Document:

Exhibit 4.9

 

AMENDMENT NO. 1

 

This AMENDMENT NO. 1 (the
“Agreement”) dated as of July 11, 2007 (the “Effective Date”) is among
Edge Petroleum Corporation, a Delaware corporation (“Borrower”), the Lenders
(as defined below) and Union Bank of California, N.A., as administrative agent
for such Lenders (in such capacity, the “Administrative Agent”) and as issuing
lender (in such capacity, the “Issuing Lender”).

 

RECITALS

 

A.             The Borrower is party to that certain Fourth
Amended and Restated Credit Agreement dated as of January 31, 2007 (as
amended, modified or supplemented from time to time, the “Credit Agreement”),
among the Borrower, the financial institutions party thereto from time to time
(the “Lenders”), the Issuing Lender and the Administrative Agent.

 

B.             In connection with such Credit Agreement,
(i) Edge Petroleum Exploration Company (“Edge Exploration”),
(ii) Edge Petroleum Operating Company, Inc. (“Edge Operating”),
(iii) Edge Petroleum Production Company (“Edge Production”), (iv) Miller
Exploration Company (“Miller Exploration”), (v) Miller Oil Corporation
(together with Edge Exploration, Edge Operating, Edge Production and Miller
Exploration, the “Guarantors”) executed and delivered a Guaranty dated as of
January 31, 2007 (the “Guaranty”) in favor of the Administrative Agent for
the benefit of itself, the Issuing Lender and the Lenders.

 

C.             The Borrower proposes to issue certain senior
unsecured notes in a public offering and sale (the “Bond Issuance”) and to use
a portion of the proceeds of such Bond Issuance to repay a portion of the
Obligations (as defined in the Credit Agreement).

 

D.             Pursuant the Credit Agreement, the Bond
Issuance would cause the Borrower to incur Debt (as defined in the Credit
Agreement) that is not permitted under Section 6.02 of the Credit
Agreement without the prior consent of the Required Lenders (as defined in the
Credit Agreement).

 

E.             The Borrower, the Guarantors, the Lenders, the
Administrative Agent and the Issuing Lender wish to, subject to the terms and
conditions of this Agreement, (i) consent to the Bond Issuance and the
incurrence of Debt in connection therewith, (ii) provide for a waiver of
certain Events of Default, and (iii) make certain amendments to the Credit
Agreement as provided herein.

 

THEREFORE, the Borrower, the Guarantors, the Lenders, the
Administrative Agent and the Issuing Lender hereby agree as follows:

 

Section 1.              Defined
Terms.  As used in this Agreement, each of the terms
defined in the opening paragraph and the Recitals above shall have the meanings
assigned to such terms therein.  Each
term defined in the Credit Agreement and used herein without definition shall 

 

 

have
the meaning assigned to such term in the Credit Agreement, unless expressly
provided to the contrary.

 

Section 2.              Other Definitional Provisions. Article, Section, Schedule, and
Exhibit references are to Articles and Sections of and Schedules and
Exhibits to this Agreement, unless otherwise specified.  All references to instruments, documents,
contracts, and agreements are references to such instruments, documents,
contracts, and agreements as the same may be amended, supplemented, and
otherwise modified from time to time, unless otherwise specified.  The words “hereof”, “herein”, and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.  The term “including” means
“including, without limitation,”. 
Paragraph headings have been inserted in this Agreement as a matter of
convenience for reference only and it is agreed that such paragraph headings
are not a part of this Agreement and shall not be used in the interpretation of
any provision of this Agreement.

 

Section 3.              Consent.  Subject to the terms of this
Agreement, the Administrative Agent and the
Lenders hereby consent to the Bond Issuance and the incurrence of Debt by the
Borrower in connection therewith; provided that such Debt (a) is in
an aggregate principal amount not to exceed $250,000,000; (b) shall have
(i) a non-default interest rate that is no higher than 10.0% per annum,
(ii) a scheduled maturity date that is no earlier than April 15,
2011, (iii) covenants and restrictions that are no more restrictive in any
material respect than those set forth in the Credit Agreement and the other
Loan Documents, (iv) no restriction on the ability of the Borrower or any
of its Subsidiaries to amend, modify or otherwise supplement the Credit
Agreement or the other Loan Documents, (v) no Lien securing such Debt,
(vi) no restriction on the ability of the Borrower or any of its
Subsidiaries to guarantee the Obligations or pledge assets as collateral
security for the Obligations, (vii) a bullet repayment and not provide for
scheduled amortization or mandatory prepayments (other than amortization
resulting from any mandatory prepayments required in respect of such Debt in
connection with the occurrence of an event of default under such Debt, a change
of control of the issuer (including a disposition of all or substantially all
of the assets of the Borrower and its Subsidiaries, a liquidation or
dissolution of the Borrower, or any event constituting a Change of Control or
an asset sale by the issuer or a Subsidiary thereof) and (viii) a closing
date of not later than December 31, 2007; (c) shall not otherwise
cause the occurrence of a Default or Event of Default after giving effect to
the issuance of such Debt; and (d) may be guaranteed by the Subsidiaries
of the Borrower, provided that no Lien secures such guarantees and such Subsidiaries
are Obligors.

 

Section 4.              Waiver.  The Borrower hereby acknowledges the existence of an Event of Default
(the “Existing Default”) under Section 6.14 of the Credit Agreement, which
Event of Default is the result of the Borrower entering into of Hedge Contracts
longer than the two-year maximum tenor provided for in such Section 6.14
(which limit is being amended as described below).  The Lenders hereby agree, subject to the
terms and conditions of this Agreement, to waive the Existing Default. The
waiver by the Lenders described in this Section 4 is contingent upon the
satisfaction of the conditions precedent set forth below and is limited to the
Existing Default.  Such waiver shall not
be construed to be a consent to or a permanent waiver of the Sections covered
by the Existing Default or any other terms, provisions, covenants, warranties
or agreements contained in the Credit Agreement or in any of the other Loan
Documents.  The Lenders reserve the right
to exercise any rights and remedies available to them in connection 

 

 

with
any other present or future defaults with respect to the Credit Agreement or
any other provision of any Loan Document. 
The descriptions herein of the Existing Default are based upon the
information provided to the Lenders on or prior to the date hereof and shall
not be deemed to exclude the existence of any other Defaults or Events of
Default.  The failure of the Lenders to
give notice to the Borrower or the Guarantors of any such other Defaults or
Events of Default is not intended to be nor shall be a waiver thereof.  The Borrower hereby agrees and acknowledges
that the Lenders require and will require strict performance by the Borrower of
all of its obligations, agreements and covenants contained in the Credit
Agreement, as amended hereby, and the other Loan Documents, and no inaction or
action regarding any Default or Event of Default is intended to be or shall be
a waiver thereof.

 

Section 5.              Amendments
to Credit Agreement.

 

(a)           Section 1.01 of the Credit
Agreement is hereby amended by adding the following new term in alphabetical
order:

 

“Amendment
No. 1 Effective Date” means July 11, 2007.

 

(b)           Section 6.14 of the Credit
Agreement is hereby amended by deleting the Section in its entirety and
replacing it with the following:

 

Section 6.14   Limitation on Speculative Hedging.  The Borrower shall not, nor shall it permit
any of its Subsidiaries to, (a) purchase, assume, or hold a speculative
position in any commodities market or futures market or enter into any Hedge
Contract for speculative purposes or (b) be party to or otherwise enter
into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement, or any other
Hedge Contract that (i) is entered into for reasons other than as a part
of its normal business operations as a risk management strategy and/or hedge
against changes resulting from market conditions related to the Borrower’s
operations, (ii) covers notional volumes in excess of the greater of
(A) 80% of the anticipated production volumes attributable to Proven Reserves
of the Borrower and its Subsidiaries which are categorized as “proved,
developed and producing” during the period such hedge arrangement is in effect
or (B) 50% of the anticipated production volumes attributable to total
Proven Reserves during the period such hedge arrangement is in effect, each as
shown on its most recently delivered Engineering Report, (iii) is longer
than three years in duration, or (iv) except as consented to by the
Administrative Agent, is with a counterparty or has a guarantor of the obligation
of the counterparty who (unless such counterparty is a Lender Party or one of
its Affiliates) at the time the contract is made does not have long-term
obligations rated BBB or Baa2 or better, respectively, by either
Standard & Poor’s Ratings Group or Moody’s Investors
Service, Inc., or is an investment grade-rated industry participant.  Notwithstanding the foregoing, the existence
of the Hedge Contracts in effect on the Amendment No. 1 Effective Date (“Existing
Hedge Contracts”) shall not be considered a violation of this Section 6.14
(it being understood, however, that in determining compliance with 

 

 

the foregoing requirements (including without
limitation, the percentage of volumes hedged) in connection with any Hedge
Contracts proposed to be entered into after the date of this Agreement, both
the Existing Hedge Contracts and all other Hedge Contracts existing after the
date of this Agreement shall be considered).

