AGREEMENT AND PLAN OF MERGER among CHAPARRAL ENERGY, INC., CHAPARRAL EXPLORATION, L.L.C. and EDGE PETROLEUM CORPORATION Dated July 14, 2008

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

among

CHAPARRAL ENERGY, INC.,

CHAPARRAL EXPLORATION, L.L.C.

and

EDGE PETROLEUM CORPORATION

Dated July 14, 2008

TABLE OF CONTENTS

		Page
ARTICLE I THE MERGER		1
Section 1.1	The Merger	1
Section 1.2	Effective Time; Closing	2
Section 1.3	Effect of the Merger	2
Section 1.4	Certificate of Formation; Limited Liability Company Agreement	2
Section 1.5	Managers and Officers of Surviving Entity	2
Section 1.6	Conversion of Securities	2
Section 1.7	Employee Stock Options, Restricted Shares and Units	3
Section 1.8	Surrender of Shares; Stock Transfer Books	4
Section 1.9	Withholding Taxes	7
Section 1.10	Adjustment of Common Exchange Ratio	7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF EDGE		7
Section 2.1	Organization and Qualification; Subsidiaries	7
Section 2.2	Charter and Bylaws	8
Section 2.3	Capitalization	9
Section 2.4	Authority; Due Authorization; Binding Agreement; Approval	9
Section 2.5	No Violation; Consents	10
Section 2.6	Compliance	11
Section 2.7	SEC Filings; Financial Statements; Internal Control	11
Section 2.8	No Undisclosed Liabilities	12
Section 2.9	Absence of Certain Changes or Events	12
Section 2.10	Litigation	13
Section 2.11	Employee Benefit Plans	14
Section 2.12	Properties; Oil and Gas Matters	16
Section 2.13	Taxes	17
Section 2.14	Environmental Matters	18
Section 2.15	Intellectual Property	19
Section 2.16	Material Contracts	20
Section 2.17	Hedging	21
Section 2.18	Brokers; Transaction Fees	21
Section 2.19	Takeover Provisions	21
Section 2.20	Tax Treatment	22
Section 2.21	Business Locations; Bank Accounts	22
Section 2.22	Future Production	22
Section 2.23	Lease Provisions; Suspense	22
Section 2.24	Previously Owned Properties	22
Section 2.25	Operator; Audits	23
Section 2.26	Preferential Rights to Purchase and Required Consents to Assign	23
Section 2.27	Work Plan	23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB		23
Section 3.1	Organization and Qualification; Subsidiaries	23

i

Section 3.2	Charter and Bylaws	24
Section 3.3	Capitalization	25
Section 3.4	Authority; Due Authorization; Binding Agreement; Approval	25
Section 3.5	No Violation; Consents	26
Section 3.6	Compliance	27
Section 3.7	SEC Filings; Financial Statements; Internal Control	28
Section 3.8	No Undisclosed Liabilities	28
Section 3.9	Absence of Certain Changes or Events	28
Section 3.10	Litigation	29
Section 3.11	Employee Benefit Plans	30
Section 3.12	Properties; Oil and Gas Matters	32
Section 3.13	Taxes	32
Section 3.14	Environmental Matters	33
Section 3.15	Intellectual Property	34
Section 3.16	Material Contracts	35
Section 3.17	Hedging	36
Section 3.18	Brokers; Transaction Fees	36
Section 3.19	Ownership of Shares	36
Section 3.20	Tax Treatment	37
Section 3.21	Future Production	37
Section 3.22	Lease Provisions; Suspense	37
Section 3.23	Previously Owned Properties	37
Section 3.24	Operator; Audits	37
Section 3.25	Financing Commitment	37
ARTICLE IV CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME		38
Section 4.1	Conduct of Edge Business	38
Section 4.2	Conduct of Parent Business	40
ARTICLE V ADDITIONAL AGREEMENTS		41
Section 5.1	Proxy Statement; Stockholders Meeting	41
Section 5.2	Access to Information; Confidentiality	41
Section 5.3	No Solicitation	44
Section 5.4	Directors’ and Officers’ Indemnification and Insurance	45
Section 5.5	Notification of Certain Matters	48
Section 5.6	Governmental Filings; Efforts	49
Section 5.7	Public Announcements	50
Section 5.8	Parent Guarantee	50
Section 5.9	Employee Matters	50
Section 5.10	Rule 16b-3	52
Section 5.11	Listing Application	52
Section 5.12	Reorganization	52
Section 5.13	Parent Directors	53
Section 5.14	Parent Restructure	53
ARTICLE VI CONDITIONS TO THE MERGER		53
Section 6.1	Conditions to the Obligations of Each Party to Effect the Merger	53

ii

Section 6.2	Conditions to the Obligations of Parent and Sub	54
Section 6.3	Conditions to the Obligations of Edge	54
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER		55
Section 7.1	Termination	55
Section 7.2	Effect of Termination	57
Section 7.3	Fees and Expenses	57
Section 7.4	Amendment	59
Section 7.5	Waiver	59
ARTICLE VIII GENERAL PROVISIONS		59
Section 8.1	Survival	59
Section 8.2	Scope of Representations and Warranties	59
Section 8.3	Notices	61
Section 8.4	Certain Definitions	62
Section 8.5	Severability	63
Section 8.6	Entire Agreement; Assignment	63
Section 8.7	Parties in Interest	63
Section 8.8	Specific Performance	63
Section 8.9	Governing Law; Jurisdiction and Venue	63
Section 8.10	Headings	64
Section 8.11	Interpretation	64
Section 8.12	Incorporation of Exhibits	64
Section 8.13	Disclosure Schedules	64
Section 8.14	Counterparts	65

Exhibit 1.2	—	Form of Certificate of Merger
Exhibit 1.4(a)	—	Certificate of Formation of Sub
Exhibit 1.4(b)	—	Limited Liability Company Agreement of Sub
Exhibit 1.6(b)	—	Certificate of Designations for Parent 5.75% Series A cumulative convertible perpetual preferred stock
Exhibit 3.5(a)(i)	—	Amended and Restated Certificate of Incorporation of Parent
Exhibit 3.5(a)(ii)	—	Amended and Restated Bylaws of Parent
Exhibit 4.2(d)	—	Certificate of Designations for Parent Series B convertible preferred stock

iii

SCHEDULE OF DEFINED TERMS

Defined Term		Section
Acquisition Proposal		Section 5.3(a)
Affiliate		Section 8.4(a)
Agreement		Preamble
Amended and Restated Bylaws		Section 3.5(a)
Amended Certificate of Incorporation		Section 3.5(a)
Applicable Environmental Law		Section 2.14(f)
Applicable Law		Section 1.5
beneficial owner		Section 8.4(b)
Book-Entry Shares		Section 1.8(b)
business day		Section 8.4(c)
Certificate of Merger		Section 1.2
Certificates		Section 1.8(b)
Change in the Edge Recommendation		Section 5.3(b)
Closing		Section 1.2
Closing Date		Section 1.2
Code		Recitals
Common Exchange Ratio		Section 1.6(a)
Common Merger Consideration		Section 1.6(a)
Common Shares		Recitals
Confidentiality Agreements		Section 5.2(b)
Continuing Employee		Section 5.9(a)
Control		Section 8.4(d)
controlled by		Section 8.4(d)
Delaware Law		Recitals
Disclosure Schedules		Section 8.13
Edge		Preamble
Edge 401(k) Plan		Section 2.11(a)
Edge Board of Directors		Section 2.4(d)
Edge Common Stock		Recitals
Edge Credit Agreement		Section 2.9
Edge Employee Benefit Plans		Section 2.11(c)
Edge ERISA affiliate		Section 2.11(a)
Edge Material Adverse Effect		Section 2.1
Edge Material Contracts		Section 2.16(a)
Edge Permits		Section 2.6(b)
Edge Preferred Stock		Recitals
Edge Property		Section 2.14(a)
Edge Recommendation		Section 5.1(e)
Edge Reservoir Engineers		Section 2.12(b)
Edge Reserve Reports		Section 2.12(b)
Edge Schedule		Article II
Edge SEC Reports		Section 2.7(a)
Edge Stockholder Approval		Section 5.1(e)

iv

Defined Term		Section
Edge Stockholders’ Meeting		Section 5.1(e)
Edge Termination Fee		Section 7.3(a)
Effective Time		Section 1.2
Eligible Employees		Section 5.9(a)
Employment Agreements		Section 5.9(a)
Environmental Laws		Section 2.14(f)
ERISA		Section 2.11(a)
Estimated Fractional Share Value		Section 1.8(f)
Exchange Act		Section 2.5(b)
Exchange Agent		Section 1.8(a)
Exchange Fund		Section 1.8(a)
Financing		Section 3.25
Financing Commitment		Section 3.25
GAAP		Section 2.1
good and defensible title		Section 2.12(c)
governmental authority		Section 8.4(e)
HSR Act		Section 2.5(b)
Indemnified Parties		Section 5.4(b)
Intellectual Property		Section 2.15(b)
IRS		Section 2.11(f)
Merger		Recitals
Merger Consideration		Section 1.6
NYSE		Section 3.5(a)
Option		Section 1.7(a)
Outside Date		Section 7.1(b)(i)
Parent		Preamble
Parent 401(k) Plan		Section 3.11(a)
Parent Board of Directors		Section 3.4(d)
Parent Common Stock		Section 1.6(a)
Parent Credit Agreement		Section 3.9
Parent Employee Benefit Plans		Section 3.11(c)
Parent ERISA affiliate		Section 3.11(a)
Parent Material Adverse Effect		Section 3.1
Parent Material Contracts		Section 3.16(a)
Parent Parties		Preamble
Parent Permits		Section 3.6(b)
Parent Preferred Stock		Section 1.6(b)
Parent Property		Section 3.14
Parent Reservoir Engineers		Section 3.12(b)
Parent Reserve Reports		Section 3.12(b)
Parent Restructure		Section 5.14
Parent Schedule		Article III
Parent SEC Reports		Section 3.7(a)
Parent Termination Fee		Section 7.3(b)
Permitted Liens		Section 2.9

v

Defined Term		Section
person		Section 8.4(f)
Preferred Exchange Ratio		Section 1.6(b)
Preferred Merger Consideration		Section 1.6(b)
Preferred Shares		Recitals
Proxy Statement/Prospectus		Section 5.1
reasonable best efforts		Section 8.4(g)
Registration Statement		Section 5.1
Restricted Shares		Section 1.7(b)
Returns		Section 2.13(a)
SEC		Section 1.7(c)
Securities Act		Section 2.5(b)
Series B Preferred Stock		Section 4.2(d)
Shares		Recitals
Stockholders’ Amendment		Section 3.4(e)
Sub		Preamble
subsidiaries		Section 8.4(h)
subsidiary		Section 8.4(h)
Superior Proposal		Section 5.3(b)
Surviving Entity		Section 1.1
Taxes		Section 2.13
Terminated Employees		Section 5.9(b)
Transactions		Section 2.1
Treasury Regulations		Recitals
under common control with		Section 8.4(d)
Units		Section 1.7(b)
Work Plan		Section 2.27

vi

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, executed this 14th day of July, 2008 (this “Agreement”), is by and among Chaparral Energy, Inc., a Delaware corporation (“Parent”), Chaparral Exploration, L.L.C., a Delaware limited liability company and a wholly owned subsidiary of Parent (“Sub,” and together with Parent, the “Parent Parties”), and Edge Petroleum Corporation, a Delaware corporation (“Edge”).

RECITALS:

A. The respective governing bodies of Parent, Sub and Edge have approved this Agreement, and deem it advisable and in the best interests of their respective stockholders and members to merge Edge with and into Sub (the “Merger”) upon the terms and subject to the conditions set forth herein.

B. As a result of the Merger, and in accordance with the General Corporation Law of the State of Delaware (“Delaware Law”), (i) each issued and outstanding share (the “Common Shares”) of common stock, par value $0.01 per share of Edge (the “Edge Common Stock”), other than Edge Common Stock owned by Parent, Sub or Edge (or any of their respective direct or indirect wholly owned subsidiaries), shall be converted into the right to receive the Common Merger Consideration as set forth herein, and (ii) each issued and outstanding share (the “Preferred Shares,” and together with the Common Shares, the “Shares”) of 5.75% Series A cumulative convertible perpetual preferred stock, par value $0.01 per share of Edge (the “Edge Preferred Stock”), shall be converted into the right to receive the Preferred Merger Consideration as set forth herein.

C. For federal income tax purposes, it is intended by the parties hereto that Sub be disregarded and that the Merger qualify as a reorganization involving Parent and Edge within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the rules and regulations promulgated thereunder (the “Treasury Regulations”).

AGREEMENT:

In consideration of the mutual promises contained herein, the benefits to be derived by each party hereunder and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parent, Sub and Edge agree as follows:

ARTICLE I

THE MERGER

Section 1.1 The Merger.  Upon the terms and subject to the conditions set forth in Article VI, and in accordance with Delaware Law, at the Effective Time, Edge shall be merged with and into Sub.  As a result of the Merger, the separate corporate existence of Edge shall cease and Sub shall continue as the surviving limited liability company of the Merger (the “Surviving Entity”).

1

Section 1.2 Effective Time; Closing.  As promptly as practicable (but no later than two business days) after the satisfaction or, if permissible, waiver in accordance with Section 7.5 of the last to be satisfied or waived of the conditions set forth in Article VI (other than conditions that by their nature can be satisfied only at the Closing but subject to the satisfaction or waiver of these conditions), the parties hereto shall cause the Merger to be consummated by duly filing a certificate of merger in the form attached hereto as Exhibit 1.2 (the “Certificate of Merger”) with the Secretary of State of the State of Delaware (the date and time of such filing being the “Effective Time”).  Prior to but on the same day as such filing, a closing (the “Closing”) shall be held at the offices of McAfee & Xxxx A Professional Corporation in Oklahoma City, Oklahoma, or such other place as the parties shall agree, for the purpose of confirming the satisfaction or waiver, as the case may be, of the conditions set forth in Article VI.  The date of the Closing is herein called the “Closing Date.”

Section 1.3 Effect of the Merger.  At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of Delaware Law.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Edge and Sub shall vest in the Surviving Entity, and all debts, liabilities and duties of Edge and Sub shall become the debts, liabilities and duties of the Surviving Entity.

Section 1.4 Certificate of Formation; Limited Liability Company Agreement.  At the Effective Time, (i) the certificate of formation of Sub as in effect immediately prior to the Effective Time shall be in the form attached hereto as Exhibit 1.4(a) and shall be the certificate of formation of the Surviving Entity until duly amended in accordance with Delaware Law, and (ii) the limited liability company agreement of Sub shall be in the form attached hereto as Exhibit 1.4(b) and shall be the limited liability company agreement of the Surviving Entity until duly amended in accordance with Delaware Law.

Section 1.5 Managers and Officers of Surviving Entity.  Sub shall be manager managed and the managers and officers of Sub immediately prior to the Effective Time shall continue to be the managers and officers of the Surviving Entity from the Effective Time until their respective successors have been duly elected or appointed in accordance with the certificate of formation and limited liability company agreement of the Surviving Entity and applicable law, rule or regulation (“Applicable Law”).

Section 1.6 Conversion of Securities.  At the Effective Time, by virtue of the Merger and without any action on the part of Sub, Edge or the holders of any of the Shares:

(a) The holders of Common Shares issued and outstanding immediately prior to the Effective Time (other than any Common Shares to be canceled without payment of any consideration therefor pursuant to Section 1.6(c)) shall have the right to receive 0.2511 (the “Common Exchange Ratio”) validly issued, fully paid and nonassessable shares of common stock, par value $0.01 per share, of Parent (“Parent Common Stock”) in exchange for each Common Share, payable without interest to the holder of such Common Share upon its surrender in the manner provided in Section 1.8.  Each such Common Share shall cease to be outstanding and shall be canceled, each holder of any such Common Share shall thereafter cease to have any rights with respect to such Common Share, except the right to receive, without interest, (i) certificates representing whole shares of Parent Common Stock or whole shares of Parent

2

Common Stock represented by book-entry in accordance with Section 1.8(b), (ii) any unpaid dividends and distributions on shares of Parent Common Stock (after giving effect to any required withholding of Taxes) in accordance with Section 1.8(e) and (iii) cash for fractional shares in accordance with 1.8(f) upon the surrender of the relevant Common Share (or certificate representing such Common Share) ((i), (ii) and (iii), taken together, the “Common Merger Consideration”).  The issued and outstanding membership interests of Sub shall remain outstanding and be the membership interests of the Surviving Entity;

(b) The holders of Preferred Shares issued and outstanding immediately prior to the Effective Time (other than any Preferred Shares to be canceled without payment of any consideration therefor pursuant to Section 1.6(c)) shall have the right to receive one (1) (the “Preferred Exchange Ratio”) validly issued, fully paid and nonassessable share of 5.75% Series A cumulative convertible perpetual preferred stock, par value $0.01 per share, of Parent with the voting powers, designations, preferences, rights, and qualifications, limitations or restrictions set forth in Exhibit 1.6(b) and with a conversion price into one share of Parent Common Stock equal to the quotient of the conversion price of the Edge Preferred Stock divided by the Common Exchange Ratio (“Parent Preferred Stock”) in exchange for each Preferred Share, payable without interest to the holder of such Preferred Share upon its surrender in the manner provided in Section 1.8.  Each such Preferred Share shall cease to be outstanding and shall be canceled, each holder of any such Preferred Share shall thereafter cease to have any rights with respect to such Preferred Share, except the right to receive, without interest, (i) certificates representing whole shares of Parent Preferred Stock or whole shares of Parent Preferred Stock represented by book-entry in accordance with Section 1.8(b), (ii) any unpaid dividends and distributions on shares of Edge Preferred Stock (after giving effect to any required withholding of taxes) in accordance with Section 1.8(e) ((i) and (ii), taken together, the “Preferred Merger Consideration”), and (iii) cash in the amount of any dividend on Edge Preferred Stock that has been declared but not paid as of the Effective Time; and

(c) Each Share held in the treasury of Edge and each Share owned by Sub, Parent or any direct or indirect wholly owned subsidiary of Parent or of Edge immediately prior to the Effective Time shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto.

For purposes of this Agreement, “Merger Consideration” shall mean the Common Merger Consideration and the Preferred Merger Consideration or, when used with respect to a specified Share, shall mean the consideration allocable to such Share in accordance with Section 1.6(a) or (b), as the case may be.

Section 1.7 Employee Stock Options, Restricted Shares and Units.

(a) At the Effective Time, each stock option to purchase Common Shares granted by Edge or any of its subsidiaries to an employee or director thereof (in each case, an “Option”) that is then outstanding, whether or not then exercisable or vested, shall become fully vested and converted into the right to purchase Parent Common Stock subject to the modifications described in this Section 1.7(a). Prior to the Effective Time, the Surviving Entity shall take all actions (if any) as may be required to permit the assumption of each Option by Parent or the Surviving Entity pursuant to this Section 1.7(a) so that at the Effective Time each Option shall be assumed

3

and adjusted by Parent or the Surviving Entity, subject to the same terms and conditions as under the applicable Edge Employee Benefit Plan and the applicable option agreement entered into pursuant thereto, except that (i) at the Effective Time each Option shall become fully vested and converted into the right to purchase Parent Common Stock and (ii) (A) each Option shall be exercisable only for that whole number of shares of Parent Common Stock equal to the product (rounded to the nearest whole share) of the number of shares of Edge Common Stock subject to such Option immediately prior to the Effective Time multiplied by the Common Exchange Ratio and (B) the exercise price per share of Parent Common Stock shall be an amount equal to the exercise price per share of Edge Common Stock subject to such Option in effect immediately prior to the Effective Time divided by the Common Exchange Ratio (the price per share, as so determined, being rounded down to the nearest whole cent); provided, that in no event shall the exercise price be less than the par value of Parent Common Stock.

(b) Immediately prior to the Effective Time, each outstanding award of restricted stock granted by Edge or any of its subsidiaries pursuant to any employee benefit plan (the “Restricted Shares”) and each unit with respect to Edge Common Stock granted pursuant to any employee benefit plan (collectively, the “Units”) that has not vested shall become fully vested and be converted into the right to receive the Common Merger Consideration pursuant to Section 1.6 (reduced by any applicable withholding) for each Restricted Share or Unit previously subject to such award.  Edge may elect to cause all shares of Edge Common Stock in the Edge 401(k) Plan to fully vest immediately prior to the Effective Time.

(c) As soon as practicable after the Effective Time, Parent shall deliver to holders of Options appropriate notices setting forth such holders’ rights pursuant thereto.  On or prior to the Effective Time, Parent shall file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-8 (or a post-effective amendment on Form S-8 with respect to the Registration Statement (or such other appropriate form)) covering all shares of Parent Common Stock subject to the Options.

Section 1.8 Surrender of Shares; Stock Transfer Books.

(a) Prior to the Effective Time, Parent shall designate a bank or trust company to act as agent (the “Exchange Agent”) for the holders of Shares in connection with the Merger to receive the Merger Consideration to which holders of Shares shall become entitled pursuant to Section 1.6.  At or prior to the Effective Time, Parent shall deposit with the Exchange Agent, in trust for the benefit of the holders of Shares, (i) certificates representing shares of Parent Common Stock and Parent Preferred Stock to be issued pursuant to Section 1.6 and delivered pursuant to this Section 1.8 and (ii) cash funds sufficient to pay cash in lieu of fractional shares in accordance with this Section 1.8. Such shares of Parent Common Stock and Parent Preferred Stock, together with any dividends or distributions with respect thereto (as provided in Section 1.8(e)), and such cash are referred to herein as the “Exchange Fund.”  The Exchange Agent, pursuant to irrevocable instructions consistent with the terms of this Agreement, shall deliver the Parent Common Stock, Parent Preferred Stock and cash to be issued or paid pursuant to Section 1.6 out of the Exchange Fund, and the Exchange Fund shall not be used for any other purpose whatsoever.  The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to the Parent Common Stock or Parent Preferred Stock held by it from time to time hereunder, except that it shall receive and hold all dividends or other distributions

4

paid or distributed after the deposit of such Exchange Fund with respect thereto for the account of persons entitled thereto.  Any cash in the Exchange Fund shall be invested by the Exchange Agent as directed by the Surviving Entity; provided, however, that such investments shall be in obligations of or guaranteed by the United States of America or of any agency thereof and backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Xxxxx’x Investors Services, Inc. or Standard & Poor’s Corporation, respectively, or in deposit accounts, certificates of deposit or banker’s acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits purchased from, commercial banks with capital, surplus and undivided profits aggregating in excess of $100 million (based on the most recent financial statements of such bank which are then publicly available at the SEC or otherwise); provided, further, that no loss on any investment made pursuant to this Section 1.8 shall affect the Merger Consideration payable to the holders of Shares and, following any losses, Parent shall promptly provide additional funds to the Exchange Agent for the benefit of the stockholders of Edge in the amount of any such losses.

