EXHIBIT C
WAIVER AND CLARIFICATION OF AGREEMENTS
Reference is made to (i) the Loan Agreement dated April 7, 1991 (the "1991
Loan Agreement") by and among Xx. Xxxx Xxxxxxxxx and Napamco, Ltd. (together,
the "General Partners") and Xx. Xxxxx X. Xxxxxxx as the lender thereunder, with
Southwest Minerals, Inc. Defined Pension Plan, Xxxxxxx Petroleum Int., Inc., Xx.
Xxxxxxx Xxxxxxxxx, Antwerp Diamond Distributors, Inc., Xxxxxx Energy and
Technology Employee Retirement Fund and Mr. Xxxx Xxxxx as the participants
thereunder (collectively with Xx. Xxxxx X. Xxxxxxx, the "1991 Loan Agreement
Participants"), (ii) the Loan Agreement dated October 1, 1993 (the "1993 Loan
Agreement") by and among the General Partners and Xx. Xxxxx X. Xxxxxxx as the
lender thereunder, with Xx. Xxxx Xxxxxxxxx as the participant thereunder
(collectively with Xx. Xxxxx X. Xxxxxxx, the "1993 Loan Agreement
Participants"), (iii) the Addendum to Loan Agreement dated April 26, 1994 (the
"Addendum to the 1993 Loan Agreement") by and among the General Partners and Xx.
Xxxxx X. Xxxxxxx as the lender thereunder and (iv) a Loan Agreement dated
February 17, 1993, as amended on March 4, 1996 (the "Benedict Agreement"),
between the General Partners and Xx. Xxxxx X. Xxxxxxxx ("Xx. Xxxxxxxx") whereby
Xx. Xxxxxxxx is entitled to receive a portion of distributions made with respect
to the general partner interests in Edge Group II Limited Partnership, a
Connecticut limited partnership ("Edge Group II") (the 1991 Loan Agreement, the
1993 Loan Agreement, the Addendum to the 1993 Loan Agreement and the Benedict
Agreement are hereinafter collectively referred to as the "Agreements"). The
1991 Loan Agreement Participants, the 1993 Loan Agreement Participants, Xx.
Xxxxx X. Xxxxxxx and Xx. Xxxxxxxx are hereinafter collectively referred to as
the "Participants."
In connection with the transactions contemplated by that certain
Combination Agreement (the "Combination Agreement") to be entered into by and
among (i) Edge Group II, (ii) Gulfedge Limited Partnership, a Texas limited
partnership, (iii) Edge Group Partnership, a Connecticut general partnership,
(iv) Edge Petroleum Corporation, a Texas corporation, (v) Edge Mergeco, Inc., a
Texas corporation, and (vi) Edge Petroleum Corporation, a Delaware corporation
(the "Company"), the parties hereto agree as follows:
1. Xx. Xxxxx X. Xxxxxxx, as lender under the 1991 Loan Agreement,
the 1993 Loan Agreement and the Addendum to the 1993 Loan Agreement, hereby
consents to the withdrawal of the General Partners as general partners of Edge
Group II and the transfer of the General Partners' general partner interests in
Edge Group II to the Company or its permitted assigns in exchange for shares of
Common Stock, par value $0.01 per share (the "Common Stock"), of the Company as
contemplated by the Combination Agreement and hereby waives any provisions of
the Agreements, and releases any liens or security interests under the
Agreements, to the extent necessary to permit such transfer; provided, however,
the parties agree that upon such transfer, such shares of Common Stock shall be
Pledged Collateral under the Pledge and Security Agreements referred to in the
1991 Loan Agreement, the 1993 Loan Agreement and the Addendum to the 1993 Loan
Agreement.
2. With respect to the Participants' rights under the Agreements relating
to the general partner interests in Edge Group II (other than as collateral for
borrowed money), the parties hereto
hereby acknowledge that the original intent of the Agreements was that in the
event of an exchange of the General Partners' general partner interests in Edge
Group II for an equity interest in another entity (such as the exchange for
shares of Common Stock contemplated under the Combination Agreement), the
General Partners, who shall have the sole power to make the investment decision
as to whether to so exchange their general partner interests in Edge Group II,
would be required to transfer to each of the Participants his or her respective
proportional share of the equity interest received in such exchange as follows
and that upon receipt of such equity interest by each Participant, such
Participant's rights relating to the general partner interests in Edge Group II
(other than as collateral for borrowed money) shall be satisfied and terminate.
