the executive officers.  However, the Company does have a stockownership requirement for its non-employee Directors, as described in “DirectorCompensation—Stock Ownership Requirements for Directors” later in this report.

 

*Section 162(m) of theInternal Revenue Code. *Section 162(m) ofthe Internal Revenue Code of 1986, as amended, generally limits (to $1 millionper covered executive) the deductibility for federal income tax purposes of 

 

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annual compensation paid to company’s executiveofficers in a taxable year. Compensation above $1 million may be deducted if itis “performance-based compensation” within the meaning of the Code. Optiongrants that are made outside of stockholder-approved plans, such as most of theoptions grants made to Mr. Elias, are generally subject to thedeductibility limits of Section 162(m). In addition, restricted stock awards that vest solely on the basis ofthe passage of time are not considered performance-based compensation under Section 162(m),so compensation realized upon the vesting of restricted units awarded toexecutive officers to the extent the $1 million limitation is exceeded will notbe deductible by the Company.  In thefuture, while the tax impact of compensation arrangements is one factor theCompensation Committee will consider, that impact must be evaluated in light ofthe Company’s overall compensation philosophy and objectives.  Accordingly, the Compensation Committee willseek to qualify compensation for deductibility in instances where it believesthat to be in the best interests of the Company but retains discretion toauthorize the payment of nondeductible amounts.

 

**Compensation Committee Report**

** **

TheCompensation Committee has reviewed the Compensation Discussion and Analysisincluded above and discussed the same with management of the Company and, basedupon that review and discussion, recommends inclusion of the Company’sCompensation Discussion and Analysis in this Amendment No. 1 to theCompany’s Annual Report on Form 10-K for the year ended December 31,2008 and in its proxy statement.

 

The Compensation Committee:

 

Thurmon Andress

Jonathan M. Clarkson

Robert W. Shower

David F. Work,Chair

 

Pursuant to the SECRules, the foregoing Compensation Committee Report is not deemed “solicitingmaterial” and is not “filed” with the SEC.

 

**Compensation Committee Interlocks and InsiderParticipation**

 

The members of theCompensation Committee during the last completed fiscal year wereThurmon M. Andress, Jonathan M. Clarkson, Robert W. Shower and David F.Work.  There are no matters relating tointerlocks or insider participation that the Company is required to report.

 

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**SUMMARY COMPENSATION TABLE**

 

TheSummary Compensation Table set forth below contains information regarding thecombined salary, bonus and other compensation of each of the executive officerswith respect to 2006, 2007 and 2008.

** **
| **Name and Principal  Position**                                           | ** ** | **Year** | ** ** | **Salary** | ** ** | **Bonus(1)** | ** ** | **Restricted  Stock  Awards (2)** | ** ** | **Option  Awards (3)** | ** ** | **Non-Equity  Incentive Plan  Compensation(4)** | ** ** | **All  Other Compensation (5)** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------------|------------|----------|------------|------------|------------|--------------|------------|-----------------------------------|------------|------------------------|------------|-------------------------------------------------|------------|---------------------------------|------------|-----------|------------|
|                                                                       |       |     |       |       |       |         |       |                              |       |                   |       |                                            |       |                            |       |      |       |
| John W. Elias                                                              |       | 2008     |       | $          | 400,000    |         | —     |                              | $          | 184,806                |       | —                                          |       | -0-                             |       | $         | 4,040      |   | $ | 588,846 |   |
| Chairman of the Board,  President                                          |       | 2007     |       | $          | 387,500    |         | —     |                              | $          | 195,956                |       | —                                          |       | -0-                             |       | $         | 4,040      |   | $ | 587,496 |   |
| and Chief  Executive Officer                                               |       | 2006     |       | $          | 350,000    |         | —     |                              | $          | 156,795                |       | $                                               | 68,937     |                            | -0-        |      | $          | 4,040 |   | $ | 579,772 |   |
|                                                                       |       |     |       |       |       |         |       |                              |       |                   |       |                                            |       |                            |       |      |       |
| John O. Tugwell                                                            |       | 2008     |       | $          | 246,000    |         | —     |                              | $          | 151,466                |       | —                                          |       | -0-                             |       | $         | 15,500     |   | $ | 412,966 |   |
| Executive Vice  President and                                              |       | 2007     |       | $          | 243,250    |         | —     |                              | $          | 188,099                |       | —                                          |       | -0-                             |       | $         | 66,257     |   | $ | 497,606 |   |
| Chief Operating  Officer                                                   |       | 2006     |       | $          | 220,000    |         | —     |                              | $          | 100,342                |       | —                                          |       | $                               | 56,000     |      | $          | 15,000 |   | $ | 391,342 |   |
|                                                                       |       |     |       |       |       |         |       |                              |       |                   |       |                                            |       |                            |       |      |       |
| C.W. MacLeod(6)  Senior Vice President and Acting  Chief Financial Officer |       | 2008     |       | $          | 195,000    |         | $          | 97,600                            |       | $                      | 135,599    |                                            | —     |                            | -0-        |      | $          | 15,600 |   | $ | 443,799 |   |
|                                                                       |       |     |       |       |       |         |       |                              |       |                   |       |                                            |       |                            |       |      |       |
| Michael G.  Long(7)                                                        |       | 2008     |       | $          | 99,166     |         | —     |                              | $          | 33,267                 |       | —                                          |       | -0-                             |       | $         | 20,085     |   | $ | 152,518 |   |
| Executive Vice President                                                   |       | 2007     |       | $          | 235,250    |         | —     |                              | $          | 188,099                |       | —                                          |       | -0-                             |       | $         | 14,008     |   | $ | 437,357 |   |
| and Chief  Financial Officer                                               |       | 2006     |       | $          | 212,750    |         | —     |                              | $          | 100,342                |       | —                                          |       | $                               | 49,900     |      | $          | 14,260 |   | $ | 377,252 |   |
|                                                                            |            |          |            |            |            |              |            |                                   |            |                        |            |                                                 |            |                                 |            |           |            |  |  |  |  |  |  |  |

 

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| (1) | This  amount reflects Mr. MacLeod’s award made in October 2008 under the  Company’s Retention Bonus Plan prior to Mr. MacLeod becoming an  executive officer. This award is discussed in more detail under the heading  “—Executive Compensation Components—*Other Benefits*—*Retention Bonus Plan*” of the  “Compensation Discussion and Analysis” section above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | These  amounts reflect the dollar amount recognized for financial statement  reporting purposes for the fiscal years ended December 31, 2006, 2007  and 2008 in accordance with Financial Accounting Standards Board Statement of  Financial Accounting Standards No 123(R) (“SFAS 123R”) of awards made  pursuant to the Incentive Plan, and thus may include amounts in respect of  stock awards granted in and prior to 2006. Pursuant to SEC rules, the amounts  shown exclude the impact of estimated forfeitures. A discussion of the  assumptions used in calculating these amounts may be found in Note 19 to our  2008 audited financial statements included in our Annual Report on  Form 10-K for the year ended December 31, 2008. These amounts  reflect the Company’s accounting expense for these awards and do not  correspond to the actual value that may be recognized by the executive  officers.             |
| (3) | The  amount reflects the dollar amount recognized for financial statement  reporting purposes for the fiscal year ended December 31, 2006, in  accordance with SFAS 123R of option awards made to Mr. Elias in 2004.  Pursuant to SEC rules, the amount shown excludes the impact of estimated  forfeitures. The amount reflects the Company’s accounting expense for this  award and does not correspond to the actual value that may be recognized by  the executive. A discussion of the assumptions used in calculating this  amount may be found in Note 19 to our 2008 audited financial statements  included in our annual report on Form 10-K for the year ended December 31,  2008. All option awards to Messrs. Tugwell, MacLeod and Long were fully  vested prior to the Company’s adoption of SFAS 123R; therefore, there was no  accounting expense in 2006, 2007 or 2008 for any unexercised options held by  them. |
| (4) | These amounts reflect the  annual performance-based cash bonus awards for the performance year in which  they were earned and are paid on or about March 15 of the following  year. No bonus amounts were paid with respect to 2007 or 2008 performance to  executive officers. These awards are discussed in more detail under the  heading “—Executive Compensation Components—*Performance-Based Cash Bonus*” of the  “Compensation Discussion and Analysis” section above.                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (5) | In  the case of Mr. Elias, amounts shown represent payments by the Company  for life insurance on his account. In the case of Mr. Tugwell, amounts  shown represent the Company’s contributions under its 401(k) Plan and  tuition and related cost reimbursements made to Mr. Tugwell in 2007  ($50,757). In the case of Mr. MacLeod, amounts shown represent Company  contributions under its 401(k) Plan. In the case of Mr. Long,  amounts shown represent the Company’s contributions under                                                                                                                                                                                                                                                                                                                                                                                                                        |

 

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|   | its  401(k) Plan in 2006 and 2007 and, in 2008, the Company’s contributions  under its 401(k) Plan ($4,760) and payment for accrued but unused vacation at  his date of resignation ($15,325).   None of the executive officers received perquisites with an  incremental cost to the Company in excess of $10,000 in 2008.                                                                                                                                                                                                                                                                                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6)    | On  July 14, 2008, Mr. MacLeod was appointed Senior Vice President  Business Development and Planning and Acting Chief Financial Officer of the  Company.  The amounts reflected include  his salary as Senior Vice President Business Development and Planning prior  to that date.  Mr. MacLeod served  as Acting Chief Financial Officer until January 26, 2009, when the  Company hired Gary L. Pittman as Executive Vice President and Chief Financial  Officer.  After that date, Mr. MacLeod  continued his role as Senior Vice President Business Development and  Planning. |
| (7)    | Mr. Long  resigned as Executive Vice President and Chief Financial and Accounting  Officer effective May 30, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

 

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The 2008 Grants ofPlan-Based Awards Table sets forth information regarding the estimated possiblepayouts of non-equity incentive plan awards to the executive officers based onCompany performance and Restricted Stock Awards for 2008.  There were no plan-based awards made toexecutive officers in 2008.

 

**2008 GRANTS OF PLAN-BASED AWARDS**

 
| ** **          | ** ** | ** ** | ** ** | ** **    | ** ** | ** **                               | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **     | ** ** |
|---------------------|------------|------------|------------|---------------|------------|------------------------------------------|------------|---------------|------------|----------------|------------|-------------------|------------|----------------|------------|
| ** **          | ** ** | ** ** | ** ** | ** **    | ** ** | ** **                               | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **     | ** ** |
| ** **          | ** ** | ** ** | ** ** | ** **    | ** ** | ** **                               | ** ** | ** **    | ** ** | ** **     | ** ** | **All Other**     | ** ** | ** **     | ** ** |
| ** **          | ** ** | ** ** | ** ** | ** **    | ** ** | ** **                               | ** ** | ** **    | ** ** | ** **     | ** ** | **Stock Awards;** | ** ** | ** **     | ** ** |
| ** **          | ** ** | ** ** | ** ** | ** **    | ** ** | ** **                               | ** ** | ** **    | ** ** | ** **     | ** ** | **Number of**     | ** ** | **Grant Date** | ** ** |
| ** **          | ** ** | ** ** | ** ** | **Committee** | ** ** | **Estimated Possible Payouts Under**     | ** ** | **Shares of** | ** ** | **Fair Value** | ** ** |
| ** **          | ** ** | **Grant**  | ** ** | **Action**    | ** ** | **Non-Equity Incentive Plan Awards (1)** | ** ** | **Stock or**  | ** ** | **of Stock**   | ** ** |
| **Name**            | ** ** | **Date**   | ** ** | **Date**      | ** ** | **Threshold**                            | ** ** | **Target**    | ** ** | **Maximum**    | ** ** | **Units(2)**      | ** ** | **Awards**     | ** ** |
|                |       |       |       |          |       |                                     |       |          |       |           |       |              |       |           |       |
| John W. Elias       |       | —     |       | —        |       | (3)                                      |       | $             | 260,000    |           | $          | 520,000           |       | —         |       | — |   |
| John O. Tugwell     |       | —     |       | —        |       | (3)                                      |       | $             | 147,600    |           | $          | 295,200           |       | —         |       | — |   |
| C.W. MacLeod        |       | —     |       | —        |       | (3)                                      |       | $             | 97,500     |           | $          | 195,000           |       | —         |       | — |   |
| Michael G.  Long(4) |       | —     |       | —        |       | (3)                                      |       | $             | 130,900    |           | $          | 261,800           |       | —         |       | — |   |

 

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| (1) | The  amounts shown represent the potential target and maximum payment levels for  2008 performance under the Company’s performance-based cash bonus program (a  non-equity incentive plan). These amounts are based upon target and maximum  percentages of each executive’s base salary and based upon Company and  individual performance, as described in “Executive Compensation Components—*Performance-Based Cash Bonus*” of the  “Compensation Discussion and Analysis” section above. No payouts of  non-equity incentive plan compensation were in fact made to any executive  officer with respect to 2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | No  stock awards were made to any executive officer in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (3) | There  were no threshold amounts payable under the performance-based cash bonus  program. Under the program, bonus payouts could range from $0 to the maximum  amounts set forth above, as described in “Executive Compensation Components—*Performance-Based Cash Bonus*” of the  “Compensation Discussion and Analysis” section above.                                                                                                                                                                                                                                                                                        |
| (4) | Mr. Long  resigned as Executive Vice President and Chief Financial and Accounting  Officer effective May 30, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

 

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The following OutstandingEquity Awards at Fiscal Year End 2008 table provides information with respectto the value of outstanding unexercised stock options and unvested stock awardsheld by the executive officers as of December 31, 2008.