(b) Promptly after the Effective Time and in any event not later than the fifth business day following the Effective Time, Parent shall mail to each person who was, at the Effective Time, a holder of record of an outstanding certificate or certificates (“Certificates”) that immediately prior to the Effective Time represented such holder’s Shares, or Shares represented by book-entry (“Book-Entry Shares”), a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent or, in the case of Book-Entry Shares, upon adherence to the procedures set forth therein, which shall be in customary form and agreed to by Parent and Edge prior to the Effective Time) and instructions for use in effecting the surrender of the Certificates or, in the case of Book-Entry Shares, the surrender of such shares, in exchange for payment of the Merger Consideration.  Upon surrender to the Exchange Agent of a Certificate or Book-Entry Shares for cancellation, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required pursuant to such instructions, (i) the holder of such Certificate or Book-Entry Shares shall be entitled to receive in exchange therefor the Merger Consideration and (ii) such Certificate or Book-Entry Shares shall then be canceled.  No interest shall accrue or be paid on the Merger Consideration payable upon the surrender of any Certificate or Book-Entry Shares for the benefit of the holder of such Certificate or Book-Entry Shares.  If payment of the Merger Consideration is to be made to a person other than the person in whose name the surrendered Certificate is registered on the stock transfer books of Edge, it shall be a condition of payment that the Certificate so surrendered shall be endorsed properly or otherwise be in proper form for transfer and that the person requesting such payment shall have paid all transfer and other Taxes required by reason of the payment to a person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of Parent that such Taxes either have been paid or are not applicable.  In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such person of a bond in such reasonable amount as Parent may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue the Merger Consideration in exchange for such lost, stolen or destroyed Certificate deliverable in respect thereof pursuant to this Agreement.  Parent shall pay all charges

5

and expenses, including those of the Exchange Agent, in connection with the distribution of the Merger Consideration.

(c) At any time following one year after the Effective Time, Parent shall be entitled to require the Exchange Agent to deliver to it any funds and shares of Parent Common Stock and Parent Preferred Stock in the Exchange Fund that had been made available to the Exchange Agent and not disbursed to holders of Shares (including, without limitation, all interest and other income received by the Exchange Agent in respect of all funds made available to it) and, thereafter, such holders shall be entitled to look to Parent (subject to abandoned property, escheat and other similar laws) only as general creditors thereof with respect to any Merger Consideration that may be payable upon due surrender of the Certificates or Book-Entry Shares held by them.  Notwithstanding the foregoing, neither Parent nor the Exchange Agent shall be liable to any holder of a Share for any Merger Consideration delivered in respect of such Share to a public official pursuant to any applicable abandoned property, escheat or other similar law.

(d) At the close of business on the day of the Effective Time, the stock transfer books of Edge shall be closed and, thereafter, there shall be no further registration of transfers of Shares on the records of Edge.  From and after the Effective Time, the holders of Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided herein or by Applicable Law.

(e) No dividends or other distributions with respect to Parent Common Stock or Parent Preferred Stock declared or made after the Effective Time with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate or Book-Entry Shares.  Subject to the effect of Applicable Law:  (i) at the time of the surrender of a Certificate or Book-Entry Shares for exchange in accordance with the provisions of this Section 1.8, there shall be paid to the surrendering holder, without interest, the amount of dividends or other distributions (having a record date after the Effective Time but on or prior to surrender and a payment date on or prior to surrender) not theretofore paid with respect to the number of whole shares of Parent Common Stock or Parent Preferred Stock that such holder is entitled to receive (less the amount of any withholding Taxes that may be required with respect thereto); and (ii) at the appropriate payment date and without duplicating any payment made under clause (i) above, there shall be paid to the surrendering holder, without interest, the amount of dividends or other distributions (having a record date after the Effective Time but on or prior to surrender and a payment date subsequent to surrender) payable with respect to the number of whole shares of Parent Common Stock or Parent Preferred Stock that such holder receives (less the amount of any withholding Taxes that may be required with respect thereto).

(f) No certificates or scrip representing fractional shares of Parent Common Stock shall be issued in the Merger and, except as provided in this Section 1.8(f), no dividend or other distribution, stock split or interest shall relate to any such fractional share, and such fractional share shall not entitle the owner thereof to vote or to any other rights of a stockholder of Parent.  In lieu of any fractional share of Parent Common Stock to which an Edge stockholder would otherwise be entitled (after taking into account all Certificates and Book-Entry Shares delivered by or on behalf of such holder), such holder, upon surrender of a Certificate or Book-Entry Shares as described in this Section 1.8, shall be paid an amount in cash (without interest) determined by multiplying (i) the Estimated Fractional Share Value by (ii) the fraction of a share

6

of Parent Common Stock to which such holder would in addition otherwise be entitled.  The parties acknowledge that payment of cash consideration in lieu of issuing fractional shares of Parent Common Stock was not separately bargained for consideration but represents merely a mechanical rounding off for purposes of simplifying the problems that would otherwise be caused by the issuance of fractional shares of Parent Common Stock.  “Estimated Fractional Share Value” means the quotient of (x) the average of the per share closing sales prices of Edge Common Stock on the Nasdaq Global Select Market, as reported in The Wall Street Journal, for the ten consecutive trading days ending on the third trading day immediately prior to the Effective Time divided by (y) the Common Exchange Ratio.

Section 1.9 Withholding Taxes.  Notwithstanding anything in this Agreement to the contrary, Parent, Sub, the Surviving Entity and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any former holder of Shares (and, for the avoidance of doubt, Restricted Shares) pursuant to this Agreement any amount as may be required to be deducted and withheld with respect to the making of such payment under applicable Tax laws.  To the extent that amounts are so properly withheld by Parent, Sub, the Surviving Entity or the Exchange Agent, as the case may be, and are paid over to the appropriate governmental authority in accordance with Applicable Law, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by Parent, Sub, the Surviving Entity or the Exchange Agent, as the case may be.

Section 1.10 Adjustment of Common Exchange Ratio.  If, between the date of this Agreement and the Effective Time and as permitted by Sections 4.l and 4.2, the outstanding number of Shares or the outstanding shares of Parent Common Stock shall have been increased, decreased, changed into or exchanged for a different number of shares or different class, in each case, by reason of any reclassification, recapitalization, stock split, split-up, combination or exchange of shares or a stock dividend or dividend payable in other securities shall be declared with a record date within such period, or any similar event shall have occurred, the Merger Consideration and the Common Exchange Ratio shall be appropriately adjusted to provide to the holders of Shares the same economic effect as contemplated by this Agreement prior to such event; provided, however, that the consummation of the Parent Restructure will not result in an adjustment of the Merger Consideration or the Common Exchange Ratio pursuant to this Section 1.10.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF EDGE

Edge hereby represents and warrants to Parent and Sub that, except as otherwise set forth (i) in Edge’s Schedules to this Agreement (the “Edge Schedule”) or (ii) in the Edge SEC Reports filed prior to the date of this Agreement:

Section 2.1 Organization and Qualification; Subsidiaries.  Edge is a corporation duly incorporated and validly existing in good standing under the laws of the State of Delaware.  Edge has the requisite corporate power and authority to own or lease its properties and to carry on its business as it is now being conducted and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character of the properties

7

owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified has not had and is not reasonably likely to have, individually or in the aggregate, an Edge Material Adverse Effect.  Each subsidiary of Edge (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) has the requisite corporate or other business entity power and authority to own or lease its properties and to carry on its business as it is now being conducted and (iii) is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character of the properties owned or leased by it makes such licensing or qualification necessary, in each case, except as has not had and is not reasonably likely to have, individually or in the aggregate, an Edge Material Adverse Effect.  The term “Edge Material Adverse Effect” means a material adverse effect on the business, properties, financial condition or results of operations of Edge and its subsidiaries taken as a whole or on the ability of Edge to consummate the transactions contemplated by this Agreement (the “Transactions”), except, in each case, for any such effect attributable to (i) general economic, capital market, regulatory or political conditions, any outbreak of hostilities or war (including acts of terrorism), natural disasters or other force majeure events, in each case in the United States or elsewhere, (ii) changes in or events or conditions generally affecting the oil and gas exploration and development industry or exploration and production companies of a similar size to Edge (including changes in commodity prices and general market prices), (iii) changes in laws, regulations or United States generally accepted accounting principles (“GAAP”) or interpretations thereof, (iv) the announcement or pendency of this Agreement, any actions taken in compliance with this Agreement or the consummation of any of the Transactions, (v) any failure by Edge to meet estimates of revenues or earnings for any period ending after the date of this Agreement, (vi)  changes in the price or trading volume of Edge’s stock, provided, that this clause (vi) does not prevent a determination that any underlying causes of such changes resulted in an Edge Material Adverse Effect, (vii) the failure of Edge or its subsidiaries to take any action referred to in Section 4.1 due to Parent’s unreasonable withholding, delaying or conditioning of its consent or (viii) effects to the extent resulting from any legal proceedings made or brought by any of the current or former stockholders of Edge (on their own behalf or on behalf of Edge) arising out of or related to this Agreement or the Transactions.  For purposes of determining whether a particular change, event, circumstance or effect has a “material adverse effect,” no predetermined formulaic or analogical approach to a determination of materiality shall be considered (for example, a percentage of the value of the aggregate Merger Consideration); rather, the nature and effect of each change, event, circumstance or effect shall be considered along with the detrimental impact on the properties, financial condition or results of operations of Edge and its subsidiaries, taken as a whole, of such change, event, circumstance or effect.  A true and complete list of all of Edge’s subsidiaries, together with the jurisdiction of incorporation or organization of each such subsidiary and the percentage of the outstanding capital stock of each such subsidiary owned by Edge and each other Edge subsidiary, is set forth in Section 2.1 of the Edge Schedule.  Other than with respect to the Edge subsidiaries set forth on Section 2.1 of the Edge Schedule, Edge does not directly or indirectly own any equity interest in, or any interest convertible into or exchangeable or exercisable for, any equity interest in, any corporation, partnership, joint venture or other business entity, other than equity interests held for investment that are not, in the aggregate, material to Edge.

Section 2.2 Charter and Bylaws.  Edge has heretofore furnished to Parent a true and complete copy of its certificate of incorporation and bylaws, each as amended to date.  Such

8

certificate of incorporation and bylaws are in full force and effect as of the date of this Agreement.

Section 2.3 Capitalization.  The authorized capital stock of Edge consists of 60,000,000 shares of Edge Common Stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share, of which 2,875,000 shares have been designated as 5.75% Series A cumulative convertible perpetual preferred stock.  As of July 14, 2008, (i) 28,683,690 shares of Edge Common Stock were issued and outstanding, all of which were validly issued and fully paid and are nonassessable, and none of which were issued in violation of any preemptive or similar rights of any securityholder of Edge, (ii) 2,875,000 shares of Edge Preferred Stock were issued and outstanding, all of which were validly issued and fully paid and were nonassessable, and none of which were issued in violation of any preemptive or similar rights of any securityholder of Edge, (iii) 8,680,489 shares of Edge Common Stock were reserved for issuance upon the conversion of Edge Preferred Stock, (iv) 459,360 shares of Edge Common Stock were reserved for issuance upon the vesting of Units or as restricted stock and (v) Options to purchase an aggregate of 643,600 shares of Edge Common Stock were issued and outstanding (of which Options to purchase an aggregate of 643,600 shares of Edge Common Stock were exercisable).  From December 31, 2007 to the date of this Agreement, Edge has not issued any shares of capital stock or granted any options covering shares of capital stock, except for shares issued pursuant to the exercise of Options, the vesting of Units or the Edge 401(k) Plan.  Subject to the foregoing and other than as contemplated by the Edge Employee Benefit Plans, the Edge 401(k) Plan or the Certificate of Designations of the Edge Preferred Stock, there are no options, warrants or other rights, agreements, arrangements or commitments of any character obligating Edge or any Edge subsidiary to issue or sell any shares of capital stock of, or other equity interests in, Edge or any Edge subsidiary.  Other than as provided in the Certificate of Designations of the Edge Preferred Stock, there are no outstanding contractual obligations of Edge or any Edge subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock of Edge or any Edge subsidiary.  All of the issued and outstanding capital stock or equivalent equity interests of each Edge subsidiary were duly authorized, validly issued and fully paid and are non-assessable and are owned by Edge, directly or through its subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim (other than in favor of Edge or any of its subsidiaries); and none of the outstanding shares of capital stock or equivalent equity interests of any Edge subsidiary were issued in violation of any preemptive or similar rights arising by operation of law, or under the charter, bylaws or other comparable organizational documents of any Edge subsidiary or under any agreement to which Edge or any Edge subsidiary is a party.

Section 2.4 Authority; Due Authorization; Binding Agreement; Approval.

(a) Edge has all requisite corporate power and authority to enter into this Agreement and to perform its obligations under this Agreement subject, with respect to the Merger, to the adoption of this Agreement by the affirmative vote of the holders of Common Shares to the extent required by Applicable Law.

(b) The execution, delivery and performance of this Agreement by Edge and the consummation by Edge of the Transactions have been duly and validly authorized by all requisite corporate action on the part of Edge (other than, with respect to the Merger, the

9

adoption of this Agreement by the affirmative vote of the holders of Common Shares to the extent required by Applicable Law and the filing of appropriate merger documents as required by Delaware Law).

(c) This Agreement has been duly executed and delivered by Edge and, assuming the due authorization, execution and delivery hereof by Parent and Sub, constitutes a valid and binding obligation of Edge, enforceable against Edge in accordance with its terms, except as limited by bankruptcy, insolvency, moratorium, fraudulent transfer, reorganization and other laws of general applicability relating to or affecting the rights or remedies of creditors and by general equitable principles (whether considered in a proceeding in equity or at law).

(d) (i) The board of directors of Edge (the “Edge Board of Directors”), at a meeting duly called and held, has (A) determined that this Agreement and the Transactions are advisable and in the best interests of the Edge stockholders, (B) approved this Agreement and (C) resolved (subject to Section 5.3) to recommend adoption of this Agreement by the holders of Common Shares; and (ii) Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated has delivered to the Edge Board of Directors a written opinion to the effect that, as of the date thereof, based on and subject to the assumptions, qualifications and limitations set forth therein, the Common Merger Consideration is fair, from a financial point of view, to the holders of the Common Shares, it being agreed that neither Parent nor Sub has any rights with respect to such opinion.

Section 2.5 No Violation; Consents.

(a) The execution and delivery of this Agreement by Edge does not, and the consummation by Edge of the Transactions will not, (i) violate the certificate of incorporation or bylaws of Edge, (ii) constitute a breach or violation of, or a default (or an event which, with notice or lapse of time or both, would constitute such a default) under any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which Edge or any of its subsidiaries is a party or by which any of them or any of their respective properties are bound, (iii) (assuming that the consents and approvals referred to in Section 2.5(b) are duly and timely made or obtained and that, to the extent required by Applicable Law or the Edge certificate of incorporation, the adoption of this Agreement by the affirmative vote of the holders of Common Shares is obtained) violate any statute, law or regulation or any order, judgment, decree or injunction of any court or governmental authority directed to Edge or any of its subsidiaries or any of their properties, (iv) result in the triggering, acceleration or increase of any payment to any person pursuant to any “change in control” or similar provision of any contract or agreement with any seismic data vendor or licensor or any other contract or agreement that constitutes an Edge Material Contract or (v) result in the creation or imposition of any lien, charge or encumbrance upon any property of Edge or its subsidiaries pursuant to the agreements and instruments referred to in clause (ii).

(b) Except for (i) compliance with applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the “HSR Act”) and any other Applicable Law analogous to the HSR Act or otherwise regulating antitrust, competition or merger control matters in foreign jurisdictions, (ii) compliance with any applicable requirements of (A) the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any other

10

applicable U.S. state or federal securities or “Blue Sky” laws and (B) the Nasdaq Global Select Market, (iii) filing or recordation of merger or other appropriate documents as required by Delaware Law or Applicable Law of other states in which Edge is qualified to do business, (iv) any governmental authorizations, consents, approvals or filings necessary for transfers of permits and licenses or made in connection with the transfer of interests in or the change of control of ownership in oil and gas properties and (v) such other authorizations, consents, approvals or filings the failure of which to obtain or make have not had and are not reasonably likely to have, individually or in the aggregate, an Edge Material Adverse Effect, no authorization, consent or approval of or filing with any governmental authority is required to be obtained or made by Edge for the execution and delivery by Edge of this Agreement or the consummation by Edge of the Transactions.

Section 2.6 Compliance.

(a) Neither Edge nor any Edge subsidiary (i) is in violation of its certificate of incorporation, bylaws or other equivalent governing documents, as applicable, (ii) is in violation of any Applicable Law or order, judgment or decree of any governmental authority having jurisdiction over it, except that no representation or warranty is made in this Section 2.6 with respect to laws, rules, regulations, orders, judgments or decrees relating to employee benefit, Tax or environmental matters, which are addressed exclusively in Sections 2.11, 2.13 and 2.14, respectively, (iii) is in default in the performance of any obligation, agreement, covenant or condition under any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which Edge or any Edge subsidiary is a party or by which any of them or any of their respective properties are bound or (iv) has received a written notice of non-compliance with any Applicable Law, order, judgment or decree of any governmental authority that remains unresolved, except, in the case of clauses (ii), (iii) and (iv), for such violations, defaults or notices that have not had and are not reasonably likely to have, individually or in the aggregate, an Edge Material Adverse Effect.

(b) Except as has not had and is not reasonably likely to have, individually or in the aggregate, an Edge Material Adverse Effect, (i) Edge and its subsidiaries are in possession of all franchises, tariffs, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any governmental authority necessary for Edge and its subsidiaries for the current ownership, lease and operation of their properties and assets or to carry on their businesses as they are now being conducted (the “Edge Permits”) and (ii) to the knowledge of Edge, no event or condition has occurred which would reasonably be expected to result in a violation or breach of any Edge Permit (in each case, with or without notice or lapse of time or both).

Section 2.7 SEC Filings; Financial Statements; Internal Control.

(a) Edge has filed all reports, schedules, registration statements, definitive proxy statements and exhibits to the foregoing documents required to be filed by it with the SEC since January 1, 2008 (collectively, the “Edge SEC Reports”).  As of their respective dates, (i) the Edge SEC Reports complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations thereunder and (ii) none of the Edge SEC Reports contained any untrue statement of a material fact or

11

omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except for such statements, if any, as have been corrected by subsequent filings with the SEC.  No Edge subsidiary is currently required to file any form, report or other document with the SEC under Section 13(a) or 15(d) of the Exchange Act.

(b) The historical financial statements of Edge, together with the related schedules and notes thereto, included in the Edge SEC Reports present fairly, in all material respects (subject, in the case of unaudited statements, to recurring audit adjustments normal in nature and amount), the consolidated financial position of Edge and its consolidated subsidiaries at the dates indicated and the consolidated results of operations and consolidated cash flows of Edge and its consolidated subsidiaries for the periods specified; and such historical financial statements have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved, except as noted therein or, in the case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC.

(c) Edge has (i) designed disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) and  internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) to ensure that material information relating to Edge, including its consolidated subsidiaries, is made known to the chief executive officer and chief financial officer of Edge by others within those entities and (ii) designed internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.  Since January 1, 2008, neither Edge nor its independent auditors have identified any significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which were or are reasonably likely to adversely affect Edge’s ability to record, process, summarize and report financial information.

Section 2.8 No Undisclosed Liabilities.  Except for  liabilities and obligations (i) reflected or reserved against in Edge’s consolidated balance sheets or the notes thereto included in the Edge SEC Reports, (ii) arising under this Agreement and the Transactions, (iii) incurred since March 31, 2008 in the ordinary course of business consistent with past practice and (iv) that are not material to Edge under GAAP, neither Edge nor any of its subsidiaries has any liabilities or obligations, whether absolute or contingent, required by GAAP to be reflected or reserved against in Edge’s consolidated balance sheet.

Section 2.9 Absence of Certain Changes or Events.  From March 31, 2008 until the date of this Agreement, except as contemplated by this Agreement, Edge has conducted its businesses only in the ordinary course and there has not been (i) any event having, individually or in the aggregate, an Edge Material Adverse Effect, (ii) any change by Edge in its accounting methods, principles or practices materially affecting the consolidated assets, liabilities or results of operations of Edge and its consolidated subsidiaries, except insofar as may have been required by a change in GAAP, (iii) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of Edge or any redemption, purchase or other acquisition for value of any of its capital stock, other than regular quarterly dividends with respect to the Edge Preferred Stock in the amount of $0.71875 per share, (iv) any split, combination or reclassification of any capital stock of Edge, (v) any incurrence, assumption or

12

guarantee by Edge of any indebtedness for borrowed money other than under the Fourth Amended and Restated Credit Agreement dated as of January 31, 2007 among Edge, the lenders party thereto, and Union Bank of California, N.A. (as amended, the “Edge Credit Agreement”), (vi) any creation or other incurrence by Edge of any lien on any asset securing an amount in excess of $100,000 (other than Permitted Liens, liens securing obligations under the Edge Credit Agreement and liens securing purchase money obligations created in connection with the acquisition, in the ordinary course of business consistent with past practice, of field vehicles and office equipment, not exceeding $1,000,000 in the aggregate), (vii) any material Tax election by Edge or any settlement of any material Tax liability, (viii) except for the acquisition of oil and gas leases and seismic data and the drilling, workover and recompletion of xxxxx in the ordinary course of business, any asset acquisition or capital expenditure by Edge in excess of $500,000 individually or $1,000,000 in the aggregate, (ix) any termination or amendment of, or waiver of any material right under, any Edge Material Contract; (x) any material damage to or destruction or loss of any material asset of Edge (whether or not covered by insurance), (xi) other than by expiration of any lease, any sale or other disposition by Edge, in any single or related series of transactions, of assets having a value in excess of $500,000; (xii) any granting by Edge of any increase in compensation or fringe benefits to any employee, except for normal increases of cash compensation in the ordinary course of business consistent with past practice, or any payment by Edge of any bonus, except for bonuses paid in the ordinary course of business consistent with past practice, or any granting by Edge of any increase in severance or termination pay or any entry by Edge into any employment, severance, termination or indemnification agreement; (xiii) any entry by Edge into any licensing or other agreement with regard to the acquisition or disposition of any Intellectual Property in excess of $1 million, (xiv) any change in Edge’s independent petroleum engineers, (xv) any revaluation for Tax reporting or financial statement purposes by Edge of any of its assets, including writing down or writing off notes or accounts receivable in excess of $100,000 or (xvi) the entering into of any agreement, whether written or oral, to do any of the foregoing.