In the event of the transfer of the General Partners' general partner interests
in Edge Group II to the Company or its permitted assigns pursuant to the
Combination Agreement, the General Partners shall transfer to each of the
Participants his or her respective proportional share of the proceeds of such
transfer as follows and upon receipt thereof, such participant's rights relating
to the general partner interests in Edge Group II (other than as collateral for
borrowed money) shall be satisfied and terminate:
(i) Under the 1991 Loan Agreement, the 1991 Loan Agreement
Participants shall each receive a portion of the proceeds of the transfer of the
general partner interests in Edge Group II equal to the product of (A) one-half
of the Transfer Proceeds, multiplied by (B) a fraction, (1) the numerator of
which is an amount equal to the total amount of the loan outstanding under the
1991 Loan Agreement on July 15, 1991 with respect to each 1991 Loan Agreement
Participant ($80,508.92 for Xx. Xxxxx X. Xxxxxxx; $156,041.18 for Southwest
Minerals, Inc. Defined Pension Plan; $286,075.49 for Xxxxxxx Petroleum Int.,
Inc.; $83,221.96 for Xx. Xxxxxxx Xxxxxxxxx; $62,416.47 for Antwerp Diamond
Distributors, Inc.; $62,936.61 for Xxxxxx Energy and Technology Employees
Retirement Fund; and $24,966.59 for Mr. Xxxx Xxxxx) divided by $60,500 (the
amount initially contributed by each limited partner of Edge Group II with
respect to each unit representing a limited partner interest in Edge Group II
(each, an "Edge Group II Unit")) and (2) the denominator of which is 189 (the
total number of outstanding Edge Group II Units). In the case of the
transactions contemplated by the Combination Agreement, to obtain the number of
shares of Common Stock to be transferred to each Participant, such amount shall
be divided by the initial public offering price per share of Common Stock.
(ii) Under the 1993 Loan Agreement, the 1993 Loan Agreement
Participants shall each receive a portion of the proceeds of the transfer of the
general partner interests in Edge Group II equal to the product of (A) the GP's
After Payout Amount, multiplied by (B) four, multiplied by (C) an amount equal
to the total amount loaned under the 1993 Loan Agreement with respect to each
1993 Loan Agreement Participant ($150,000 for Xx. Xxxxx X. Xxxxxxx and $25,000
for Xx. Xxxx Xxxxxxxxx) divided by the total amount loaned under the 1993 Loan
Agreement ($175,000) multiplied by (D) 0.00381344. In the case of the
transactions contemplated by the Combination Agreement, to obtain the number of
shares of Common Stock to be transferred to each Participant, such amount shall
be divided by the initial public offering price per share of Common Stock.
(iii) Under the Addendum to the 1993 Loan Agreement, Xx. Xxxxx X.
Xxxxxxx shall receive a portion of the proceeds of the transfer of the general
partner interests in Edge Group II
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equal to the product of (A) the GP's After Payout Amount, multiplied by (B)
four, multiplied by (C) 0.00245196. In the case of the transactions contemplated
by the Combination Agreement, to obtain the number of shares of Common Stock to
be transferred to each Participant, such amount shall be divided by the initial
public offering price per share of Common Stock.
(iv) Under the Benedict Agreement, Xx. Xxxxxxxx shall receive a
portion of the proceeds of such transfer equal to the product of (A) the GP's
After Payout Amount, multiplied by (B) 0.01063830. In the case of the
transactions contemplated by the Combination Agreement, to obtain the number of
shares of Common Stock to be transferred to each Participant, such amount shall
be divided by the initial public offering price per share of Common Stock.
(v) For purposes of the transactions contemplated by the Combination
Agreement, the "Transfer Proceeds" means the fair market value of the proceeds
of the transfer of the general partner interests in Edge Group II (in the case
of the transactions contemplated by the Combination Agreement, the parties
hereby agree that such fair market value shall be deemed to equal the product of
the number of shares of Common Stock issued in exchange for the general partner
interests in Edge Group II multiplied by the initial public offering price per
share of Common Stock).