 

**OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2008**

 
| ** **          | ** ** | **Option Awards(1)**                                                         | ** ** | **Stock Awards**            | ** ** |
|---------------------|------------|------------------------------------------------------------------------------|------------|-----------------------------|------------|
| **Name**            | ** ** | **Number of  Securities  Underlying  Unexercised  Options  Exercisable (1)** | ** ** | **Option  Exercise  Price** | ** ** | **Option  Expiration  Date** | ** ** | **Number of  Shares or  Units of  Stock Held  That Have  Not Vested** | ** ** | **Market Value of  Non-Vested Shares  or Units of Stock  Held That Have  Not Vested (2)** | ** ** |
|                |       |                                                                         |       |                        |       |   |   |   |   |   |   |
| John W. Elias       |       | —                                                                       |       | —                      |       | — |   | 24,000 |   | $ | 3,840 |   |
|                |       | 200,000                                                                      | (3)        | $                           | 4.22       |   | 01/08/2009 |   | — |   | — |   |
|                |       | 50,000                                                                       |       | $                           | 3.16       |   | 01/02/2010 |   | — |   | — |   |
|                |       | 50,000                                                                       |       | $                           | 8.88       |   | 01/02/2011 |   | — |   | — |   |
|                |       | 50,000                                                                       |       | $                           | 5.18       |   | 01/02/2012 |   | — |   | — |   |
|                |       | 24,000                                                                       |       | $                           | 5.59       |   | 04/01/2012 |   | — |   | — |   |
|                |       | 50,000                                                                       |       | $                           | 3.88       |   | 01/23/2013 |   | — |   | — |   |
|                |       | 50,000                                                                       |       | $                           | 13.99      |   | 04/01/2014 |   | — |   | — |   |
|                |       |                                                                         |       |                        |       |   |   |   |   |   |   |
| John O. Tugwell     |       | —                                                                       |       | —                      |       | — |   | 35,800 |   | $ | 5,728 |   |
|                |       | 8,700                                                                        |       | $                           | 7.06       |   | 05/21/2009 |   | — |   | — |   |
|                |       | 1,300                                                                        |       | $                           | 7.06       |   | 05/21/2009 |   | — |   | — |   |
|                |       | 12,000                                                                       |       | $                           | 5.59       |   | 04/01/2012 |   | — |   | — |   |
|                |       |                                                                         |       |                        |       |   |   |   |   |   |   |
| C.W. MacLeod        |       | —                                                                       |       | —                      |       | — |   | 33,400 |   | $ | 5,344 |   |
|                |       | 10,000                                                                       |       | $                           | 5.18       |   | 01/02/2012 |   | — |   | — |   |
|                |       | 12,000                                                                       |       | $                           | 5.59       |   | 04/01/2012 |   | — |   | — |   |
|                |       |                                                                         |       |                        |       |   |   |   |   |   |   |
| Michael G.  Long(4) |       | —                                                                       |       | —                      |       | — |   | — |   | — |   |

 

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(1)   All stockoptions granted by the Company to the executive officers are fully vested andthe Company has not issued any stock options to executive officers since 2003except to Mr. Elias on April 1, 2004. All options granted have a 10-year term.

(2)   The value shownis based on a closing stock price of $0.16 per share as of December 31,2008.

(3)   These optionsexpired on January 8, 2009 without being exercised by Mr. Elias.

(4)   Michael Longforfeited his unvested restricted stock upon his resignation from the Companyon May 30, 2008 and had previously exercised all of his available options.

 

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Shown below in the 2008Option Exercises and Stock Vested table is information regarding the valuerealized by the executive officers by virtue of the exercise of options orvesting of restricted stock.

 

**2008 OPTION EXERCISES AND STOCK VESTED**

 
| ** **                    | ** ** | **Option Awards**                           | ** ** | **Stock Awards**                 | ** ** |
|-------------------------------|------------|---------------------------------------------|------------|----------------------------------|------------|
| **Name of Executive Officer** | ** ** | **Number of  Shares Acquired  on Exercise** | ** ** | **Value  Realized on  Exercise** | ** ** | **Number of  Shares Acquired  on Vesting** | ** ** | **Value  Realized on  Vesting** | ** ** |
| John W. Elias                 |       | —                                      |       | —                           |       | 6,861 | (1) | $ | 28,267 | (2) |
| John O. Tugwell               |       | —                                      |       | —                           |       | 3,361 | (3) | $ | 13,847 | (2) |
|                          |       | —                                      |       | —                           |       | 6,000 | (4) | $ | 10,680 | (4) |
| C.W. MacLeod                  |       | —                                      |       | —                           |       | 2,668 | (5) | $ | 10,992 | (2) |
|                          |       | —                                      |       | —                           |       | 6,000 | (4) | $ | 10,680 | (4) |
| Michael G. Long (6)           |       | —                                      |       | —                           |       | 3,361 | (3) | $ | 13,847 | (2) |

 

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| (1) | Includes  2,861 shares under a restricted stock award granted on April 1, 2005 and  4,000 shares under a restricted stock award granted on April 1, 2006.                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The  shares vested on April 1, 2008. A price of $4.12 per share was  determined by taking the average of the high and low prices of the stock on  April 1, 2008.                                                                       |
| (3) | Includes  1,561 shares under a restricted stock award granted on April 1, 2005 and  1,800 shares under a restricted stock award granted on April 1, 2006.                                                                              |
| (4) | The  shares vested on October 1, 2008 under a restricted stock awarded  granted on October 1, 2006. A price of $1.78 per share was determined by  taking the average of the high and low prices of the stock on October 1,  2008. |
| (5) | Includes  1,268 shares under a restricted stock award granted on April 1, 2005 and  1,400 shares under a restricted stock award granted on April 1, 2006.                                                                              |
| (6) | Mr. Long  resigned as Executive Vice President and Chief Financial and Accounting  Officer effective May 30, 2008.                                                                                                                     |

 

**Pension Benefits**

 

The Company does not haveany defined benefit pension plan that provides for payments, pensions or otherbenefits at, following or in connection with retirement.

 

**Non-Qualified DeferredCompensation**

 

The Company does not haveany plan that provides for the deferral of compensation on a basis that is nottax-qualified.

 

**POTENTIAL PAYMENTS UPON CHANGE IN CONTROL ORTERMINATION**

 

Edge has entered intothree types of agreements with the executive officers, or certain of them asdetailed below, which provide for payments upon a termination of employment:employment agreements, severance agreements and restricted stock awardagreements under the Incentive Plan.

 

*EmploymentAgreement with Mr. Elias*

 

Mr. Elias is theonly executive officer with whom Edge has entered into an employment agreement.Mr. Elias entered into an employment agreement with Edge effective November 16,1998 and amended and restated on April 3, 2008 to comply with Section 409A.The amendments, which are reflected as appropriate in the following descriptionof the agreement, change the timing of certain payments under Mr. Elias’agreement in accordance with the requirements of Section 409A, but do notchange the amount of such payments. The agreement automatically renews forsuccessive one-year terms and will continue to do so unless either party givesadvance notice of non-renewal. Most recently, the agreement renewed on November 16,2008. If either Edge or Mr. Elias gives notice of 

 

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non-renewal, no automatic extension shall occur and Mr. Elias’employment will terminate on the third November 16th to occur followingthat notice; that is his employment may continue for a period of up to threeyears following the notice.

 

*Rightof Edge to Terminate Employment*. Notwithstanding the provisions regarding the term ofagreement described above, Edge has the right to terminate Mr. Elias’employment at any time for any of the following reasons:

 

·                  Mr. Elias’ death;

·                  Mr. Elias’ becoming incapacitated by accident,sickness or other circumstances that render him mentally or physicallyincapable of performing the duties and services required of him under theagreement on a full-time basis with reasonable accommodations for a period ofat least 120 consecutive days or for a period of 180 business days during any12-month period (referred to in this description of the employment agreement as“disability”);

·                  for cause (as described below);

·                  for Mr. Elias’ material breach of any materialprovisions of the agreement that, if correctable, remains uncorrected for 30days following written notice to Mr. Elias by Edge of such breach; or

·                  for any reason at the sole discretion of the Edgeboard of directors.

 

“For cause” means Mr. Elias’ gross negligence,gross neglect or willful misconduct in the performance of the duties requiredof him or his final conviction of a felony or of a misdemeanor involving moralturpitude, excluding misdemeanor convictions relating to the operation of amotor vehicle.

 

*Rightof Mr. Elias to Terminate Employment*. Notwithstanding the provisions regarding the term ofagreement described above, Mr. Elias has the right to terminate hisemployment under the agreement at any time for any reason in his solediscretion or for any of the following reasons (the reasons below beingreferred to in this description of the employment agreement as “good reason”):

 

·                  Edge’s material breach of any material provision ofthe agreement;

·                  Edge’s assignment to Mr. Elias of duties andresponsibilities that are materially inconsistent with the positions of ChiefExecutive Officer or Chairman of the Board;

·                  Edge’s failure to reappoint Mr. Elias to thepositions of Chief Executive Officer and Chairman of the Board; or

·                  change in Mr. Elias’ principal place ofemployment by more than 50 miles.

 

In the case of the firstthree bullets above, Mr. Elias is required to give notice to Edge of thebreach, assignment or failure within 90 days of its initial existence and suchcondition must remain uncorrected for 30 days before giving rise to thetermination right (the “employment agreement correction period”). Mr. Elias’resignation must be within 30 days after the expiration of the correctionperiod.

 

*Entitlementto Termination Benefits*. Mr. Elias is entitled to the termination benefits describedbelow under the employment agreement if his employment is terminated for any ofthe following reasons:

 

·                  his death or disability;

·                  termination of employment by Edge prior to expirationof term of agreement for any reason other than:

·                  for cause; or

·                  material breach of agreement by Mr. Elias; or

·                  termination by Mr. Elias for good reason.

 

*TerminationBenefits*. Thetermination benefits under the employment agreement are as follows:

 

·                  a “Salary Severance Amount” equal to his base salarythen in effect for the unexpired portion of the term of the agreement (a periodof up to three years), paid out as follows:

 

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·                  an immediate lump sum salary severance payment of$460,000 to be paid within five days of termination; plus

·                  the remaining balance of his Salary Severance Amountas reduced by the payment in (i) of this paragraph, such amount to be paidon the later of January 2, 2009 or five days after the termination date.

·                  immediate vesting of all outstanding stock optionsgranted by Edge to him which will remain exercisable for a period of 12 monthsafter such termination (but in no event beyond the expiration of the originalterm of such stock option grants);

·                  a lump sum cash payment equal to his proratedincentive target bonus in the year of termination (if termination is subsequentto January 1, 2008, to be paid on the later of (i) January 2,2009 or (ii) five days following his termination date);

·                  life insurance coverage ($1,000,000) and annual taxgross-up of premium payments shall continue to be provided for the unexpiredportion of the term of the agreement (a period of up to three years), with thelife insurance gross-up payment to be made on the later of January 2, 2009or five days following Mr. Elias’ termination date;

·                  cash payments equal to the amount credited to hisaccount under any employee profit sharing plan or stock ownership plans thatare forfeitable in accordance with the terms of such plans; and

·                  participation in Edge’s group health plan (for thesame cost Edge charges to active employees) for a period of up to 18 monthsafter the date of termination.

 

*Covenants*. The employment agreement of Mr. Eliasprovides for a covenant limiting competition with Edge during employment withEdge and, except in the event that his termination was by the board in its solediscretion, for as long as Edge is providing him with termination benefits. Theagreement provides that Mr. Elias will not make any unauthorizeddisclosure of any confidential business information or trade secrets of Edge orits affiliates at any time during or after his employment with Edge and alsocontains a non-disparagement clause.

 

*SeveranceAgreements*

 

All current employees ofEdge, including Messrs. Elias, Tugwell and MacLeod, are parties toseverance agreements that provide for certain benefits in the event aninvoluntary termination of employment occurs within two years of a change ofcontrol of Edge. The agreements renew automatically for two-year terms unlessthe board elects to terminate the agreement during the 60 days prior to suchautomatic renewal. Most recently, the agreements for Messrs. Elias,Tugwell and MacLeod were renewed through January 1, 2010. The agreementsfor all employees, including Messrs. Elias, Tugwell and MacLeod, wereamended and restated on April 3, 2008 to comply with Section 409A.The amendments, which are reflected as appropriate in the following descriptionof the agreement, change the timing of certain payments under Mr. Elias’agreements in accordance with the requirements of Section 409A, but do notchange the amount of such payments. In the event a change of control occurs,the agreements are not subject to termination or amendment for a period of twoyears after the change of control, and if within the two year period followingthe change of control, an executive becomes entitled to severance benefitsunder the agreement, the agreement cannot be terminated. The agreements werefurther amended on July 14, 2008 to modify certain of the employees’post-termination benefits, as described below in “—*SeveranceBenefits.*”

 

*Changein Control*.Change in control is defined as any of the following occurrences:

 

·                  Edge is not the surviving entity in any merger,consolidation or other reorganization (or survives only as a subsidiary of anentity other than a previously wholly-owned subsidiary of Edge);

·                  Edge is to be dissolved and liquidated, and as aresult of or in connection with such transaction, the persons who weredirectors of Edge before such transaction will cease to constitute a majorityof the board;

·                  any person or entity, including a “group” ascontemplated by Section 13(d)(3) of the Exchange Act acquires orgains ownership or control (including, without limitation, power to vote) of20% or more of the outstanding shares of Edge’s voting stock (based upon votingpower), and as a result of or in connection with such transaction, the personswho were directors of Edge before such transaction cease to constitute amajority of the board; or

 

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·                  Edge sells all or substantially all of the assets ofEdge to any other person or entity (other than a wholly-owned subsidiary ofEdge) in a transaction that requires Edge stockholder approval pursuant to theTexas Business Corporation Act.

 

*InvoluntaryTermination.* Aninvoluntary termination means any termination of employment with Edge otherthan:

 

·                  resignation by the executive (other than a resignationat the request of Edge or a resignation in connection with a change in dutiesdescribed below);

·                  termination by Edge for cause (which is the same asdescribed for purposes of Mr. Elias’ employment agreement above);

·                  termination due to disability, as defined for purposesof Edge’s long-term disability plan;

·                  termination due to death; and

·                  in the case of Mr. Elias, his retirement, whichis defined as his voluntary resignation (other than a resignation within 60days after the date he receives notice of a change in duties or a resignationat the request of Edge).