 

Section 6.              Borrowing Base and Confirming
Borrowing Base Redetermination.

 

(a)           Borrowing Base.  Subject to the provisions of this Agreement,
the Lenders and the Borrower hereby agree that immediately following the
closing of the Bond Issuance, the Borrowing Base shall automatically reduce to
$200,000,000.  Such redetermined
Borrowing Base shall remain in effect until the immediately following
redetermination made pursuant to Credit Agreement, as amended hereby.  If a Borrowing Base deficiency is created by
such reduction, the Borrower hereby agrees that, notwithstanding anything
contained in the Credit Agreement to the contrary, such deficiency shall be
eliminated on the date of the closing of the Bond Issuance by making payments
on the Advances and, if necessary, cash collateralizing Letters of Credit.

 

(b)           Conforming Borrowing Base.  Subject to the provisions of this Agreement,
the Lenders and the Borrower hereby agree that immediately following the
closing of the Bond Issuance, it is the intent of the parties that there will
no longer be have both a Borrowing Base and a Conforming Borrowing Base, and
(i) the Borrower shall not be permitted to request and the Lenders shall
no longer approve a separate Borrowing Base and Conforming Borrowing Base and
(ii) the Borrowing Base as determined pursuant to Section 2.02 of the
Credit Agreement shall also be the Conforming Borrowing Base.

 

Section 7.              Borrower Representations and
Warranties.  The
Borrower represents and warrants that: (a) the representations and
warranties contained in the Credit Agreement, as amended hereby, and the
representations and warranties contained in the other Loan Documents, are true
and correct in all material respects on and as of the Effective Date as if made
on as and as of such date except to the extent that any such representation or
warranty expressly relates solely to an earlier date, in which case such
representation or warranty is true and correct in all material respects as of
such earlier date; (b) after giving effect to this Agreement, no Default
has occurred and is continuing; (c) the execution, delivery and performance
of this Agreement are within the corporate power and authority of the Borrower
and have been duly authorized by appropriate corporate and governing action and
proceedings; (d) this Agreement constitutes the legal, valid, and binding
obligation of the Borrower enforceable in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the rights of creditors generally and general principles
of equity; (e) there are no governmental or other third party consents,
licenses and approvals required in connection with the execution, delivery,
performance, validity and enforceability of this Agreement; and (f) the
Liens under the Security Documents are valid and subsisting and secure the
Borrower’s obligations under the Loan Documents.

 

Section 8.              Guarantors Representations
and Warranties.  Each Guarantor represents and warrants that:
(a) after giving effect to the terms of this Agreement, the 

 

 

representations
and warranties contained in their respective Guaranties and the representations
and warranties contained in the other Loan Documents are true and correct in
all material respects on and as of the Effective Date as if made on as and as
of such date; (b) after giving effect to the terms of this Agreement, no
Default has occurred and is continuing; (c) the execution, delivery and
performance of this Agreement are within the corporate power and authority of
such Guarantor and have been duly authorized by appropriate corporate action
and proceedings; (d) this Agreement constitutes the legal, valid, and
binding obligation of such Guarantor enforceable in accordance with their
respective terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the rights of creditors
generally and general principles of equity; (e) there are no governmental
or other third party consents, licenses and approvals required in connection
with the execution, delivery, performance, validity and enforceability of this
Agreement; (f) it has no defenses to the enforcement of the Guaranty; and
(g) the Liens under the Security Instruments are valid and subsisting and
secure such Guarantor’s obligations under the Loan Documents.

 

Section 9.              Conditions to Effectiveness.  This
Agreement shall become effective on the Effective Date and enforceable against
the parties hereto upon the occurrence of the following conditions precedent:

 

(a)           The Administrative Agent shall have received multiple
original counterparts, as requested by the Administrative Agent, of this
Agreement duly and validly executed and delivered by duly authorized officers
of the Borrower, the Guarantors, the Administrative Agent, the Issuing Lender
and the Lenders.

 

(b)           The Administrative Agent shall have received a
certificate, dated the Effective Date and executed by a Responsible Officer of
the Borrower, which shall (1) certify that the resolutions of the
governing body of the Borrower and each Guarantor attached as Exhibit C to
the “Certificate of Secretary” dated January 31, 2007, and delivered in
connection with the Credit Agreement (the “Secretary’s Certificate”), have not
been amended and are in full force and effect, (2) certify that the
organizational documents of the Borrower and each Guarantor attached as
Exhibits A and B to the Secretary’s Certificate delivered in connection with
the Credit Agreement, have not been amended and are in full force and effect,
and (3) all other documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement.

 

(c)           After giving effect to this Agreement, no Default shall
have occurred and be continuing as of the Effective Date.

 

(d)           The representations and warranties in this Agreement shall
be true and correct in all material respects.

 

(e)           The Borrower shall have paid all costs and expenses which
have been invoiced and are payable pursuant to Section 9.03 of the Credit
Agreement.

 

Section 10.            Acknowledgments and
Agreements.

 

(f)            The Borrower acknowledges that on the date hereof all
Obligations are payable without defense, offset, counterclaim or recoupment.

 

 

(g)           The Administrative Agent, the Issuing Lender and the
Lenders hereby expressly reserve all of their rights, remedies, and claims
under the Loan Documents.  Other than as
expressly provided in Section 4 above, nothing in this Agreement shall
constitute a waiver or relinquishment of (i) any Default or Event of
Default under any of the Loan Documents, (ii) any of the agreements, terms
or conditions contained in any of the Loan Documents, (iii) any rights or
remedies of the Administrative Agent, the Issuing Lender or any Lender with
respect to the Loan Documents or (iv) the rights of the Administrative
Agent, the Issuing Lender or any Lender to collect the full amounts owing to
them under the Loan Documents.

 

(h)           Each of the Borrower, the Guarantors, the Administrative
Agent, the Issuing Lender and the Lenders does hereby adopt, ratify, and
confirm the Credit Agreement, as amended hereby, and acknowledges and agrees
that the Credit Agreement, as amended hereby, is and remains in full force and
effect, and the Borrower and the Guarantors acknowledge and agree that their
respective liabilities and obligations under the Credit Agreement, as amended
hereby, are not impaired in any respect by this Agreement.

 

(i)            From and after the Effective Date, all references to the
Credit Agreement and the Loan Documents shall mean such Credit Agreement and
such Loan Documents as amended by this Agreement.

 

(j)            This Agreement is a Loan Document for the purposes of the
provisions of the other Loan Documents. 
Without limiting the foregoing, any breach of representations,
warranties, and covenants under this Agreement shall be a Default or Event of
Default, as applicable, under the Credit Agreement.

 

Section 11.            Reaffirmation of the
Guaranty.  Each Guarantor hereby ratifies, confirms,
acknowledges and agrees that its obligations under the Guaranty are in full
force and effect and that such Guarantor continues to unconditionally and
irrevocably guarantee the full and punctual payment, when due, whether at
stated maturity or earlier by acceleration or otherwise, all of the Guaranteed
Obligations (as defined in the Guaranty), as such Guaranteed Obligations may
have been amended by this Agreement, and its execution and delivery of this
Agreement does not indicate or establish an approval or consent requirement by
such Guarantor under the Guaranty in connection with the execution and delivery
of amendments to the Credit Agreement, the Notes or any of the other Loan
Documents.

 

Section 12.            Counterparts.  This
Agreement may be signed in any number of counterparts, each of which shall be
an original and all of which, taken together, constitute a single
instrument.  This Agreement may be executed
by facsimile signature and all such signatures shall be effective as originals.

 

Section 13.            Successors
and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted pursuant to the Credit Agreement.

 

Section 14.            Invalidity.  In
the event that any one or more of the provisions contained in this Agreement
shall for any reason be held invalid, illegal or unenforceable in any respect, 

 

 

such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement.

 

Section 15.            Governing
Law.  This Agreement shall be deemed to be a
contract made under and shall be governed by and construed in accordance with
the laws of the State of Texas.

 

Section 16.            Entire Agreement. 
THIS AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AGREEMENT, THE
NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

 

THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES.

 

 

EXECUTED effective as of the
date first above written.