For the purposes of this Agreement, “Permitted Liens” means (i) liens for Taxes, impositions, assessments, fees, rents or other governmental charges levied or assessed or imposed not yet delinquent or being contested in good faith by appropriate proceedings, (ii) statutory liens (including materialmen’s, warehousemen’s, mechanic’s, repairmen’s, landlord’s, and other similar liens) arising in the ordinary course of business securing payments not yet delinquent or being contested in good faith by appropriate proceedings, (iii) restrictive covenants, easements and defects, imperfections or irregularities of title, if any, that are not reasonably expected to impair in any material respect the use or occupancy of any asset in the operation of the business of Edge or Parent, as applicable, (iv) preferential purchase rights and other similar arrangements with respect to which consents or waivers are obtained for the transactions contemplated by this Agreement or as to which the time for asserting such rights has expired at the Effective Time without an exercise of such rights, (v) restrictions on transfer with respect to which consents or waivers are obtained for the transactions contemplated by this Agreement and (vi) liens listed on Section 2.9 of the Edge Schedule or Section 3.9 of the Parent Schedule, as applicable.

Section 2.10 Litigation.  Except with respect to employee benefit or Tax matters or Environmental Laws, which are addressed exclusively in Sections 2.11, 2.13 and 2.14, respectively, (i) there is no action, suit or proceeding before or by any court or governmental

13

authority now pending, or, to the knowledge of Edge, threatened, against Edge or any of its subsidiaries, or any of their respective officers or directors in their capacities as such and (ii) neither Edge nor any of Edge’s properties nor, to the knowledge of Edge, any of Edge’s or its subsidiaries’ officers and directors in their capacities as such, are subject to any order, writ, judgment, decree or injunction of any court or arbitrator or any governmental body, agency or official.

Section 2.11 Employee Benefit Plans.

(a) Except for the plan (the “Edge 401(k) Plan”) maintained by Edge pursuant to Section 401(k) of the Code, none of Edge or any of its subsidiaries or any trade or business (whether or not incorporated) which is under common control, or which is treated as a single employer, with Edge under Section 414(b), (c), (m) or (o) of the Code (“Edge ERISA affiliate”) maintains any “employee pension plan” as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is subject to the funding requirements of ERISA.

(b) None of Edge or any of its subsidiaries or any other Edge ERISA affiliate maintains or contributes to any plan that is (i) covered by Title IV of ERISA, (ii) subject to the minimum funding requirements of Section 412 of the Code, (iii) a “multiemployer plan” as defined in Section 3(37) of ERISA, (iv) subject to Section 4063 or 4064 of ERISA or Section 413(c) of the Code or (v) funded by a voluntary employees’ beneficiary association within the meaning of Code Section 501(c)(9). None of Edge or any of its subsidiaries or any other Edge ERISA affiliate has incurred any liability under Title IV of ERISA which remains unsatisfied.

(c) Section 2.11 of the Edge Schedule contains a true and complete list of all the “employee benefit plans,” as defined in Section 3(3) of ERISA, and all other material employee compensation and benefit plans, agreements, programs, policies or other arrangements or payroll practices, whether formal or informal, oral or written, legally binding or not, and whether or not subject to ERISA, including, without limitation, employment agreements, change-in-control agreements, severance and retention pay, short term and long term disability paid leave, vacation pay, consulting or other compensation agreements, deferred compensation in form of annual bonuses, long-term incentive programs in form of restricted stock grants and stock option grants, medical insurance including medical, dental, vision, and prescription coverage, life and accidental death and dismemberment insurance, tuition aid reimbursement, relocation assistance, expatriate benefits, retiree medical and life insurance maintained by Edge or any of its subsidiaries or any Edge ERISA affiliate or to which Edge or any of its subsidiaries or any Edge ERISA affiliate has contributed or is obligated to contribute or has any present or future liability thereunder (all such plans, other than the Edge 401(k) Plan, are referred to as the “Edge Employee Benefit Plans”).

(d) With respect to the Edge 401(k) Plan and each Edge Employee Benefit Plan, Edge has provided to Parent a current, accurate and complete copy (or, to the extent no such copy exists, an accurate description) thereof and, to the extent applicable: (i) any related trust agreement or other funding instrument; (ii) the most recent determination letter, if applicable; (iii) any summary plan description and other written communications (or a description of any oral communications) by Edge or its subsidiaries to their employees concerning the extent of the

14

benefits provided under an Edge Employee Benefit Plan or the Edge 401(k) Plan; and (iv) for the three most recent years (A) the Form 5500 and attached schedules, (B) audited financial statements, (C) actuarial valuation reports and (D) attorney’s response to an auditor’s request for information.

(e) Each Edge Employee Benefit Plan and Edge 401(k) Plan has been established and administered in accordance with its terms, and in substantial compliance with the applicable provisions of ERISA, the Code and other applicable laws, rules and regulations; (ii) the Edge 401(k) Plan and each Edge Employee Benefit Plan which is intended to be qualified within the meaning of Code Section 401(a) is so qualified has received a favorable determination letter as to its qualification, and nothing has occurred, whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification; (iii) no event has occurred and no condition exists that would subject Edge or its subsidiaries, either directly or by reason of their affiliation with any member of their Edge ERISA affiliate, to any tax, fine, lien, penalty or other liability imposed by ERISA, the Code or other applicable laws, rules and regulations; (iv) for the Edge 401(k) Plan and each Edge Employee Benefit Plan with respect to which a Form 5500 has been filed, no material change has occurred with respect to the matters covered by the most recent Form since the date thereof; (v) no “reportable event” (as such term is defined in ERISA Section 4043), “prohibited transaction” (as such term is defined in ERISA Section 406 and Code Section 4975) or “accumulated funding deficiency” (as such terms is defined in ERISA Section 302 and Code Section 412 (whether or not waived)) has occurred with respect to any Edge Employee Benefit Plan or the Edge 401(k) Plan; (vi) no Edge Employee Benefit Plan provides retiree welfare benefits except as required under Section 4980B of the Code; and (vii) neither Edge nor the Edge ERISA affiliates has engaged in, or is a successor or parent corporation to an entity that has engaged in, a transaction described in Sections 4069 or 4212(c) of ERISA.  The Edge Employee Benefit Plans and the Edge 401(k) Plan have been maintained, in all material respects, in accordance with their terms and with all provisions of ERISA (including rules and regulations thereunder) and other applicable federal and state law, and none of Edge or any of its subsidiaries or any “party in interest” or “disqualified person” with respect to the Edge Employee Benefit Plans or the Edge 401(k) Plan has engaged in a “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 of ERISA, except where any of the foregoing has not had and is not reasonably likely to have an Edge Material Adverse Effect.

(f) With respect to the Edge 401(k) Plan and any Edge Employee Benefit Plan, (i) no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the knowledge of Edge, threatened, (ii) no facts or circumstances exist that could give rise to any such actions, suits or claims, and (iii) no administrative investigation, audit or other administrative proceeding by the Department of Labor, the Pension Benefit Guaranty Corporation, the Internal Revenue Service (“IRS”)or other governmental agencies are pending, in progress or, to the knowledge of Edge, threatened.

(g) Except as provided in Section 2.11 of the Edge Schedule, no Edge Employee Benefit Plan exists that could result in the payment to any present or former employee of Edge or any of its subsidiaries of any money or other property or accelerate or provide any other rights or benefits to any present or former employee of Edge or any of its subsidiaries as a result of the transactions contemplated by this Agreement.  Except as provided in Section 2.11 of the Edge Schedule, there is no contract, plan or arrangement (written or otherwise) covering any employee

15

or former employee of Edge or any of its subsidiaries that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the Code.

Section 2.12 Properties; Oil and Gas Matters.

(a) All major items of operating equipment owned or leased by Edge or its subsidiaries are, in the aggregate, in a state of repair so as to be adequate in all material respects for reasonably prudent operations in the areas in which they are operated.

(b) Except for goods (including hydrocarbons produced from Edge’s consolidated oil and gas properties) and other property sold, used or otherwise disposed of since the dates of the respective Edge Reserve Reports in the ordinary course of business, as of the date hereof, Edge and its subsidiaries have good and defensible title to all oil and gas properties forming the basis for the reserves reflected in the reserve reports of Xxxxx Xxxxx Company, L.P. and X. X. Xxx Xxxxxx & Co. (together, the “Edge Reservoir Engineers”), in each case relating to Edge interests referred to therein as of December 31, 2007 (the “Edge Reserve Reports”), and in each case as attributable to interests owned by Edge and its subsidiaries, free and clear of any liens, except for the following liens or other imperfections of title: (i) liens arising under the Edge Credit Agreement, (ii) liens for current Taxes or assessments not yet delinquent or, if delinquent, being contested in good faith by appropriate actions, (iii) liens in favor of the operator arising under operating agreements and statutory liens securing payment by the first purchaser to the producer, (iv) imperfections of title that do not (A) materially interfere with the use, operation and possession of any property, (B) materially reduce the value of any Edge Property or (C) interfere with the production and sale of hydrocarbons for the account of Edge from any Edge Property; and (v) liens, charges and irregularities in the chain of title which, because of remoteness in or passage of time, statutory cure periods, marketable title acts or other similar reasons, have not affected or interrupted, and are not reasonably expected to affect or interrupt, the claimed ownership of Edge or its predecessors in title to, or the receipt of production revenues from, the property affected thereby.  The historical information supplied by Edge to the Edge Reservoir Engineers underlying the estimates of the reserves reflected in the Edge Reserve Reports, including, without limitation, production volumes, sales prices for production, contractual pricing provisions under oil or natural gas sales or marketing contracts or under hedging arrangements, costs of operations and development and working interest and net revenue information relating to interests owned by Edge and its subsidiaries, was true and correct in all material respects on the date such information was supplied to the Edge Reservoir Engineers.  The estimates of future capital expenditures and other future exploration and development costs supplied by Edge to the Edge Reservoir Engineers were prepared in good faith by the management of Edge.

(c) For the purposes of this Agreement, “good and defensible title” means defensible title of record in Edge or its subsidiaries, or Parent or its subsidiaries, as applicable.

(d) Section 2.12 to the Edge Schedule lists all Edge Properties which have different before payout and after payout interests, together with the approximate amount of the payout balance with respect to each such property as of the date indicated.

16

Section 2.13 Taxes.

(a) Each of Edge, each of its subsidiaries and any affiliated, combined or unitary group of which any such entity is or was a member has timely (taking into account any extensions) filed all federal and material state, local and foreign returns, declarations, reports, estimates, information returns and statements (“Returns”) required to be filed in respect of any Taxes, and has timely paid all Taxes shown by such Returns to be due and payable;

(b) Each of Edge and its subsidiaries has established reserves that are adequate in the aggregate for the payment of all material Taxes not yet due and payable with respect to the results of operations of Edge and its subsidiaries through the date hereof, and complied in all material respects with all Applicable Law relating to the payment and withholding of Taxes;

(c) Section 2.13 of the Edge Schedule sets forth the last taxable period through which the federal income Tax Returns of Edge and its subsidiaries have been examined by the IRS or otherwise closed.  Except to the extent being contested in good faith, all material deficiencies asserted as a result of such examinations and any examination by any applicable state or local taxing authority have been paid, fully settled or adequately provided for in Edge’s most recent audited financial statements.  No material federal, state or local income or franchise tax audits or other administrative proceedings or court proceedings are presently pending with regard to any Taxes for which Edge or any of its subsidiaries would be liable, and no material deficiency that has not yet been paid for any such Taxes has been proposed, asserted or assessed against Edge or any of its subsidiaries with respect to any period;

(d) Neither Edge nor any of its subsidiaries has executed or entered into with the IRS or any taxing authority (i) any agreement or other document extending or having the effect of extending the period for assessment or collection of any Tax for which Edge or any of its subsidiaries would be liable or (ii) a closing agreement pursuant to Section 7121 of the Code or any similar provision of state or local income tax law that relates to Edge or any of its subsidiaries;

(e) Neither Edge nor any of its subsidiaries is a party to, is bound by or has any obligation under any tax sharing agreement or similar agreement or arrangement;

(f) Edge is not a party to any agreement, contract, or arrangement that would, as a result of the transactions contemplated hereby, result, separately or in the aggregate, in (A) the payment of any “excess parachute payments” within the meaning of Section 280G of the Code by reason of the Merger, (B) the payment of any form of compensation or reimbursement for any Tax incurred by any person arising under Section 280G of the Code, or (C) the payment of any amounts not deductible by Edge, in whole or in part, by reason of Section 162(m) of the Code; and

(g) Neither Edge nor any of its subsidiaries has been a “controlled corporation” or a “distributing corporation” in any distribution that was purported or intended to be governed by Section 355 of the Code (or any similar provision of state, local or foreign Law) (i) occurring during the two-year period ending on the date hereof, or (ii) that otherwise constitutes part of a

17

“plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) that includes the Merger.

For purposes of this Agreement, a “Tax” or “Taxes” shall mean all federal, state, local, foreign and other taxes, charges, fees, levies, imposts, duties, licenses or other assessments, together with any interest, penalties, additions to tax or additional amounts imposed by any taxing authority.

Section 2.14 Environmental Matters.

(a) There does not exist on any oil and gas property, including leasehold, working interest, surface, mineral, royalty and other associated rights and interests, owned in fee or by virtue of leases, contracts, agreements, vested or contingent, and pertinent to Edge’s oil & gas operations, owned or operated by Edge or any of its subsidiaries (individually an “Edge Property” and collectively, the “Edge Properties”) any condition or conditions that constitute a violation of Applicable Environmental Law and that reasonably could be expected to require or result in a compliance action, response or remediation cost to Edge, either individually or in the aggregate, in excess of $500,000.

(b) There are no agreements, consents or administrative orders, injunctions, decrees, judgments, license, administrative rule or guidance, permit conditions, or other directives of any governmental entity based on any Applicable Environmental Law, relating to or that require any material change in the present condition or remediation of any Edge Property which remain unsatisfied and outstanding, and Edge has not received from any governmental entity or any private or public person or entity any notice or claim advising Edge that it is or is potentially responsible for damages or response costs under Applicable Environmental Law as a result of Edge’s or its predecessors’ ownership or activities in connection with the Edge Properties, which claim or notice remains unsatisfied and outstanding.

(c) Edge and, to the knowledge of Edge, each other person that owns, operates or occupies the Edge Properties, has obtained all material permits, licenses, franchises, authorities, consents and approvals, and has made all material filings and maintained all material data, documentation and records necessary for owning and operating the Edge Properties under Applicable Environmental Law, and all such permits, licenses, franchises, authorities, consents, approvals and filings remain in full force and effect.

(d) There are no ongoing, pending or, to the knowledge of Edge, threatened investigations, claims, demands, actions, administrative proceedings, lawsuits or inquiries relating to (i) the Edge Properties under Applicable Environmental Law, or (ii) the restoration, remediation or reclamation of any of the Edge Properties.

(e) There are no third-party commissioned reports of environmental investigations, studies or audits performed within the past five (5) years, or internally generated reports of environmental investigations, studies or audits performed within the past two (2) years, with respect to any of the Edge Properties in the possession of Edge.

18

(f) As used in this Agreement, the term “Applicable Environmental Law” means: (i) all federal statutes regulating or prescribing restrictions regarding the condition, activities or operations, of or affecting, the Edge Properties or, as applicable, the Parent Properties relating to the environment, human health, safety and security, including but not limited to the following: the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601, et seq., the Resource Conservation and Recovery Act (Solid Waste Disposal Act), 42 U.S.C. § 6901, et seq., the Clean Air Act, 42 U.S.C. § 7401, et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251, et seq., the Safe Drinking Water Act (and Amendments of 1996), 42 U.S.C. § 300f, et seq., the Emergency Planning and Community Xxxxx-xx-Xxxx Xxx, 00 X.X.X. § 00000 et seq., the Endangered Species Act, 16 U.S.C. § 1531, et seq., Migratory Bird Treaty Act, 16 U.S.C. § 703 et seq., the National Environmental Policy Act, 42 U.S.C. § 4321, et seq.,  the Oil Pollution Act of 1990, 33 U.S.C. § 2701, et seq. and 46 U.S.C.  § 3703a, the Toxic Substances Control Act, 15 U.S.C. § 2601, et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Homeland Security Act, 6 U.S.C. § 101, et seq., the Aviation and Transportation Security Act, 49 U.S.C. § 114, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 106, et seq. (collectively, and as amended and recodified, the “Environmental Laws”); (ii) any regulations promulgated under such federal statutes; (iii) any state law counterparts of such federal statutes and the regulations promulgated thereunder; (iv) any other state or local statutes, rules, regulations or ordinances regulating the use of or affecting the environment; and (v) all common law rights, duties and obligations regarding the use of or matters affecting the environment.

Notwithstanding anything to the contrary contained elsewhere in this Agreement, Edge makes no representation in this Agreement regarding any compliance or failure to comply with, or any actual or contingent liability under, or claims, demands, actions, proceedings, lawsuits or investigations with respect to any Applicable Environmental Law, except as set forth in this Section 2.14.

Section 2.15 Intellectual Property.

(a) Except as have not had and are not reasonably likely to have, individually or in the aggregate, an Edge Material Adverse Effect, either Edge or an Edge subsidiary owns, or is licensed or otherwise possesses adequate rights to use, the Intellectual Property of Edge, and (i) there are no pending or, to the knowledge of Edge, threatened claims by any person alleging infringement by Edge or any of its subsidiaries or with regard to the ownership, validity or use of any Intellectual Property of Edge, (ii) to the knowledge of Edge, the conduct of the business of Edge and its subsidiaries does not infringe any intellectual property rights of any person, (iii) neither Edge nor any of its subsidiaries has made any claim of a violation or infringement by others of its rights to or in connection with the Intellectual Property of Edge or any of its subsidiaries and (iv) to the knowledge of Edge, no person is infringing any Intellectual Property of Edge or any of its subsidiaries.  To the knowledge of Edge, upon the consummation of the Transactions, the Surviving Entity or its subsidiaries shall own or have the right to use all Intellectual Property on the same terms and conditions as Edge and its subsidiaries enjoyed prior to such transaction.

(b) As used herein, “Intellectual Property” means all material trademarks, trade names, service marks, service names, xxxx registrations, logos, assumed names, registered and

19

unregistered copyrights, patents or applications and registrations, domain names, internet addresses and other computer identifiers, web sites and web pages, computer software programs and related documentation, trade secrets, know-how, customer information, confidential business information, technical information and seismic data licenses used in Parent’s or Edge’s respective businesses as currently conducted.

Section 2.16 Material Contracts.

(a) For purposes of this Agreement, the following shall constitute the “Edge Material Contracts”:

(A) a loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture or other binding commitment (other than those between Edge and its subsidiaries) relating to indebtedness in an amount in excess of $1 million;

(B) a contract, lease or license (including any seismic license agreements) pursuant to which Edge or any of its subsidiaries paid amounts in excess of $1 million within the 12 month period prior to the date of this Agreement; for the avoidance of doubt, the foregoing does not include contracts with drilling contractors or oil and gas royalties paid in the ordinary course of business;

(C) a contract that to the knowledge of Edge purports to materially limit the right of Edge or any of its affiliates to engage or compete in any line of business in which Edge or its subsidiaries is engaged or to compete with any person or operate in any location;

(D) a contract that creates a partnership or joint venture or similar arrangement (other than a tax partnership) having assets reasonably valued in excess of $1 million

(E) any acquisition agreement, asset purchase or sale agreement, stock purchase or sale agreement, exploration agreement, prospect agreement, joint venture agreement, seismic acquisition agreement, area of mutual interest agreement, farmout or farmin agreement or other similar agreement pursuant to which (i) Edge reasonably expects to incur expenditures in excess of $1 million during the period ending one year from the date of this Agreement, or (ii) any other party may acquire or earn an interest in Edge Properties described in the Edge Reserve Reports;

(F) any agreement for the sale of oil, gas or liquids from or attributable to the Edge Properties at less than market price (including any call on production at a price less than the prevailing price in the field or the applicable monthly index price, as applicable) that may not be terminated by Edge at will and without penalty on notice of sixty(60) days or less;

(G) any lease by Edge or any of its subsidiaries of any real property, including office leases, under which the annual rental is in excess of $250,000;

20

(H) any guaranty, direct or indirect, by Edge, of any obligation for borrowings of any other person, other than endorsements made for collection in the ordinary course of business, guarantees by Edge subsidiaries of Edge obligations and guarantees by Edge of Edge subsidiaries’ obligations;

(I) any outsourcing agreement for the performance by third parties of administrative or professional services for or on behalf of Edge or any of the Edge subsidiaries;

(J) any agreement to which any affiliate of Edge is a party that is of the type that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act; and

(K) any agreement filed by Edge with the SEC as a material contract as required by Item 601(b)(10) of Regulation S-K, any terms of which remain executory.

(b) Other than as a result of the expiration or termination of any Edge Material Contract in accordance with its terms, (i) except as has not had and is not reasonably likely to have, individually or in the aggregate, an Edge Material Adverse Effect, each Edge Material Contract is valid and binding on Edge and any of its subsidiaries that is a party thereto, as applicable, and in full force and effect, except as the enforceability there of may be limited by bankruptcy, insolvency, moratorium, fraudulent transfer, reorganization and other laws of general applicability relating to or affecting the rights or remedies of creditors and by general equitable principles (whether considered in a proceeding in equity or at law), and except that any indemnity, contribution and exoneration provisions contained therein may be limited by Applicable Law and public policy, (ii) Edge and each of its subsidiaries has in all material respects performed all obligations required to be performed by it to date under each Edge Material Contract and (iii) neither Edge nor any of its subsidiaries has received written notice of, the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of Edge or any of its subsidiaries or their counterparties under any such Edge Material Contract.

Section 2.17 Hedging.  Section 2.17 of the Edge Schedule sets forth, as of the date of this Agreement, the futures, hedge, swap, collar, put, call, floor, cap, option and other similar contracts to which Edge or any of its subsidiaries is a party or is bound that are intended to reduce or eliminate the risk of fluctuations in interest rates, currency exchange rates or the price of commodities, including hydrocarbons.

Section 2.18 Brokers; Transaction Fees.  No broker, finder or investment banker (other xxxx Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc.) is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Edge.

Section 2.19 Takeover Provisions.  Assuming the accuracy of the representations in Section 3.19, the Edge Board of Directors has approved this Agreement and taken all other

21

requisite action, if any, necessary to render the restrictions on “business combinations” set forth in Section 203 of Delaware Law inapplicable to this Agreement and the Transactions.

Section 2.20 Tax Treatment.  Neither Edge nor any of its affiliates has taken or agreed to take any action, or is aware of any fact or circumstance, that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

Section 2.21 Business Locations; Bank Accounts.

(a) Edge has provided Parent a schedule which sets forth the location of the principal place of business and chief executive office of Edge and each Edge subsidiary, together with each field office and other office out of which Edge business is conducted.  The schedule includes a designation of the office or other location where the corporate books and records, including the charter documents, corporate records and books of account of Edge and its subsidiaries, are located.