 

As amended for Section 409A,if an executive has notified Edge of the existence of a change in duties (asdefined below) within 90 days of its initial existence and Edge has not curedthe condition within 30 days after such notice is provided (the “change incontrol correction period”), then a resignation of theexecutive is an involuntary terminationif it occurs within 30 days after the expiration of the change in controlcorrection period. A change in duties means the occurrence, within two yearsafter a change in control, of any one of the following:

 

·                  a significant reduction in the duties of theexecutive;

·                  a material reduction in the executive’s annual salary;

·                  a change in location of executive’s principal place ofemployment by Edge by more than 50 miles; and

·                  in the case of Mr. Elias, Edge’s failure toreappoint him to the positions of Chief Executive Officer and Chairman of theBoard.

 

*SeveranceBenefits.*Pursuant to such agreements, if the executive officers’ employment by Edge issubject to an involuntary termination occurring within two years after a changein control of Edge, the executive officer is entitled to receive:

 

·                  a severance amount equal to 2.99 times the sum of hisannual salary and target annual bonus in the case of Mr. Elias, 2.0 timesthe sum of their annual salary and target annual bonus in the case of each of Messrs. Tugwelland MacLeod (in each case, the “severance amount”);

·                  for Mr. Elias, the portion of the severanceamount attributable to his target bonus shall be paid in a lump sum within fivedays of his termination. In addition, a lump sum amount equal to the portion ofthe severance amount that exceeds the benefit payable under Mr. Elias’employment agreement shall be paid in a lump sum within five days of histermination. The remaining portion of the severance amount shall be paid asspecified in Mr. Elias’ employment agreement. Messrs. Tugwell and MacLeodshall be paid their severance amounts in a lump sum within five days oftermination;

·                  full vesting of any outstanding incentive awards (suchas restricted stock grants) that had not previously vested or otherwise becomeexercisable;

·                  continued medical, dental and vision coverage for 18months at active employee premium rates;

·                  if still not reemployed after 18 months, a cash lumpsum payment in an amount equal to 18 times the monthly amount that Edge pays tosubsidize medical coverage for active employees;

·                  for executive officers other than Mr. Elias, a$2,000 lump sum payment to help defray the employee’s cost of obtainingpost-termination life and accidental death and dismemberment insurance;

·                  reimbursement for outplacement services up to $6,000;and

·                  a tax gross-up payment designed to keep the employeewhole with respect to any excise taxes imposed by Section 4999 of theCode.

 

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When Mr. Elias’severance agreement was amended and restated to comply with Section 409A,it was also amended to clarify that in the event severance benefits wouldotherwise be payable under both the severance agreement and any other plan oragreement, including his employment agreement, Mr. Elias has agreed thathe will receive only the benefits specified under his severance agreement andthe continuation of certain term life insurance as provided for under hisemployment agreement.

 

*RestrictedStock Awards*

 

When a restricted stockaward is made by Edge, including those made to the executive officers, underthe Incentive Plan, a restricted stock award agreement is entered into betweenEdge and the individual. The award agreements provide for accelerated vestingof restricted stock at termination of employment if termination is:

 

·                  by Edge without cause, as described below;

·                  by the executive for good reason, as described below;

·                  due to death; or

·                  due to disability (in the case of Mr. Elias, asdefined in his employment agreement and in the case of Messrs. Tugwell andMacLeod as defined in good faith by Edge and/or by Edge’s long-term disabilityplan).

 

Under the awardagreements, “cause” is defined as (1) having the same meaning as definedin any written employment agreement covering the subject employee or, in theabsence of an employment agreement, (2) any of the following:

 

·                  conviction in a court of competent jurisdiction of anyfelony or a crime involving moral turpitude;

·                  the employee’s knowing failure or refusal to followreasonable instructions, policies, standards and regulations of either theboard or Edge;

·                  continued failure or refusal to faithfully anddiligently perform his or her duties of employment;

·                  continuously conducting himself or herself in anunprofessional, unethical, immoral or fraudulent manner; or

·                  exhibiting conduct that discredits Edge or is detrimentalto the reputation, character and standing of Edge.

 

Under the award agreements, “good reason” is definedas (1) having the same meaning as defined in any written employmentagreement covering the subject employee or, if such agreement exists but thatterm is not defined, but the agreement contains a provision permitting theexecutive to voluntarily terminate employment upon the occurrence of certainevents on terms substantially equal to a termination by Edge without cause,good reason shall mean any of those events, or, in the absence of an employmentagreement provision, (2) any of the following:

 

·                  reduction in annual rate of salary;

·                  failure by Edge to continue an employee benefit planor Edge taking action to adversely affect the employee’s participation in thebenefit plan (unless such action adversely affects the senior management ofEdge generally);

·                  assignment to the employee of materially moreoppressive or onerous duties;

·                  relocation of the office more than 20 miles from thecurrent location; or

·                  failure of Edge to obtain the assumption in writing ofEdge’s obligations under the award agreement prior to a reorganization, merger,consolidation, disposition of all or substantially all assets or similartransaction in which Edge is not the survivor.

 

*Terminationof Employment by Edge for Cause or by the Employee Other than for Good Reason*. If an executive officer terminatesemployment voluntarily, and not for good reason, any restricted stock awardedto the executive officer that has not previously vested is forfeited.

 

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*Terminationand Change of Control Benefit Tables*

 

Under the individualagreements with the executive officers described above that address theirtermination of employment, each executive officer would be entitled to receivethe following estimated benefits. These disclosed amounts are estimates onlyand do not necessarily reflect the actual amounts that would be paid to theexecutive officers, which would only be known at the time that they becomeeligible for payment and would depend upon the circumstances of the executiveofficer’s separation from Edge. The tables reflect amounts payable under theagreements assuming a termination of employment occurred on December 31,2008.

 

*JohnW. Elias*. Thefollowing table shows the potential payments upon termination for John W.Elias, Edge’s Chairman, President and Chief Executive Officer, as if suchtermination had occurred on December 31, 2008.

 
| ** **                          | ** ** | **By Mr. Elias**                | ** ** | **By the Company**                                     | ** ** | ** **                                                          | ** ** |
|-------------------------------------|------------|--------------------------------------|------------|--------------------------------------------------------|------------|---------------------------------------------------------------------|------------|
| ** **                          | ** ** | **Resignation  or  Retirement  ($)** | ** ** | **For Good  Reason  Without  Change in  Control  ($)** | ** ** | **Due to Change  in Duties  Following  Change in  Control(1)  ($)** | ** ** | **Without  Cause  ($)** | ** ** | **Without  Cause  Following  Change in  Control  ($)** | ** ** | **For Cause  ($)** | ** ** | **Disability or  Death  ($)** | ** ** |
| Salary (2)                          |       | —                               |       | 1,149,589                                              |       | —                                                              |       | 1,149,589 |   | — |   | — |   | 1,149,589 |   |
| Incentive Bonus (3)            |       | —                               |       | 260,000                                                |       | —                                                              |       | 260,000 |   | — |   | — |   | 260,000 |   |
| Cash Severance (4)             |       | —                               |       | —                                                 |       | 1,973,400                                                           |       | — |   | 1,973,400 |   | — |   | — |   |
| Equity (5)                          |       | —                               |       | 3,840                                                  |       | 3,840                                                               |       | 3,840 |   | 3,840 |   | — |   | 3,840 |   |
| Health &  Welfare (6) |       | —                               |       | 37,332                                                 |       | 65,236                                                              |       | 37,332 |   | 65,236 |   | — |   | 37,332 |   |
| Outplacement  Svc.                  |       | —                               |       | —                                                 |       | 6,000                                                               |       | — |   | 6,000 |   | — |   | — |   |
| Tax Gross Up                        |       | —                               |       | —                                                 |       | 649,834                                                             |       | — |   | 649,834 |   | — |   | — |   |
|                                |       |                                 |       |                                                   |       |                                                                |       |   |   |   |   |   |   |   |   |
| Total                               |       | —                               |       | 1,450,761                                              |       | 2,698,310                                                           |       | 1,450,761 |   | 2,698,310 |   | — |   | 1,450,761 |   |

 

----

(1)   Resignation is required to begiven within 30 days after the expiration of the change in control correctionperiod, as defined above in “—Change in Control Agreements—*InvoluntaryTermination*.”

(2)   Termination under Mr. Elias’employment agreement will result in payments according to the payment schedulediscussed above in “—Employment Agreement with Mr. Elias—TerminationBenefits.”

(3)   This value is based upon Mr. Elias’target bonus of 65% of base salary for 2008 and is included separately from thecash severance amount only to illustrate payments required to be made under hisemployment agreement. His employment agreement provides that such payment beprorated for months of service during the year; assuming termination ofemployment on December 31, 2008, 100% of the target bonus amount($260,000) would be payable. Any termination of employment would result inpayment of the target bonus on the later of (i) five days following thetermination date or (ii) January 1, 2009.

(4)   Cash severance payments arepayable upon a qualified termination of employment following a change ofcontrol and are defined as 2.99 times the sum of Mr. Elias’ current salaryplus his targeted bonus opportunity.

(5)   Represents the potentialvalue of accelerated vesting of shares of restricted stock that have beenawarded to Mr. Elias but were unvested as of December 31, 2008(24,000 shares) based upon the closing share price on December 31, 2008($0.16). All stock option awards held by Mr. Elias are fully vested, so noamount is included for early vesting.

(6)   Includes an approximate costto Edge to continue payment of supplemental life insurance premiums in theamount of $9,427 if termination benefits are paid under Mr. Elias’employment agreement, which amount may not be due upon Mr. Elias’ death.

 

*JohnO. Tugwell*. Thefollowing table shows the potential payments upon termination of employment forJohn O. Tugwell, Edge’s Executive Vice President and Chief OperatingOfficer, as if such termination had occurred on December 31, 2008.

 

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| ** **                 | ** ** | **By Mr. Tugwell**              | ** ** | **By the Company**                                     | ** ** | ** **                                                          | ** ** |
|----------------------------|------------|--------------------------------------|------------|--------------------------------------------------------|------------|---------------------------------------------------------------------|------------|
| ** **                 | ** ** | **Resignation  or  Retirement  ($)** | ** ** | **For Good  Reason  Without  Change in  Control  ($)** | ** ** | **Due to Change  in Duties  Following  Change in  Control(1)  ($)** | ** ** | **Without  Cause  ($)** | ** ** | **Without Cause  Following  Change in  Control  ($)** | ** ** | **For Cause  ($)** | ** ** | **Disability or  Death  ($)** | ** ** |
| Cash Severance (2)    |       | —                               |       | —                                                 |       | 787,200                                                             |       | — |   | 787,200 |   | — |   | — |   |
| Equity (3)                 |       | —                               |       | 5,728                                                  |       | 5,728                                                               |       | 5,728 |   | 5,728 |   | — |   | 5,728 |   |
| Health &  Welfare |       | —                               |       | —                                                 |       | 74,892                                                              |       | — |   | 74,892 |   | — |   | — |   |
| Outplacement  Svc.         |       | —                               |       | —                                                 |       | 6,000                                                               |       | — |   | 6,000 |   | — |   | — |   |
|                       |       |                                 |       |                                                   |       |                                                                |       |   |   |   |   |   |   |   |   |
| Total                      |       | —                               |       | 5,728                                                  |       | 873,820                                                             |       | 5,728 |   | 873,820 |   | — |   | 5,728 |   |

 

----

(1)   Resignation is required to begiven within 30 days after the expiration of the change in control correctionperiod, as defined above.

(2)   Cash severance payments arepayable upon a qualified termination of employment following a change ofcontrol and are defined as 2.00 times the sum of Mr. Tugwell’s currentsalary plus his targeted bonus opportunity.

(3)   Represents the potentialvalue of accelerated vesting of shares of restricted stock that have beenawarded to Mr. Tugwell but were unvested (35,800 shares) as of December 31,2008 based upon the closing share price on December 31, 2008 ($0.16). Allstock option awards held by Mr. Tugwell are fully vested, so no amount isincluded for early vesting.

 

*C.W.MacLeod*. Thefollowing table shows the potential payments upon termination of employment forC.W. MacLeod, Edge’s Senior Vice President Business Development and Planningand Acting Chief Financial Officer, as if such termination had occurred on December 31,2008.

 
| ** **                 | ** ** | **By Mr. MacLeod**              | ** ** | **By the Company**                                         | ** ** | ** **                                                              | ** ** |
|----------------------------|------------|--------------------------------------|------------|------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|
| ** **                 | ** ** | **Resignation  or  Retirement  ($)** | ** ** | **For Good   Reason   Without   Change in   Control  ($)** | ** ** | **Due to Change   in Duties   Following   Change in   Control(1)  ($)** | ** ** | **Without  Cause  ($)** | ** ** | **Without Cause  Following   Change in   Control  ($)** | ** ** | **For Cause  ($)** | ** ** | **Disability or   Death  ($)** | ** ** |
| Cash Severance (2)    |       | —                               |       | —                                                     |       | 585,000                                                                 |       | — |   | 585,000 |   | — |   | — |   |
| Equity (3)                 |       | —                               |       | 5,344                                                      |       | 5,344                                                                   |       | 5,344 |   | 5,344 |   | — |   | 5,344 |   |
| Health &  Welfare |       | —                               |       | —                                                     |       | 54,603                                                                  |       | — |   | 54,603 |   | — |   | — |   |
| Outplacement  Svc.         |       | —                               |       | —                                                     |       | 6,000                                                                   |       | — |   | 6,000 |   | — |   | — |   |
|                       |       |                                 |       |                                                       |       |                                                                    |       |   |   |   |   |   |   |   |   |
| Total                      |       | —                               |       | 5,344                                                      |       | 650,947                                                                 |       | 5,344 |   | 650,947 |   | — |   | 5,344 |   |

 

----

(1)   Resignation is required to begiven within 30 days after the expiration of the change in control correctionperiod, as defined above.

(2)   Cash severance payments arepayable upon a qualified termination of employment following a change ofcontrol and are defined as 2.00 times the sum of Mr. MacLeod’s currentsalary plus his targeted bonus opportunity.

(3)   Represents the potentialvalue of accelerated vesting of shares of restricted stock that have beenawarded to Mr. MacLeod but were unvested (33,400 shares) as of December 31,2008 based upon the closing share price on December 31, 2008 ($0.16). Allstock option awards held by Mr. MacLeod are fully vested, so no amount isincluded for early vesting.