 

	
  BORROWER:

  	
  EDGE PETROLEUM CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL G. LONG

  
	
   

  	
  Name:

  	
  MICHAEL G. LONG

  
	
   

  	
  Title:

  	
    Executive V.P. & CFO

  
					

 

 

	
  GUARANTORS:

  	
  EDGE PETROLEUM EXPLORATION COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL G. LONG

  
	
   

  	
  Name:

  	
  MICHAEL G. LONG

  
	
   

  	
  Title:

  	
    Executive V.P. & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EDGE PETROLEUM OPERATING COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL G. LONG

  
	
   

  	
  Name:

  	
  MICHAEL G. LONG

  
	
   

  	
  Title:

  	
    Executive V.P. & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EDGE PETROLEUM PRODUCTION COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL G. LONG

  
	
   

  	
  Name:

  	
  MICHAEL G. LONG

  
	
   

  	
  Title:

  	
    Executive V.P. & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MILLER EXPLORATION COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL G. LONG

  
	
   

  	
  Name:

  	
  MICHAEL G. LONG

  
	
   

  	
  Title:

  	
    Executive V.P. & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MILLER OIL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL G. LONG

  
	
   

  	
  Name:

  	
  MICHAEL G. LONG

  
	
   

  	
  Title:

  	
    Executive V.P. & CFO

  
					

 

 

	
  ADMINISTRATIVE AGENT/

  	
   

  
	
  ISSUING LENDER/LENDER:

  	
   

  
	
   

  	
  UNION BANK OF CALIFORNIA, N.A.,

  
	
   

  	
  as Administrative Agent, Issuing Lender and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAMIEN G. MEIBURGER

  
	
   

  	
  Name:

  	
  DAMIEN G. MEIBURGER

  
	
   

  	
  Title:

  	
    Senior Vice President

  
					

 

 

	
  LENDERS:

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JO LINDA
  PAPADAKIS

  
	
   

  	
  Name:

  	
  JO LINDA
  PAPADAKIS

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

	
   

  	
  SUNTRUST BANK, as
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SEAN
  ROCHE

  
	
   

  	
  Name:

  	
  SEAN ROCHE

  
	
   

  	
  Title:

  	
    Vice
  President

  
					

 

 

	
   

  	
  MIZUHO CORPORATE BANK, LTD.,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ RAYMOND
  VENTURA

  
	
   

  	
  Name:

  	
  RAYMOND
  VENTURA

  
	
   

  	
  Title:

  	
    Deputy
  General Manager

  
					

 

 

	
   

  	
  BNP PARIBAS, as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID DODD

  
	
   

  	
  Name:

  	
  DAVID DODD

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BETSY JOCHER

  
	
   

  	
  Name:

  	
  BETSY JOCHER

  
	
   

  	
  Title:

  	
  Director

  
					

 

 

	
   

  	
  FORTIS CAPITAL CORP.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SCOTT
  MYATT

  
	
   

  	
  Name:

  	
  SCOTT MYATT

  
	
   

  	
  Title:

  	
    Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DEIRDRE
  SANBORN

  
	
   

  	
  Name:

  	
  DEIRDRE
  SANBORN

  
	
   

  	
  Title:

  	
    Senior
  Vice President

  
					

 

 

	
   

  	
  THE FROST NATIONAL BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANDREW
  A. MERRYMAN

  
	
   

  	
  Name:

  	
  ANDREW A.
  MERRYMAN

  
	
   

  	
  Title:

  	
    SVP

  
					

 

 

	
   

  	
  COMPASS BANK, as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ADRIANNE
  D. GRIFFIN

  
	
   

  	
  Name:

  	
  ADRIANNE D.
  GRIFFIN

  
	
   

  	
  Title:

  	
    Vice
  President

  
					

 

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JUSTIN
  M. ALEXANDER

  
	
   

  	
  Name:

  	
  JUSTIN M.
  ALEXANDER

  
	
   

  	
  Title:

  	
    Vice
  President

  
					

 

 

	
   

  	
  BANK OF SCOTLAND,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PERCY NGAI

  
	
   

  	
  Name:

  	
  PERCY NGAI

  
	
   

  	
  Title:

  	
    Assistant Vice President

  
					

 

 

AMENDMENT NO. 2

 

This AMENDMENT NO. 2 (the
“Agreement”) dated as of December 10, 2007 (the “Effective Date”) is among
Edge Petroleum Corporation, a Delaware corporation (“Borrower”), the Lenders
(as defined below) and Union Bank of California, N.A., as administrative agent
for such Lenders (in such capacity, the “Administrative Agent”) and as issuing
lender (in such capacity, the “Issuing Lender”).

 

RECITALS

 

F.             The Borrower is
party to that certain Fourth Amended and Restated Credit Agreement dated as of
January 31, 2007 (as amended, modified or supplemented from time to time,
the “Credit Agreement”), among the Borrower, the financial institutions party
thereto from time to time (the “Lenders”), the Issuing Lender and the
Administrative Agent.

 

G.            The Borrower and the
Lenders wish to, subject to the terms and conditions of this Agreement,
(i) redetermine the amount of the Borrowing Base and the Conforming
Borrowing Base, and (ii) make certain amendments to the Credit Agreement
as provided herein.

 

THEREFORE, the Borrower, the Administrative Agent and the Lenders
hereby agree as follows:

 

Section 17.            Defined
Terms.  As used in this Agreement, each of the terms
defined in the opening paragraph and the Recitals above shall have the meanings
assigned to such terms therein.  Each
term defined in the Credit Agreement and used herein without definition shall
have the meaning assigned to such term in the Credit Agreement, unless
expressly provided to the contrary.

 

Section 18.            Other Definitional Provisions. Article, Section, Schedule, and Exhibit references
are to Articles and Sections of and Schedules and Exhibits to this Agreement,
unless otherwise specified.  All
references to instruments, documents, contracts, and agreements are references
to such instruments, documents, contracts, and agreements as the same may be
amended, supplemented, and otherwise modified from time to time, unless
otherwise specified.  The words “hereof”,
“herein”, and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement.  The term “including”
means “including, without limitation,”. 
Paragraph headings have been inserted in this Agreement as a matter of
convenience for reference only and it is agreed that such paragraph headings
are not a part of this Agreement and shall not be used in the interpretation of
any provision of this Agreement.

 

Section 19.            Amendments
to Credit Agreement.

 

Section 2.02(f) of
the Credit Agreement is hereby amended in its entirety by deleting such
Section and replacing it with the following new clause (f):

 

 

(f)            For each redetermination of the Borrowing Base and the
Conforming Borrowing Base occurring from and after April 30, 2008, only a
Conforming Borrowing Base shall be determined pursuant to this
Section 2.02, and the Conforming Borrowing Base as so determined shall
also be the Borrowing Base for all purposes under this Agreement (it being
understood that the Borrowing Base redetermination scheduled to take place in
the spring of 2008 using the January 1, 2008 Engineering Report shall be
considered to have occurred on April 30, 2008, or if completed later, the
date of completion thereof, and such redetermination shall be the first
scheduled Borrowing Base redetermination applicable under this Section).

 

Section 20.            Redetermination
of Borrowing Base and Conforming Borrowing Base.  The
Borrowing Base in effect as of the date of this Agreement has been set by the
Administrative Agent and the Lenders and acknowledged by the Borrower as $300,000,000.  The Conforming Borrowing Base in effect as of
the date of this Agreement has been set by the Administrative Agent and the
Lenders and acknowledged by the Borrower as $260,000,000.  The amount of such Borrowing Base and such
Conforming Borrowing Base shall remain in effect until each is redetermined
pursuant to Section 2.02 of the Credit Agreement.

 

Section 21.            Borrower Representations and
Warranties.  The
Borrower represents and warrants that: (a) the representations and
warranties contained in the Credit Agreement, as amended hereby, and the
representations and warranties contained in the other Loan Documents, are true
and correct in all material respects on and as of the Effective Date as if made
on as and as of such date except to the extent that any such representation or
warranty expressly relates solely to an earlier date, in which case such
representation or warranty is true and correct in all material respects as of
such earlier date; (b) after giving effect to this Agreement, no Default has
occurred and is continuing; (c) the execution, delivery and performance of
this Agreement are within the corporate power and authority of the Borrower and
have been duly authorized by appropriate corporate and governing action and
proceedings; (d) this Agreement constitutes the legal, valid, and binding
obligation of the Borrower enforceable in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the rights of creditors generally and general principles
of equity; (e) there are no governmental or other third party consents,
licenses and approvals required in connection with the execution, delivery,
performance, validity and enforceability of this Agreement; and (f) the
Liens under the Security Documents are valid and subsisting and secure the
Borrower’s obligations under the Loan Documents.