(b) Edge has provided Parent a schedule which sets forth a listing of all bank accounts, depository accounts, securities accounts and other similar accounts of Edge and each Edge subsidiary with any bank, broker or other depository institution and the names of all persons authorized to withdraw funds from each such account.

Section 2.22 Future Production.  Except as set forth in Section 2.22 of the Edge Schedule, Edge is not obligated, by virtue of a prepayment arrangement, make-up right under a production sales contract containing a “take or pay” or similar provision, production payment or any other arrangement, to deliver hydrocarbons having a value in excess of $500,000 attributable to the Edge Properties at some future time without then or thereafter receiving full payment therefor.  No Edge Property is subject to an allowable penalty under applicable laws, rules or regulations that would prevent any well on such property from being entitled to its full legal and regular allowable from and after the Closing Date, the effect of which would be to materially reduce the projected production from such property as set out in the Edge Reserve Reports.  Section 2.22 of the Edge Schedule sets forth a summary of Edge’s gas balancing obligations, including the amounts of any over production and under production imbalances.

Section 2.23 Lease Provisions; Suspense.  All rents, royalties, overriding royalty interests and other payments due with respect to production from the Edge Properties have been timely and properly paid, except amounts (i) that are properly being held in suspense, or (ii)  as has not had and is not reasonably likely to have, individually or in the aggregate, an Edge Material Adverse Effect.  Edge has made available to Parent or Parent’s counsel for review Edge’s suspense register listing all amounts held in suspense by Edge.

Section 2.24 Previously Owned Properties.  Except as set forth in Section 2.24 of the Edge Schedule, Edge has no continuing contractual indemnification obligations with respect to any properties that were owned or leased by Edge or any of its subsidiaries within the five-year period prior to the date of this Agreement but are not currently owned or leased; provided, however, that the foregoing representation and warranty is not intended to relate to any potential liability of Edge or any Edge subsidiary arising solely under Applicable Environmental Law (and

22

not by contract) with respect to matters which, to Edge’s knowledge, have not been asserted and are not reasonably expected by Edge to be asserted.

Section 2.25 Operator; Audits.  As of the date hereof, Edge has no knowledge of any pending vote, or any requests for a vote (whether written or oral), to have Edge removed as the named operator of any of the Edge Properties for which Edge or any subsidiary is currently designated as the operator.  To Edge’s knowledge, as of the date hereof, except as set forth in Section 2.25 of the Edge Schedule, there is no pending third-party audit of Edge’s or any Edge subsidiary’s joint interest xxxxxxxx as operator and neither Edge nor any subsidiary has received any notice of or demand with respect to any such audit.

Section 2.26 Preferential Rights to Purchase and Required Consents to Assign.  As of the date hereof, except as set forth in Section 2.26 of the Edge Schedule, no Edge Property is subject to any preferential right to purchase, right of first refusal or other agreement that gives a third party the right to purchase such Edge Property as a result of the Merger, or requires the consent of any third party to consummate the Merger.

Section 2.27 Work Plan.  Section 2.27 of the Edge Schedule sets forth a general description of Edge’s proposed capital expenditures for the orderly extension, renewal, exploration and development of the Edge Properties for the third quarter and the fourth quarter of 2008 (the “Work Plan”).  Prior to the Closing, Edge will use commercially reasonable efforts to complete the Work Plan.   Edge will routinely keep Parent informed of its activities under the Work Plan and any changes or modifications thereto, provided, however, that nothing herein shall require or guarantee that Edge will make any particular expenditure or achieve any particular result.  Notwithstanding anything in this Agreement to the contrary, nothing herein shall limit the ability of Edge to make any changes in the Work Plan based on new or changed facts, conditions, opportunities, circumstances, evaluations or results of operations, including changes in timing of operations, availability of equipment, rigs and personnel, revised assessments, matters beyond Edge’s control and other new or unforeseen conditions or events which may arise or become evident after the execution and delivery of this Agreement. For the avoidance of doubt, no failure to comply with the second sentence of this paragraph shall result in a breach of this Section 2.27 if such failure does not result in an Edge Material Adverse Effect.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

Parent and Sub hereby, jointly and severally, represent and warrant to Edge that, except as otherwise set forth (i) in the Parent Parties’ Schedules to this Agreement (the “Parent Schedule”) or (ii) in the Parent SEC Reports filed prior to the date of this Agreement:

Section 3.1 Organization and Qualification; Subsidiaries.  Parent is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware, and Sub is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware.  Each of Parent and Sub has the requisite corporate power and authority to own or lease its properties and to carry on its business as it is now being conducted and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character of the properties owned or leased by it makes such licensing or qualification

23

necessary, except where the failure to be so licensed or qualified has not had and is not reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect.  Each subsidiary of Parent (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) has the requisite corporate or other business entity power and authority to own or lease its properties and to carry on its business as it is now being conducted and (iii) is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character of the properties owned or leased by it makes such licensing or qualification necessary, in each case, except as has not had and is not reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect.  The term “Parent Material Adverse Effect” means a material adverse effect on the business, properties, financial condition or results of operations of Parent and its subsidiaries taken as a whole or on the ability of Parent and its subsidiaries to consummate the Transactions, except, in each case, for any such effect attributable to (i) general economic, capital market, regulatory or political conditions, any outbreak of hostilities or war (including acts of terrorism), natural disasters or other force majeure events, in each case in the United States or elsewhere, (ii) changes in or events or conditions generally affecting the oil and gas exploration and development industry or exploration and production companies of a similar size to Parent (including changes in commodity prices and general market prices), (iii) changes in laws, regulations or GAAP or interpretations thereof, (iv) the announcement or pendency of this Agreement, any actions taken in compliance with this Agreement or the consummation of any of the Transactions, (v) any failure by Parent to meet estimates of revenues or earnings for any period ending after the date of this Agreement, (vi) changes in the price or trading volume of Parent’s stock, provided, that this clause (vi) does not prevent a determination that any underlying causes of such changes resulted in a Parent Material Adverse Effect, (vii) the failure of Parent or its subsidiaries to take any action referred to in Section 4.2 due to Edge’s unreasonable withholding, delaying or conditioning of its consent or (viii) effects to the extent resulting from any legal proceedings made or brought by any of the current or former stockholders of Parent (on their own behalf or on behalf of Parent) arising out of or related to this Agreement or the Transactions.  For purposes of determining whether a particular change, event, circumstance or effect has a “material adverse effect,” no predetermined formulaic or analogical approach to a determination of materiality shall be considered (for example, a percentage of the value of the aggregate Merger Consideration); rather, the nature and effect of each change, event, circumstance or effect shall be considered along with the detrimental impact on the properties, financial condition or results of operations of Parent and its subsidiaries, taken as a whole, of such change, event, circumstance or effect.  A true and complete list of all of Parent’s subsidiaries, together with the jurisdiction of incorporation or organization of each such subsidiary and the percentage of the outstanding capital stock of each such subsidiary owned by Parent and each other Parent subsidiary, is set forth in Section 3.1 of the Parent Schedule.  Other than with respect to the Parent subsidiaries set forth on Section 3.1 of the Parent Schedule, Parent does not directly or indirectly own any equity interest in, or any interest convertible into or exchangeable or exercisable for, any equity interest in, any corporation, partnership, joint venture or other business entity, other than equity interests held for investment that are not, in the aggregate, material to Parent.

Section 3.2 Charter and Bylaws.  Each of Parent and Sub has heretofore furnished to Edge true and complete copies of its certificate of incorporation and bylaws, each as amended to

24

date.  Such certificates of incorporation and bylaws are in full force and effect as of the date of this Agreement.

Section 3.3 Capitalization.  The authorized capital stock of Parent consists of 3,600,000 shares of Parent Common Stock and 600,000 shares of preferred stock, par value $0.01 per share.  As of July 14, 2008, 877,000 shares of Parent Common Stock were issued and outstanding, all of which were validly issued and fully paid and are nonassessable, and none of which were issued in violation of any preemptive or similar rights of any securityholder of Parent. From December 31, 2007 to the date of this Agreement, Parent has not issued any shares of capital stock or granted any options covering shares of capital stock.  Subject to the foregoing and other than as contemplated by the Parent Employee Benefit Plans or the Parent 401(k) Plan, there are no options, warrants or other rights, agreements, arrangements or commitments of any character obligating Parent or any Parent subsidiary to issue or sell any shares of capital stock of, or other equity interests in, Parent or any Parent subsidiary.  There are no outstanding contractual obligations of Parent or any Parent subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock of Parent or any Parent subsidiary.  All of the issued and outstanding capital stock or equivalent equity interests of each Parent subsidiary were duly authorized, validly issued and fully paid and are non-assessable and are owned by Parent, directly or through its subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim (other than in favor of Parent or any of its subsidiaries); and none of the outstanding shares of capital stock or equivalent equity interests of any Parent subsidiary were issued in violation of any preemptive or similar rights arising by operation of law, or under the charter, bylaws or other comparable organizational documents of any Parent subsidiary or under any agreement to which Parent or any Parent subsidiary is a party.

Section 3.4 Authority; Due Authorization; Binding Agreement; Approval.

(a) Each of Parent and Sub has all requisite corporate or other business entity power and authority to enter into and to perform its obligations under this Agreement and all agreements, instruments and documents related to the Financing.

(b) The execution, delivery and performance of this Agreement by Parent and Sub and the consummation by Parent and Sub of the Transactions, including the Financing, have been duly and validly authorized by all requisite corporate or other business entity action on the part of each of Parent and Sub (other than, with respect to the Merger, the filing of appropriate merger documents as required by Delaware Law).

(c) This Agreement has been duly executed and delivered by each of Parent and Sub and, assuming the due authorization, execution and delivery hereof by Edge, constitutes a valid and binding obligation of each of Parent and Sub, enforceable against each of them in accordance with its terms, except as limited by bankruptcy, insolvency, moratorium, fraudulent transfer, reorganization and other laws of general applicability relating to or affecting the rights or remedies of creditors and by general equitable principles (whether considered in a proceeding in equity or at law).

(d) The board of directors of Parent (the “Parent Board of Directors”), by irrevocable unanimous written consent, (A) determined that this Agreement and the

25

Transactions, including the Parent Restructure and issuance of Parent Common Stock and Parent Preferred Stock, are advisable and in the best interests of the Parent stockholders, (B) approved this Agreement and (C) resolved to recommend the issuance of shares of Parent Common Stock and Parent Preferred Stock pursuant to Section 1.6 and the amendment of Parent’s certificate of incorporation pursuant to Section 5.14.

(e) The stockholders of Parent, by irrevocable written consent (copies of which have been delivered to Edge) have (A) adopted this Agreement, (B) approved the Transactions, including the amendment of Parent’s certificate of incorporation pursuant to Section 5.14 and (C) approved the First Amendment to Stockholders’ Agreement, dated as of July 11, 2008, among Parent, Xxxxxxx Investments, L.L.C., an Oklahoma limited liability company, Altoma Energy, an Oklahoma general partnership, and CHK Holdings, LLC, an Oklahoma limited liability company (a copy of which has been delivered to Edge) (the “Stockholders’ Amendment”).

(f) The Stockholders’ Amendment has been duly executed and delivered by Parent and each of the other parties thereto and, assuming the due authorization, execution and delivery thereof by such other parties, constitutes a valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except as limited by bankruptcy, insolvency, moratorium, fraudulent transfer, reorganization and other laws of general applicability relating to or affecting the rights or remedies of creditors and by general equitable principles (whether considered in a proceeding in equity or at law).

Section 3.5 No Violation; Consents.

(a) The execution and delivery of this Agreement by Parent or Sub does not, and the consummation by Parent or Sub of the Transactions, including the Financing and the adoption of Parent’s Amended and Restated Certificate of Incorporation attached hereto as Exhibit 3.5(a)(i) (the “Amended Certificate of Incorporation”) and the Parent’s Amended and Restated Bylaws attached hereto as Exhibit 3.5(a)(ii) (the “Amended and Restated Bylaws”) will not, (i) violate the certificate of incorporation or bylaws or other comparable governing documents of Parent or Sub, (ii) constitute a breach or violation of, or a default (or an event which, with notice or lapse of time or both, would constitute such a default) under any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which Parent or Sub or any of their subsidiaries is a party or by which any of them or any of their respective properties are bound, (iii) (assuming that the consents and approvals referred to in Section 3.5(b) are duly and timely made or obtained and that, to the extent required by the applicable rules of the New York Stock Exchange (the “NYSE”), the approval of the issuance of shares of Parent Common Stock pursuant to Section 1.6) violate any statute, law or regulation or any order, judgment, decree or injunction of any court or governmental authority directed to Parent, Sub or any of their subsidiaries or any of their properties, (iv) result in the triggering, acceleration or increase of any payment to any person pursuant to any “change in control” or similar provision of any contract or agreement with any seismic data vendor or licensor or any other contract or agreement that constitutes a Parent Material Contract, or (v) result in the creation or imposition of any lien, charge or encumbrance upon any property of Parent, Sub or any of their subsidiaries pursuant to the agreements and instruments referred to in clause (ii).

26

(b) Except for (i) compliance with applicable requirements of the HSR Act and any other Applicable Law analogous to the HSR Act or otherwise regulating antitrust, competition or merger control matters in foreign jurisdictions, (ii) compliance with any applicable requirements of (A) the Securities Act, the Exchange Act and any other applicable U.S. state or federal securities laws or “Blue Sky” laws and (B) the NYSE, (iii) filing or recordation of merger or other appropriate documents as required by Delaware Law or Applicable Law of other states in which Parent or Sub is qualified to do business, (iv) any governmental authorizations, consents, approvals or filings necessary for transfers of permits and licenses or made in connection with the transfer of interests in or the change of control of ownership in oil and gas properties and (v) such other authorizations, consents, approvals or filings the failure of which to obtain or make have not had and are not reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect, no authorization, consent or approval of or filing with any governmental authority is required to be obtained or made by Parent or Sub or any ultimate parent entity or controlling person of Parent for the execution and delivery by either of them of this Agreement or the consummation by either of them of the Transactions, including the Financing.

Section 3.6 Compliance.

(a) Neither Parent nor any Parent subsidiary (i) is in violation of its certificate of incorporation, bylaws or other equivalent governing documents, as applicable, (ii) is in violation of any Applicable Law or order, judgment or decree of any governmental authority having jurisdiction over it, except that no representation or warranty is made in this Section 3.6 with respect to laws, rules, regulations, orders, judgments or decrees relating to employee benefit, Tax or environmental matters, which are addressed exclusively in Sections 3.11, 3.13 and 3.14, respectively, (iii) is in default in the performance of any obligation, agreement, covenant or condition under any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which Parent or any Parent subsidiary is a party or by which any of them or any of their respective properties are bound or (iv) has received a written notice of non-compliance with any Applicable Law, order, judgment or decree of any governmental authority that remains unresolved, except, in the case of clauses (ii), (iii) and (iv), for such violations, defaults or notices that have not had and are not reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect.

(b) Except as has not had and is not reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect, (i) Parent and its subsidiaries are in possession of all franchises, tariffs, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any governmental authority necessary for Parent and its subsidiaries for the current ownership, lease and operation of their properties and assets or to carry on their businesses as they are now being conducted (the “Parent Permits”) and (ii) to the knowledge of Parent, no event or condition has occurred which would reasonably be expected to result in a violation or breach of any Parent Permit (in each case, with or without notice or lapse of time or both).

27

Section 3.7 SEC Filings; Financial Statements; Internal Control.

(a) Parent has filed all reports, schedules, registration statements, definitive proxy statements and exhibits to the foregoing documents required to be filed by it with the SEC since January 1, 2008 (collectively, the “Parent SEC Reports”).  As of their respective dates, (i) the Parent SEC Reports complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations thereunder and (ii) none of the Parent SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except for such statements, if any, as have been corrected by subsequent filings with the SEC.  No Parent subsidiary is currently required to file any form, report or other document with the SEC under Section 13(a) or 15(d) of the Exchange Act.

(b) The historical financial statements of Parent, together with the related schedules and notes thereto, included in the Parent SEC Reports present fairly, in all material respects (subject, in the case of unaudited statements, to recurring audit adjustments normal in nature and amount), the consolidated financial position of Parent and its consolidated subsidiaries at the dates indicated and the consolidated results of operations and consolidated cash flows of Parent and its consolidated subsidiaries for the periods specified; and such historical financial statements have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved, except as noted therein or, in the case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC.

(c) Parent has (i) designed disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) and  internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) to ensure that material information relating to Parent, including its consolidated subsidiaries, is made known to the chief executive officer and chief financial officer of Parent by others within those entities and (ii) designed internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.  Since January 1, 2008, neither Parent nor its independent auditors have identified any significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which were or are reasonably likely to adversely affect Parent’s ability to record, process, summarize and report financial information.

Section 3.8 No Undisclosed Liabilities.  Except for liabilities and obligations (i) reflected or reserved against in Parent’s consolidated balance sheets or the notes thereto included in the Parent SEC Reports, (ii) arising under this Agreement and the Transactions, (iii) incurred since March 31, 2008 in the ordinary course of business consistent with past practice and (iv) that are not material to Parent under GAAP, neither Parent nor any of its subsidiaries has any liabilities or obligations, whether absolute or contingent, required by GAAP to be reflected or reserved against in Parent’s consolidated balance sheet.

Section 3.9 Absence of Certain Changes or Events.  From March 31, 2008 until the date of this Agreement, except as contemplated by this Agreement or as provided in Section 3.9 of the Parent Schedule, Parent has conducted its businesses only in the ordinary course and there

28

has not been (i) any event having, individually or in the aggregate, a Parent Material Adverse Effect, (ii) any change by Parent in its accounting methods, principles or practices materially affecting the consolidated assets, liabilities or results of operations of Parent and its consolidated subsidiaries, except insofar as may have been required by a change in GAAP, (iii) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of Parent or any redemption, purchase or other acquisition for value of any of its capital stock, (iv) any split, combination or reclassification of any capital stock of Parent, (v) any incurrence, assumption or guarantee by Parent of any indebtedness for borrowed money other than under the Seventh Restated Credit Agreement dated as of October 31, 2006 among Parent, certain of Parent’s subsidiaries, the lenders party thereto and JPMorgan Chase Bank, N.A.(as amended, the “Parent Credit Agreement”) , (vi) any creation or other incurrence by Parent of any lien on any asset securing an amount in excess of $300,000 (other than Permitted Liens, liens securing obligations under the Parent Credit Agreement and liens securing purchase money obligations created in connection with the acquisition, in the ordinary course of business consistent with past practice, of field vehicles and office equipment, not exceeding $3,000,000 in the aggregate), (vii) any material Tax election by Parent or any settlement of any material Tax liability, (viii) except for the acquisition of oil and gas leases and seismic data and the drilling of xxxxx in the ordinary course of business, any asset acquisition or capital expenditure by Parent in excess of $1,500,000 individually or $3,000,000 in the aggregate, (ix) any termination or amendment of, or waiver of any material right under, any Parent Material Contract; (x) any material damage to or destruction or loss of any material asset of Parent (whether or not covered by insurance), (xi) other than by expiration of any lease, any sale or other disposition by Parent, in any single or related series of transactions, of assets having a value in excess of $1,500,000; (xii) any granting by Parent of any increase in compensation or fringe benefits to any employee, except for normal increases of cash compensation in the ordinary course of business consistent with past practice, or any payment by Parent of any bonus, except for bonuses paid in the ordinary course of business consistent with past practice, or any granting by Parent of any increase in severance or termination pay or any entry by Parent into any employment, severance, termination or indemnification agreement; (xiii) any entry by Parent into any licensing or other agreement with regard to the acquisition or disposition of any Intellectual Property in excess of $3 million, (xiv) any change in Parent’s independent petroleum engineers, (xv) any revaluation for Tax reporting or financial statement purposes by Parent of any of its assets, including writing down or writing off notes or accounts receivable in excess of $300,000, or (xvi) the entering into of any agreement, whether written or oral, to do any of the foregoing.

Section 3.10 Litigation.  Except as provided in Section 3.10 of the Parent Schedule, or with respect to employee benefit or Tax matters or Environmental Laws, which are addressed exclusively in Sections 3.11, 3.13 and 3.14, respectively, (i) there is no action, suit or proceeding before or by any court or governmental authority now pending, or, to the knowledge of Parent, threatened, against Parent or any of its subsidiaries, or any of their respective officers or directors in their capacities as such and (ii) neither Parent nor any of Parent’s properties nor, to the knowledge of Parent, any of Parent’s or its subsidiaries’ officers and directors in their capacities as such, are subject to any order, writ, judgment, decree or injunction of any court or arbitrator or any governmental body, agency or official.

29

Section 3.11 Employee Benefit Plans.

(a) Except for the plan (the “Parent 401(k) Plan”) maintained by Parent pursuant to Section 401(k) of the Code, none of Parent or any of its subsidiaries or any trade or business (whether or not incorporated) which is under common control, or which is treated as a single employer, with Parent under Section 414(b), (c), (m) or (o) of the Code (“Parent ERISA affiliate”) maintains any “employee pension plan” as defined in Section 3(2) of ERISA, that is subject to the funding requirements of ERISA.

(b) None of Parent or any of its subsidiaries or any other Parent ERISA affiliate maintains or contributes to any plan that is (i) covered by Title IV of ERISA, (ii) subject to the minimum funding requirements of Section 412 of the Code, (iii) a “multiemployer plan” as defined in Section 3(37) of ERISA, (iv) subject to Section 4063 or 4064 of ERISA or Section 413(c) of the Code or (v) funded by a voluntary employees’ beneficiary association within the meaning of Code Section 501(c)(9).  None of Parent or any of its subsidiaries or any other Parent ERISA affiliate has incurred any liability under Title IV of ERISA which remains unsatisfied.

(c) Section 3.11(c) of the Parent Schedule contains a true and complete list of all the “employee benefit plans,” as defined in Section 3(3) of ERISA, and all other material employee compensation and benefit plans, agreements, programs, policies or other arrangements or payroll practices, whether formal or informal, oral or written, legally binding or not, and whether or not subject to ERISA, including, without limitation, employment agreements, change-in-control agreements, severance and retention pay, short term and long term disability paid leave, vacation pay, consulting or other compensation agreements, deferred compensation in form of annual bonuses, long-term incentive programs in form of restricted stock grants and stock option grants, medical insurance including medical, dental, vision, and prescription coverage, life and accidental death and dismemberment insurance, tuition aid reimbursement, relocation assistance, expatriate benefits, retiree medical and life insurance maintained by Parent or any of its subsidiaries or any Parent ERISA affiliate or to which Parent or any of its subsidiaries or any Parent ERISA affiliate has contributed or is obligated to contribute or has any present or future liability thereunder (all such plans, other than the Parent 401(k) Plan, are referred to as the “Parent Employee Benefit Plans”).