 

**DIRECTOR COMPENSATION**

 

We use a combination ofcash and stock-based incentive compensation to attract and retain qualifiedcandidates to serve on the Board.  Insetting director compensation, the Board considers the significant amount of timethat Directors expend in fulfilling their duties to the Company, as well as theskills required by the Company of members of the Board.

 

**Annual Retainer**

 

Effective June 1,2006, each non-employee member of the Board receives an annual retainer, whichis paid in arrears on or following the annual meeting of stockholders, of$20,000 payable in cash and $50,000 payable in Common Stock of the Company,valued as of the award date (subject to rounding up or down such that thenumber of shares issued to each Director is a whole number, but not to exceed$50,000 in value), pursuant to the Incentive Plan.  Under the Incentive Plan, the annual stockawards to non-employee Directors are made as of the first business 

 

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day of the month following the annual meeting of stockholders.  Following the originally scheduled andsubsequently adjourned 2008 annual meeting of stockholders, each non-employeemember of the Board received a retainer payment consisting of $20,000cash.  However, after a review of all2008 operating and financial results, the Board of Directors waived payment ofthe $50,000 portion of their annual retainer that is payable in Common Stock ofthe Company for fiscal 2008. Furthermore, all Directors are reimbursed for out-of-pocket expensesincurred in attending meetings of the Board or Board committees and for otherexpenses incurred in their capacity as Directors.  No stock options were granted to Directors in2008.  For a discussion of the Company’spolicies regarding issuance of stock options and restricted stock grants, see “CertainPolicies of Executive Compensation Program” in the Compensation Discussion andAnalysis section.

 

 In addition, the chairmen of the Board’sstanding committees (Audit, Compensation and Corporate Governance/Nominating)each spend a significant amount of extra time beyond what is required for Boardcommittee membership in performing their duties.  In acknowledgment of this fact, the chairmanof each standing committee receives the following additional annual retainer,payable in cash in arrears:

 
| Audit Committee  Chairman                           |   | $ | 10,000 |   |
|-----------------------------------------------------|--------|---|--------|--------|
| Compensation  Committee Chairman                    |   | $ | 5,000  |   |
| Corporate  Governance/Nominating Committee Chairman |   | $ | 5,000  |   |

 

At their January 6,2009 meeting, the Board approved payment of the annual retainers that are paidin cash to the Directors, including the $20,000 annual retainer to allDirectors and the annual retainers to be paid to committee chairmen, on aquarterly basis, in arrears, which payment will occur on or about the first dayof the following quarter.  The $20,000annual retainer will be paid to all Directors in four equal quarterly paymentson January 1, April 1, July 1 and October 1 for theimmediately preceding quarter.  Acatch-up payment for the two quarters from July 1, 2008 through December 31,2008 was made to the Directors in January 2009.

 

**Board and Board Committee MeetingFees**

 

Each non-employee Director receives$1,500 cash for in-person attendance at a meeting of the Board of Directors($500 if such attendance is telephonic) and $1,500 cash for each meeting of astanding committee of the Board of Directors attended in person ($500 iftelephonic). Board and Board committee meeting fees are paid in cash to theDirectors at or shortly after the time of the respective meetings.  The Board also appoints non-employeeDirectors to other special committees of the Board, as necessary.  Examples of these special committees mayinclude, but are not limited to, a Pricing Committee, a Dividend Committee forour Preferred Stock and an Independent Committee.  Currently we do not pay committee meetingfees to non-employee Directors for attendance at special committee meetings,except in the case of two special committees that were established in2008.  In addition to our standingCommittees of our Board, on April 21, 2008, our Board of Directorsestablished the Independent Committee to represent the interests of the holdersof our preferred stock in connection with possible strategic alternatives. OurBoard of Directors appointed Messrs. Clarkson and Creel as members of theIndependent Committee, with Mr. Creel serving as chairman.  Messrs. Clarkson and Creel each receiveda one-time payment of $15,000 in cash plus $1,000 in cash for each IndependentCommittee meeting attended.  On December 4,2008, our Board established a special committee of our Board (the “StrategicAlternatives Committee”) to formulate a strategic plan to reposition theCompany in the marketplace given the current financial challenges faced by theCompany and the industry and marketplace in general.  Our Board appointed Messrs. Andress,Clarkson, Creel and Work as members of the Strategic Alternatives Committee,with Mr. Work serving as chairman. In recognition of the significant extra time and effort that will berequired from these Directors on the Strategic Alternative Committee, the Boarddetermined that each member of the Strategic Alternative Committee will receiveattendance fees at the same rate and in the same manner as standing Committeesof the Board.

 

The following 2008Director Compensation Table shown below reflects information regarding thecompensation of each of the non-employee Directors with respect to 2008.

 

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**2008 Director Compensation**

 
| **Name(1)**           | ** ** | **Fees Earned or   Paid in Cash(2)** | ** ** | **Stock  Awards ($)(3)** | ** ** | **Total** | ** ** |
|-----------------------|------------|--------------------------------------|------------|--------------------------|------------|-----------|------------|
|                  |       |                                 |       |                     |       |      |       |
| Thurmon M.  Andress   |       | $                                    | 40,500     |                     | $          | 3,995     |       | $ | 44,495 |   |
| Vincent S.  Andrews   |       | $                                    | 43,000     |                     | $          | 3,995     |       | $ | 46,995 |   |
| Jonathan M.  Clarkson |       | $                                    | 77,500     |                     | —     |      | $          | 77,500 |   |
| Michael A. Creel      |       | $                                    | 70,500     |                     | —     |      | $          | 70,500 |   |
| John Sfondrini        |       | $                                    | 38,000     |                     | $          | 3,995     |       | $ | 41,995 |   |
| Robert W. Shower      |       | $                                    | 42,500     |                     | $          | 3,995     |       | $ | 46,495 |   |
| David F. Work         |       | $                                    | 43,500     |                     | $          | 3,995     |       | $ | 52,495 |   |

 

----

| (1) |   | John  W. Elias, the Company’s President, Chairman of the Board and Chief Executive  Officer, is not included in this table, as he is an employee of the Company  and receives no compensation for his service as a Director. The compensation  received by Mr. Elias as an employee of the Company is shown on the  Summary Compensation Table earlier in this report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Reflects  the portion of the Board annual retainer that was paid in cash on  October 29, 2008 ($20,000), committee chairmanship annual retainers paid  in cash on October 29, 2008 (Mr. Clarkson, $10,000; Mr. Creel,  $5,000; and Mr. Work, $5,000), Independent Committee fees  (Mr. Clarkson, $15,000; Mr. Creel, $15,000) and the Board and Board  committee meeting fees paid in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (3) |   | Reflects  the dollar amount recognized for financial statement reporting purposes for  the fiscal year ended December 31, 2008 in accordance with SFAS 123R,  and thus includes amounts in respect of stock awards granted in and prior to  2007. Pursuant to SEC rules, the amounts shown exclude the impact of  estimated forfeitures. A discussion of the assumptions used in calculating  these amounts may be found in Note 19 to our 2008 audited financial  statements included in our Form 10-K. These amounts reflect the Company’s  accounting expense for these awards and do not correspond to the actual value  that may be recognized by directors. No new grants of restricted stock were  made to any member of the Board of Directors in 2008. On May 2, 2008,  the remaining traunche of the May 2, 2005 restricted stock grants made  to certain members of the Board of Directors vested in the amount of 835  shares for each of Messrs. Andress, Andrews, Sfondrini, Shower and Work.  Messrs. Clarkson and Creel were not members of the Board of Directors at  the time of the May 2, 2005 restricted stock grants. No dollar amounts  were recognized in 2008 under SFAS 123R with respect to stock options granted  to non-employee Directors. As of December 31, 2008, the number of  outstanding option awards held by the named directors were as follows:  Mr. Andress: 8,000 shares; Mr. Andrews: 21,300 shares; and  Mr. Work: 8,000 shares. |

 

**Stock Ownership Requirements for Directors**

 

At their March 9,2006 meeting, the Corporate Governance/Nominating Committee recommended thateach Director be required to own shares of common stock of the Company equal tothree times his annual Director compensation for 2006 and that such ownershipbe achieved within three years from July 1, 2006.  “Stock ownership” is defined to include stockowned by the Director directly or indirectly, stock owned by a controlledentity, such as an IRA or trust that is controlled by the Director, andrestricted stock that has not yet vested but will vest to the Director prior toJuly 1, 2009.   Director compensationincludes the annual retainer (both cash and stock), committee chairmanship feesand Board and committee meeting fees.  Atits January 2008 meeting, the Corporate Governance/Nominating Committeeclarified that the value of each Director’s stock for the purposes of thisrequirement will be based upon the price paid at the time of purchase for stockthat is purchased or the value of the stock at the grant date for stock that isgranted by the Company. The Corporate Governance/Nominating Committee monitorseach Director’s progress over time towards his or her three-year target andinforms the Directors of their progress towards this target annually.

 

***ITEM 12.***      SECURITY OWNERSHIP OF CERTAINBENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

*** ***

The following table setsforth information as of April 1, 2009 (except as indicated below) withrespect to beneficial ownership of the Common Stock by:  (i) all persons who are the beneficialowner of 5% or more of the outstanding Common Stock; (ii) each Director ornominee for Director; (iii) each executive officer of the Company; and (iv) allexecutive officers and Directors of the Company as a group. As of April 1,2009, 28,866,328 shares of Common Stock were issued and outstanding.  As of April 1, 2009, 2,875,000 shares ofour 5.75% Series A cumulative convertible perpetual preferred stock (“ConvertiblePreferred Stock”) were issued and outstanding. Each 

 

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shareof Convertible Preferred Stock is convertible at any time at the option of theholder thereof into approximately 3.0193 shares of Common Stock, subject toadjustments.  However, upon conversion,we have the right to deliver, in lieu of shares of Common Stock, cash or acombination of cash and shares of Common Stock. Except for Gary L. Pittman, as noted below, no Director or executiveofficer of the Company beneficially owned any shares of Convertible PreferredStock as of April 1, 2009.

 
| **Name (1)**                                                       | ** ** | **Number of Shares of  Common Stock  Beneficially Owned** | ** ** | **Percent of Common  Stock Beneficially Owned** | ** ** |
|--------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|-------------------------------------------------|------------|
| John W. Elias  (2)                                                 |       | 564,693                                                   |       | 1.94%                                           |       |
| John O. Tugwell  (3)                                               |       | 83,386                                                    |       | *                                               |       |
| Gary L. Pittman  (4)                                               |       | 3,019                                                     |       | *                                               |       |
| C.W. MacLeod (5)                                                   |       | 50,183                                                    |       | *                                               |       |
| Michael G. Long  (6)                                               |       | 79,767                                                    |       | *                                               |       |
| Thurmon Andress  (7)                                               |       | 29,847                                                    |       | *                                               |       |
| Vincent S.  Andrews (8)                                            |       | 54,552                                                    |       | *                                               |       |
| Jonathan M.  Clarkson                                              |       | 11,942                                                    |       | *                                               |       |
| Michael A. Creel                                                   |       | 15,942                                                    |       | *                                               |       |
| John Sfondrini  (9)                                                |       | 26,099                                                    |       | *                                               |       |
| Robert W. Shower                                                   |       | 23,544                                                    |       | *                                               |       |
| David F. Work  (10)                                                |       | 24,422                                                    |       | *                                               |       |
| FMR LLC (11)                                                       |       | 2,864,976                                                 |       | 9.92%                                           |       |
| Mac-Per-Wolf  Company (12)                                         |       | 2,226,800                                                 |       | 7.71%                                           |       |
| Reed  Conner & Birdwell LLC (13)                          |       | 1,795,404                                                 |       | 6.22%                                           |       |
| Manning &  Napier Advisors, Inc. (14)                |       | 1,500,880                                                 |       | 5.20%                                           |       |
| All Directors  and executive officers as a group (12 persons) (15) |       | 967,396                                                   |       | 3.31%                                           |       |

 

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| *      |   | Less than one percent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (1)    |   | Except as otherwise noted,  each stockholder has sole voting and investment power with respect to the  shares beneficially owned, subject to community property laws, where  applicable.                                                                                                                                                                                                                                                                                                                             |
| (2)    |   | Shares shown include  (i) 274,000 shares of Common Stock that could be acquired pursuant to  stock options exercisable within 60 days of April 1, 2009 and  (ii) 215,000 shares purchased by Mr. Elias’ IRA account pursuant to  the Company’s 1999 private placement on the same terms as were applicable to  unrelated parties.                                                                                                                                                      |
| (3)    |   | Shares  shown include (i) 12,000 shares of Common Stock that could be acquired  pursuant to stock options exercisable within 60 days of April 1, 2009;  (ii) 10,000 shares of Common Stock that could be acquired pursuant to  stock options exercisable within 60 days of April 1, 2009 but expire, if  unexercised, on May 21, 2009; and (iii) 9,157 shares held in the  Company’s 401(k) plan.                                                                            |
| (4)    |   | Shares  shown include 3,019 shares of Common Stock that may be obtained through the  conversion of Convertible Preferred Stock. Mr. Pittman acquired 1,000  shares of Convertible Preferred Stock prior to joining the Company. Based on  the conversion rate of 3.0193 discussed above, Mr. Pittman would have  the right to acquire 3,019 shares of Common Stock, assuming we do not  exercise our right to deliver, in lieu of Common Stock, cash or a combination  of cash and shares of Common Stock. |
| (5)    |   | Shares  shown include (i) 1,500 shares held by Mr. MacLeod’s IRA account;  (ii) 22,000 shares of Common Stock that could be acquired pursuant to  stock options exercisable within 60 days of April 1, 2009; and  (iii) 9,518 shares held in the Company’s 401(k) plan.                                                                                                                                                                                                      |
| (6)    |   | Mr. Long  resigned as Executive Vice President and Chief Financial and Accounting  Officer effective May 30, 2008. Shares shown are reflective of his  holdings at that date, including 3,856 shares of Common Stock held in the  Company’s 401(k) plan.                                                                                                                                                                                                                                         |

 