 

Section 22.            Conditions to Effectiveness.  This
Agreement shall become effective on the Effective Date and enforceable against
the parties hereto upon the occurrence of the following conditions precedent:

 

(a)           The Administrative Agent shall have received multiple
original counterparts, as requested by the Administrative Agent, of this
Agreement duly and validly executed and delivered by duly authorized officers
of the Borrower, the Administrative Agent and all of the Lenders.

 

(b)           After giving effect to this Agreement, no Default shall
have occurred and be continuing as of the Effective Date.

 

 

(c)           The representations and warranties in this Agreement shall
be true and correct in all material respects.

 

(d)           The Borrower shall have paid all costs and expenses which
have been invoiced and are payable pursuant to Section 9.03 of the Credit
Agreement.

 

Section 23.            Acknowledgments and Agreements.

 

(e)           The Borrower acknowledges that on the date hereof all
Obligations are payable without defense, offset, counterclaim or recoupment.

 

(f)            The Lenders hereby expressly reserve all of their rights,
remedies, and claims under the Loan Documents.

 

(g)           Each of the Borrower, the Administrative Agent and the
Lenders does hereby adopt, ratify, and confirm the Credit Agreement, as amended
hereby, and acknowledges and agrees that the Credit Agreement, as amended
hereby, is and remains in full force and effect, and the Borrower acknowledges
and agrees that its liabilities and obligations under the Credit Agreement, as
amended hereby, are not impaired in any respect by this Agreement.

 

(h)           From and after the Effective Date, all references to the
Credit Agreement and the Loan Documents shall mean such Credit Agreement and
such Loan Documents as amended by this Agreement.

 

(i)            This Agreement is a Loan Document for the purposes of the
provisions of the other Loan Documents. 
Without limiting the foregoing, any breach of representations,
warranties, and covenants under this Agreement shall be a Default or Event of
Default, as applicable, under the Credit Agreement.

 

Section 24.            Counterparts.  This
Agreement may be signed in any number of counterparts, each of which shall be
an original and all of which, taken together, constitute a single
instrument.  This Agreement may be
executed by facsimile signature and all such signatures shall be effective as
originals.

 

Section 25.            Successors
and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted pursuant to the Credit Agreement.

 

Section 26.            Invalidity.  In
the event that any one or more of the provisions contained in this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement.

 

Section 27.            Governing
Law.  This Agreement shall be deemed to be a contract
made under and shall be governed by and construed in accordance with the laws
of the State of Texas.

 

Section 28.            Entire Agreement. 
THIS AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AGREEMENT, THE
NOTES, AND THE OTHER LOAN 

 

 

DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

 

THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES.

 

 

EXECUTED
effective as of the date first above written.

 

	
  BORROWER:

  	
  EDGE PETROLEUM CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL G. LONG

  
	
   

  	
  Name:

  	
  MICHAEL G. LONG

  
	
   

  	
  Title:

  	
    Executive Vice
  President & CFO

  
					

 

 

	
  ADMINISTRATIVE AGENT/

  	
  UNION BANK OF CALIFORNIA, N.A.,

  
	
  ISSUING LENDER/LENDER:

  	
  as Administrative Agent, Issuing Lender and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAMIEN G. MEIBURGER

  
	
   

  	
  Name:

  	
  DAMIEN G. MEIBURGER

  
	
   

  	
  Title:

  	
    Senior Vice President

  
					

 

 

	
  LENDERS:

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL
  A. KAMAUF

  
	
   

  	
  Name:

  	
  MICHAEL A.
  KAMAUF

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

	
   

  	
  SUNTRUST BANK, as
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JAMES M.
  WARREN

  
	
   

  	
  Name:

  	
  JAMES M.
  WARREN

  
	
   

  	
  Title:

  	
    Managing
  Director

  
					

 

 

	
  MIZUHO CORPORATE BANK, LTD., as a

  	
   

  
	
   

  	
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  HIDEKATSU TAKE

  
	
   

  	
  Name:

  	
  HIDEKATSU
  TAKE

  
	
   

  	
  Title:

  	
    Deputy
  General Manager

  
					

 

 

	
   

  	
  BNP PARIBAS, as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ POLLY SCHOTT

  
	
   

  	
  Name:

  	
  POLLY SCHOTT

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BETSY JOCHER

  
	
   

  	
  Name:

  	
  BETSY JOCHER

  
	
   

  	
  Title:

  	
  Director

  
					

 

 

	
   

  	
  FORTIS CAPITAL CORP.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ILENE
  FOWLER

  
	
   

  	
  Name:

  	
  ILENE FOWLER

  
	
   

  	
  Title:

  	
    Director

  
					

 

 

	
   

  	
  THE FROST NATIONAL BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANDREW
  A. MERRYMAN

  
	
   

  	
  Name:

  	
  ANDREW A.
  MERRYMAN

  
	
   

  	
  Title:

  	
    SVP

  
					

 

 

	
   

  	
  COMPASS BANK, as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ADRIANNE D. GRIFFIN

  
	
   

  	
  Name:

  	
  ADRIANNE D. GRIFFIN

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JUSTIN
  M. ALEXANDER

  
	
   

  	
  Name:

  	
  JUSTIN M.
  ALEXANDER

  
	
   

  	
  Title:

  	
    Vice
  President

  
					

 

 

	
   

  	
  BANK OF SCOTLAND,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KAREN WEICH

  
	
   

  	
  Name:

  	
  KAREN WEICH

  
	
   

  	
  Title:

  	
    Vice President

  
					

 

 

AMENDMENT NO. 3 AND AGREEMENT

 

This AMENDMENT NO. 3 AND
AGREEMENT (the “Agreement”) dated as of May 8, 2008 (the “Effective Date”)
is among Edge Petroleum Corporation, a Delaware corporation (“Borrower”), the
Lenders (as defined herein) and Union Bank of California, N.A., as
administrative agent for the Lenders (in such capacity, the “Administrative
Agent”) and as issuing lender (in such capacity, the “Issuing Lender”).

RECITALS

 

A.                                    The Borrower is party to that certain Fourth
Amended and Restated Credit Agreement dated as of January 31, 2007, as
amended by Amendment No. 1 dated July 11, 2007 and Amendment No. 2
dated December 10, 2007 (as so amended and as the same may be further
amended, modified or supplemented from time to time, the “Credit Agreement”),
among the Borrower, the financial institutions party thereto from time to time
(the “Lenders”), the Issuing Lender and the Administrative Agent.

 

B.                                    The Borrower, the Administrative Agent, the
Issuing Lender and the Lenders wish to, subject to the terms and conditions of
this Agreement, (i) amend the Credit Agreement as provided herein, and (ii) redetermine
the amount of the Borrowing Base.

 

THEREFORE, the Borrower, the Administrative Agent, the Issuing Lender
and the Lenders hereby agree as follows:

 

Section 1.              Defined
Terms.  As used in this Agreement, each of the terms
defined in the opening paragraph and the Recitals above shall have the meanings
assigned to such terms therein.  Each
term defined in the Credit Agreement and used herein without definition shall
have the meaning assigned to such term in the Credit Agreement, unless
expressly provided to the contrary herein.

 

Section 2.              Other Definitional Provisions.  Article,
Section, Schedule, and Exhibit references are to Articles and Sections of
and Schedules and Exhibits to this Agreement, unless otherwise specified.  All references to instruments, documents,
contracts, and agreements are references to such instruments, documents,
contracts, and agreements as the same may be amended, supplemented, and
otherwise modified from time to time, unless otherwise specified.  The words “hereof”, “herein”, and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.  The term “including” means “including,
without limitation,”.  Paragraph headings
have been inserted in this Agreement as a matter of convenience for reference
only and it is agreed that such paragraph headings are not a part of this
Agreement and shall not be used in the interpretation of any provision of this
Agreement.

 

Section 3.              Amendment to Credit Agreement.  Section 2.02(f) of
the Credit Agreement is hereby amended in its entirety by deleting such Section and
replacing it with the following new clause (f):

 

 

(f)            For each redetermination of the
Borrowing Base and the Conforming Borrowing Base occurring after June 30,
2008, only a Borrowing Base shall be determined pursuant to this Section 2.02,
and the Borrowing Base as so determined shall also be the Conforming Borrowing
Base for all purposes under this Agreement, it being understood that the then
existing Borrowing Base and Conforming Borrowing Base shall remain in effect
until such redetermination.