(d) With respect to the Parent 401(k) Plan and each Parent Employee Benefit Plan, Parent has provided to Edge a current, accurate and complete copy (or, to the extent no such copy exists, an accurate description) thereof and, to the extent applicable: (i) any related trust agreement or other funding instrument; (ii) the most recent determination letter, if applicable; (iii) any summary plan description and other written communications (or a description of any oral communications) by Parent or its subsidiaries to their employees concerning the extent of the benefits provided under a Parent Employee Benefit Plan or the Parent 401(k) Plan; and (iv) for the three most recent years (A) the Form 5500 and attached schedules, (B) audited financial statements, (C) actuarial valuation reports and (D) attorney’s response to an auditor’s request for information.

(e) Each Parent Employee Benefit Plan and Parent 401(k) Plan has been established and administered in accordance with its terms, and in substantial compliance with the applicable provisions of ERISA, the Code and other applicable laws, rules and regulations; (ii) the Parent

30

401(k) Plan and each Parent Employee Benefit Plan which is intended to be qualified within the meaning of Code Section 401(a) is so qualified has received a favorable determination letter as to its qualification, and nothing has occurred, whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification; (iii) no event has occurred and no condition exists that would subject Parent or its subsidiaries, either directly or by reason of their affiliation with any member of their Parent ERISA affiliate, to any tax, fine, lien, penalty or other liability imposed by ERISA, the Code or other applicable laws, rules and regulations; (iv) for the Parent 401(k) Plan and each Parent Employee Benefit Plan with respect to which a Form 5500 has been filed, no material change has occurred with respect to the matters covered by the most recent Form since the date thereof; (v) no “reportable event” (as such term is defined in ERISA Section 4043), “prohibited transaction” (as such term is defined in ERISA Section 406 and Code Section 4975) or “accumulated funding deficiency” (as such terms is defined in ERISA Section 302 and Code Section 412 (whether or not waived)) has occurred with respect to any Parent Employee Benefit Plan or the Parent 401(k) Plan; (vi) no Parent Employee Benefit Plan provides retiree welfare benefits except as required under Section 4980B of the Code; and (vii) neither Parent nor the Parent ERISA affiliates has engaged in, or is a successor or parent corporation to an entity that has engaged in, a transaction described in Sections 4069 or 4212(c) of ERISA.  The Parent Employee Benefit Plans and the Parent 401(k) Plan have been maintained, in all material respects, in accordance with their terms and with all provisions of ERISA (including rules and regulations thereunder) and other applicable federal and state law, and none of Parent or any of its subsidiaries or any “party in interest” or “disqualified person” with respect to the Parent Employee Benefit Plans or the Parent 401(k) Plan has engaged in a “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 of ERISA, except where any of the foregoing has not had and is not reasonably likely to have a Parent Material Adverse Effect.

(f) With respect to the Parent 401(k) Plan and any Parent Employee Benefit Plan, (i) no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the knowledge of Parent, threatened, (ii) no facts or circumstances exist that could give rise to any such actions, suits or claims, and (iii) no administrative investigation, audit or other administrative proceeding by the Department of Labor, the Pension Benefit Guaranty Corporation, the IRS or other governmental agencies are pending, in progress or, to the knowledge of Parent, threatened.

(g) Except as provided in Section 3.11 of the Parent Schedule, no Parent Employee Benefit Plan exists that could result in the payment to any present or former employee of Parent or any of its subsidiaries of any money or other property or accelerate or provide any other rights or benefits to any present or former employee of Parent or any of its subsidiaries as a result of the transactions contemplated by this Agreement.  Except as provided in Section 3.11 of the Parent Schedule, there is no contract, plan or arrangement (written or otherwise) covering any employee or former employee of Parent or any of its subsidiaries that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the Code.

31

Section 3.12 Properties; Oil and Gas Matters.

(a) All major items of operating equipment owned or leased by Parent or its subsidiaries are, in the aggregate, in a state of repair so as to be adequate in all material respects for reasonably prudent operations in the areas in which they are operated.

(b) Except for goods (including hydrocarbons produced from Parent’s consolidated oil and gas properties) and other property sold, used or otherwise disposed of since the dates of the respective Parent Reserve Reports in the ordinary course of business, as of the date hereof, Parent and its subsidiaries have good and defensible title to all oil and gas properties forming the basis for the reserves reflected in the reserve reports of Xxxxxx, Xxxxxxxxx & Associates, Inc. and by Xxx Xxxxxxx & Associates, Inc. (the “Parent Reservoir Engineers”), in each case relating to Parent interests referred to therein as of December 31, 2007 (the “Parent Reserve Reports”), and in each case as attributable to interests owned by Parent and its subsidiaries, free and clear of any liens, except for the following liens or other imperfections of title: (i) liens reflected in the Parent Reserve Reports, (ii) liens for current Taxes or assessments not yet delinquent or, if delinquent, being contested in good faith by appropriate actions, (iii) liens in favor of the operator arising under operating agreements and statutory liens securing payment by the first purchaser to the producer, (iv) imperfections of title that do not (A) materially interfere with the use, operation and possession of any property, (B) materially reduce the value of any Parent Property or (C) interfere with the production and sale of hydrocarbons for the account of Parent from any Parent Property; and (v) liens, charges and irregularities in the chain of title which, because of remoteness in or passage of time, statutory cure periods, marketable title acts or other similar reasons, have not affected or interrupted, and are not reasonably expected to affect or interrupt, the claimed ownership of Parent or its predecessors in title to, or the receipt of production revenues from, the property affected thereby.  The historical information supplied by Parent to the Parent Reservoir Engineers underlying the estimates of the reserves reflected in the Parent Reserve Reports, including, without limitation, production volumes, sales prices for production, contractual pricing provisions under oil or natural gas sales or marketing contracts or under hedging arrangements, costs of operations and development and working interest and net revenue information relating to interests owned by Parent and its subsidiaries, was true and correct in all material respects on the date such information was supplied to the Parent Reservoir Engineers.  The estimates of future capital expenditures and other future exploration and development costs supplied by Parent to the Parent Reservoir Engineers were prepared in good faith by the management of Parent.

(c) Section 3.12 to the Parent Schedule lists all Parent Properties which have different before payout and after payout interests, together with the approximate amount of the payout balance with respect to each such property as of the date indicated.

Section 3.13 Taxes

(a) Each of Parent, each of its subsidiaries and any affiliated, combined or unitary group of which any such entity is or was a member has timely (taking into account any extensions) filed all Returns required to be filed in respect of any Taxes, and has timely paid all Taxes shown by such Returns to be due and payable;

32

(b) Each of Parent and its subsidiaries has established reserves that are adequate in the aggregate for the payment of all material Taxes not yet due and payable with respect to the results of operations of Parent and its subsidiaries through the date hereof, and complied in all material respects with all Applicable Law relating to the payment and withholding of Taxes;

(c) Section 3.13 of the Parent Schedule sets forth the last taxable period through which the federal income Tax Returns of Parent and its subsidiaries have been examined by the IRS or otherwise closed.  Except to the extent being contested in good faith, all material deficiencies asserted as a result of such examinations and any examination by any applicable state or local taxing authority have been paid, fully settled or adequately provided for in Parent’s most recent audited financial statements.  No material federal, state, or local income or franchise tax audits or other administrative proceedings or court proceedings are presently pending with regard to any Taxes for which Parent or any of its subsidiaries would be liable, and no material deficiency that has not yet been paid for any such Taxes has been proposed, asserted or assessed against Parent or any of its subsidiaries with respect to any period;

(d) Neither Parent nor any of its subsidiaries has executed or entered into with the IRS or any taxing authority (i) any agreement or other document extending or having the effect of extending the period for assessment or collection of any Tax for which Parent or any of its subsidiaries would be liable or (ii) a closing agreement pursuant to Section 7121 of the Code or any similar provision of state or local income tax law that relates to Parent or any of its subsidiaries;

(e) Neither Parent nor any of its subsidiaries is a party to, is bound by or has any obligation under any tax sharing agreement or similar agreement or arrangement;

(f) Parent is not a party to any agreement, contract, or arrangement that would, as a result of the transactions contemplated hereby, result, separately or in the aggregate, in (A) the payment of any “excess parachute payments” within the meaning of Section 280G of the Code by reason of the Merger, (B) the payment of any form of compensation or reimbursement for any Tax incurred by any person arising under Section 280G of the Code, or (C) the payment of any amounts not deductible by Parent, in whole or in part, by reason of Section 162(m) of the Code; and

(g) Neither Parent nor any of its subsidiaries has been a “controlled corporation” or a “distributing corporation” in any distribution that was purported or intended to be governed by Section 355 of the Code (or any similar provision of state, local or foreign Law) (i) occurring during the two-year period ending on the date hereof, or (ii) that otherwise constitutes part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) that includes the Merger.

Section 3.14 Environmental Matters.

(a) Except as provided in Section 3.14 of the Parent Schedule, there does not exist on any oil and gas property owned or operated by Parent or any of its subsidiaries (individually a “Parent Property” and collectively, the “Parent Properties”) any condition or conditions that constitute a violation of Applicable Environmental Law and that reasonably could be expected to

33

require or result in a compliance action, response or remediation cost to Parent, either individually or in the aggregate, in excess of $1,500,000.

(b) There are no agreements, consents or administrative orders, injunctions, decrees, judgments, license, administrative rule or guidance, permit conditions, or other directives of any governmental entity based on any Applicable Environmental Law, relating to or that require any material change in the present condition or remediation of any Parent Property which remain unsatisfied and outstanding, and Parent has not received from any governmental entity or any private or public person or entity any notice or claim advising Parent that it is or is potentially responsible for damages or response costs under Applicable Environmental Law as a result of Parent’s or its predecessors’ ownership or activities in connection with the Parent Properties, which claim or notice remains unsatisfied and outstanding.

(c) Parent and, to the knowledge of Parent, each other person that owns, operates or occupies the Parent Properties, has obtained all material permits, licenses, franchises, authorities, consents and approvals, and has made all material filings and maintained all material data, documentation and records necessary for owning and operating the Parent Properties under Applicable Environmental Law, and all such permits, licenses, franchises, authorities, consents, approvals and filings remain in full force and effect.

(d) There are no ongoing, pending or, to the knowledge of Parent, threatened investigations, claims, demands, actions, administrative proceedings, lawsuits or inquiries relating to (i) the Parent Properties under Applicable Environmental Law, or (ii) the restoration, remediation or reclamation of any of the Parent Properties.

(e) There are no third-party commissioned reports of environmental investigations, studies or audits performed within the past five (5) years, or internally generated reports of environmental investigations, studies or audits performed within the past two (2) years, with respect to any of the Parent Properties in the possession of Parent.

Notwithstanding anything to the contrary contained elsewhere in this Agreement, neither Parent nor Sub makes any representation in this Agreement regarding any compliance or failure to comply with, or any actual or contingent liability under, or claims, demands, actions, proceedings, lawsuits or investigations with respect to any Applicable Environmental Law, except as set forth in this Section 3.14.

Section 3.15 Intellectual Property.  Except as have not had and are not reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect, either Parent or a Parent subsidiary owns, or is licensed or otherwise possesses adequate rights to use, the Intellectual Property of Parent, and (i) there are no pending or, to the knowledge of Parent, threatened claims by any person alleging infringement by Parent or any of its subsidiaries or with regard to the ownership, validity or use of any Intellectual Property of Parent, (ii) to the knowledge of Parent, the conduct of the business of Parent and its subsidiaries does not infringe any intellectual property rights of any person, (iii) neither Parent nor any of its subsidiaries has made any claim of a violation or infringement by others of its rights to or in connection with the Intellectual Property of Parent or any of its subsidiaries, and (iv) to the knowledge of Parent, no

34

person is infringing any Intellectual Property of Parent or any of its subsidiaries.  To the knowledge of Parent, upon the consummation of the Transactions, Parent shall own or have the right to use all Intellectual Property on the same terms and conditions as Parent and its subsidiaries enjoyed prior to such transaction.

Section 3.16 Material Contracts.

(a) For purposes of this Agreement, the following shall constitute the “Parent Material Contracts”:

(A) a loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture or other binding commitment (other than those between Parent and its subsidiaries) relating to indebtedness in an amount in excess of $3 million;

(B) a contract, lease or license (including any seismic license agreements) pursuant to which Parent or any of its subsidiaries paid amounts in excess of $3 million within the 12 month period prior to the date of this Agreement; for the avoidance of doubt, the foregoing does not include contracts with drilling contractors or oil and gas royalties paid in the ordinary course of business;

(C) a contract that to the knowledge of Parent purports to materially limit the right of Parent or any of its affiliates to engage or compete in any line of business in which Parent or its subsidiaries is engaged or to compete with any person or operate in any location;

(D) a contract that creates a partnership or joint venture or similar arrangement (other than a tax partnership) having assets reasonably valued in excess of $3 million;

(E) any acquisition agreement, asset purchase or sale agreement, stock purchase or sale agreement, exploration agreement, prospect agreement, joint venture agreement, seismic acquisition agreement, area of mutual interest agreement, farmout or farmin agreement, or other similar agreement pursuant to which (i) Parent reasonably expects to incur expenditures in excess of $3 million during the period ending one year from the date of this Agreement, or (ii) any other party may acquire or earn an interest in Parent Properties described in the Parent Reserve Reports;

(F) any agreement for the sale of oil, gas or liquids from or attributable to the Parent Properties at less than market price (including any call on production at a price less than the prevailing price in the field or the applicable monthly index price, as applicable) that may not be terminated by Parent at will and without penalty on notice of sixty (60) days or less;

(G) any lease by Parent or any of its subsidiaries of any real property, including office leases, under which the annual rental is in excess of $750,000;

35

(H) any guaranty, direct or indirect, by Parent, of any obligation for borrowings of any other person, other than endorsements made for collection in the ordinary course of business, guarantees by Parent subsidiaries of Parent obligations and guarantees by Parent of Parent subsidiaries’ obligations;

(I) any outsourcing agreement for the performance by third parties of administrative or professional services for or on behalf of Parent or any of the Parent subsidiaries;

(J) any agreement to which any affiliate of Parent is a party that is of the type that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act; and

(K) any agreement filed by Parent with the SEC as a material contract as required by Item 601(b)(10) of Regulation S-K, any terms of which remain executory.

(b) Other than as a result of the expiration or termination of any Parent Material Contract in accordance with its terms, (i) except as has not had and is not reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect, each Parent Material Contract is valid and binding on Parent and any of its subsidiaries that is a party thereto, as applicable, and in full force and effect, except as the enforceability there of may be limited by bankruptcy, insolvency, moratorium, fraudulent transfer, reorganization and other laws of general applicability relating to or affecting the rights or remedies of creditors and by general equitable principles (whether considered in a proceeding in equity or at law), and except that any indemnity, contribution and exoneration provisions contained therein may be limited by Applicable Law and public policy, (ii) Parent and each of its subsidiaries has in all material respects performed all obligations required to be performed by it to date under each Parent Material Contract and (iii) neither Parent nor any of its subsidiaries has received written notice of the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of Parent or any of its subsidiaries or their counterparties under any such Parent Material Contract.

Section 3.17 Hedging.  Section 3.17 of the Parent Schedule sets forth, as of the date of this Agreement, the futures, hedge, swap, collar, put, call, floor, cap, option and other similar contracts to which Parent or any of its subsidiaries is a party or is bound that are intended to reduce or eliminate the risk of fluctuations in interest rates, currency exchange rates or the price of commodities, including hydrocarbons.

Section 3.18 Brokers; Transaction Fees.  No broker, finder or investment banker (other than SunTrust Xxxxxxxx Xxxxxxxx, Inc. and RBS Securities Corporation d/b/a RBS Greenwich Capital) is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or Sub.

Section 3.19 Ownership of Shares.  Neither Parent nor Sub is, nor have either of them during the past three years been, the beneficial owner (as defined herein) of any Shares.

36

Section 3.20 Tax Treatment.  Neither Parent nor any of its affiliates has taken or agreed to take any action, or is aware of any fact or circumstance, that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

Section 3.21 Future Production.  Except as set forth in Section 3.21 of the Parent Schedule, Parent is not obligated, by virtue of a prepayment arrangement, make-up right under a production sales contract containing a “take or pay” or similar provision, production payment or any other arrangement, to deliver hydrocarbons having a value in excess of $1,500,000 attributable to the Parent Properties at some future time without then or thereafter receiving full payment therefor.  No Parent Property is subject to an allowable penalty under applicable laws, rules or regulations that would prevent any well on such property from being entitled to its full legal and regular allowable from and after the Closing Date, the effect of which would be to materially reduce the projected production from such property as set out in the Parent Reserve Reports.  Section 3.21 of the Parent Schedule sets forth a summary of Parent’s gas balancing obligations, including the amounts of any over production and under production imbalances.

Section 3.22 Lease Provisions; Suspense.  All rents, royalties, overriding royalty interests and other payments due with respect to production from the Parent Properties have been timely and properly paid, except amounts (i) that are properly being held in suspense, or (ii)  as has not had and is not reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect.  Parent has made available to Edge or Edge’s counsel for review Parent’s suspense register listing all amounts held in suspense by Parent.

Section 3.23 Previously Owned Properties.  Except as set forth in Section 3.23 of the Parent Schedule, Parent has no continuing contractual indemnification obligations with respect to any properties that were owned or leased by Parent or any of its subsidiaries within the five-year period prior to the date of this Agreement but are not currently owned or leased; provided, however, that the foregoing representation and warranty is not intended to relate to any potential liability of Parent or any Parent subsidiary arising solely under Applicable Environmental Law (and not by contract) with respect to matters which, to Parent’s knowledge, have not been asserted and are not reasonably expected by Parent to be asserted.

Section 3.24 Operator; Audits.  Except as provided in Section 3.24 of the Parent Schedule, as of the date hereof, Parent has no knowledge of any pending vote, or any requests for a vote (whether written or oral), to have Parent removed as the named operator of any of the Parent Properties for which Parent or any subsidiary is currently designated as the operator.  To Parent’s knowledge, as of the date hereof, except as set forth in Section 3.24 of the Parent Schedule, there is no pending third-party audit of Parent’s or any Parent subsidiary’s joint interest xxxxxxxx as operator and neither Parent nor any subsidiary has received any notice of or demand with respect to any such audit.

Section 3.25 Financing Commitment.  Parent has delivered to Edge a true and complete copy of the Financing Commitment issued by JPMorgan Chase Bank, N.A., X.X. Xxxxxx Securities Inc., The Royal Bank of Scotland plc, RBS Securities Corporation d/b/a RBS Greenwich Capital, SunTrust Bank and SunTrust Xxxxxxxx Xxxxxxxx, Inc., dated June 24, 2008 (the “Financing Commitment”) providing for debt financing as described therein (the “Financing”), subject  to the terms and conditions set forth therein.  The Financing Commitment

37

is in full force and effect and has not been withdrawn or terminated (and no party thereto has indicated an intent to so withdraw or terminate) or otherwise amended or modified in any respect and neither Parent nor Sub is in breach of any of the terms or conditions set forth therein and no event has occurred which, with or without notice, lapse of time or both, could reasonably be expected to constitute a material breach or failure to satisfy a condition precedent set forth therein.  No event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Parent or Sub with any term or condition of the Financing Commitment.  As of the date hereof, Parent has no reason to believe it will be unable to satisfy on a timely basis any term or condition of closing to be satisfied by it pursuant to the Financing Commitment.

ARTICLE IV

CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME

Section 4.1 Conduct of Edge Business.  Edge covenants and agrees that, between the date of this Agreement and the Effective Time, except (i) with the prior written consent of Parent, which may not be unreasonably withheld, delayed or conditioned, (ii) as contemplated by this Agreement or by the schedules hereto, (iii) as required by Applicable Law or (iv) for transactions between or among Edge and its subsidiaries:

(a) the respective businesses of Edge and the Edge subsidiaries shall be conducted in the ordinary course and in a manner consistent with past practice, in each case in all material respects;

(b) except to the extent required to comply with Applicable Law, Edge and each of the Edge subsidiaries shall not amend or otherwise change its certificate of incorporation or bylaws;

(c) Edge shall not, and shall not permit any of the Edge subsidiaries to, issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of any shares of capital stock of any class of Edge or any Edge subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock (except in accordance with the terms of securities outstanding on the date hereof or in respect of the outstanding Units or the Edge 401(k) Plan);

(d) Edge shall not (A) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for regular quarterly dividends with respect to the Edge Preferred Stock in the amount of $0.71875 per share) or (B) reclassify, combine, split or subdivide, or redeem, purchase or otherwise acquire (except in accordance with the terms of securities outstanding on the date hereof and except in connection with the payment of withholding Taxes and option exercise prices by Edge in connection with Edge Employee Benefit Plans or the Edge 401(k) Plan), directly or indirectly, any of its capital stock;

(e) Edge shall not, and shall not permit its subsidiaries to, (i) acquire (including, without limitation, by merger, consolidation or acquisition of stock or assets) any corporation,

38

partnership or other business organization or any division thereof, (ii) acquire any material amount of assets (other than hydrocarbons), other than in the ordinary course of business, (iii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Edge or any of its subsidiaries), or make any loans or advances, except as would be permitted without the waiver or consent of any other party under the documents and instruments related to Edge Credit Agreement as in effect as of the date of this Agreement and without regard to any subsequent modification, amendment or replacement thereof, or (iv) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter prohibited by this paragraph (e);

(f) Edge shall not, and shall not permit its subsidiaries to, increase the compensation payable to its officers or employees, or enter into any employment or severance agreement with or grant any severance or termination pay to any director, officer or other employee of Edge or any of its subsidiaries, or, except as required by law, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee; provided, that Edge may make payments under its cash bonus retention plan, a copy of which has been delivered to Parent; and provided further, that Edge may enter into employment agreements to secure the replacement of officers or employees, so long as such employment agreements do not (i) contemplate the issuance of any equity-based compensation, (ii) include any severance or termination pay provisions, and (iii) provide for cash-based compensation materially in excess of the amount paid to the officer or employee being replaced;

(g) Edge shall not, and shall not permit any of its subsidiaries to, make any capital expenditures, except as required on an emergency basis, in any fiscal quarter exceeding its capital expenditure budget (a copy of which is attached hereto as Section 4.1(g) of the Edge Schedule) for such fiscal quarter by more than $2 million, excluding any capital expenditures (i) to repair or replace equipment necessary to continue its operations in a manner consistent with such operations as of the date of this Agreement, (ii) to the extent covered by insurance proceeds and (iii) in amounts unspent but allowed in any prior quarter;

(h) Edge shall not, and shall not permit any of its subsidiaries to, sell or transfer any Edge Properties or other assets other than (i) sales of supplies, surplus or obsolete equipment or (ii) sales of other assets in the ordinary course of business.  Edge shall not, and shall not permit any of its subsidiaries to, enter into any farmout agreements; provided, that in the event Edge or its subsidiaries determines to farmout an Edge Property to a third party, then to the extent allowed by the applicable lease, joint operating or other applicable agreement, (A) Edge will first offer to Parent the Edge Property on the same terms and conditions as Edge intends to offer to such third party, (B) such offer by Edge shall include a form of farmout agreement, and (C) Parent will promptly thereafter arrange to meet with Edge at its offices to review the technical merits of the proposed farmout.  Edge agrees at such meeting to provide Parent all supporting information used by Edge in making its decision to farmout the Edge Property.  If Parent does not elect to execute such farmout agreement within five business days of such review, it shall be deemed a decision by Parent to reject such offer and will entitle Edge to farmout such Edge

39

Property to any third party on the same terms as those in the form of farmout agreement delivered to Parent.