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| (7)  |   | Shares  shown include (i) 8,000 shares of Common Stock that could be acquired  pursuant to stock options exercisable within 60 days of April 1, 2009;  and (ii) 4,000 shares of Common Stock held by Andress Oil & Gas  LP, a limited partnership of which Mr. Andress serves as managing  partner. Mr. Andress may be deemed the beneficial owner of the shares of  Common Stock beneficially owned by Andress Oil & Gas LP.  Mr. Andress disclaims such beneficial ownership except to the extent of  his pecuniary interest in such limited partnership.                                                                             |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (8)  |   | Shares  shown include (i) 15,000 shares of Common Stock beneficially owned by  Mr. Andrews’ wife, (ii) 3,568 shares held by Mr. Andrews’  children; (iii) 15,000 shares that could be acquired pursuant to stock  options exercisable within 60 days of April 1, 2009; and (iv) 6,300  shares that could be acquired pursuant to stock options exercisable within 60  days of April 1, 2009 but expire, if unexercised, on May 21, 2009.  Mr. Andrews may be deemed the beneficial owner of the shares of Common  Stock beneficially owned by his wife and children. Mr. Andrews disclaims  such beneficial ownership. |
| (9)  |   | Shares  shown include 4,998 shares held by Mr. Sfondrini’s children.  Mr. Sfondrini may be deemed the beneficial owner of these shares.  Mr. Sfondrini disclaims such beneficial ownership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (10) |   | Shares  shown include 8,000 shares of Common Stock that could be acquired pursuant to  stock options exercisable within 60 days of April 1, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (11) |   | The  business address of this beneficial holder is 82 Devonshire Street, Boston,  Massachusetts 02109. The information regarding FMR LLC is based on a filing  made with the SEC reflecting beneficial ownership of the Common Stock as of  December 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (12) |   | The  business address of this beneficial holder is 311 S. Wacker Dr.,  Suite 6000, Chicago, Illinois 60606. The information regarding  Mac-Per-Wolf Company is based on a filing made with the SEC reflecting  beneficial ownership of the Common Stock as of December 31, 2007. Shares  shown include 201,800 shares of Common Stock beneficially owned with sole  voting and dispositive power, and 2,025,000 shares of Common Stock  beneficially owned with shared voting and dispositive power. The shared  voting and dispositive shares of Common Stock are held by Perkins, Wolf,  McDonnell and Company, LLC, a subsidiary of Mac-Per-Wolf Company.                  |
| (13) |   | The  business address of this beneficial holder is 11111 Santa Monica Blvd.,  Suite 1700, Los Angeles, California 90025. The information regarding  Reed Conner & Birdwell, LLC is based on a filing made reflecting  beneficial ownership of the Common Stock made as of November 12, 2008.                                                                                                                                                                                                                                                                                                                                                                         |
| (14) |   | The  business address of this beneficial holder is 290 Woodcliff Drive, Fairport,  New York 14450. The information regarding Manning & Napier  Advisors, Inc. is based on a filing made reflecting beneficial ownership  of the Common Stock as of December 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                |
| (15) |   | Shares  shown include (i) 339,000 shares of Common Stock that may be acquired  pursuant to stock options exercisable within 60 days of April 1, 2009;  and (ii) 16,300 shares of Common Stock that may be acquired pursuant to  stock options exercisable within 60 days of April 1, 2009 but expire, if  unexercised, on May 21, 2009.                                                                                                                                                                                                                                                                                                                        |

 

# **Equity Compensation Plan Information**

# ** **

# **The following table provides certain information withrespect to all of the Company’s equity compensation plans in effect as of December 31,2008.**

 
| ** **                                                 | ** ** | **(a)**                                                                                                | ** ** | **(b)**                                                                                    | ** ** | **(c)**                                                                                                                                                  | ** ** |
|------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| **Plan Category**                                          | ** ** | **Number of securities to  be issued upon exercise  of outstanding options,  warrants and rights (1)** | ** ** | **Weighted   average exercise  price of  outstanding   options, warrants  and rights (2)** | ** ** | **Number of securities  remaining available for  future issuance under  equity compensation plans  (excluding securities  reflected in column (a)) (3)** | ** ** |
| Equity  compensation plans approved by security holders    |       | 487,620                                                                                                |       | $                                                                                          | 6.54       |                                                                                                                                                     | 423,768    |   |
| Equity  compensation plan not approved by security holders |       | 461,000                                                                                                |       | $                                                                                          | 5.53       |                                                                                                                                                     | —     |   |
| Total                                                      |       | 948,620                                                                                                |       | $                                                                                          | 5.82       |                                                                                                                                                     | 423,768    |   |

# ** **

# **All amounts set forth opposite “Equity compensationplans approved by security holders” relate to the Incentive Plan. Amounts setforth opposite “Equity compensation plan not approved by security holders”relate to the Amended and Restated Edge Petroleum Corporation Elias StockIncentive Plan (the “Elias Plan”), which is described below.**

# ** **

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----

| (1) |   | The  shares set forth in column (a) are comprised of shares of Common Stock  that may be issued in the future pursuant to currently outstanding options  for the purchase of Common Stock and shares of Common Stock that may be  issued in the future pursuant to currently outstanding restricted stock  awards. In the case of restricted stock awards, the Company does not actually  issue shares of Common Stock until and to the extent the awards vest. The  amounts set forth in column (a) include 305,020****shares  with respect to the Incentive Plan that may be issued in the future pursuant  to currently outstanding restricted stock awards. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | The  calculations of weighted average exercise prices are exclusive of restricted  stock awards. In the case of equity compensation plans approved by security  holders, the amount is based solely on options to purchase 182,600 shares of  Common Stock pursuant to the Incentive Plan. In the case of equity  compensation plans not approved by security holders, the amount is based on  options to purchase 461,000****shares of  Common Stock pursuant to the Elias Plan.                                                                                                                                                                                         |
| (3) |   | All  of the shares set forth in column (c) with respect to the Incentive Plan  may be issued pursuant to stock awards, including stock options, restricted  stock grants and stock appreciation rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

 

# **The Elias Plan, which provides for awards of restrictedstock and of options for the purchase of Common Stock, was approved by theBoard of Directors of the Company and 475,000 shares of Common Stock wereinitially reserved for issuance thereunder, of which no shares remain availablefor additional awards at December 31, 2008.  As of December 31, 2008, options for thepurchase of 461,000 shares of Common Stock and a restricted stock awardrelating to 14,000 shares of Common Stock had been made to Mr. Elias underthe Elias Plan.  The Elias Plan wasadopted to induce and retain the employment of Mr. Elias and to stimulatehis active interest in the development and financial success of theCompany.  Mr. Elias’ employmentagreement contemplates the issuance to him of options for the purchase of up to450,000 shares of Common Stock, all of which options have been issued under theElias Plan as of December 31, 2008. The Elias Plan provided for the issuance of an initial option award to Mr. Eliasfor the purchase of 200,000 shares of Common Stock effective January 8,1999, which became exercisable in increments of one-third of the shares subjectthereto annually beginning on the date of grant, has a term of ten years and anexercise price equal to the fair market value of the Common Stock on the dateof grant.  The Elias Plan provides thatall subsequent option awards under the Elias Plan, which may be made in thesole discretion of the Board, be of options with a ten-year term, becomingexercisable in full upon the second anniversary of the date of grant and withan exercise price not less than the fair market value of the Common Stock onthe date of grant.  Pursuant to the EliasPlan, the Board approved grants of non-qualified stock options to purchase50,000 shares of Common Stock effective on or about January 1 of each ofthe years 2000 through and including 2003. For 2004, options for the purchase of 37,000 shares were issued to Mr. Eliasunder the Elias Plan and options for the purchase of 13,000 shares were issuedto him under the Incentive Plan.  Alloptions were granted at an exercise price equal to the fair market value of theCommon Stock on the date of grant.  TheElias Plan also provides for an award of 14,000 shares of restricted stock to Mr. Eliaseffective March 1, 2001, which vested in increments of one-third of theshares subject thereto annually beginning on the first anniversary ofgrant.  An option award to Mr. Eliasfor the purchase of 24,000 shares of Common Stock was made from the Elias Planon April 1, 2002, which became exercisable in full upon the secondanniversary of the date of grant at an exercise price equal to the fair marketvalue of the Common Stock on the date of grant.**

# ** **

***ITEM 13***.    CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS, AND DIRECTOR INDEPENDENCE

*** ***

**DIRECTOR INDEPENDENCE**

 

The Board, at its meetingheld on January 6, 2009, determined that all directors of the Company areindependent directors within the meaning of Marketplace Rule 4200(a)(15)of the Nasdaq Stock Market, except that Mr. Elias is not independentbecause he is an employee of the Company, and except that Mr. Sfondrini isnot independent because of prior transactions described under “CertainRelationships and Related Transactions” later in this report.  There are no family relations, of firstcousin or closer, among the Company’s directors or executive officers by blood,marriage or adoption.

 

The Board took intoconsideration certain relationships, described below, in making itsdeterminations as to which directors are independent.  These relationships are not of a nature orsignificance such that they are required to be disclosed under the requirementsapplicable to the “Certain Relationships and Related Transactions” section ofthis report. The Board’s opinion was that the following relationships would notinterfere with the exercise of independent judgment on the part of the directorin carrying out his responsibilities as a director:

 

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·                  Mr. Andrews, together with Mr. Sfondrini,control BV Partners Limited Partnership, which partnership was involved in asale of oil and gas assets to the Company in 2007.  Mr. Andrews owns no limited partnerinterest in BV Partners Limited Partnership, and his ownership in the corporategeneral partner is not material in size or economic value.

 

·                  Two corporations, of which Mr. Andrews is anofficer and a member of his immediate family hold ownership interests, ownworking interests in certain wells and prospects operated by the Company.  These working interests bear their share oflease operating costs and royalty burdens on the same basis as theCompany.   Amounts paid by the Company tothese parties represent their pro-rata ownership shares in the particularproperties involved.  These workinginterests are immaterial in amount.

 

·                  A limited partnership, of which one of thecorporations affiliated with Mr. Andrews is the general partner, holdsoverriding royalty interests with respect to the Company’s working interest incertain wells and prospects.  As a resultthe Company pays royalties to these parties. These overriding royalty interests are immaterial in amount.

 

**CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

 

In 2008, no financial transactions were disclosed orproposed with related persons for the Company to review, approve or ratify inwhich (i) the Company was or is to be a participant, (ii) the amountexceeded $120,000, and (iii) any related person had or will have a director indirect material interest.

 

The following parties formerly owned certain workinginterests in the Company’s Nita and Austin Prospects and certain other wellsand prospects operated by the Company:  (1) EdgeGroup Partnership, a general partnership composed of three limited partnershipsof which Mr. Sfondrini and a company wholly owned by Mr. Sfondriniare general partners; (2) Edge Holding Company, L.P., a limitedpartnership of which Mr. Sfondrini and a corporation wholly owned by himare the general partners; and (3) Essex Royalty Joint Venture I (“Essex I”)and Essex Royalty Joint Venture II (“Essex II”), both being joint venturepartnerships of which Mr. Sfondrini and a company wholly owned by Mr. Sfondriniare managers.  In November 2007,Essex I and Essex II disposed of all of their remaining royalty and overridingroyalty interests in wells operated by the Company.  Certain working interests, royalty interestsand overriding royalty interests of Edge Holding Company, LP and Edge GroupPartnership in the Austin Prospect in properties not operated by the Companywere sold in February 2008 and the Company, at the same time, sold itsinterests in all properties where interests were also owned by any of thesepartnerships to the same unrelated third party purchasers in an auction.

 

**RELATEDPARTY TRANSACTION POLICIES AND PROCEDURES**

 

As set forth in writingin the Audit Committee Charter, related party transactions are subject toreview and approval by the Audit Committee to the extent required by Nasdaqrules.  For this purpose, related partytransactions are transactions required to be disclosed pursuant to Item 404(a) ofRegulation S-K.  In order to identifyrelated party transactions, among other measures, the Company requires itsdirectors and officers to complete questionnaires identifying transactions withthe company in which the officer or director or their family members may havean interest.  In addition, our Code ofEthics for employees, directors and officers requires employees to disclosepossible conflicts of interest to the Company.

 

##### **ITEM 14**.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

##### ** **

Our consolidatedfinancial statements for the year ended December 31, 2008 have beenaudited by BDO Seidman, LLP, independent registered public accountingfirm.  The Audit Committee is scheduledto select, later this year, the independent registered public accounting firmto perform our audit for the year ending December 31, 2009; accordingly,no independent registered public accounting firm has yet been selected for theyear ending December 31, 2009, although BDO Seidman, LLP has been engagedto provide review services in connection with the quarter ended March 31,2009.

 

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BDO Seidman, LLP billedthe Company as set forth in the table below for professional services renderedfor the audit of the Company’s annual financial statements for the years ended December 31,2008 and 2007, respectively, and for the reviews of the Company’s quarterlyfinancial statements included in the Company’s Quarterly Reports on Form 10-Qfor such periods and for work on other SEC filings. Audit-related fees includeBDO Seidman, LLP’s due diligence review of mergers and acquisitions and auditsof acquisitions during the years ended December 31, 2008 and 2007,respectively.  All amounts billed by BDOSeidman, LLP were for work performed subsequent to its engagement during 2007and 2008 and are reflected in the columns below.

 
| ** **          | ** ** | **Fiscal 2008** | ** ** | **Fiscal 2007** | ** ** |
|---------------------|------------|-----------------|------------|-----------------|------------|
| ** **          | ** ** | ** **      | ** ** | ** **      | ** ** |
| Audit Fees          |       | $               | 537,916    |            | $          | 590,481 |   |
| Audit-related  Fees |       | $               | 115,685    |            | $          | 92,797 |   |
| Tax Fees            |       | —          |       | —          |       |
| All Other Fees      |       | —          |       | —          |       |

 

The Audit Committeepre-approved all of the services described above that were provided during thefiscal year ended December 31, 2008 and 2007 in accordance with the AuditCommittee’s policy (discussed below) and the pre-approval requirements of theSarbanes-Oxley Act.  Accordingly, therewere no services for which the de minimis exception, as defined in Section 202of the Sarbanes-Oxley Act, was applicable.