 

Section 4.              Redetermination of Borrowing
Base.  The
Borrowing Base in effect as of the date of this Agreement has been set by the
Administrative Agent and the Lenders and acknowledged by the Borrower as $250,000,000.  The Conforming Borrowing Base in effect as of
the date of this Agreement has been set by the Administrative Agent and the
Lenders and acknowledged by the Borrower as $225,000,000.  The amount of such Borrowing Base and such
Conforming Borrowing Base shall remain in effect until each is redetermined
pursuant to Section 2.02 of the Credit Agreement, provided that in
addition to any redetermination permitted to be made under Section 2.02(c) of
the Credit Agreement, the Administrative Agent and the Lenders shall also be
permitted to redetermine the Borrowing Base and the Conforming Borrowing Base
on or before June 30, 2008 (the “June 2008 Redetermination”), using
an Engineering Report delivered by the Borrower on or before June 1, 2008.

 

Section 5.              Borrower Representations and
Warranties.  The
Borrower represents and warrants that: (a) the representations and
warranties contained in the Credit Agreement, as amended hereby, and the
representations and warranties contained in the other Loan Documents, are true
and correct in all material respects on and as of the Effective Date as if made
on as and as of such date except to the extent that any such representation or
warranty expressly relates solely to an earlier date, in which case such
representation or warranty is true and correct in all material respects as of
such earlier date; (b) after giving effect to this Agreement, no Default
has occurred and is continuing; (c) the execution, delivery and
performance of this Agreement are within the corporate power and authority of
the Borrower and have been duly authorized by appropriate corporate and
governing action and proceedings; (d) this Agreement constitutes the
legal, valid, and binding obligation of the Borrower enforceable in accordance
with its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the rights of creditors
generally and general principles of equity; (e) there are no governmental
or other third party consents, licenses and approvals required in connection
with the execution, delivery, performance, validity and enforceability of this
Agreement; and (f) the Liens under the Security Documents are valid and
subsisting and secure the Borrower’s obligations under the Loan Documents.

 

Section 6.              Conditions to Effectiveness.  This
Agreement shall become effective on the Effective Date and enforceable against
the parties hereto upon the occurrence of the following conditions precedent:

 

(a)           The
Administrative Agent shall have received multiple original counterparts, as
requested by the Administrative Agent, of this Agreement duly and validly
executed and delivered by duly authorized officers of the Borrower, the
Administrative Agent, the Issuing Lender and all of the Lenders.

 

 

(b)           After
giving effect to this Agreement, no Default shall have occurred and be
continuing as of the Effective Date.

 

(c)           The
representations and warranties in this Agreement shall be true and correct in
all material respects.

 

(d)           The
Borrower shall have paid all costs and expenses which have been invoiced and
are payable pursuant to Section 9.03 of the Credit Agreement.

 

Section 7.              Acknowledgments and
Agreements.

 

(a)           The
Borrower acknowledges that on the date hereof all Obligations are payable
without defense, offset, counterclaim or recoupment.

 

(b)           The
Lenders hereby expressly reserve all of their rights, remedies, and claims
under the Loan Documents.

 

(c)           Each
of the Borrower, the Administrative Agent, the Issuing Lender and the Lenders
does hereby adopt, ratify, and confirm the Credit Agreement, as amended hereby,
and acknowledges and agrees that the Credit Agreement, as amended hereby, is
and remains in full force and effect, and the Borrower acknowledges and agrees
that its liabilities and obligations under the Credit Agreement, as amended
hereby, are not impaired in any respect by this Agreement.

 

(d)           From
and after the Effective Date, all references to the Credit Agreement and the
Loan Documents shall mean such Credit Agreement and such Loan Documents as amended
by this Agreement.

 

(e)           This
Agreement is a Loan Document for the purposes of the provisions of the other
Loan Documents.  Without limiting the
foregoing, any breach of representations, warranties, and covenants under this
Agreement shall be a Default or Event of Default, as applicable, under the
Credit Agreement.

 

Section 8.              Counterparts.  This
Agreement may be signed in any number of counterparts, each of which shall be
an original and all of which, taken together, constitute a single
instrument.  This Agreement may be
executed by facsimile signature and all such signatures shall be effective as
originals.

 

Section 9.              Successors
and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted pursuant to the Credit Agreement.

 

Section 10.            Invalidity.  In
the event that any one or more of the provisions contained in this Agreement
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement.

 

 

Section 11.            Governing
Law.  This Agreement shall be deemed to be a
contract made under and shall be governed by and construed in accordance with
the laws of the State of Texas.

 

Section 12.            Entire Agreement. 
THIS AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AGREEMENT, THE
NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

 

THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES.

 

[Signature Pages Follow]

 

 

EXECUTED
effective as of the date first above written.

 

 

	
  BORROWER:

  	
  EDGE PETROLEUM CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL G. LONG

  
	
   

  	
  Name:

  	
  MICHAEL G.
  LONG

  
	
   

  	
  Title:

  	
  Executive Vice President & CFO

  
					

 

1

 

	
  ADMINISTRATIVE AGENT/

  	
   

  	
   

  
	
  ISSUING LENDER/LENDER:

  	
   

  	
   

  
	
   

  	
  UNION BANK OF CALIFORNIA, N.A.,

  
	
   

  	
  as Administrative Agent, Issuing Lender

  
	
   

  	
  and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAMIEN
  G. MEIBURGER

  
	
   

  	
  Name:

  	
  DAMIEN G. MEIBURGER

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

2

 

	
  LENDERS:

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL A. KAMAUF

  
	
   

  	
  Name:

  	
  MICHAEL A. KAMAUF

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

3

 

	
   

  	
  SUNTRUST BANK, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ YANN PIRIO

  
	
   

  	
  Name:

  	
  YANN PIRIO

  
	
   

  	
  Title:

  	
  Director

  
					

 

4

 

	
   

  	
  MIZUHO CORPORATE BANK, LTD., as a

  
	
   

  	
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ LEON MO

  
	
   

  	
  Name:

  	
  LEON MO

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

5

 

	
   

  	
  BNP PARIBAS, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ POLLY SCHOTT

  
	
   

  	
  Name:

  	
  POLLY SCHOTT

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT LONG

  
	
   

  	
  Name:

  	
  ROBERT LONG

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

6

 

	
   

  	
  FORTIS CAPITAL CORP.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID MONTGOMERY

  
	
   

  	
  Name:

  	
  DAVID MONTGOMERY

  
	
   

  	
  Title:

  	
    Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DARRELL HOLLEY

  
	
   

  	
  Name:

  	
  DARRELL HOLLEY

  
	
   

  	
  Title:

  	
    Managing Director

  
					

 

7

 

	
   

  	
  THE FROST NATIONAL BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANDREW A. MERRYMAN

  
	
   

  	
  Name:

  	
  ANDREW A. MERRYMAN

  
	
   

  	
  Title:

  	
    SVP

  
					

 

8

 

	
   

  	
  COMPASS BANK, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOROTHY MARCHAND

  
	
   

  	
  Name:

  	
  DOROTHY MARCHAND

  
	
   

  	
  Title:

  	
    Senior Vice President

  
					

 

9

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JUSTIN M. ALEXANDER

  
	
   

  	
  Name:

  	
  JUSTIN M. ALEXANDER

  
	
   

  	
  Title:

  	
    Vice President

  
					

 

10

 

	
   

  	
  BANK OF SCOTLAND, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KAREN WEICH

  
	
   

  	
  Name:

  	
  KAREN WEICH

  
	
   

  	
  Title:

  	
    Vice President

  
					

 

11Exhibit 10.1

 

PDL
BIOPHARMA, INC.

STOCK
OPTION AGREEMENT

 

PDL
BioPharma, Inc. has granted to the Participant named in the Notice of Grant of Stock Option (the “Grant Notice”)
to which this Stock Option Agreement (the “Option
Agreement”) is attached an option (the “Option”) to purchase certain
shares of Stock upon the terms and conditions set forth in the Grant Notice and
this Option Agreement.  The Option has
been granted pursuant to and shall in all respects be subject to the terms and
conditions of the PDL BioPharma, Inc. 2005 Equity Incentive Plan (the “Plan”), as amended to the
Date of Grant, the provisions of which are incorporated herein by
reference.  By signing the Grant Notice,
the Participant: (a) acknowledges receipt of and represents that the Participant
has read and is familiar with the Grant Notice, this Option Agreement, the Plan
and a prospectus for the Plan in the form
most recently registered with the Securities and Exchange Commission (the “Plan Prospectus”),
(b) accepts the Option subject to all of the terms and conditions of the
Grant Notice, this Option Agreement and the Plan and (c) agrees to accept
as binding, conclusive and final all decisions or interpretations of the
Committee upon any questions arising under the Grant Notice, this Option
Agreement or the Plan.