(vi) For purposes of the transactions contemplated by the Combination
Agreement, the "GP's After Payout Amount" means an amount equal to the Transfer
Proceeds, minus (1) $201,886, minus (2) the fair market value of such proceeds
attributable to the general partners' accrued but unpaid management fees (in the
case of the transactions contemplated by the Combination Agreement, the parties
hereby agree that such fair market value shall be deemed to equal $1,332,450),
minus (3) the fair market value of such proceeds attributable to the general
partners' future cash flow based management fee (in the case of the transactions
contemplated by the Combination Agreement, the parties hereby agree that such
fair market value shall be deemed to equal the product of 0.03 multiplied by the
total number of shares of Common Stock for which the general and limited
partners of Edge Group II will have the opportunity to exchange their interests
in Edge Group II pursuant to the Combination Agreement multiplied by the initial
public offering price per share of the Common Stock).
(vii) For example, in the event of the exchange of the General
Partners' general partner interests in Edge Group II for shares of Common Stock
pursuant to the Combination Agreement, assuming an initial public offering price
per share of Common Stock of $16.00 and the receipt by the General Partners of
361,665 shares of Common Stock in exchange for the general partner interests in
Edge Group II and the receipt by the limited partners of Edge Group II of
1,837,287 for their limited partner in interests in Edge Group II, each
Participant would be entitled to receive the number of shares of Common Stock
set forth opposite such Participant's name below:
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Participant Number of Shares
1991 Loan Agreement
Xx. Xxxxx X. Xxxxxxx................................. 1,273
Southwest Minerals, Inc.
Defined Pension Plan................................. 2,468
Xxxxxxx Petroleum Int., Inc.......................... 4,524
Xx. Xxxxxxx Xxxxxxxxx................................ 1,316
Antwerp Diamond Distributors, Inc.................... 987
Xxxxxx Energy and Technology
Employees Retirement Fund............................ 995
Mr. Xxxx Xxxxx....................................... 395
1993 Loan Agreement
Xx. Xxxxx X. Xxxxxxx................................. 2,608
Xx. Xxxx Xxxxxxxxx................................... 435
Addendum to 1993 Loan Agreement
Xx. Xxxxx X. Xxxxxxx................................. 1,957
Benedict Agreement
Xx. Xxxxx X. Xxxxxxxx................................ 2,122
3. The parties confirm that it is the original intent under the
Agreements that the rights under the Agreements relating to the general partner
interests in Edge Group II (other than as collateral for borrowed money) do not
restrict in any way the transfer of such interests and, as a result, that the
Participants' consent to the transfer of such interests is not required with
respect to such rights. The parties further confirm that it is the original
intent under the 1991 Loan Agreement and the 1993 Loan Agreement that Xx. Xxxxx
X. Xxxxxxx may act for and bind the 1991 Loan Agreement Participants and the
1993 Loan Agreement Participants with respect to the 1991 Loan Agreement and the
1993 Loan Agreement.
4. All other provisions of the Agreements shall continue in full force.
5. This will clarify that references in the 1993 Loan Agreement and
the Addendum to the 1993 Loan Agreement to 100% of the net income of Essex
Royalty II Limited Partnership refers to 100% of the net income after payout of
the Essex Royalty II Limited Partnership.
6. This Waiver and Clarification of Agreements may be executed in any
number of counterparts, each such counterpart being deemed to be an original,
and all such counterparts taken together shall constitute the same agreement.
This Waiver and Clarification Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. The parties hereto without
additional consideration shall execute and deliver or shall cause to be executed
and delivered such further documents and certificates and to take such further
actions as may be reasonably
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required or desirable to carry out the provisions of this Waiver and
Clarification of Agreements and consummate the transactions contemplated hereby.
7. Nothing herein shall obligate the General Partners to exchange
their general partner interests in Edge Group II for an equity interest in
another entity (including without limitation, the exchange for shares of Common
Stock contemplated under the Combination Agreement).
IN WITNESS WHEREOF, the undersigned have signed this Waiver and
Clarification of Agreements dated as of November 27, 1996.
NAPAMCO, LTD.
By: /s/ Xxxx Xxxxxxxxx
____________________________
Name: Xxxx Xxxxxxxxx
Title: President
/s/ Xxxx Xxxxxxxxx
________________________________
XXXX XXXXXXXXX
/s/ Xxxxx X. Xxxxxxx
________________________________
XXXXX X. XXXXXXX
/s/ Xxxxx X. Xxxxxxxx
________________________________
XXXXX X. XXXXXXXX
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