(i) Edge shall not, and shall not permit any of its subsidiaries to, enter into any “non-compete,” “non-solicit” or similar agreement that would materially restrict the businesses of the Surviving Entity or its subsidiaries or their ability to solicit customers or employees following the Effective Time;

(j) Edge shall not, and shall not permit any of its subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger or consolidation of such entity;

(k) Edge shall not, and shall not permit any of its subsidiaries to, change its methods of accounting, including Tax accounting, except in accordance with changes in GAAP as concurred to by Edge’s independent auditors or, as applicable, Tax advisors;

(l) Edge shall not, and shall not permit its subsidiaries to, enter into any agreement pursuant to which any affiliate of Edge is a party that is of the type that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act; and

(m) Edge shall not, and shall not permit any of its subsidiaries (as applicable) to, agree or formally commit to do any of the foregoing.

Section 4.2 Conduct of Parent Business.  Parent covenants and agrees that, between the date of this Agreement and the Effective Time, except (i) with the prior written consent of Edge, which may not be unreasonably withheld or delayed, (ii) as contemplated by this Agreement or by the schedules hereto, (iii) as required by Applicable Law or (iv) for transactions between or among Parent and its subsidiaries:

(a) the respective businesses of Parent and the Parent subsidiaries shall be conducted in the ordinary course and in a manner consistent with past practice, in each case in all material respects;

(b) Parent shall not, and shall not permit its subsidiaries to, acquire, by merging or consolidating with, or by purchasing an equity interest in or the assets of or by any other manner, any business or corporation, partnership or other business organization or division thereof, or otherwise acquire any assets of any other entity (other than the purchase of assets from suppliers, clients or vendors in the ordinary course of business and consistent with past practice) if such transaction would reasonably be expected to prevent or materially delay the consummation of the Merger;

(c) Parent shall not, and shall not permit its subsidiaries to, adopt or propose to adopt any amendments to its charter documents, other than those amendments to be made pursuant to the Parent Restructure or otherwise reflected in the Amended Certificate of Incorporation or the Amended and Restated Bylaws;

(d) Parent shall not, and shall not permit its subsidiaries to, issue, split, combine or reclassify any shares of its or their capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its or

40

their capital stock (except for regular quarterly dividends in the ordinary course of business not in excess of the amount paid for the most recent quarter) or otherwise make any payments to stockholders in their capacity as such or authorize any of the foregoing; provided, that Parent may (i) issue Parent Common Stock and Parent Preferred Stock to satisfy its obligations under Article I, (ii) issue up to $150 million of its Series B convertible preferred stock, par value $0.01 per share (the “Series B Preferred Stock”) the certificate of designations for which is attached as Exhibit 4.2(d), (iii) consummate the stock split contemplated as part of the Parent Restructure, and (iv) if the Merger Consideration and Common Exchange Ratio are appropriately adjusted, issue options, restricted stock or other equity-based incentive compensation awards pursuant to Parent Employee Benefit Plans;

(e) Parent shall not, and shall not permit any of its subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger or consolidation of such entity;

(f) Parent shall not, and shall not permit its subsidiaries to, incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Parent or any of its subsidiaries), or make any loans or advances, except as would be permitted without the waiver or consent of any other party under the documents and instruments related to the indebtedness (including debt securities) of Parent and its subsidiaries as in effect as of the date of this Agreement and without regard to any subsequent modification, amendment or replacement thereof;

(g) Parent shall not, and shall not permit its subsidiaries to, enter into any agreement pursuant to which any affiliate of Parent is a party that is of the type that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act; and

(h) Parent shall not and shall not permit its subsidiaries (as applicable) to agree or formally commit to do any of the foregoing.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.1 Proxy Statement; Stockholders Meeting.

(a) Parent and Edge shall cooperate and promptly prepare and file (i) the proxy statement relating to the Edge Stockholders’ Meeting  (also constituting the prospectus in respect of shares of Parent Common Stock and Parent Preferred Stock into which Common Shares and Preferred Shares will be converted) (the “Proxy Statement/Prospectus”), to be filed by Edge with the SEC, and any amendments or supplements thereto, and (ii) the Registration Statement on Form S-4 (the “Registration Statement”) to be filed by Parent with the SEC in connection with the Merger, and any amendments or supplements thereto.  Parent and Edge shall cause to be filed the Registration Statement in which the Proxy Statement/Prospectus will be included as a prospectus with the SEC as soon as reasonably practicable after the date hereof and in any event not later than August 15, 2008.  Parent and Edge shall cooperate to promptly respond to any comments made by the SEC and otherwise use reasonable best efforts to cause the Registration

41

Statement to be declared effective under the Securities Act as promptly as practicable after filing.  Parent and Edge will provide each other with any information that may be required to prepare and file the Proxy Statement/Prospectus and the Registration Statement hereunder.  Edge will cause the Proxy Statement/Prospectus to be mailed to its stockholders at the earliest practicable time after the Registration Statement is declared effective by the SEC.  If at any time prior to the Effective Time any event occurs that is required to be set forth in an amendment or supplement to the Proxy Statement/Prospectus or the Registration Statement, Parent or Edge, as applicable, will promptly inform the other of such occurrence and cooperate in filing such amendment or supplement with the SEC, use reasonable best efforts to cause such amendment to become effective as promptly as possible and, if required, mail it to stockholders of Edge.  Parent shall use reasonable best efforts, and Edge shall cooperate with Parent, to obtain any and all necessary state securities law or “blue sky” permits, approvals and registrations in connection with the issuance of Parent Common Stock and Parent Preferred Stock pursuant to the Merger.

(b) Parent will cause the Registration Statement (and Parent and Edge will cause the Proxy Statement/Prospectus, each to the extent such party provides information to be contained therein), at the time it becomes effective under the Securities Act, to comply as to form in all material respects with the applicable provisions of the Securities Act, the Exchange Act and the rules and regulations of the SEC thereunder, and Edge shall be responsible for furnishing to Parent materially true, accurate and complete information relating to Edge and holders of Edge Common Stock, Edge Preferred Stock and Options as is required to be included therein.  Parent shall advise Edge, promptly after it receives notice thereof, of the time when the Registration Statement has become effective under the Securities Act, the issuance of any stop order with respect to the Registration Statement, the suspension of the qualification of the Parent Common Stock or Parent Preferred Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or any comments or requests for additional information by the SEC with respect to the Registration Statement.

(c) Each of Parent and Edge shall ensure that the information provided by it for inclusion in the Proxy Statement/Prospectus and each amendment or supplement thereto, at the time of mailing thereof and at the time of the Edge Stockholders’ Meeting or, in the case of information provided by it for inclusion in the Registration Statement or any amendment or supplement thereto, at the time it becomes effective, will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(d) None of the Registration Statement, the Proxy Statement/Prospectus or any amendment or supplement (including by incorporation by reference) thereto will be filed or disseminated to the stockholders of Edge without the approval of both Parent and Edge, which approval shall not be unreasonably withheld, delayed or conditioned; provided, that with respect to documents filed by a party hereto that are incorporated by reference in the Registration Statement or Proxy Statement/Prospectus, this right of approval shall apply only with respect to information relating to the other party or its business, financial condition or results of operations; and provided, further, that Edge, in connection with a Change in the Edge Recommendation, may amend or supplement the Proxy Statement/Prospectus or Registration Statement (including by incorporation by reference) to effect such a Change in the Edge Recommendation, and in such

42

event, this right of approval shall apply only with respect to information relating to the other party or its business, financial condition or results of operations.

(e) Edge, acting through the Edge Board of Directors, shall, in accordance with Applicable Law and Edge’s certificate of incorporation and bylaws, duly call, give notice of, convene and hold an annual or special meeting of the holders of Common Shares (the “Edge Stockholders’ Meeting”) as soon as reasonably practicable following execution of this Agreement for the purpose of the holders of Common Shares adopting by requisite vote this Agreement (the “Edge Stockholder Approval”).  The Edge Board of Directors shall, subject to Section 5.3(b) and the fiduciary duties of the Edge Board of Directors, recommend the adoption of this Agreement at the Edge Stockholders’ Meeting (the “Edge Recommendation”), include such recommendation in the Proxy Statement/Prospectus and use its reasonable best efforts to obtain the Edge Stockholder Approval.  Following announcement of the execution of the Agreement, Edge’s Board of Directors shall use reasonable best efforts to cause Edge’s executive officers to participate in “road show-style” stockholder and analyst presentations reasonably requested by Parent or its financial advisors and undertaken prior to the Edge Stockholder’ Meeting; provided, that any such presentation shall (i) be in compliance with all Federal and State securities laws, and (ii) not result in the Proxy Statement/Prospectus containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and provided, further, that (i) such participation does not unreasonably interfere with the performance of any executive officer’s duties and the operations of Edge, (ii) out of pocket costs for such participation by Edge’s executive officers shall be borne by Parent and (iii) the form and content of such presentation with respect to any information related to Edge or its subsidiaries is mutually agreeable to Edge and Parent.

(f) Concurrent with the execution of this Agreement by Parent, Parent, acting through the Parent Board of Directors, shall deliver to Edge irrevocable unanimous written consents, executed in accordance with Applicable Law and Parent’s certificate of incorporation and bylaws of the Parent Board of Directors (i) determining that this Agreement and the Transactions, including the Parent Restructure and issuance of Parent Common Stock and Parent Preferred Stock, are advisable and in the best interests of the Parent stockholders, (ii) approving this Agreement and (iii) resolving to recommend the issuance of shares of Parent Common Stock and Parent Preferred Stock pursuant to Section 1.6 and the amendment of Parent’s certificate of incorporation pursuant to Section 5.14.

(g) Concurrent with the execution of this Agreement by Parent, Parent shall deliver to Edge irrevocable written consents, executed in accordance with Applicable Law and Parent’s certificate of incorporation and bylaws, of the stockholders of Parent (A) adopting this Agreement and (B) approving the Transactions, including the amendment of Parent’s certificate of incorporation pursuant to Section 5.14.

(h) Notwithstanding anything to the contrary contained in this Agreement, Edge, after consultation with Parent and subject to Parent’s approval (which shall not be unreasonably withheld, conditioned or delayed), may adjourn or postpone the Edge Stockholders’ Meeting to the extent it believes in good faith is necessary to ensure that any required supplement or amendment to the Proxy Statement/Prospectus is provided to its stockholders or, if as of the time

43

for which the Edge Stockholders’ Meeting is originally scheduled (as set forth in the Proxy Statement/Prospectus) there are insufficient shares of Edge Common Stock, as applicable, represented (either in person or by proxy) to constitute a quorum necessary to conduct business at such meeting.

(i) Prior to the Effective Time, Parent shall use all reasonable efforts to authorize for listing on the NYSE the shares of Parent Common Stock and Parent Preferred Stock issuable and required to be reserved for issuance in connection with the Merger, subject to official notice of issuance.

Section 5.2 Access to Information; Confidentiality.

(a) To the extent not restricted by third-party agreement or Applicable Law, each of Parent and Edge shall, subject to any necessary third-party approvals, allow the other party and its officers, employees, representatives, consultants, attorneys, agents, lenders, bankers, financial advisors and other advisors reasonable access during normal business hours, at such party’s sole risk and expense, to all facilities, properties, personnel, books and records of Parent or Edge and their respective subsidiaries, as applicable; provided, that no investigation pursuant to this Section 5.2 shall affect any representation or warranty given by any party hereunder; and provided, further, that notwithstanding the provision of information or investigation by any party, no party shall be deemed to make any representation or warranty except as expressly set forth in this Agreement.  Each of Parent and Edge agree to conduct its investigation in a manner that does not interfere unreasonably with the other party’s or its subsidiaries’ operations and with the prompt and timely discharge by such party’s employees of their duties.  Each party agrees to indemnify and hold the other parties and their subsidiaries harmless from any and all claims and liabilities, including costs and expenses for loss, injury to or death of any representative of such party, and any loss, damage to or destruction of any property owned by a party or its subsidiaries or others (including claims or liabilities for loss of use of any property) resulting directly or indirectly from the action or inaction of any of the parties’ representatives during any visit to the business or property sites of Edge or Parent or their subsidiaries prior to the completion of the Merger, whether pursuant to this Section 5.2 or otherwise.  Notwithstanding the foregoing, no party shall be required to provide access to or otherwise disclose information if such information is subject to, or such access or disclosure would jeopardize, the attorney-client privilege, work product doctrine or other applicable privilege concerning legal proceedings or governmental investigations or which it is required to keep confidential by reason of contract or agreement with third parties or by reason of Applicable Law.  Neither the Parent Parties nor Edge, nor any of their officers, employees, representatives, consultants, attorneys, agents, lenders, bankers, financial advisors or other advisors, shall conduct any environmental testing or sampling on any of the business or property sites of another party hereto or its subsidiaries prior to the completion of the Merger without the prior written consent of the other party, which consent shall not be unreasonably withheld.  The unreasonable withholding by any party of consent for environmental testing or sampling shall constitute that party’s material breach of a covenant for purposes of Section 6.2(b).

(b) Any information obtained by the Parent Parties or Edge or their respective directors, officers, employees, representatives, consultants, attorneys, agents, lenders, bankers, financial advisors and other advisors under this Section 5.2 shall be subject to the confidentiality

44

and use restrictions contained in that certain letter agreements between Edge and Parent dated March 17, 2008 and April 17, 2008 (the “Confidentiality Agreements”).

Section 5.3 No Solicitation.

(a) Edge agrees that none of it, its subsidiaries or any of the officers and directors of it or its subsidiaries shall, and that it shall cause its and such subsidiaries’ employees, agents and representatives (including any investment banker, attorney or accountant retained by it or any of its subsidiaries) not to, (i) initiate, solicit or knowingly encourage any inquiry, proposal or offer with respect to, or a transaction to effect, a merger, reorganization, share exchange, consolidation, business combination, recapitalization or similar transaction involving Edge or any Edge subsidiary, or any purchase or sale of 20% or more of the consolidated assets (including stock of its subsidiaries) of Edge and its subsidiaries, taken as a whole, or any purchase or sale of, or tender or exchange offer for, its equity securities that, if consummated, would reasonably be expected to result in any person (or the stockholders of such person) beneficially owning securities representing 20% or more of Edge’s total voting power (or of the surviving parent entity in such transaction) (any such inquiry, proposal, offer or transaction, an “Acquisition Proposal”), (ii) have any discussion with or provide any confidential information to any person relating to an Acquisition Proposal, or engage in any negotiations concerning an Acquisition Proposal, (iii) approve or recommend any Acquisition Proposal or (iv) approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement or agree to do any of the foregoing related to any Acquisition Proposal.

(b) Notwithstanding anything in this Agreement to the contrary, prior to obtaining the Edge Stockholder Approval, Edge or its Board of Directors may (i) engage or participate in negotiations or discussions with, or provide any information to, any person in response to an unsolicited Acquisition Proposal if (A) Edge’s Board of Directors concludes in good faith after consultation with its legal and financial advisors that such Acquisition Proposal constitutes or reasonably could be expected to lead to a Superior Proposal and (B) prior to providing any confidential information to any person in connection with an Acquisition Proposal by any such person, Edge receives from such person an executed confidentiality agreement having provisions that are substantially similar to those of the Confidentiality Agreements and (ii)  withdraw, modify, qualify or fail to make (or publicly propose to withdraw, modify or qualify) the Edge Recommendation or approve or recommend (or publicly propose to approve or recommend) any Acquisition Proposal or letter of intent, agreement in principle, acquisition agreement or similar agreement providing for any Acquisition Proposal (a “Change in the Edge Recommendation”) if and only if the Edge Board of Directors concludes in good faith after consultation with its legal and financial advisors that its failure to make such a Change in the Edge Recommendation would be inconsistent with its fiduciary obligations.  Notwithstanding anything in this Agreement to the contrary, disclosure by Edge of any Acquisition Proposal in accordance with Section 5.3(d) and the operation of this Agreement with respect thereto shall not be deemed to be a Change in the Edge Recommendation. “Superior Proposal” means an Acquisition Proposal (1) that the Edge Board of Directors determines, in good faith after consultation with its financial advisor, would reasonably be expected to result in a transaction that is more favorable to the stockholders of Edge than the transactions provided for in this Agreement and (2) as to which the Edge Board of Directors concludes after consultation with its legal and financial advisors that the failure to

45

engage or participate in negotiations or discussions with, or provide information to, the person making such proposal would be inconsistent with its fiduciary obligations.  Upon receipt of any unsolicited Acquisition Proposal, Edge will promptly provide written notice to Parent advising Parent of the identity of the person making the unsolicited Acquisition Proposal, the material terms and conditions of the Acquisition Proposal and of Edge’s intention to furnish nonpublic information to, or enter into discussions or negotiations with, such person.  Edge will furnish Parent with any written information furnished to such person within 24 hours of the time such information was so furnished.

(c) Edge agrees that it will, and will cause its officers, directors and representatives to, immediately cease and cause to be terminated any activities, discussions or negotiations existing as of the date of this Agreement with any person (other than Parent) conducted heretofore with respect to any Acquisition Proposal.

(d) Nothing contained in this Agreement shall prohibit Edge or its Board of Directors from making any required disclosure to the stockholders of Edge if, in the good faith judgment of the Board of Directors after consultation with legal advisors, failure to do so would constitute a violation of Applicable Law, including any disclosure to the Edge stockholders required by Rule 14d-9 or 14e-2(a) promulgated under the Exchange Act.

(e) Any action pursuant to Section 5.3(b), (c) or (d) shall not constitute a breach of Edge’s representations, warranties or covenants in this Agreement.

(f) In addition to the obligations of Edge set forth in this Section 5.3, Edge as promptly as practicable shall advise Parent orally and in writing of any request received by Edge for information which Edge reasonably believes would lead to an Acquisition Proposal or of any Acquisition Proposal, or any inquiry received by Edge with respect to, or which Edge reasonably believes would lead to, any Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the person or group making any such request, Acquisition Proposal or inquiry.  Edge will keep Parent informed in all material respects of the status and details (including, without limitation, material amendments or proposed amendments) of any such request, Acquisition Proposal or inquiry.

(g) Nothing contained in this Section 5.3 shall limit Edge’s obligation to hold and convene the Edge Stockholders’ Meeting (regardless of whether a Change in the Edge Recommendation has occurred), unless this Agreement has been terminated in accordance with its terms.

Section 5.4 Directors’ and Officers’ Indemnification and Insurance.

(a) The certificate of formation and limited liability company agreement of the Surviving Entity and the organizational documents of each of its subsidiaries shall contain provisions no less favorable to the persons covered thereby with respect to exculpation, indemnification and advancement of expenses than are set forth in the certificate of incorporation and bylaws of Edge as of the date of this Agreement, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals who at any time from and after

46

the date of this Agreement and to and including the Effective Time were directors, officers, employees, fiduciaries or agents of Edge or any of its subsidiaries in respect of actions or omissions occurring at or prior to the Effective Time (including, without limitation, the matters contemplated by this Agreement), unless such modification is required by law.

(b) From and after the Effective Time, the Surviving Entity shall, to the fullest extent permitted under Applicable Law, indemnify, hold harmless and advance expenses to each present and former director, officer, employee, fiduciary and agent of Edge and each of its subsidiaries (collectively, the “Indemnified Parties”) against all costs and expenses (including attorneys’ fees), judgments, fines, losses, claims, damages, inquiries, liabilities and settlement amounts paid in connection with any threatened or actual claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative, arising out of or pertaining to any action or omission in their capacity as an officer, director, employee, fiduciary or agent (including, without limitation, any claim arising out of this Agreement or any of the Transactions), whether occurring before or after the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, for a period of six years after the Effective Time, in each case to the fullest extent permitted under Applicable Law (and shall pay any expenses in advance of the final disposition of any such action or proceeding to each Indemnified Party to the fullest extent permitted under Applicable Law, upon receipt from the Indemnified Party to whom expenses are advanced of any undertaking to repay such advances required under Applicable Law).  In the event of any such claim, action, suit, proceeding or investigation, (i) the Indemnified Parties may retain counsel (including local counsel) satisfactory to them, the reasonable fees and expenses of which shall be paid by the Surviving Entity promptly after statements therefor are received and (ii) the Surviving Entity shall use reasonable best efforts in the vigorous defense of any such matter; provided, however, that the Surviving Entity shall not be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld, delayed or conditioned); and provided, further, that the Surviving Entity shall not be obligated pursuant to this subsection (b) to pay the fees and expenses of more than one counsel (plus appropriate local counsel) for all Indemnified Parties in any single action unless there is, as determined by counsel to the Indemnified Parties, under applicable standards of professional conduct, a conflict or a reasonable likelihood of a conflict on any significant issue between the positions of any two or more Indemnified Parties, in which case such additional counsel (including local counsel) as may be required to avoid any such conflict or likely conflict may be retained by the Indemnified Parties at the expense of the Surviving Entity; and provided, further, that, in the event that any claim for indemnification is asserted or made prior to the Effective Time or within such six-year period, all rights to indemnification in respect of such claim shall continue until the final disposition of such claim. The Surviving Entity shall pay all reasonable expenses, including attorneys’ fees, that may be incurred by any Indemnified Party in enforcing the indemnity and other obligations provided in this Section 5.4.

(c) From and for a period of six years after the Effective Time, the Surviving Entity shall maintain in effect the current directors’ and officers’ liability insurance policies maintained by Edge (provided, that the Surviving Entity may substitute therefor policies of at least the same coverage and amounts containing terms and conditions that are no less advantageous to such officers and directors so long as substitution does not result in gaps or lapses in coverage) with respect to matters occurring prior to the Effective Time; provided, however, that in no event shall

47

the Surviving Entity be required to expend pursuant to this Section 5.4(c) more than an amount per year equal to 200% of current annual premiums paid by Edge for such insurance and, in the event the cost of such coverage shall exceed that amount, the Surviving Entity shall purchase as much coverage as possible for such amount.