 

**Policy on Audit Committee Pre-Approval of Auditand Non-Audit Services**

 

The Audit Committee hasestablished a policy for the pre-approval of audit and non-audit servicesperformed for the Company by the independent registered public accounting firm,which also specifies the types of services that the independent registeredpublic accounting firm may and may not provide to the Company.  The policy provides for general pre-approvalof services and specific case-by-case approval of certain services. Theservices that are pre-approved include audit services and audit-relatedservices such as due diligence services pertaining to potential businessacquisitions and dispositions, tax services and may also include otherservices.  The term of any pre-approvalis 12 months and is generally subject to certain specific budgeted amounts orratios as determined by the Committee. The Committee may revise the list ofgeneral pre-approved services from time to time based on subsequentdeterminations.   Unless a type ofservice has received general pre-approval, it will require specificpre-approval by the Audit Committee.  Anyproposed services which were addressed in the pre-approval, but exceedpre-approved cost levels or budgeted amounts will also require specificpre-approval by the Committee.  The AuditCommittee does not delegate its responsibilities concerning pre-approval ofservices to management.  The independentregistered public accounting firm and management are required to periodicallyreport to the Audit Committee regarding the extent of services provided by theindependent registered public accounting firm in accordance with thispre-approval, and the fees for services performed to date.

 

**PART IV**

 

**ITEM 15****. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

 

(a)          Financial Statements and Schedules:

 

1.               Financial Statements: See Index to the Consolidated Financial Statements and SupplementaryInformation immediately following the signature page of the Form 10-K,as originally filed.

 

2.               Financial Statement Schedule: See Index to the ConsolidatedFinancial Statements and Supplementary Information immediately following thesignature page of the Form 10-K, as originally filed.

 

(b)         Exhibits: The following documents are filed as exhibits to this report:

 
| 2.1 | — |   | Amended and Restated  Combination Agreement by and among (i) Edge Group II Limited  Partnership, (ii) Gulfedge Limited Partnership, (iii) Edge Group  Partnership, (iv) Edge Petroleum Corporation, (v) Edge  Mergeco, Inc. and (vi) the Company, dated as of January 13,  1997 |
|-----|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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|   |   |   | (Incorporated by  reference from Appendix A to the Joint Proxy Statement/Prospectus contained  in the Company’s Registration Statement on Form S-4/A filed on  January 15, 1997 (Registration No. 333-17269)).                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.2    | — |   | Agreement and Plan of  Merger dated as of May 28, 2003 among Edge Petroleum Corporation, Edge  Delaware Sub Inc. and Miller Exploration Company (“Miller”) (Incorporated by  reference from Annex A to the Joint Proxy Statement/Prospectus contained in  the Company’s Registration Statement on Form S-4/A filed on  October 31, 2003 (Registration No. 333-106484)).                                                                                                                                                         |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.3    | — |   | Asset Purchase  Agreement by and among Contango STEP, L.P., Contango Oil & Gas  Company, Edge Petroleum Exploration Company and Edge Petroleum Corporation,  dated as of October 7, 2004 (Incorporated by reference from exhibit 2.1  to the Company’s Current Report on Form 8-K filed October 12,  2004).                                                                                                                                                                                                                           |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.4    | — |   | Purchase and Sale  Agreement, dated as of September 21, 2005 among Pearl Energy Partners,  Ltd., and Cibola Exploration Partners, L.P., as Sellers; and Edge Petroleum  Exploration Company as Buyer and Edge Petroleum Corporation as Guarantor  (Incorporated by reference from exhibit 2.1 to the Company’s Current Report  on Form 8-K filed October 19, 2005).                                                                                                                                                                            |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.5    | — |   | Stock Purchase  Agreement by and among Jon L. Glass, Craig D. Pollard, Leigh T. Prieto,  Yorktown Energy Partners V, L.P., Yorktown Energy Partners VI, L.P., Cinco  Energy Corporation, and Edge Petroleum Exploration Company and Edge Petroleum  Corporation, dated as of September 21, 2005 (Incorporated by reference  from exhibit 2.5 to the Company’s Quarterly Report on Form 10-Q for the  quarterly period ended September 30, 2005).                                                                                               |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.6    | — |   | Letter Agreement dated  November 18, 2005 by and among Edge Petroleum Exploration Company, Cinco  Energy Corporation and Sellers (Incorporated by reference from exhibit 2.02  to the Company’s Current Report on Form 8-K filed December 6,  2005). Pursuant to Item 601(b)(2) of Regulation S-K, the Company had  omitted certain Schedules to the Letter Agreement (all of which are listed  therein) from this Exhibit 2.6. It hereby agrees to furnish a  supplemental copy of any such omitted item to the SEC on its request. |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.7    | — |   | Agreement and Plan of  Merger, dated July 14, 2008, among Chaparral Energy, Inc.,  Chaparral Exploration, L.L.C. and Edge Petroleum Corporation (Incorporated by  reference from exhibit 2.1 to the Company’s Current Report on Form 8-K  filed July 15, 2008). Pursuant to Item 601(b)(2) of Regulation S-K,  the Company had omitted the disclosure schedules to the Merger Agreement from  this Exhibit 2.1. It hereby agrees to furnish a supplemental copy of any  such omitted item to the SEC on its request.            |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.1    | — |   | Restated Certificate of  Incorporation of the Company effective January 27, 1997 (Incorporated by  reference from exhibit 3.1 to the Company’s Current Report on Form 8-K  filed April 29, 2005).                                                                                                                                                                                                                                                                                                                                              |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.2    | — |   | Certificate of  Amendment to the Restated Certificate of Incorporation of the Company  effective January 31, 1997 (Incorporated by reference from exhibit 3.2  to the Company’s Current Report on Form 8-K filed April 29, 2005).                                                                                                                                                                                                                                                                                                              |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.3    | — |   | Certificate of  Amendment to the Restated Certificate of Incorporation of the Company  effective April 27, 2005 (Incorporated by reference from exhibit 3.3 to  the Company’s Current Report on Form 8-K filed April 29, 2005).                                                                                                                                                                                                                                                                                                                |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.4    | — |   | Bylaws of the Company  (Incorporated by reference from exhibit 3.3 to the Company’s Quarterly Report  on Form 10-Q for the quarterly period ended September 30, 1999  (File No. 000-22149)).                                                                                                                                                                                                                                                                                                                                                   |

 

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| 3.5    | — |   | First Amendment to  Bylaws of the Company on September 28, 1999 (Incorporated by reference  from exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the  quarterly period ended September 30, 1999 (File No. 000-22149)).                                                                                                                                                                                                                                                                                       |
|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.6    | — |   | Second Amendment to  Bylaws of the Company on May 7, 2003 (Incorporated by reference from  exhibit 3.4 to the Company’s Quarterly Report on Form 10-Q for the  quarterly period ended March 31, 2003).                                                                                                                                                                                                                                                                                                                           |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.7    | — |   | Certificate of  Designations establishing the 5.75% Series A cumulative convertible  perpetual preferred stock, dated January 25, 2007 (Incorporated by  reference to exhibit 3.1 to the Company’s Current Report on Form 8-K  filed January 30, 2007).                                                                                                                                                                                                                                                                     |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.8    | — |   | Third Amendment to  Bylaws of Edge Petroleum Corporation on October 21, 2008 (Incorporated  by reference to exhibit 3.4 to the Company’s Current Report on Form 8-K  filed October 23, 2008).                                                                                                                                                                                                                                                                                                                                    |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.1    | — |   | Miller Exploration  Company Stock Option and Restricted Stock Plan of 1997 (Incorporated by  reference from exhibit 10.1(a) to Miller’s Annual Report on  Form 10-K for the year ended December 31, 1997 (File  No. 000-23431)).                                                                                                                                                                                                                                                                                            |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.2    | — |   | Amendment No. 1 to  the Miller Exploration Company Stock Option and Restricted Stock Plan of 1997  (Incorporated by reference to Exhibit 4.2 from Miller’s Registration  Statement on Form S-8 filed on April 11, 2001 (Registration  No. 333-58678)).                                                                                                                                                                                                                                                                 |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.3    | — |   | Amendment No. 2 to  the Miller Exploration Company Stock Option and Restricted Stock Plan of 1997  (Incorporated by reference from Exhibit 4.3 to Miller’s Registration  Statement on Form S-8 filed on April 11, 2001 (Registration  No. 333-58678)).                                                                                                                                                                                                                                                                 |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.4    | — |   | Form of Miller  Stock Option Agreement (Incorporated by reference from exhibit  10.1(b) to Miller’s Annual Report on Form 10-K for the year ended  December 31, 1997 (File No. 000-23431)).                                                                                                                                                                                                                                                                                                                            |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.5    | — |   | Fourth Amended and  Restated Credit Agreement dated January 31, 2007 by and among Edge  Petroleum Corporation, as borrower, and Union Bank of California, N.A., as  Administrative Agent and Issuing Lender, and the other lenders party thereto  (Incorporated by reference from exhibit 4.1 to the Company’s Current Report  on Form 8-K filed on February 5, 2007).                                                                                                                                                           |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.6    | — |   | Amendments No. 1,  2 and 3 to the Fourth Amended and Restated Credit Agreement dated as of  July 11, 2007, December 10, 2007 and May 8, 2008,  respectively, by and among Edge Petroleum Corporation, as borrower, and Union  Bank of California, N.A., as Administrative Agent and Issuing Lender, and the  other lenders party thereto (Incorporated by reference from exhibit 4.9 to  the Company’s Quarterly Report on Form 10-Q for the quarterly period  ending March 31, 2008 filed on May 12, 2008). |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.7    | — |   | Consent, executed  July 11, 2008, among Edge Petroleum Corporation, the Lenders party  thereto and Union Bank of California, N.A., as administrative agent for such  Lenders (Incorporated by reference from exhibit 4.1 to the Company’s Current  Report on Form 8-K filed July 15, 2008).                                                                                                                                                                                                                                      |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.8    | — |   | Letter Agreement dated  November 5, 2008 by and among Edge Petroleum Corporation, Union Bank of  California, N.A., as Administrative Agent and Issuing Lender, and the other  lenders party thereto (Incorporated by reference from exhibit 4.11 to the  Company’s Quarterly Report on Form 10-Q for the quarterly period ending  September 30, 2008 filed November 10, 2008).                                                                                                                                              |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.9    | — |   | Consent and Agreement,  executed February 9, 2009, among Edge Petroleum Corporation, the lenders  party thereto and Union Bank of California, N.A., as administrative agent for  such lenders (Incorporated by reference from exhibit 4.1 to the Company’s  Current Report on Form 8-K filed February 9, 2009).                                                                                                                                                                                                                  |

 

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| 4.10          | — |   | Consent and Agreement,  executed March 10, 2009, among Edge Petroleum Corporation, the lenders  party thereto and Union Bank of California, N.A., as administrative agent for  such lenders (Incorporated by reference from exhibit 4.1 to the Company’s  Current Report on Form 8-K filed March 10, 2009).                                             |
|---------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| 4.11          | — |   | Consent and Agreement  No. 4 executed March 16, 2009, among Edge Petroleum Corporation,  the lenders party thereto and Union Bank of California, N.A., as  administrative agent for such lenders (Incorporated by reference from exhibit  4.1 to the Company’s Current Report on Form 8-K filed March 16,  2009).                                  |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.1    | — |   | Form of  Indemnification Agreement between the Company and each of its directors  (Incorporated by reference from exhibit 10.7 to the Company’s Registration  Statement on Form S-4 (Registration No. 333-17269)).                                                                                                                                      |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.2    | — |   | Stock Option Plan of  Edge Petroleum Corporation, a Texas corporation (Incorporated by reference  from exhibit 10.13 to the Company’s Registration Statement on Form S-4  (Registration No. 333-17269)).                                                                                                                                                     |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.3    | — |   | Employment Agreement  dated as of November 16, 1998, by and between the Company and John W.  Elias (Incorporated by reference from exhibit 10.12 to the Company’s Annual  Report on Form 10-K for the year ended December 31, 1998 (File  No. 000-22149)).                                                                                         |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.4    | — |   | Amended and Restated  Incentive Plan of Edge Petroleum Corporation as Amended and Restated  Effective as of August 1, 2006 (Incorporated by reference from exhibit  10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly  period ending June 30, 2006).                                                                                |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.5    | — |   | Edge Petroleum  Corporation Incentive Plan “Standard Non-Qualified Stock Option Agreement” by  and between Edge Petroleum Corporation and the Officers named therein  (Incorporated by reference from exhibit 10.2 to the Company’s Quarterly  Report on Form 10-Q for the quarterly period ended September 30,  1999 (File No. 000-22149)).  |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.6    | — |   | Edge Petroleum  Corporation Incentive Plan “Director Non-Qualified Stock Option Agreement” by  and between Edge Petroleum Corporation and the Directors named therein  (Incorporated by reference from exhibit 10.3 to the Company’s Quarterly  Report on Form 10-Q for the quarterly period ended September 30,  1999 (File No. 000-22149)). |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.7    | — |   | Form of  Director’s Restricted Stock Award Agreement under the Incentive Plan of Edge  Petroleum Corporation (Incorporated by reference from exhibit 10.12 to the  Company’s Quarterly Report on Form 10-Q for the quarterly period ended  June 30, 2004).                                                                                         |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.8    | — |   | Form of Employee  Restricted Stock Award Agreement under the Incentive Plan of Edge Petroleum  Corporation (Incorporated by reference from exhibit 10.15 to the Company’s  Quarterly Report on Form 10-Q/A for the quarterly period ended March 31,  1999 (File No. 000-22149)).                                                                   |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.9    | — |   | Edge Petroleum  Corporation Amended and Restated Elias Stock Incentive Plan (Incorporated by  reference from exhibit 4.5 to the Company’s Registration Statement on  Form S-8 filed May 30, 2001 (Registration No. 333-61890)).                                                                                                                         |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.10   | — |   | Form of Edge  Petroleum Corporation John W. Elias Non-Qualified Stock Option Agreement  (Incorporated by reference from exhibit 4.6 to the Company’s Registration  Statement on Form S-8 filed May 30, 2001 (Registration  No. 333-61890)).                                                                                                        |
|          |   |   |                                                                                                                                                                                                                                                                                                                                                                        |
| **†10.11 | — |   | Summary  of Compensation of Non-Employee Directors.                                                                                                                                                                                                                                                                                                                         |