 

1.             DEFINITIONS AND CONSTRUCTION.

 

1.1           Definitions.  Unless
otherwise defined herein, capitalized terms shall have the meanings assigned to
such terms in the Grant Notice or the Plan.

 

1.2           Construction.  Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of this Option Agreement.  Except when otherwise indicated by the
context, the singular shall include the plural and the plural shall include the
singular.  Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise.

 

2.             TAX STATUS OF OPTION.

 

This Option is intended to be a Nonstatutory Stock
Option and shall not be treated as an Incentive Stock Option within the meaning
of Section 422(b) of the Code.

 

3.             ADMINISTRATION.

 

All questions of interpretation concerning this Option
Agreement shall be determined by the Committee. 
All determinations by the Committee shall be final and binding upon all
persons having an interest in the Option. 
Any Officer shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided
the Officer has apparent authority with respect to such matter, right,
obligation, or election.

 

 

4.             EXERCISE OF THE OPTION.

 

4.1           Right to
Exercise.  Except as otherwise provided herein, the
Option shall be exercisable on and after the Initial Vesting Date and prior to
the termination of the Option (as provided in Section 6) in an amount not
to exceed the number of Vested Shares less the number of shares previously
acquired upon exercise of the Option.  In
no event shall the Option be exercisable for more shares than the Number of
Option Shares, as adjusted pursuant to Section 9.

 

4.2           Method of
Exercise.  Exercise of the Option shall be by means of
electronic or written notice (the “Exercise Notice”) in a form
authorized by the Company.  An electronic
Exercise Notice must be digitally signed or authenticated by the Participant in
such manner as required by the notice and transmitted to the Company or an
authorized representative of the Company (including a third-party administrator
designated by the Company).  In the event
that the Participant is not authorized or is unable to provide an electronic
Exercise Notice, the Option shall be exercised by a written Exercise Notice
addressed to the Company, which shall be signed by the Participant and
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other means as the Company may
permit, to the Company, or an authorized representative of the Company
(including a third-party administrator designated by the Company).  Each Exercise Notice, whether electronic or
written, must state the Participant’s election to exercise the Option, the
number of whole shares of Stock for which the Option is being exercised and
such other representations and agreements as to the Participant’s investment
intent with respect to such shares as may be required pursuant to the
provisions of this Option Agreement. 
Further, each Exercise Notice must be received by the Company prior to
the termination of the Option as set forth in Section 6 and must be
accompanied by full payment of the aggregate Exercise Price for the number of
shares of Stock being purchased.  The
Option shall be deemed to be exercised upon receipt by the Company of such
electronic or written Exercise Notice and the aggregate Exercise Price.

 

4.3           Payment of
Exercise Price.

 

(a)           Forms of Consideration Authorized.  Except as
otherwise provided below, payment of the aggregate Exercise Price for the
number of shares of Stock for which the Option is being exercised shall be made
(i) in cash or by check or cash equivalent, (ii) if permitted by the
Company, by tender to the Company, or attestation to the ownership, of whole
shares of Stock owned by the Participant having a Fair Market Value not less
than the aggregate Exercise Price, (iii) by means of a Cashless Exercise,
as defined in Section 4.3(b), or (iv) by any combination of the
foregoing.

 

(b)           Limitations on Forms of
Consideration.

 

(i)            Tender of Stock. 
Notwithstanding the foregoing, the Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock to the
extent such tender or attestation would constitute a violation of the
provisions of any law, regulation or agreement restricting the redemption of
the Company’s stock.  If required by the
Company, the Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such shares either have
been owned by the Participant for more than six (6) months or such other
period, if any, required by the Company (and not used for another option
exercise by attestation during such period) or were not acquired, directly or
indirectly, from the Company.

 

2

 

(ii)           Cashless Exercise.  A “Cashless Exercise” means the
delivery of a properly executed notice together with irrevocable instructions
to a broker in a form acceptable to the Company providing for the assignment to
the Company of the proceeds of a sale or loan with respect to some or all of
the shares of Stock acquired upon the exercise of the Option pursuant to a
program or procedure approved by the Company (including, without limitation,
through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System).  The Company reserves, at any
and all times, the right, in the Company’s sole and absolute discretion, to
establish, decline to approve or terminate any such program or procedure,
including with respect to the Participant notwithstanding that such program or
procedures may be available to others.

 

4.4           Tax
Withholding.  At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the
Participant hereby authorizes withholding from payroll and any other amounts
payable to the Participant, and otherwise agrees to make adequate provision for
(including by means of a Cashless Exercise to the extent permitted by the
Company), any sums required to satisfy the federal, state, local and foreign
tax withholding obligations of the Participating Company Group, if any, which
arise in connection with the Option.  The
Company shall have no obligation to deliver shares of Stock until the tax
withholding obligations of the Participating Company Group have been satisfied
by the Participant.

 

4.5           Beneficial
Ownership of Shares; Certificate Registration.  The Participant hereby authorizes the
Company, in its sole discretion, to deposit for the benefit of the Participant
with any broker with which the Participant has an account relationship of which
the Company has notice any or all shares acquired by the Participant pursuant
to the exercise of the Option.  Except as
provided by the preceding sentence, a certificate for the shares as to which
the Option is exercised shall be registered in the name of the Participant, or,
if applicable, in the names of the heirs of the Participant.

 

4.6           Restrictions
on Grant of the Option and Issuance of Shares.  The grant of the Option and the issuance of
shares of Stock upon exercise of the Option shall be subject to compliance with
all applicable requirements of federal, state or foreign law with respect to
such securities.  The Option may not be
exercised if the issuance of shares of Stock upon exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system
upon which the Stock may then be listed. 
In addition, the Option may not be exercised unless (i) a
registration statement under the Securities Act shall at the time of exercise
of the Option be in effect with respect to the shares issuable upon exercise of
the Option or (ii) in the opinion of legal counsel to the Company, the shares
issuable upon exercise of the Option may be issued in accordance with the terms
of an applicable exemption from the registration requirements of the Securities
Act.  THE PARTICIPANT IS CAUTIONED THAT
THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE
SATISFIED.  ACCORDINGLY, THE PARTICIPANT MAY NOT
BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS
VESTED.  The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company’s
legal counsel to be necessary to the lawful issuance and sale of any shares
subject to the Option shall relieve the Company of any liability in respect of
the failure to issue or sell such shares as to which such 

 

3

 

requisite
authority shall not have been obtained. 
As a condition to the exercise of the Option, the Company may require
the Participant to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any applicable law or regulation and
to make any representation or warranty with respect thereto as may be requested
by the Company.

 

4.7           Fractional
Shares.  The Company shall not be required to issue
fractional shares upon the exercise of the Option.

 

5.             NONTRANSFERABILITY OF THE OPTION.

 

During the lifetime of the Participant, the Option
shall be exercisable only by the Participant or the Participant’s guardian or
legal representative.  The Option shall
not be subject in any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution. 
Following the death of the Participant, the Option, to the extent
provided in Section 7, may be exercised by the Participant’s legal representative or
by any person empowered to do so under the deceased Participant’s will or under the then
applicable laws of descent and distribution.

 

6.             TERMINATION OF THE OPTION.

 

The Option shall terminate and may no longer be
exercised after the first to occur of (a) the close of business on the
Option Expiration Date, (b) the close of business on the last date for
exercising the Option following termination of the Participant’s Service as described in Section 7,
or (c) a Change in Control to the extent provided in Section 8.

 

7.             EFFECT OF TERMINATION OF SERVICE.

 

7.1           Option
Exercisability.  The Option
shall terminate immediately upon the Participant’s termination of Service to
the extent that it is then unvested and shall be exercisable after the
Participant’s termination of Service to the extent it is then vested only
during the applicable time period as determined below and thereafter shall
terminate.

 

(a)           Disability.  If the Participant’s Service terminates because of the
Disability of the Participant, the Option, to the extent unexercised and
exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by
the Participant (or the Participant’s guardian or legal representative) at
any time prior to the expiration of twelve (12) months after the date on which
the Participant’s Service terminated, but in any event no later than
the Option Expiration Date.

 

(b)           Death.  If the Participant’s Service
terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable
for Vested Shares on the date on which the Participant’s Service
terminated, may be exercised by the Participant’s legal representative or other
person who acquired the right to exercise the Option by reason of the
Participant’s death at any time prior to the expiration of twelve (12) months
after the date on which the Participant’s Service terminated, but in any event no
later than the Option Expiration Date. 
The Participant’s Service shall be deemed to have terminated on account
of death if the Participant dies within three (3) months after the
Participant’s termination of Service.