(d) In the event the Surviving Entity or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving company or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Surviving Entity shall assume the obligations set forth in this Section 5.4.

(e) In the event that the Surviving Entity should fail, at any time from and after the Effective Time, to comply with any of the foregoing obligations set forth in this Section 5.4, for any reason, Parent shall be responsible therefor and hereby agrees to perform such obligations unconditionally without regard to any defense or other basis for nonperformance which the Surviving Entity may have or claim (except as would be prohibited by Applicable Law), it being the intention of this subsection (e) that the officers, directors, employees, fiduciaries and agents of Edge and its subsidiaries shall be fully indemnified and that the provisions of this subsection (e) be a primary obligation of Parent and not merely a guarantee by Parent of the obligations of the Surviving Entity.

(f) The obligations of Parent and the Surviving Entity under this Section 5.4 shall not be terminated or modified in such a manner as to adversely affect any director, officer, employee, fiduciary and agent to whom this Section 5.4 applies without the consent of each affected director, officer, employee, fiduciary and agent (it being expressly agreed that the directors, officers, employees, fiduciaries and agents to whom this Section 5.4 applies shall be third-party beneficiaries of this Section 5.4).  The rights of each Indemnified Party hereunder shall be in addition to any other rights such Indemnified Party may have under the charter or bylaws of Edge, under Delaware Law or otherwise.

Section 5.5 Notification of Certain Matters.  Edge shall give prompt notice to Parent, and Parent shall give prompt notice to Edge, of (i) the occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence, of which would be likely to cause any representation or warranty contained in this Agreement to be materially untrue or inaccurate and (ii) any failure of Edge, Parent or Sub, as the case may be, to comply with or satisfy in any material respect any covenant, condition or agreement required to be complied with or satisfied by it hereunder; provided, however, that no failure by Edge to provide a required notice under this Section 5.5 with respect to any matter that would not result in a failure of the condition set forth in Section 6.2(a) shall result in a failure of the condition set forth in Section 6.2(b); provided further, that no failure by Parent to provide a required notice under this Section 5.5 with respect to any matter that would not result in a failure of the condition set forth in Section 6.3(a) shall result in a failure of the condition set forth in Section 6.3(b).  Edge shall also give notice to Parent of the occurrence of a Default or Event of Default (as those terms are defined in the Edge Credit Agreement) under the Edge Credit Agreement promptly upon Edge’s knowledge of such occurrence.

48

Section 5.6 Governmental Filings; Efforts.

(a) Subject to the terms and conditions of this Agreement, and subject, in the case of Edge, to the fiduciary duties of the Edge Board of Directors, each of the parties hereto shall cooperate and use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under Applicable Law to consummate the Transactions, including (i) preparing and filing as promptly as practicable with any governmental authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents, (ii) obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any governmental authority or other third party that are necessary, proper or advisable to consummate the Transactions, (iii) vigorously defending or contesting any litigation or administrative proceeding that would otherwise prevent or materially restrain or delay the consummation of the Transactions, and (iv) with respect to Parent, consummating the Financing on the terms and conditions described in the Financing Commitment.  In furtherance and not in limitation of the foregoing, Parent (and, as applicable, Sub and the ultimate parent entity of Parent) and Edge shall (A) make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the Transactions as promptly as practicable, and in any event within 15 business days of the date hereof, (B) supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act and in any event, “substantially comply” and certify substantial compliance with any request for additional information (also known as a “second request”) issued pursuant to the HSR Act within 60 days of such request and (C) take all other actions necessary to cause the expiration or termination of the applicable waiting period under the HSR Act as soon as practicable.  Parent and Sub shall cause any “ultimate parent entity” of Parent (as such term is defined or used in the regulations under the HSR Act) to cooperate fully with the provisions of this Section 5.6.

(b) Each of Edge and Parent (and, as applicable, Sub) shall promptly notify the other of any communication concerning this Agreement or the Transactions to that party or its affiliates from any governmental authority and permit the other to review in advance any proposed communication concerning this Agreement or the Transactions to any governmental authority.

(c) Each of Edge and Parent (and, as applicable, Sub) shall not participate or agree to participate in any meeting or discussion with any governmental authority in respect of any filing, investigation or other inquiry concerning this Agreement or the Transactions unless it consults with the other in advance and, to the extent permitted by such governmental authority, gives the other party the opportunity to attend and participate in such meeting or discussion.

(d) Each of Edge and Parent (and, as applicable, Sub) shall furnish the other party with copies of all correspondence, filings and communications (and memoranda setting forth the substance thereof) between it and its affiliates and representatives on the one hand, and any government or regulatory authority or members of any such authority’s staff on the other hand, with respect to this Agreement and the Transactions.

49

(e) In furtherance and not in limitation of the covenants of the parties contained in this Section 5.6, if any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging the Merger or any other Transaction, each of Edge and Parent (and, as applicable, Sub) shall cooperate in all respects with each other and shall use their respective reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the Merger or any other Transaction.  Notwithstanding the foregoing or any other provision of this Agreement, nothing in this Section 5.6 shall limit a party’s right to terminate this Agreement pursuant to Section 7.1(b)(i) or (ii) so long as such party has, prior to such termination, complied with its obligations under this Section 5.6.

Section 5.7 Public Announcements.  On or after the date of this Agreement, Parent and Edge shall issue a joint press release with respect to the execution of this Agreement and the Merger, which press release shall be reasonably satisfactory to Parent and Edge. Parent and Edge shall use reasonable best efforts to consult with each other before issuing any other press release or otherwise making any public statements (including press conferences or conference calls with investors or analysts) with respect to this Agreement or the Transactions and shall use reasonable best efforts not to issue any such press release or make any such public statement prior to such consultation, except as may be required by law or any listing agreement with a national securities exchange to which Parent or Edge is a party, in which case the party required to make the release or announcement shall use its reasonable best efforts to allow the other party reasonable time to comment on such release or announcement in advance of such issuance, it being understood that the final form and content of any such release or announcement, to the extent so required, shall be at the final discretion of the disclosing party.  Notwithstanding the foregoing, Parent and Edge may respond to inquiries from securities analysts and the news media to the extent necessary to respond to such inquiries, provided that such responses are in compliance with applicable securities laws.

Section 5.8 Parent Guarantee.  Parent agrees to take all action necessary to cause Sub to perform all of Sub’s, and the Surviving Entity to perform all of the Surviving Entity’s, agreements, covenants and obligations under this Agreement and to consummate the Merger on the terms and subject to the conditions set forth in this Agreement.  Parent shall be liable for any breach of any representation, warranty, covenant or agreement of Sub in this Agreement and for any breach of this covenant.

Section 5.9 Employee Matters.

(a) Edge has heretofore furnished to Parent a listing of all current employees of Edge and its subsidiaries, including each employee’s (i) name, (ii) title, position or job description, (iii) current salary or hourly rate, (iv) the location where such employee generally performs services for Edge or an Edge subsidiary, and (v) the date such employee was employed by Edge or an Edge subsidiary (collectively, the “Eligible Employees”).  Parent shall have the right to contact the Eligible Employees to discuss their continued employment following the Closing and Parent’s employee policies and procedures, which include pre-employment drug testing.  As soon as reasonably practicable following the execution of this Agreement, but in no event less

50

than ten (10) business days prior to the Closing, Parent shall notify Edge of each Eligible Employee whose employment with the Surviving Entity (or with Parent or a Parent subsidiary) will be continued beyond the Closing (each a “Continuing Employee”).  Although Continuing Employees will be employed on an at-will basis, for a period of at least one year beginning on the Closing Date, Parent shall cause each Continuing Employee: (i) to continue in the employ of Surviving Entity or by Parent or a Parent subsidiary in substantially the same position with similar job responsibilities as such employee’s current position with Edge or an Edge subsidiary (subject to such employee’s desire to continue in such position during such period and subject to the satisfactory performance by such employee of his/her assigned duties, to the same extent required of Parent’s and Parent’s subsidiaries’ similarly situated employees); (ii) to receive salary of not less than such Continuing Employee’s current salary from Edge or an Edge subsidiary; and (iii) to receive the same benefits (including annual bonuses) on substantially the same basis as that provided by Parent and Parent’s subsidiaries to its similarly situated employees; provided, that this sentence shall not affect any severance agreement between Edge or an Edge subsidiary and an employee of Edge or such subsidiary.  This Section 5.9 shall not be construed to limit the ability of Parent and the Surviving Entity to terminate any such at-will employees at any time and Parent and the Surviving Entity shall have no obligations to continue employing such Continuing Employees for any length of time thereafter except as required by law or pursuant to any agreements, including severance agreements, disclosed on Section 2.11 of the Edge Schedule or in the Edge SEC Reports (collectively, the “Employment Agreements”).

(b) Edge and its subsidiaries shall terminate all Eligible Employees who are not Continuing Employees immediately preceding the Effective Time (collectively, the “Terminated Employees”), and shall cause all amounts due and owning to Terminated Employees to be paid to Terminated Employees effective as of the time of termination.  For purposes of their entitlement to termination payments or benefits, Terminated Employees will be treated as if they were involuntarily terminated immediately following a “Change of Control” as that term is defined in the applicable Employment Agreements.  Edge shall take any and all actions necessary, including the amendment of any Employment Agreements of Terminated Employees, to permit the termination payments contemplated by this Section 5.9(b).

(c) Parent shall cause the Surviving Entity to perform, as of the Effective Time, each severance agreement between Edge or an Edge subsidiary and an employee of Edge or such subsidiary that becomes a Continuing Employee, and Parent and the Surviving Entity agree that the Continuing Employee may enforce such agreement against either Parent or the Surviving Entity as of the Effective Time.  Parent shall deem, and shall cause the Surviving Entity to deem, the period of employment with Edge and its subsidiaries (and with predecessor employers with respect to which Edge and its subsidiaries shall have granted service credit) to have been employment and service with Parent and the Surviving Entity for benefit plan eligibility and vesting purposes for all of Parent’s and the Surviving Entity’s employee benefit plans, programs, policies or arrangements to the extent service with Parent or the Surviving Entity is recognized under any such plan, program, policy or arrangement.

(d) For purposes of any Parent Employee Benefit Plan covering any Continuing Employee, to the extent applicable, there shall be waived, and Parent or the Surviving Entity shall use its reasonable best efforts to cause the relevant insurance carriers and other third parties to waive, all restrictions and limitations for any medical condition existing as of the Effective

51

Time of any of such employees and their eligible dependents for the purpose of any such plans other than restrictions and limitations that are already in effect with respect to such individuals and that have not been satisfied as of the Effective Time under any similar welfare benefit plan maintained by Edge and its subsidiaries immediately prior to the Effective Time, but only to the extent that such condition would be covered by the relevant Edge Employee Benefit Plan if it were not a pre-existing condition and only to the extent of comparable coverage in effect immediately prior to the Effective Time.  With respect to any Parent Employee Benefit Plan, Parent or Surviving Entity shall credit each Continuing Employee for any deductibles already incurred during the year in which the Effective Time occurs under the relevant Edge Employee Benefit Plan.

(e) On or before March 15, 2009, Parent shall pay to each Continuing Employee who on such date is employed by Parent or its subsidiaries and who was a full-time employee of and provided services to Edge or one of its subsidiaries in 2008, an amount equal to any annual incentive bonus award that Parent determines, in accordance with the terms of a 2008 Annual Incentive Bonus Award Program.

Section 5.10 Rule 16b-3.  Prior to the Effective Time, Parent and Edge and their respective boards of directors or committees thereof shall use their reasonable best efforts to take all actions to cause any dispositions of Shares (including derivative securities with respect thereto) or acquisitions of Parent Common Stock (including derivative securities with respect thereto) resulting from the transactions contemplated hereby by each individual who is subject to the reporting requirements of Section 16(a) of Exchange Act to be exempt from Section 16(b) of the Exchange Act under Rule 16b-3 promulgated under the Exchange Act in accordance with the terms and conditions set forth in no-action letters issued by the SEC in similar transactions.

Section 5.11 Listing Application.  Parent shall promptly prepare and submit to the NYSE a listing application covering the (i) Parent Common Stock and Parent Preferred Stock issuable in connection with the Merger, (ii) Parent Common Stock issuable to holders of Parent Preferred Stock upon conversion thereof and (iii) Parent Common Stock issuable upon the exercise of Options and vesting of Units, and shall obtain, prior to the Effective Time, approval for the listing of such Parent Common Stock and Parent Preferred Stock, subject to official notice of issuance.

Section 5.12 Reorganization.

(a) Parent, Sub and Edge shall each use its reasonable best efforts to cause the Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and to obtain the Tax opinions set forth in Section 6.2(d) and Section 6.3(d).  Parent, Sub and Edge agree to file all Returns consistent with the treatment of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code and in particular as a transaction described in Section 368(a)(1)(A) of the Code and the Treasury Regulations thereunder.  This Agreement is intended to constitute a “plan of reorganization” within the meaning of Treasury Regulation Sections 1.368-2(g) and 1.368-3(a).

(b) Parent and Sub shall deliver to McAfee & Xxxx A Professional Corporation and Xxxxx Xxxxx L.L.P. a “Tax Representation Letter,” dated as of the Closing Date and signed by an

52

officer of Parent, containing representations of Parent and Sub, and Edge shall deliver to McAfee & Xxxx A Professional Corporation and Xxxxx Xxxxx L.L.P. a “Tax Representation Letter,” dated as of the Closing Date and signed by an officer of Edge, containing representations of Edge, in each case as shall be reasonably necessary or appropriate to enable McAfee & Xxxx A Professional Corporation and Xxxxx Xxxxx L.L.P. to render the opinions described in Section 6.2(d) and Section 6.3(d).  Each of Parent, Sub and Edge shall use its reasonable best efforts not to take or cause to be taken any action that would cause to be untrue (or fail to take or cause not to be taken any action which would cause to be untrue) any of the certifications and representations included in the tax representation letters described in this Section 5.12.

Section 5.13 Parent Directors.  Parent’s Board of Directors shall select and appoint, effective as of the Effective Time, (i) at least two (2) directors currently serving on the Edge Board of Directors to the Parent Board of Directors (one of whom shall be a Class II Director and one of whom shall be a Class III Director, in accordance with the Amended Certificate of Incorporation) and (ii) expand, to the extent necessary in connection with appointing such directors, the Parent Board of Directors.

Section 5.14 Parent Restructure.  Not less than three (3) business days prior to the Closing, Parent shall take any and all actions necessary to (i) increase the authorized shares of Parent common stock to 150,000,000 shares and the authorized Parent preferred stock to 10,000,000 shares, (ii) file a certificate of  designations for the Parent Preferred Stock, (iii) file a certificate of designations for the Series B Preferred Stock, (iv) consummate, as of the date of such filing, a pro rata stock dividend to increase the outstanding shares of Parent’s common stock from 877,000 shares to 45,013,576 shares, and (iv) file with the Delaware Secretary of State the Amended Certificate of Incorporation (collectively, the “Parent Restructure”).

ARTICLE VI

CONDITIONS TO THE MERGER

Section 6.1 Conditions to the Obligations of Each Party to Effect the Merger.  The respective obligations of each party to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of the following conditions:

(a) to the extent required by Delaware Law and the certificate of incorporation of Edge, this Agreement shall have been adopted by the requisite affirmative vote of the holders of Common Shares;

(b) the waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or been earlier terminated;

(c) no statute, rule or regulation shall have been enacted or promulgated by any governmental authority that prohibits the consummation of the Merger, and there shall be no order or injunction of a court of competent jurisdiction in effect preventing the consummation of the Merger;

53

(d)           the (i) shares of Parent Common Stock issuable to holders of Edge Common Stock and Units and the shares of Parent Preferred Stock issuable to the holders of Edge Preferred Stock pursuant to the Merger, (ii) shares of Parent Common Stock issuable to holders of Parent Preferred Stock upon conversion thereof and (iii) shares of Parent Common Stock issuable upon the exercise of Options, shall have been approved for listing on the NYSE, subject to official notice of issuance; and

(e)           the Registration Statement shall have become effective under the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC.

Section 6.2        Conditions to the Obligations of Parent and Sub.  The obligations of Parent and Sub to effect the Merger are also subject to the satisfaction or waiver by Parent on or prior to the Closing Date of the following conditions:

(a)           the representations and warranties of Edge in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on or as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure of any such representations and warranties to be so true and correct (without giving effect to any qualification as to materiality or an Edge Material Adverse Effect) has not had and is not reasonably likely to have, individually or in the aggregate, an Edge Material Adverse Effect;

(b)           Edge shall have performed in all material respects all of its covenants required to be performed by it under this Agreement at or prior to the Closing Date;

(c)           Parent shall have received a certificate signed on behalf of Edge by an executive officer of Edge to the effect that the conditions in clauses (a) and (b) above have been so satisfied; and

(d)           Parent shall have received an opinion (reasonably acceptable in form and substance to Parent) from McAfee & Xxxx A Professional Corporation, dated as of the Closing Date, to the effect that for federal income tax purposes (i) the Merger will be treated as a reorganization within the meaning of Section 368(a) of the Code and (ii) each of Parent and Edge will be a party to such reorganization within the meaning of Section 368(b) of the Code, and such opinion shall not have been withdrawn, revoked or modified.  Such opinion will be based upon representations of the Parties contained in this Agreement and in the tax representation letters described in Section 5.12.

Section 6.3        Conditions to the Obligations of Edge.  The obligations of Edge to effect the Merger are also subject to the satisfaction or waiver by Edge on or prior to the Closing Date of the following conditions:

(a)           the representations and warranties of Parent and Sub in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on or as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure of any such representations and warranties to be so true and correct (without giving effect to any qualification as to materiality or Parent Material

54

Adverse Effect) has not had and is not reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect;

(b)           each of Parent and Sub shall have performed in all material respects all of its covenants required to be performed by it under this Agreement at or prior to the Closing Date;

(c)           Edge shall have received a certificate signed on behalf of Parent by an executive officer of Parent to the effect that the conditions in clauses (a) and (b) above have been so satisfied; and

(d)           Edge shall have received an opinion (reasonably acceptable in form and substance to Edge) from Xxxxx Xxxxx L.L.P., dated as of the Closing Date, to the effect that for federal income tax purposes (i) the Merger will be treated as a reorganization within the meaning of Section 368(a) of the Code and (ii) each of Parent and Edge will be a party to such reorganization within the meaning of Section 368(b) of the Code, and such opinion shall not have been withdrawn, revoked or modified.  Such opinion will be based upon representations of the Parties contained in this Agreement and in the tax representation letters described in Section 5.12.

ARTICLE VII

TERMINATION, AMENDMENT AND WAIVER

Section 7.1        Termination.  This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, notwithstanding the adoption of this Agreement by the holders of Common Shares:

(a)           by mutual written agreement of Parent, Sub and Edge; or

(b)           by Parent or Edge, if:

(i)            the Merger shall not have been consummated on or before December 31, 2008 (the “Outside Date”); provided, however, that neither Parent, on the one hand, nor Edge, on the other hand, shall be entitled to terminate this Agreement under this clause (b)(i) if such party’s (or, in the case of Parent, Parent’s or Sub’s) material breach of any of its representations, warranties or covenants in this Agreement proximately caused the Merger not to have been consummated on or before such date;

(ii)           a court of competent jurisdiction or other governmental authority shall have issued a final, non-appealable order, decree or ruling permanently restraining, enjoining or otherwise prohibiting the Merger; provided that the party seeking to terminate this Agreement pursuant to this clause (b)(ii) shall have complied in all material respects with its obligations in Section 5.6; or

(iii)          this Agreement shall not have been adopted by the holders of Common Shares by reason of the failure to obtain the requisite vote at an Edge Stockholders’ Meeting; or

55

(iv)          except for such conditions that, by their nature, can be satisfied only at the Closing, all conditions set forth in Section 6.1 and Section 6.2 have been satisfied or waived and the Merger shall not have been consummated within the time period set forth in Section 1.2 because of a failure to obtain and consummate the Financing or, if any portion of the Financing becomes unavailable, the failure to obtain alternative financing from alternative sources on terms and conditions (including termination rights and funding conditions) no less favorable to Parent or Sub than those included in the Financing Commitment and in an amount sufficient to consummate the Transactions; or

(c)           by Parent if:

(i)            Edge shall have breached or failed to perform any of its representations, warranties or covenants in this Agreement such that the conditions set forth in Section 6.2(a) or 6.2(b) are not capable of being satisfied, and such breach or failure to perform shall not have been cured prior to the earlier of (A) 30 days following notice of such breach or failure to Edge and (B) the Outside Date; provided that Parent shall have no right to terminate this Agreement pursuant to this clause (c)(i) if Parent or Sub is then in material breach or has materially failed to perform any of its representations, warranties or covenants in this Agreement;

(ii)           prior to obtaining the Edge Stockholder Approval, the Edge Board of Directors shall have (A) effected or authorized a Change in the Edge Recommendation or (B) enacted a resolution authorizing Edge to enter into a binding definitive agreement in respect of a Superior Proposal; or

(iii)          an Event of Default has occurred and is continuing under the Edge Credit Agreement, and either of the following events has occurred:  (A) the Event of Default has not been cured or waived prior to the earlier to occur of (y) five (5) days following the occurrence of the Event of Default under the Edge Credit Agreement and (z) the Outside Date; or (B) the Administrative Agent (as such term is defined in the Edge Credit Agreement) has exercised any rights set forth under, and in accordance with, Sections 7.02 or 7.03 of the Edge Credit Agreement; provided that Parent shall have no right to terminate this Agreement pursuant to this clause (c)(iii) if Parent or Sub is then in material breach or has materially failed to perform any of its representations, warranties or covenants in this Agreement; or

(d)           by Edge, if:

(i)            Parent or Sub shall have breached or failed to perform any of their representations, warranties or covenants in this Agreement such that the conditions set forth in Section 6.3(a) or 6.3(b) are not capable of being satisfied, and such breach or failure to perform shall not have been cured prior to the earlier of (A) 30 days following notice of such breach or failure to Parent and (B) the Outside Date; provided that Edge shall not have the right to terminate this Agreement pursuant to this clause (d)(i) if Edge is then in material breach or has materially failed to perform any of its representations, warranties or covenants in this Agreement; or

56

(ii)           prior to obtaining the Edge Stockholder Approval, the Edge Board of Directors shall have (A) effected or authorized a Change in the Edge Recommendation pursuant to Section 5.3(b)(ii) or (B) authorized Edge to enter into a binding definitive agreement in respect of a Superior Proposal; provided, that such termination shall not be effective until (x) five (5) business days have elapsed following delivery to Parent of written notice of such action by Edge (which written notice will inform Parent of the material terms and conditions of any Superior Proposal), and (y) Edge has made payment to Parent of the Edge Termination Fee pursuant to Section 7.3(a).