 

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| **†10.12 | — |   | Salaries and Certain Other  Compensation of Executive Officers.                                                                                                                                                                                                                                                      |
|---------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| †10.13   | — |   | Description of Annual  Cash Bonus Program for Executive Officers (Incorporated by reference from  exhibit 10.2 to the Company’s Current Report on Form 8-K filed  March 12, 2007).                                                                                                                    |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| †10.14   | — |   | New Base Salaries and  Long-Term Incentive Awards for Certain Executive Officers (Incorporated by  reference from exhibit 10.1 to the Company’s Current Report on Form 8-K  filed August 29, 2006).                                                                                                   |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| 10.15         | — |   | Purchase and Sale  Agreement between Smith Production, Inc., as seller, and Edge Petroleum  Exploration Company, as purchaser, dated November 16, 2006 (Incorporated  by reference to exhibit 10.1 to the Company’s Current Report on Form 8-K  filed January 16, 2007).                    |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| 10.16         | — |   | Purchase and Sale  Agreement between Smith Production, Inc., as seller, and Edge Petroleum  Exploration Company, as purchaser, dated November 16, 2006 (Incorporated  by reference to exhibit 10.2 to the Company’s Current Report on Form 8-K  filed January 16, 2007).                    |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| 10.17         | — |   | 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 to exhibit 10.3 to the Company’s Current  Report on Form 8-K filed January 16, 2007). |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| 10.18         | — |   | 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 to exhibit 10.1 to the Company’s Current  Report on Form 8-K filed January 19, 2007). |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| 10.19         | — |   | 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 to exhibit 10.2 to the Company’s Current  Report on Form 8-K filed January 19, 2007).  |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| 10.20         | — |   | Third Amendment of  Purchase and Sale Agreement between Smith Production, Inc., as seller,  and Edge Petroleum Exploration Company, as purchaser, dated January 31,  2007 (Incorporated by reference to exhibit 10.6 to the Company’s Current  Report on Form 8-K filed February 5, 2007).  |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| †10.21   | — |   | New Base Salaries of  Executive Officers (Incorporated by reference from Exhibit 10.1 to the  Company’s Current Report on Form 8-K filed March 12, 2007).                                                                                                                                        |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| †10.22   | — |   | Form of Amended  and Restated Severance Agreement dated April 3, 2008, between the  Company and Executive Officers of the Company Named Therein (Incorporated by  reference from exhibit 10.1 to the Company’s Current Report on Form 8-K  filed April 4, 2008).                            |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| †10.23   | — |   | Amended and Restated  Severance Agreement dated April 3, 2008, between the Company and John W.  Elias (Incorporated by reference from exhibit 10.2 to the Company’s Current  Report on Form 8-K filed April 4, 2008).                                                                            |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| †10.24   | — |   | Amended and Restated  Employment Agreement dated April 3, 2008, between the Company and John  W. Elias (Incorporated by reference from exhibit 10.3 to the Company’s  Current Report on Form 8-K filed April 4, 2008).                                                                           |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| †10.25   | — |   | First Amendment to  Amended and Restated Severance Agreement, dated July 14, 2008, between  the Company and John W. Elias (Incorporated by reference from exhibit 10.1 to  the Company’s Current Report on Form 8-K filed July 15, 2008).                                                        |
|          |   |   |                                                                                                                                                                                                                                                                                                                 |
| †10.26   | — |   | First Amendment to  Second Amended and Restated Severance Agreement, dated July 14, 2008,  between the Company and Executive Officers of the Company Named Therein  (Incorporated by reference from exhibit 10.2 to the Company’s Current Report  on Form 8-K filed July 15, 2008).              |

 

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| †10.27 |   |   | Fourth Amended and  Restated Severance Agreement among Edge Petroleum Corporation and Kirsten A.  Hink (Incorporated by reference from exhibit 10.1 to the Company’s Current  Report on Form 8-K filed April 6, 2009).                                                                                                                                                                                                                      |
|-------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.28       | — |   | Merger Termination  Agreement, dated December 16, 2008, among Chaparral Energy, Inc.,  Chaparral Exploration, L.L.C. and Edge Petroleum Corporation (Incorporated by  reference to exhibit 10.1 to the Company’s Current Report on Form 8-K  filed December 17, 2008).                                                                                                                                                            |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.29       | — |   | Termination and  Settlement Agreement, dated December 16, 2008, among Magnetar Financial  LLC**,**Investment Partners II (B),  LLC, QRA SR, LLC, Triangle Peak Partners Private Equity, LP, Post Oak Energy  Capital, LP, Chaparral Energy, Inc., Chaparral Exploration, L.L.C. and  Edge Petroleum Corporation (Incorporated by reference to exhibit 10.2 to the  Company’s Current Report on Form 8-K filed December 17, 2008). |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **12.1      | — |   | Statement of  Computation of Ratio of Earnings to Combined Fixed Charges and Preferred  Stock Dividends.                                                                                                                                                                                                                                                                                                                                                   |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **21.1      | — |   | Subsidiaries of the  Company.                                                                                                                                                                                                                                                                                                                                                                                                                              |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **23.1      | — |   | Consent of BDO Seidman,  LLP.                                                                                                                                                                                                                                                                                                                                                                                                                              |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **23.2      | — |   | Consent of Ryder Scott  Company.                                                                                                                                                                                                                                                                                                                                                                                                                           |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **23.3      | — |   | Consent of W. D. Von  Gonten & Co.                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| *31.1       | — |   | Certification by John  W. Elias, Chief Executive Officer, pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                 |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| *31.2       | — |   | Certification by Gary  L. Pittman, Chief Financial Officer, pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                               |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **32.1      | — |   | Certification by John  W. Elias, Chief Executive Officer, pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                 |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **32.2      | — |   | Certification by Gary  L. Pittman, Chief Financial Officer, pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                               |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **99.1      | — |   | Summary of Reserve  Report of Ryder Scott Company Petroleum Engineers as of December 31,  2008.                                                                                                                                                                                                                                                                                                                                                       |
|        |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **99.2      | — |   | Summary of Reserve  Report of W. D. Von Gonten & Co. Petroleum Engineers as of  December 31, 2008.                                                                                                                                                                                                                                                                                                                                           |

 

----

| *      | Filed  herewith.                                                                                                       |
|--------|------------------------------------------------------------------------------------------------------------------------|
| **     | Previously  filed with the original Annual Report on Form 10-K for the fiscal year  ended December 31, 2008. |
| † | Denotes management or  compensatory contract, arrangement or agreement, or a summary or description  thereof.          |

 

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**SIGNATURES**

 

### **Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.**

 
| ** ** | **Edge Petroleum Corporation**                     |
|------------|----------------------------------------------------|
| ** ** | ** **                                         |
|       | By                                                 | /S/ John W.  Elias |
|       | John W. Elias                                      |
|       | Chief Executive  Officer and Chairman of the Board |
|       | Date:  April 30, 2009                         |

 

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the registrant and in thecapacities and on the dates indicated.

 
| By     | /S/ John W.  Elias                                                                   |   | Date: April 30,  2009 |
|--------|--------------------------------------------------------------------------------------|--------|----------------------------|
|   | John W. Elias                                                                        |   |                       |
|   | Chief Executive  Officer and Chairman of the Board  (Principal Executive Officer)    |   |                       |
|   |                                                                                 |   |                       |
| By     | /S/ Gary L.  Pittman                                                                 |   | Date: April 30,  2009 |
|   | Gary L. Pittman                                                                      |   |                       |
|   | Executive Vice  President and Chief Financial Officer  (Principal Financial Officer) |   |                       |
|   |                                                                                 |   |                       |
| By     | /S/ Kirsten A.  Hink                                                                 |   | Date: April 30,  2009 |
|   | Vice President  and Controller                                                       |   |                       |
|   | (Principal  Accounting Officer)                                                      |   |                       |
|   |                                                                                 |   |                       |
| By     | /S/ Thurmon M.  Andress                                                              |   | Date: April 30,  2009 |
|   | Thurmon Andress                                                                      |   |                       |
|   | Director                                                                             |   |                       |
|   |                                                                                 |   |                       |
| By     | /S/ Vincent S.  Andrews                                                              |   | Date: April 30,  2009 |
|   | Vincent Andrews                                                                      |   |                       |
|   | Director                                                                             |   |                       |
|   |                                                                                 |   |                       |
| By     | /S/ Jonathan  Clarkson                                                               |   | Date: April 30,  2009 |
|   | Jonathan  Clarkson                                                                   |   |                       |
|   | Director                                                                             |   |                       |
|   |                                                                                 |   |                       |
| By     | /S/ Michael A.  Creel                                                                |   | Date: April 30,  2009 |
|   | Michael A. Creel                                                                     |   |                       |
|   | Director                                                                             |   |                       |
|   |                                                                                 |   |                       |
| By     | /S/ John  Sfondrini                                                                  |   | Date: April 30,  2009 |
|   | John Sfondrini                                                                       |   |                       |
|   | Director                                                                             |   |                       |
|   |                                                                                 |   |                       |
| By     | /S/ Robert W.  Shower                                                                |   | Date: April 30,  2009 |
|   | Robert W. Shower                                                                     |   |                       |
|   | Director                                                                             |   |                       |
|   |                                                                                 |   |                       |
| By     | /S/ David F.  Work                                                                   |   | Date: April 30,  2009 |
|   | David F. Work                                                                        |   |                       |
|   | Director                                                                             |   |                       |

 

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# **INDEX TO EXHIBITS**

# ** **

| **Exhibit**      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **No.**          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.1  — | Amended and Restated  Combination Agreement by and among (i) Edge Group II Limited  Partnership, (ii) Gulfedge Limited Partnership, (iii) Edge Group  Partnership, (iv) Edge Petroleum Corporation, (v) Edge  Mergeco, Inc. and (vi) the Company, dated as of January 13,  1997 (Incorporated by reference from Appendix A to the Joint Proxy  Statement/Prospectus contained in the Company’s Registration Statement on  Form S-4/A filed on January 15, 1997 (Registration  No. 333-17269)).         |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.2  — | Agreement and Plan of  Merger dated as of May 28, 2003 among Edge Petroleum Corporation, Edge  Delaware Sub Inc. and Miller Exploration Company (“Miller”) (Incorporated by  reference from Annex A to the Joint Proxy Statement/Prospectus contained in  the Company’s Registration Statement on Form S-4/A filed on  October 31, 2003 (Registration No. 333-106484)).                                                                                                                                                         |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.3  — | Asset Purchase  Agreement by and among Contango STEP, L.P., Contango Oil & Gas Company,  Edge Petroleum Exploration Company and Edge Petroleum Corporation, dated as  of October 7, 2004 (Incorporated by reference from exhibit 2.1 to the  Company’s Current Report on Form 8-K filed October 12, 2004).                                                                                                                                                                                                                            |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.4  — | Purchase and Sale  Agreement, dated as of September 21, 2005 among Pearl Energy Partners,  Ltd., and Cibola Exploration Partners, L.P., as Sellers; and Edge Petroleum  Exploration Company as Buyer and Edge Petroleum Corporation as Guarantor  (Incorporated by reference from exhibit 2.1 to the Company’s Current Report  on Form 8-K filed October 19, 2005).                                                                                                                                                                            |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.5  — | Stock Purchase  Agreement by and among Jon L. Glass, Craig D. Pollard, Leigh T. Prieto,  Yorktown Energy Partners V, L.P., Yorktown Energy Partners VI, L.P., Cinco  Energy Corporation, and Edge Petroleum Exploration Company and Edge Petroleum  Corporation, dated as of September 21, 2005 (Incorporated by reference  from exhibit 2.5 to the Company’s Quarterly Report on Form 10-Q for the  quarterly period ended September 30, 2005).                                                                                               |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.6  — | Letter Agreement dated  November 18, 2005 by and among Edge Petroleum Exploration Company, Cinco  Energy Corporation and Sellers (Incorporated by reference from exhibit 2.02  to the Company’s Current Report on Form 8-K filed December 6,  2005). Pursuant to Item 601(b)(2) of Regulation S-K, the Company had  omitted certain Schedules to the Letter Agreement (all of which are listed  therein) from this Exhibit 2.6. It hereby agrees to furnish a  supplemental copy of any such omitted item to the SEC on its request. |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.7  — | Agreement and Plan of  Merger, dated July 14, 2008, among Chaparral Energy, Inc.,  Chaparral Exploration, L.L.C. and Edge Petroleum Corporation (Incorporated by  reference from exhibit 2.1 to the Company’s Current Report on Form 8-K  filed July 15, 2008). Pursuant to Item 601(b)(2) of Regulation S-K,  the Company had omitted the disclosure schedules to the Merger Agreement from  this Exhibit 2.1. It hereby agrees to furnish a supplemental copy of any  such omitted item to the SEC on its request.            |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.1  — | Restated Certificate of  Incorporation of the Company effective January 27, 1997 (Incorporated by  reference from exhibit 3.1 to the Company’s Current Report on Form 8-K  filed April 29, 2005).                                                                                                                                                                                                                                                                                                                                              |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.2  — | Certificate of  Amendment to the Restated Certificate of Incorporation of the Company  effective January 31, 1997 (Incorporated by reference from exhibit 3.2  to the Company’s Current Report on Form 8-K filed April 29, 2005).                                                                                                                                                                                                                                                                                                              |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.3  — | Certificate of  Amendment to the Restated Certificate of Incorporation of the Company  effective April 27, 2005 (Incorporated by reference from exhibit 3.3 to the  Company’s Current Report on Form 8-K filed April 29, 2005).                                                                                                                                                                                                                                                                                                                               |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.4  — | Bylaws of the  Company  (Incorporated by reference  from exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q for the  quarterly period ended September 30, 1999 (File No. 000-22149)).                                                                                                                                                                                                                                                                                                                                                            |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 3.5  — | First Amendment to  Bylaws of the Company on September 28, 1999 (Incorporated by reference from  exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly  period ended September 30, 1999 (File No. 000-22149)).                                                                                                                                                                                                                                                                                                                         |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |

 