 

4

 

(c)           Termination After Change in Control.  If the Participant’s Service ceases as a
result of a Termination After Change in Control (as defined below), then (i) the
Option, to the extent unexercised and exercisable for Vested Shares on the date
on which the Participant’s Service terminated, may be exercised by the Participant
(or the Participant’s guardian or legal representative) at any time prior to
the expiration of six (6) months after the date on which the Participant’s
Service terminated, but in any event no later than the Option Expiration Date.

 

(d)           Termination After Agreement to
Resign Employment.  If the
Participant’s Service as an Employee ceases as a result of an Agreement to
Resign Employment (as defined below) and as of the effective date of the
termination of Participant’s Service as an Employee, the Participant continues
his Service as a member of the Board, then the number of Vested Shares shall be
increased by an amount equal to fifty percent (50%) of the Number of Option
Shares (but in no event to a number in excess of 100% of the Number of Option
Shares) effective as of the date on which the Participant’s Service as an
Employee terminated.

 

(e)           Other
Termination of Service.  If the
Participant’s Service terminates for any reason, except Disability, death or
Termination After Change in Control, the Option, to the extent unexercised and
exercisable for Vested Shares by the Participant on the date on which the
Participant’s Service terminated, may be exercised by the Participant within
three (3) months after the date on which the Participant’s Service
terminated, but in any event no later than the Option Expiration Date.

 

7.2           Extension if
Exercise Prevented by Law.  Notwithstanding the foregoing, if the
exercise of the Option within the applicable time periods set forth in Section 7.1
is prevented by the provisions of Section 4.6, the Option shall remain
exercisable until thirty (30) days after the date such exercise would no longer
be prevented by such provisions, but in any event no later than the Option
Expiration Date.

 

7.3           Certain
Definitions.

 

(a)           “Agreement to Resign Employment” means
the termination by Participant of his Service as an Employee upon the mutual
agreement of Participant and the Board that Participant should resign as an
Employee, which agreement by the Board shall occur at the time a majority of
the members of the Board other than Participant adopt a resolution that
Participant should resign as an Employee.

 

(b)           “Termination After a Change in Control”
shall mean either of the following events occurring upon or within twelve (12)
months after a Change in Control:

 

(i)            termination by the
Participating Company Group of the Participant’s Service for any reason other
than for Cause (as defined in the Plan); or

 

(ii)           the Participant’s
resignation from all capacities in which the Participant is then rendering
Service within a reasonable period of time following the event constituting a
Constructive Termination (as defined below).

 

5

 

Notwithstanding any provision herein to the contrary,
Termination After a Change in Control shall not include any termination of the Participant’s
Service which (1) is for Cause (as defined in the Plan); (2) is a
result of the Participant’s death or disability; (3) is a result of the Participant’s
voluntary termination of Service other than upon a Constructive Termination; or
(4) occurs prior to the effectiveness of a Change in Control.

 

(c)           “Constructive Termination” shall mean
any one or more of the following:

 

(i)            without the Participant’s
express written consent, the assignment to the Participant of any duties, or
any limitation of the Participant’s responsibilities, substantially
inconsistent with the Participant’s positions, duties, responsibilities and
status with a Participating Company immediately prior to the date of the Change
in Control;

 

(ii)           without the Participant’s
express written consent, the relocation of the principal place of the Participant’s
Service to a location that is more than fifty (50) miles from the Participant’s
principal place of Service immediately prior to the date of the Change in
Control, or the imposition of travel requirements substantially more demanding
of the Participant than such travel requirements existing immediately prior to
the date of the Change in Control;

 

(iii)          any failure by a
Participating Company to pay, or any material reduction by a Participating
Company of, (1) the Participant’s base salary in effect immediately prior
to the date of the Change in Control, or (2) the Participant’s bonus
compensation, if any, in effect immediately prior to the date of the Change in
Control (subject to applicable performance requirements with respect to the
actual amount of bonus compensation earned by the Participant); or

 

(iv)          any failure by a
Participating Company to (1) continue to provide the Participant with the
opportunity to participate, on terms no less favorable than those in effect for
the benefit of any employee group which customarily includes a Person holding
the employment position or a comparable position with the Participating Company
then held by the Participant, in any benefit or compensation plans and
programs, including, but not limited to, the Participating Company’s life,
disability, health, dental, medical, savings, profit sharing, stock purchase
and retirement plans, if any, in which the Participant was participating
immediately prior to the date of the Change in Control, or their equivalent, or
(2) provide the Participant with all other fringe benefits (or their
equivalent) from time to time in effect for the benefit of any employee group
which customarily includes a Person holding the employment position or a
comparable position with the Participating Company then held by the Participant.

 

8.             EFFECT OF CHANGE IN CONTROL.

 

In the event of a Change in Control, the surviving,
continuing, successor, or purchasing entity or parent thereof, as the case may
be (the “Acquiror”),
may, without the consent of the Participant, assume or continue in full force
and effect the Company’s rights and obligations under the Option or substitute
for the Option a substantially equivalent option for the Acquiror’s stock.  In the event of a Change in Control, and
provided that the Participant’s 

 

6

 

Service has not terminated prior to the date of the
Change in Control, any shares subject to the Option which are not Vested Shares
shall become Vested Shares effective as of the date of the Change in Control.  Any exercise of the Option that was
permissible solely by reason of this Section shall be conditioned upon the
consummation of the Change in Control. 
The Option shall terminate and cease to be outstanding effective as of
the time of consummation of the Change in Control to the extent that the Option
is neither assumed or continued by the Acquiror in connection with the Change
in Control nor exercised as of the date of the Change in Control.

 

9.             ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.

 

Subject to any required action by the stockholders of
the Company, in the event of any change in the Stock effected without receipt
of consideration by the Company, whether through merger, consolidation,
reorganization, reincorporation, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares, or similar change in the capital
structure of the Company, or in the event of payment of a dividend or
distribution to the stockholders of the Company in a form other than Stock
(excepting normal cash dividends) that has a material effect on the Fair Market
Value of shares of Stock, appropriate adjustments shall be made in the number,
Exercise Price and kind of shares subject to the Option, in order to prevent
dilution or enlargement of the Participant’s rights under the Option.  For purposes of the foregoing, conversion of
any convertible securities of the Company shall not be treated as “effected
without receipt of consideration by the Company.”  Any fractional share resulting from an
adjustment pursuant to this Section shall be rounded down to the nearest
whole number, and in no event may the Exercise Price be decreased to an amount
less than the par value, if any, of the stock subject to the Option.  The Committee in its sole discretion, may
also make such adjustments in the terms of the Option to reflect, or related
to, such changes in the capital structure of the Company or distributions as it
deems appropriate.  The adjustments
determined by the Committee pursuant to this Section shall be final,
binding and conclusive.

 

10.           RIGHTS AS A STOCKHOLDER, DIRECTOR, EMPLOYEE OR
CONSULTANT.

 

The Participant shall have no rights as a stockholder
with respect to any shares covered by the Option until the date of the issuance
of the shares for which the Option has been exercised (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company).  No adjustment
shall be made for dividends, distributions or other rights for which the record
date is prior to the date the shares are issued, except as provided in Section 9.  If the Participant is an Employee, the
Participant understands and acknowledges that, except as otherwise provided in
a separate, written employment agreement between a Participating Company and
the Participant, the Participant’s employment is “at will” and is for
no specified term.  Nothing in this
Option Agreement shall confer upon the Participant any right to continue in the
Service of a Participating Company or interfere in any way with any right of
the Participating Company Group to terminate the Participant’s Service as a Director, an Employee
or Consultant, as the case may be, at any time.

 

7

 

11.           LEGENDS.

 

The Company may at any time place legends referencing
any applicable federal, state or foreign securities law restrictions on all
certificates representing shares of stock subject to the provisions of this
Option Agreement.  The Participant shall,
at the request of the Company, promptly present to the Company any and all
certificates representing shares acquired pursuant to the Option in the
possession of the Participant in order to carry out the provisions of this
Section.

 

12.           ARBITRATION.

 

In the event a dispute between the parties to this
Option Agreement arises out of, in connection with, or with respect to this
Option Agreement, or any breach of this Option Agreement, such dispute will, on
the written request of one (1) party delivered to the other party, be
submitted and settled by arbitration in Redwood City, California in accordance
with the rules of the American Arbitration Association then in effect and
will comply with the California Arbitration Act, except as otherwise
specifically stated in this Section 12. 
Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction.  The
parties submit to the in personam jurisdiction of the Supreme Court of the
State of California for the purpose of confirming any such award and entering
judgment upon the award.  Notwithstanding
anything to the contrary that may now or in the future be contained in the rules of
the American Arbitration Association, the parties agree as follows:

 

12.1         Each party will
appoint one individual approved by the American Arbitration Association to hear
and determine the dispute within twenty (20) days after receipt of notice of
arbitration from the noticing party.  The
two (2) individuals so chosen will select a third impartial arbitrator.  The majority decision of the arbitrators will
be final and binding upon the parties to the arbitration.  If either party fails to designate its
arbitrator within twenty (20) days after delivery of the notice provided for in
this Section 12.1, then the arbitrator designated by the one (1) party
will act as the sole arbitrator and will be considered the single, mutually
approved arbitrator to resolve the controversy. 
In the event the parties are unable to agree upon a rate of compensation
for the arbitrators, they will be compensated for their services at a rate to
be determined by the American Arbitration Association.

 

12.2         The parties will
enjoy, but are not limited to, the same rights to discovery as they would have
in the United States District Court for the Northern District of California.

 

12.3         The arbitrators will,
upon the request of either party, issue a written opinion of their findings of
fact and conclusions of law.

 

12.4         Upon receipt by the
requesting party of said written opinion, said party will have the right within
ten (10) days to file with the arbitrators a motion to reconsider, and
upon receipt of a timely request the arbitrators will reconsider the issues
raised by said motion and either confirm or change their majority decision
which will then be final and binding upon the parties to the arbitration.

 

12.5         The arbitrators will
award to the prevailing party in any such arbitration reasonable expenses,
including attorneys’ fees and costs, incurred in connection with the dispute.

 

8

 

13.           MISCELLANEOUS PROVISIONS.

 

13.1         Termination
or Amendment.  The Committee
may terminate or amend the Plan or the Option at any time; provided, however,
that except as provided in Section 8 in connection with a Change in
Control, no such termination or amendment may adversely affect the Option or
any unexercised portion hereof without the consent of the Participant unless
such termination or amendment is necessary to comply with any applicable law or
government regulation.  No amendment or
addition to this Option Agreement shall be effective unless in writing.

 

13.2         Compliance
with Section 409A.  The
Company intends that income realized by the Participant pursuant to the Plan
and this Agreement will not be subject to taxation under Section 409A.  The provisions of the Plan and this Agreement
shall be interpreted and construed in favor of satisfying any applicable
requirements of Section 409A.  The
Company, in its reasonable discretion, may amend (including retroactively) the
Plan and this Agreement in order to conform to the applicable requirements of Section 409A,
including amendments to facilitate the Participant’s ability to avoid taxation
under Section 409A.  However, the preceding provisions shall not be construed
as a guarantee by the Company of any particular tax result for income realized
by the Participant pursuant to the Plan or this Agreement.  In any event, and except for the
responsibilities of the Company set forth in Section 4.4, no Participating
Company shall be responsible for the payment of any applicable taxes on income realized
by the Participant pursuant to the Plan or this Agreement.

 

13.3         Further Instruments.  The
parties hereto agree to execute such further instruments and to take such
further action as may reasonably be necessary to carry out the intent of this
Option Agreement.

 

13.4         Binding
Effect.  Subject to the
restrictions on transfer set forth herein, this Option Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors and assigns.

 

13.5         Delivery of
Documents and Notices.  Any
document relating to participation in the Plan or any notice required or
permitted hereunder shall be given in writing and shall be deemed effectively
given (except to the extent that this Option Agreement provides for
effectiveness only upon actual receipt of such notice) upon personal delivery,
electronic delivery at the e-mail address, if any, provided for the Participant
by a Participating Company, or upon deposit in the U.S. Post Office or foreign
postal service, by registered or certified mail, or with a nationally
recognized overnight courier service, with postage and fees prepaid, addressed
to the other party at the address of such party set forth in the Grant Notice
or at such other address as such party may designate in writing from time to
time to the other party.

 

(a)           Description of Electronic Delivery.  The Plan documents, which may include but do
not necessarily include: the Plan, the Grant Notice, this Option Agreement, the
Plan Prospectus, and any reports of the Company provided generally to the
Company’s stockholders, may be delivered to the Participant
electronically.  In addition, the
Participant may deliver electronically the Grant Notice and Exercise Notice
called for by Section 4.2 to the Company or to such third party involved
in administering the Plan as the Company may 

 

9

 

designate from time to time.  Such means
of electronic delivery may include but do not necessarily include the delivery
of a link to a Company intranet or the internet site of a third party involved
in administering the Plan, the delivery of the document via e-mail or such
other means of electronic delivery specified by the Company.

 

(b)           Consent to Electronic Delivery.  The
Participant acknowledges that the Participant has read Section 13.5(a) of
this Option Agreement and consents to the electronic delivery of the Plan
documents and the delivery of the Grant Notice and Exercise Notice, as
described in Section 13.5(a).  The
Participant acknowledges that he or she may receive from the Company a paper
copy of any documents delivered electronically at no cost to the Participant by
contacting the Company by telephone or in writing.  The Participant further acknowledges that the
Participant will be provided with a paper copy of any documents if the
attempted electronic delivery of such documents fails.  Similarly, the Participant understands that the Participant must provide the
Company or any designated third party administrator with a paper copy of any
documents if the attempted electronic delivery of such documents fails.  The Participant may revoke his or her consent
to the electronic delivery of documents described in Section 13.5(a) or
may change the electronic mail address to which such documents are to be
delivered (if Participant has provided an electronic mail address) at any time
by notifying the Company of such revoked consent or revised e-mail address by
telephone, postal service or electronic mail. 
Finally, the Participant understands that he or she is not required to
consent to electronic delivery of documents described in Section 13.5(a).

 

13.6         Integrated
Agreement.  The Grant Notice,
this Option Agreement and the Plan, together with any employment, service or
other agreement between the Participant and a Participating Company referring
to the Option, shall constitute the entire understanding and agreement of the
Participant and the Participating Company Group with respect to the subject
matter contained herein and supersede any prior agreements, understandings,
restrictions, representations, or warranties among the Participant and the
Participating Company Group with respect to such subject matter.  To the extent contemplated herein, the
provisions of the Grant Notice, the Option Agreement and the Plan shall survive
any exercise of the Option and shall remain in full force and effect.

 

13.7         Applicable
Law.  This Option Agreement
shall be governed by the laws of the State of California as such laws are
applied to agreements between California residents entered into and to be
performed entirely within the State of California.

 

13.8         Counterparts.  The Grant Notice may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

10

 

	
   

  	
  Participant:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
              Date:

  	
   

  
				

 

 

STOCK
OPTION EXERCISE NOTICE

 

PDL BioPharma, Inc.

Stock Administrator

1400 Seaport Boulevard

Redwood City, CA 94063

 

Ladies and Gentlemen:

 

1.             Option.  I was granted a nonstatutory stock option
(the “Option”)
to purchase shares of the common stock (the “Shares”)
of PDL BioPharma, Inc. (the “Company”)
pursuant to the Company’s
2005 Equity Incentive Plan (the “Plan”),
my Notice of Grant of Stock Option (the “Grant Notice”)
and my Stock Option Agreement (the “Option
Agreement”) as follows:

 

	
  Date of Grant:

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of Option Shares:

  	
   

  
	
   

  	
   

  	
   

  
	
  Exercise Price per Share:

  	
  $

  	
   

  
				

 

2.             Exercise of Option.  I hereby elect to exercise the Option to
purchase the following number of Shares, all of which are Vested Shares in
accordance with the Grant Notice and the Option Agreement:

 

	
  Total Shares Purchased:

  	
   

  
	
   

  	
   

  	
   

  
	
  Total Exercise Price (Total Shares X Price per
  Share)

  	
  $

  	
   

  

 

3.             Payments.  I enclose payment in full of the total
exercise price for the Shares in the following form(s), as authorized by my
Option Agreement:

 

	
  o Cash:

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  o Check:

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  o Tender
  of Company Stock:

  	
  Contact Plan Administrator

  
				

 

4.             Tax Withholding.  I authorize payroll withholding and otherwise
will make adequate provision for the federal, state, local and foreign tax
withholding obligations of the Company, if any, in connection with the Option.

 

5.             Participant Information.

 

	
  My address is:

  
	
   

  
	
   

  
	
  My Social Security Number is:

  

 

 

6.             Binding Effect.  I agree that the Shares are being acquired in
accordance with and subject to the terms, provisions and conditions of the
Grant Notice, the Option Agreement and the Plan, to all of which I hereby expressly
assent.  This Agreement shall inure to
the benefit of and be binding upon my heirs, executors, administrators,
successors and assigns.

 

 

	
   

  	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  

 

 

Receipt of the above is
hereby acknowledged.

 

PDL BioPharma, Inc.

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
					

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]