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| 3.6  —  | Second Amendment to  Bylaws of the Company on May 7, 2003 (Incorporated by reference from  exhibit 3.4 to the Company’s Quarterly Report on Form 10-Q for the  quarterly period ended March 31, 2003).                                                                                                                                                                                                                                                                                                                           |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.7  —  | Certificate of  Designations establishing the 5.75% Series A cumulative convertible  perpetual preferred stock, dated January 25, 2007 (Incorporated by  reference to exhibit 3.1 to the Company’s Current Report on Form 8-K  filed January 30, 2007).                                                                                                                                                                                                                                                                     |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.8  —  | Third Amendment to  Bylaws of Edge Petroleum Corporation on October 21, 2008 (Incorporated  by reference to exhibit 3.4 to the Company’s Current Report on Form 8-K  filed October 23, 2008).                                                                                                                                                                                                                                                                                                                                    |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.1  —  | Miller Exploration  Company Stock Option and Restricted Stock Plan of 1997 (Incorporated by  reference from exhibit 10.1(a) to Miller’s Annual Report on  Form 10-K for the year ended December 31, 1997 (File  No. 000-23431)).                                                                                                                                                                                                                                                                                            |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.2  —  | Amendment No. 1 to  the Miller Exploration Company Stock Option and Restricted Stock Plan of 1997  (Incorporated by reference to Exhibit 4.2 from Miller’s Registration  Statement on Form S-8 filed on April 11, 2001 (Registration  No. 333-58678)).                                                                                                                                                                                                                                                                 |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.3  —  | Amendment No. 2 to  the Miller Exploration Company Stock Option and Restricted Stock Plan of 1997  (Incorporated by reference from Exhibit 4.3 to Miller’s Registration Statement  on Form S-8 filed on April 11, 2001 (Registration  No. 333-58678)).                                                                                                                                                                                                                                                                 |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.4  —  | Form of Miller  Stock Option Agreement (Incorporated by reference from exhibit  10.1(b) to Miller’s Annual Report on Form 10-K for the year ended  December 31, 1997 (File No. 000-23431)).                                                                                                                                                                                                                                                                                                                            |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.5  —  | Fourth Amended and  Restated Credit Agreement dated January 31, 2007 by and among Edge  Petroleum Corporation, as borrower, and Union Bank of California, N.A., as  Administrative Agent and Issuing Lender, and the other lenders party thereto  (Incorporated by reference from exhibit 4.1 to the Company’s Current Report  on Form 8-K filed on February 5, 2007).                                                                                                                                                           |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.6  —  | Amendments No. 1,  2 and 3 to the Fourth Amended and Restated Credit Agreement dated as of  July 11, 2007, December 10, 2007 and May 8, 2008,  respectively, by and among Edge Petroleum Corporation, as borrower, and Union  Bank of California, N.A., as Administrative Agent and Issuing Lender, and the  other lenders party thereto (Incorporated by reference from exhibit 4.9 to  the Company’s Quarterly Report on Form 10-Q for the quarterly period  ending March 31, 2008 filed on May 12, 2008). |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.7  —  | Consent, executed  July 11, 2008, among Edge Petroleum Corporation, the Lenders party  thereto and Union Bank of California, N.A., as administrative agent for such  Lenders (Incorporated by reference from exhibit 4.1 to the Company’s Current  Report on Form 8-K filed July 15, 2008).                                                                                                                                                                                                                                      |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.8  —  | Letter Agreement dated  November 5, 2008 by and among Edge Petroleum Corporation, Union Bank of  California, N.A., as Administrative Agent and Issuing Lender, and the other  lenders party thereto (Incorporated by reference from exhibit 4.11 to the  Company’s Quarterly Report on Form 10-Q for the quarterly period ending  September 30, 2008 filed November 10, 2008).                                                                                                                                              |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.9  —  | Consent and Agreement,  executed February 9, 2009, among Edge Petroleum Corporation, the lenders  party thereto and Union Bank of California, N.A., as administrative agent for  such lenders (Incorporated by reference from exhibit 4.1 to the Company’s  Current Report on Form 8-K filed February 9, 2009).                                                                                                                                                                                                                  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.10  — | Consent and Agreement,  executed March 10, 2009, among Edge Petroleum Corporation, the lenders  party thereto and Union Bank of California, N.A., as administrative agent for  such lenders (Incorporated by reference from exhibit 4.1 to the Company’s  Current Report on Form 8-K filed March 10, 2009).                                                                                                                                                                                                                      |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 4.11  — | Consent and Agreement  No. 4 executed March 16, 2009, among Edge Petroleum Corporation,  the lenders party thereto and Union Bank of California, N.A., as  administrative agent for such lenders (Incorporated by reference from exhibit  4.1 to the Company’s Current Report on Form 8-K filed March 16,  2009).                                                                                                                                                                                                           |

 

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| †10.1 —     | Form of  Indemnification Agreement between the Company and each of its directors  (Incorporated by reference from exhibit 10.7 to the Company’s Registration  Statement on Form S-4 (Registration No. 333-17269)).                                                                                                                                      |
|-----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.2 —     | Stock Option Plan of  Edge Petroleum Corporation, a Texas corporation (Incorporated by reference  from exhibit 10.13 to the Company’s Registration Statement on Form S-4  (Registration No. 333-17269)).                                                                                                                                                     |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.3 —     | Employment Agreement  dated as of November 16, 1998, by and between the Company and John W.  Elias (Incorporated by reference from exhibit 10.12 to the Company’s Annual  Report on Form 10-K for the year ended December 31, 1998 (File  No. 000-22149)).                                                                                         |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.4 —     | Amended and Restated  Incentive Plan of Edge Petroleum Corporation as Amended and Restated  Effective as of August 1, 2006 (Incorporated by reference from exhibit  10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly  period ending June 30, 2006).                                                                                |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.5 —     | Edge Petroleum  Corporation Incentive Plan “Standard Non-Qualified Stock Option Agreement” by  and between Edge Petroleum Corporation and the Officers named therein  (Incorporated by reference from exhibit 10.2 to the Company’s Quarterly  Report on Form 10-Q for the quarterly period ended September 30,  1999 (File No. 000-22149)).  |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.6 —     | Edge Petroleum  Corporation Incentive Plan “Director Non-Qualified Stock Option Agreement” by  and between Edge Petroleum Corporation and the Directors named therein  (Incorporated by reference from exhibit 10.3 to the Company’s Quarterly  Report on Form 10-Q for the quarterly period ended September 30,  1999 (File No. 000-22149)). |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.7 —     | Form of  Director’s Restricted Stock Award Agreement under the Incentive Plan of Edge  Petroleum Corporation (Incorporated by reference from exhibit 10.12 to the  Company’s Quarterly Report on Form 10-Q for the quarterly period ended  June 30, 2004).                                                                                         |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.8 —     | Form of Employee  Restricted Stock Award Agreement under the Incentive Plan of Edge Petroleum  Corporation (Incorporated by reference from exhibit 10.15 to the Company’s  Quarterly Report on Form 10-Q/A for the quarterly period ended  March 31, 1999 (File No. 000-22149)).                                                                   |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.9 —     | Edge Petroleum  Corporation Amended and Restated Elias Stock Incentive Plan (Incorporated by  reference from exhibit 4.5 to the Company’s Registration Statement on  Form S-8 filed May 30, 2001 (Registration No. 333-61890)).                                                                                                                         |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.10 —    | Form of Edge  Petroleum Corporation John W. Elias Non-Qualified Stock Option Agreement  (Incorporated by reference from exhibit 4.6 to the Company’s Registration  Statement on Form S-8 filed May 30, 2001 (Registration  No. 333-61890)).                                                                                                        |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| **†10.11  — | Summary  of Compensation of Non-Employee Directors.                                                                                                                                                                                                                                                                                                                         |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| **†10.12  — | Salaries  and Certain Other Compensation of Executive Officers.                                                                                                                                                                                                                                                                                                             |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.13 —    | Description of Annual  Cash Bonus Program for Executive Officers (Incorporated by reference from  exhibit 10.2 to the Company’s Current Report on Form 8-K filed  March 12, 2007).                                                                                                                                                                           |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| †10.14 —    | New Base Salaries and  Long-Term Incentive Awards for Certain Executive Officers (Incorporated by  reference from exhibit 10.1 to the Company’s Current Report on Form 8-K  filed August 29, 2006).                                                                                                                                                          |
|                  |                                                                                                                                                                                                                                                                                                                                                                        |
| 10.15 —          | Purchase and Sale  Agreement between Smith Production, Inc., as seller, and Edge Petroleum  Exploration Company, as purchaser, dated November 16, 2006 (Incorporated  by reference to exhibit 10.1 to the Company’s Current Report on Form 8-K  filed January 16, 2007).                                                                           |

 

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| 10.16 —       | Purchase and Sale  Agreement between Smith Production, Inc., as seller, and Edge Petroleum  Exploration Company, as purchaser, dated November 16, 2006 (Incorporated  by reference to exhibit 10.2 to the Company’s Current Report on Form 8-K  filed January 16, 2007).                                                                                                                                                          |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.17 —       | 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 to exhibit 10.3 to the Company’s Current  Report on Form 8-K filed January 16, 2007).                                                                                                                                       |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.18 —       | 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 to exhibit 10.1 to the Company’s Current  Report on Form 8-K filed January 19, 2007).                                                                                                                                       |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.19 —       | 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 to exhibit 10.2 to the Company’s Current  Report on Form 8-K filed January 19, 2007).                                                                                                                                        |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.20 —       | Third Amendment of  Purchase and Sale Agreement between Smith Production, Inc., as seller,  and Edge Petroleum Exploration Company, as purchaser, dated January 31,  2007 (Incorporated by reference to exhibit 10.6 to the Company’s Current  Report on Form 8-K filed February 5, 2007).                                                                                                                                        |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| †10.21 — | New Base Salaries of  Executive Officers (Incorporated by reference from Exhibit 10.1 to the  Company’s Current Report on Form 8-K filed March 12, 2007).                                                                                                                                                                                                                                                                              |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| †10.22 — | Form of Amended  and Restated Severance Agreement dated April 3, 2008, between the Company  and Executive Officers of the Company Named Therein (Incorporated by  reference from exhibit 10.1 to the Company’s Current Report on Form 8-K  filed April 4, 2008).                                                                                                                                                                  |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| †10.23 — | Amended and Restated  Severance Agreement dated April 3, 2008, between the Company and John W.  Elias (Incorporated by reference from exhibit 10.2 to the Company’s Current  Report on Form 8-K filed April 4, 2008).                                                                                                                                                                                                                  |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| †10.24 — | Amended and Restated  Employment Agreement dated April 3, 2008, between the Company and John  W. Elias (Incorporated by reference from exhibit 10.3 to the Company’s  Current Report on Form 8-K filed April 4, 2008).                                                                                                                                                                                                                 |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| †10.25 — | First Amendment to  Amended and Restated Severance Agreement, dated July 14, 2008, between  the Company and John W. Elias (Incorporated by reference from exhibit 10.1 to  the Company’s Current Report on Form 8-K filed July 15, 2008).                                                                                                                                                                                              |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| †10.26 — | First Amendment to  Amended and Restated Severance Agreement, dated July 14, 2008, between  the Company and Executive Officers of the Company Named Therein (Incorporated  by reference from exhibit 10.2 to the Company’s Current Report on  Form 8-K filed July 15, 2008).                                                                                                                                                           |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| †10.27        | Fourth Amended and  Restated Severance Agreement among Edge Petroleum Corporation and Kirsten A.  Hink (Incorporated by reference from exhibit 10.1 to the Company’s Current  Report on Form 8-K filed April 6, 2009).                                                                                                                                                                                                                      |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.28 —       | Merger Termination  Agreement, dated December 16, 2008, among Chaparral Energy, Inc.,  Chaparral Exploration, L.L.C. and Edge Petroleum Corporation (Incorporated by  reference to exhibit 10.1 to the Company’s Current Report on Form 8-K  filed December 17, 2008).                                                                                                                                                            |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.29 —       | Termination and  Settlement Agreement, dated December 16, 2008, among Magnetar Financial  LLC**,**Investment Partners II (B),  LLC, QRA SR, LLC, Triangle Peak Partners Private Equity, LP, Post Oak Energy  Capital, LP, Chaparral Energy, Inc., Chaparral Exploration, L.L.C. and  Edge Petroleum Corporation (Incorporated by reference to exhibit 10.2 to the  Company’s Current Report on Form 8-K filed December 17, 2008). |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **12.1 —      | Statement of  Computation of Ratio of Earnings to Combined Fixed Charges and Preferred  Stock Dividends.                                                                                                                                                                                                                                                                                                                                                   |
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **21.1 —      | Subsidiaries of the  Company.                                                                                                                                                                                                                                                                                                                                                                                                                              |

 

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| **23.1 — | Consent of BDO Seidman,  LLP.                                                                                                |
|---------------|------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                         |
| **23.2 — | Consent of Ryder Scott  Company.                                                                                             |
|          |                                                                                                                         |
| **23.3 — | Consent of W. D. Von  Gonten & Co.                                                                                  |
|          |                                                                                                                         |
| *31.1 —  | Certification by John  W. Elias, Chief Executive Officer, pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.   |
|          |                                                                                                                         |
| *31.2 —  | Certification by Gary  L. Pittman, Chief Financial Officer, pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002. |
|          |                                                                                                                         |
| **32.1 — | Certification by John  W. Elias, Chief Executive Officer, pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.   |
|          |                                                                                                                         |
| **32.2 — | Certification by Gary  L. Pittman, Chief Financial Officer, pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |
|          |                                                                                                                         |
| **99.1 — | Summary of Reserve  Report of Ryder Scott Company Petroleum Engineers as of December 31,  2008.                         |
|          |                                                                                                                         |
| **99.2 — | Summary of Reserve  Report of W. D. Von Gonten & Co. Petroleum Engineers as of  December 31, 2008.             |

 

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| *      | Filed herewith.                                                                                                        |
|--------|------------------------------------------------------------------------------------------------------------------------|
| **     | Previously  filed with the original Annual Report on Form 10-K for the fiscal year  ended December 31, 2008. |
| † | Denotes management or  compensatory contract, arrangement or agreement.                                                |

** **

**50**

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