Section 7.2        Effect of Termination.

(a)           Except as set forth in Section 7.2(b), in the event that the Effective Time does not occur as a result of any party hereto exercising its rights to terminate pursuant to this Article VII, then this Agreement shall be null and void and, except for the provisions in Sections 5.2(b), 7.3, 8.1, 8.3, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10 or 8.11 or as otherwise expressly provided herein, no party shall have any rights or obligations under this Agreement.

(b)           In the event the termination of this Agreement results solely from the willful and material breach of any agreement or covenant herein, then the Parent Parties or Edge, as the case may be, but subject to Section 7.3(c), shall be entitled to all remedies available at law or in equity (which, in the case of damages payable to Edge, may be based on the consideration payable to stockholders of Edge pursuant to this Agreement and may include the benefit of the bargain lost by stockholders of Edge, taking into consideration relevant matters including lost stockholder premium, other combination opportunities and the time value of money) and shall be entitled to recover court costs and reasonable attorneys’ fees in addition to any other relief to which it may be entitled; provided, however, that except as provided in this Section 7.2 and in Section 8.7, no party hereto shall be entitled to recover from another party or its affiliates any indirect, consequential, punitive or exemplary damages or damages for lost profit of any kind arising under or in connection with this Agreement or the Transactions contemplated hereby.  Subject to the preceding sentence, each party on its own behalf and on behalf of its affiliates waives any right to recover punitive, special, exemplary and consequential damages, including damages for lost profit, arising in connection with or with respect to this Agreement or the Transactions contemplated hereby.

Section 7.3        Fees and Expenses.

(a)           If this Agreement is terminated pursuant to Section 7.1(c)(ii) or 7.1(d)(ii), Edge shall pay Parent a fee of $15.0 million (the “Edge Termination Fee”).  Such amount shall be paid in cash by wire transfer in immediately available funds not later than two business days after the occurrence of such termination in the case of Section 7.1(c)(ii), and two business days after lapse of the five business day notice period set forth in Section 7.1(d)(ii)(x).  In no event shall Parent be entitled to receive more than one payment of the Edge Termination Fee.

(b)           If Edge or Parent terminates this Agreement pursuant to Section 7.1(b)(iv), then Parent shall pay to Edge a fee of $15.0 million (the “Parent Termination Fee”).  Such amount shall be paid in cash by wire transfer in immediately available funds not later than two business

57

days after the occurrence of such termination.  In no event shall Edge be entitled to receive more than one payment of the Parent Termination Fee.

(c)           Anything in this Agreement to the contrary notwithstanding, in the event the Transactions are not consummated, (i) the maximum aggregate liability of Parent and its subsidiaries for all loss or damage suffered by Edge and its subsidiaries in connection with this Agreement or the Transactions shall be limited to $25.0 million, and in no event shall Edge or any of its subsidiaries seek recovery or judgment for any damages against Parent and its subsidiaries in connection with this Agreement or the Transactions in excess of such amount and (ii) the maximum aggregate liability of Edge and its subsidiaries for all loss or damage suffered by Parent and its subsidiaries in connection with this Agreement or the Transactions shall be limited to $25.0 million, and in no event shall Parent and its subsidiaries seek recovery or judgment for any damages against Edge and its subsidiaries in connection with this Agreement or the Transactions in excess of such amount.

(d)           All costs and expenses incurred in connection with this Agreement and the Merger shall be paid by the party incurring such expenses, whether or not the Merger is consummated, except Parent shall pay (i) SEC and other filing fees incident to the Registration Statement and Proxy Statement/Prospectus and (ii) the fees associated with the NYSE listing referred to in Section 5.1(i).  Parent shall pay 86% and Edge shall pay 14% of (i) the fees incident to the HSR filings referred to in Section 5.6(a) and (ii) the costs and expenses associated with printing the Registration Statement and the Proxy Statement/Prospectus.

(e)           The parties acknowledge and agree that the agreements contained in this Section 7.3 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the parties would not enter into this Agreement.  Each of the parties hereto further acknowledges that neither the payment of the amounts by Edge specified in Section 7.3(a) nor the payment of the amounts by Parent specified in Section 7.3(b) or (c) is a penalty, but in each case is liquidated damages in a reasonable amount that will compensate Parent and Sub or Edge, as the case may be, in the circumstances in which such fees are payable and that do not involve a willful and material breach as described in Section 7.2(b) for the efforts and resources expended and the opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby, which amount would otherwise be impossible to calculate with precision.  Notwithstanding anything to the contrary in this Agreement, the parties agree that the monetary remedies set forth in this Section 7.3 and the specific performance remedies set forth in Section 8.8 shall be the sole and exclusive remedies of (A) Edge and its subsidiaries against Parent and Sub and any of their respective former, current or future general or limited partners, stockholders, managers, employees, representatives, members, directors, officers, Affiliates or agents for any loss suffered as a result of the failure of the Merger to be consummated except, with respect to Parent and Sub only, in the case of a willful and material breach as described in Section 7.2(b), and upon payment of such amount, none of Parent or Sub or any of their respective former, current or future general or limited partners, stockholders, managers, employees, representatives, members, directors, officers, Affiliates or agents shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby except, with respect to Parent and Sub only, in the case of a willful and material breach as described in Section 7.2(b) and (B) Parent and Sub against Edge and its

58

subsidiaries and any of their respective former, current or future stockholders, managers, employees, representatives, members, directors, officers, Affiliates or agents for any loss suffered as a result of the failure of the Merger to be consummated except, with respect to Edge and its subsidiaries only, in the case of a willful and material breach as described in Section 7.2(b), and upon payment of such amount, none of Edge and its subsidiaries or any of their respective former, current or future stockholders, managers, employees, representatives, members, directors, officers, Affiliates or agents shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby except, with respect to Edge and its subsidiaries only, a willful and material breach as described in Section 7.2(b).

Section 7.4        Amendment.  This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective boards of directors at any time prior to the Effective Time; provided, however, that after the Edge Stockholder Approval has been obtained, no amendment shall be made that by law requires the further approval of the holders of Common Shares without such further approval.  This Agreement may not be amended except by an instrument in writing signed by the parties hereto.

Section 7.5        Waiver.  At any time prior to the Effective Time, the Parent Parties, on one hand, or Edge, on the other hand, may (i) extend the time for the performance of any obligation or other act of Edge or the Parent Parties, respectively, hereto, (ii) waive any inaccuracy in the representations and warranties of Edge or the Parent Parties, respectively, contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any agreement or condition contained herein applicable to Edge or the Parent Parties, respectively.  Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby.

ARTICLE VIII

GENERAL PROVISIONS

Section 8.1        Survival.  The agreements in Articles I and VIII and Sections 5.4, 5.8, 5.9 and 5.12 of this Agreement shall survive the Merger.  This Article VIII and the agreements made by the parties hereto in Sections 5.2(b), 5.7, 5.8, 7.2 and 7.3 of this Agreement shall survive the termination of this Agreement.  The remainder of the representations, warranties and agreements in this Agreement or in any schedule, exhibit, instrument or other document delivered pursuant to this Agreement shall terminate at the earlier of the Effective Time or the time of termination of this Agreement pursuant to Section 7.1.

Section 8.2        Scope of Representations and Warranties.

(a)           Except as and to the extent expressly set forth in this Agreement, Edge makes no, and disclaims any, representations or warranties whatsoever, whether express or implied, and Parent and Sub confirm they are not relying upon any such representation or warranty not expressly set forth in this Agreement.  Edge disclaims all liability or responsibility for any other statement or information made or communicated (orally or in writing) to Sub, Parent, their affiliates or any stockholder, officer, director, employee, representative, consultant, attorney,

59

agent, lender or other advisor of Sub, Parent or their affiliates (including, but not limited to, any opinion, information or advice which may have been provided to any such person by any representative of Edge or any other person or contained in the files or records of Edge), wherever and however made, including any documents, projections, forecasts or other material made available to Parent and its subsidiaries in certain “data rooms” or management presentations in expectation of the Transactions.

(b)           In connection with the investigation by Parent of Edge and its subsidiaries, Parent has received or may receive from Edge and its subsidiaries certain projections, forward-looking statements and other forecasts and business plan information.  Parent acknowledges that there are uncertainties inherent in attempting to make such estimates, projections and other forecasts and plans, that Parent is familiar with such uncertainties, that Parent is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans so furnished to it (including the reasonableness of the assumptions underlying such estimates, projections, forecasts or plans), and that, absent fraud or willful misrepresentation, Parent shall have no claim against anyone with respect thereto. Accordingly, Parent acknowledges that Edge makes no representation or warranty with respect to such estimates, projections, forecasts or plans (including the reasonableness of the assumptions underlying such estimates, projections, forecasts or plans).

(c)           Except as and to the extent expressly set forth in this Agreement, neither Sub nor Parent makes, and each disclaims, any representations or warranties whatsoever, whether express or implied, and Edge confirms it is not relying upon any such representation or warranty not expressly set forth in this Agreement.  Each of Sub and Parent disclaims all liability and responsibility for any other statement or information made or communicated (orally or in writing) to Edge, its affiliates or any stockholder, officer, director, manager, employee, representative, consultant, attorney, agent, lender or other advisor of Edge or its affiliates (including, but not limited to, any opinion, information or advice which may have been provided to any such person by any representative of Sub or Parent or any other person or contained in the files or records of Parent or Sub), wherever and however made, including any documents, projections, forecasts or other material made available to Edge and its subsidiaries in certain “data rooms” or management presentations in expectation of the Transactions.

(d)           In connection with investigation by Edge of Parent and its subsidiaries, Edge has received or may receive from Parent and its subsidiaries certain projections, forward-looking statements and other forecasts and business plan information.  Edge acknowledges that there are uncertainties inherent in attempting to make such estimates, projections and other forecasts and plans, that Edge is familiar with such uncertainties, that Edge is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans so furnished to it (including the reasonableness of the assumptions underlying such estimates, projections, forecasts or plans), and that, absent fraud or willful misrepresentation, Edge shall have no claim against anyone with respect thereto. Accordingly, Edge acknowledges that Parent makes no representation or warranty with respect to such estimates, projections, forecasts or plans (including the reasonableness of the assumptions underlying such estimates, projections, forecasts or plans).

60

(e)           Any representation “to the knowledge” of a party or phrases of similar wording shall be limited to matters within the actual conscious awareness of the persons listed on Section 8.2 of the Edge Schedule and Section 8.2 of the Parent Schedule.

Section 8.3        Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telecopy, facsimile, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.3):

if to Parent or Sub:

Chaparral Energy, Inc.

000 Xxxxx Xxxx Xxxxxxxxx

Xxxxxxxx Xxxx, Xxxxxxxx 00000

Attention: Xxxx X. Xxxxxxx

	Telephone:	(000) 000-0000
	Telecopy:	(000) 000-0000

with a copy, which shall not constitute notice, to:

McAfee & Xxxx A Professional Corporation
00xx Xxxxx, Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000

	Attention:	Xxxxx X. Xxxxxxxxxxx
	Telephone:	(000) 000-0000
	Telecopy:	(000) 000-0000

if to Edge:

Edge Petroleum Corporation
0000 Xxxxxx, Xxxxx 0000

Xxxxxxx, Xxxxx 00000

Attention: Xxxxxx X. Xxxxxx

	Telephone:	(000) 000-0000
	Telecopy:	(000) 000-0000

with a copy, which shall not constitute notice, to:

Xxxxx Xxxxx L.L.P.
Xxx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx  00000-0000

	Attention:	Xxxx X. Xxxxxx
	Telephone:	(000) 000-0000
	Telecopy:	(000) 000-0000

61

Section 8.4        Certain Definitions.  For purposes of this Agreement:

(a)           “affiliate” of a specified person means a person who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such specified person;

(b)           a person shall be the “beneficial owner” of Shares (i) which such person or any of its affiliates or associates (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly or indirectly, (ii) which such person or any of its affiliates or associates has, directly or indirectly, whether or not of record, (A) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding or (iii) which are beneficially owned, directly or indirectly, by any other persons with whom such person or any of its affiliates or associates or person with whom such person or any of its affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any Shares;

(c)           “business day” means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any weekday other than Saturday or Sunday on which banking institutions in Oklahoma City, Oklahoma are required to be open;

(d)           “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise;

(e)           “governmental authority” means any United States of America or foreign, federal, state or local governmental commission, board, body, bureau, committee or other regulatory authority, agency, including courts and other judicial bodies, or any self-regulatory body or authority, including any instrumentality or entity designed to act for or on behalf of the foregoing;

(f)            “person” means an individual, corporation, partnership, limited partnership, syndicate, person (including, without limitation, a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government;

(g)           “reasonable best efforts” means a party’s efforts in accordance with reasonable commercial practice and without incurrence of unreasonable expense; and

(h)           “subsidiary” or “subsidiaries” of Edge, the Surviving Entity, Parent or any other person means an affiliate controlled by such person, directly or indirectly, through one or more intermediaries.

62

Section 8.5        Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions are consummated as originally contemplated to the fullest extent possible.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 8.6        Entire Agreement; Assignment.  This Agreement, the Edge Schedule, the Parent Schedule and the Exhibits hereto, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof, except that the Confidentiality Agreements shall remain in full force and effect.  This Agreement shall not be assigned by operation of law or otherwise.

Section 8.7        Parties in Interest.  This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than the right of such party on behalf of its security holders to pursue damages in the event of the other party’s willful breach of this Agreement and other than the rights set forth under Section 5.4 and, from and after the Effective Time, Sections 1.6, 1.7 and 5.9 (all of which are intended to be for the benefit of the persons covered thereby and may be enforced by such persons).

Section 8.8        Specific Performance.  The parties hereto agree that irreparable damage would occur in the event that any provision of this Agreement was not performed in accordance with its specific terms or was otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which they are entitled at law or in equity.  No party shall object to the other parties’ right to specific performance as a remedy for breach of this Agreement.

Section 8.9        Governing Law; Jurisdiction and Venue.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that state.  All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in the Delaware Court of Chancery.  Each of Edge, Parent and Sub hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the Delaware Court of Chancery for any litigation arising out of or relating to this Agreement and the Transactions (and agrees not to commence any litigation relating thereto except in such court), waives any objection to the laying of venue of any such litigation in the Delaware Court of Chancery and agrees not to plead or claim that such litigation brought therein has been brought in any inconvenient forum.

63

Section 8.10      Headings.  The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 8.11      Interpretation.

(a)           When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”  The words “hereby,” “herein,” “hereof” or “hereunder,” and similar terms are to be deemed to refer to this Agreement as a whole and not to any specific section.

(b)           The phrase “the date of this Agreement,” “date hereof” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to July 14, 2008.

(c)           Any statute, rule or regulation defined or referred to herein means such statute, rule or regulation as from time to time amended, modified or supplemented, including by succession of comparable successor statutes, rules and regulations and references to all attachments thereto and instruments incorporated therein.

(d)           The parties have participated jointly in negotiating and drafting this Agreement.  In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

Section 8.12      Incorporation of Exhibits.  The exhibits attached hereto and referred to herein are hereby incorporated herein and made a part hereof for all purposes as if fully set forth herein.

Section 8.13      Disclosure Schedules.  The inclusion of any information in the Edge Schedule or the Parent Schedule (collectively, the “Disclosure Schedules”) shall not be deemed an admission or acknowledgment, in and of itself and solely by virtue of the inclusion of such information in the Disclosure Schedules, that such information is required to be listed in the Disclosure Schedules or that such items are material to Parent, Sub or Edge, as the case may be, nor shall the specification of any dollar amount in the Disclosure Schedules be used in any dispute or controversy between the parties to determine whether any obligation, item or matter (whether or not described herein or included in any Disclosure Schedule) is or is not material for purposes of this Agreement.  The headings, if any, of the individual sections of each of the Disclosure Schedules are inserted for convenience only and shall not be deemed to constitute a part thereof or a part of this Agreement.  The Disclosure Schedules are arranged in sections corresponding to those contained in Article II and Article III hereof merely for convenience.  The parties acknowledge that this Agreement requires the inclusion (i) in each separate section of the Edge Schedule the disclosure of all information called for by the corresponding section of Article

64

II, without regard for the fact that the same information may be called for in two or more sections of Article II and therefore should be disclosed on two or more sections of the Edge Schedule, and (ii) in each separate section of the Parent Schedule the disclosure of all information called for by the corresponding section of Article III, without regard for the fact that the same information may be called for in two or more sections of Article III and therefore should be disclosed on two or more sections of the Parent Schedule. Notwithstanding the foregoing (y) if despite Edge’s reasonable good faith efforts to comply with such requirement, Edge includes disclosure of certain information in one or more but less than all sections of the Edge Schedule that call for the disclosure of such information, and the relevance of the information to the section(s) in which it is not disclosed is reasonably apparent on the face of the disclosure in the section(s) where such information is disclosed, then Edge shall be deemed to have disclosed such information in the sections of the Edge Schedule where such information is not disclosed and the failure of Edge to include such information in the appropriate section(s) of the Edge Schedule shall not constitute an inaccuracy of representation or breach of warranty, and (z) if despite Parent’s reasonable good faith efforts to comply with such requirement, Parent includes disclosure of certain information in one or more but less than all sections of the Parent Schedule that call for the disclosure of such information, and the relevance of the information to the section(s) in which it is not disclosed is reasonably apparent on the face of the disclosure in the section(s) where such information is disclosed, then Parent shall be deemed to have disclosed such information in the sections of the Parent Schedule where such information is not disclosed and the failure of Parent to include such information in the appropriate section(s) of the Parent Schedule shall not constitute an inaccuracy of representation or breach of warranty.  The Disclosure Schedules include matters set forth in documents referenced in the Schedules but do not purport to disclose any agreements, contracts or instruments entered into pursuant to the terms of this Agreement.

Section 8.14      Counterparts.  This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

[Remainder of page intentionally left blank]

65

IN WITNESS WHEREOF, Parent, Sub and Edge have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

	CHAPARRAL ENERGY, INC.
	By:		/s/ Xxxx X. Xxxxxxx
	Name:							Xxxx X. Xxxxxxx
	Title:					Chief Executive Officer and President
	CHAPARRAL EXPLORATION, L.L.C.
	By:	/s/ Xxxx X. Xxxxxxx
	Name:						Xxxx X. Xxxxxxx
	Title:				Chief Executive Officer and President
	EDGE PETROLEUM CORPORATION
	By:	/s/ Xxxx X. Xxxxx
	Name:						Xxxx X. Xxxxx
	Title:			Chairman, President & Chief Executive Officer

[Signature page to Agreement and Plan of Merger]

Exhibit 1.2

CERTIFICATE OF MERGER

MERGING

EDGE PETROLEUM CORPORATION

WITH AND INTO

CHAPARRAL EXPLORATION, L.L.C.

Pursuant to Title 8, Section 264(c) of the General Corporation Law of the State of Delaware and Title 6, Section 18-209 of the Delaware Limited Liability Company Act, Chaparral Exploration, L.L.C., a Delaware limited liability company (the “Company”) certifies as follows:

1. The name and jurisdiction of formation of each of the constituent entities are:

Name		Jurisdiction of Formation
Chaparral Exploration, L.L.C.		Delaware
Edge Petroleum Corporation		Delaware

2. An Agreement and Plan of Merger has been approved, adopted, certified, executed and acknowledged by each of the constituent entities.

3. The name of the surviving company is Chaparral Exploration, L.L.C.

4. The Certificate of Formation of the surviving company shall be the Certificate of Formation of the Company.

5. The Agreement and Plan of Merger is on file at the principal place of business of the surviving company, which is located at 000 Xxxxx Xxxx, Xxxx., Xxxxxxxx Xxxx, Xxxxxxxx 00000.

6. A copy of the Agreement and Plan of Merger shall be furnished by the surviving company, on request and without cost, to any member of the Company or any former stockholder of Edge Petroleum Corporation.

IN WITNESS WHEREOF, the Company has caused this Certificate of Merger to be signed by an authorized person, the            day of                     , 2008.

CHAPARRAL EXPLORATION, L.L.C.

By

Xxxx X. Xxxxxxx, Manager

Exhibit 1.4(a)

STATE OF DELAWARE

LIMITED LIABILITY COMPANY

CERTIFICATE OF FORMATION

First: The name of the limited liability company is: Chaparral Exploration, L.L.C. (the “Company”).

Second: The address of its registered office in the State of Delaware is 000 X. Xxxxxx Xxx, in the City of Dover, State of Delaware 19901. The name of its Registered Agent at such address is Capitol Services, Inc.

Third: (Use this paragraph only if the company is to have a specific effective date of dissolution: “The latest date on which the limited liability company is to dissolve is                    .”)

Fourth: (Insert any other matters the members determine to include herein.)

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation this 16^th day of June, 2008.

/s/ Xxxx X. Xxxxxxx

Xxxx X. Xxxxxxx

Authorized Person

Exhibit 1.4(b)

LIMITED LIABILITY COMPANY

AGREEMENT

OF

CHAPARRAL EXPLORATION, L.L.C.

JUNE 16, 2008

TABLE OF CONTENTS

		Page
ARTICLE 1 Organizational Matters		1
	1.1 Formation	1
	1.2 Name	1
	1.3 Principal Office	1
	1.4 Resident Agent	1
	1.5 Term	1
ARTICLE 2 Definitions		1
ARTICLE 3 Purpose of the Company		3
ARTICLE 4 Capital Contributions		3
	4.1 Units	3
	4.2 Capital Accounts	3
	4.3 Interest	3
ARTICLE 5 Distributions		4
ARTICLE 6 Management by Managers		4
	6.1 Managers	4
	6.2 Initial Number of Managers; Initial Manager	4
	6.3 Powers and Authority of Manager	4
	6.4 Number, Term and Qualifications; Removal	4
	6.5 Manner of Acting	4
	6.6 Manager’s Permissible Business Activities	4
	6.7 Company Funds	5
	6.8 Limitation on Liability of Manager	5
	6.9 Manager’s Compensation	5
	6.10 Officers	5
	6.11 Term	5
	6.12 Chairman	5
	6.13 President	5
	6.14 Vice-President	5
	6.15 Secretary	5
	6.16 Treasurer	5
ARTICLE 7 Rights and Obligations of the Members		6
	7.1 Limitation of Liability	6
	7.2 Rights of Member Relating to the Company	6
	7.3 Restrictions on Powers	6
	7.4 Member’s Permissible Business Activities	6
ARTICLE 8 Books, Records, Accounting and Reports		7
	8.1 Books and Records	7
	8.2 Fiscal Year	7

		Page
ARTICLE 9 Tax Matters		7
	9.1 Taxable Year	7
	9.2 Financial Statements and Tax Return Information	7
	9.3 Tax Returns	7
ARTICLE 10 Admission of Substitute and Additional Members		7
	10.1 Admission of Substitute Members	7
	10.2 Issuance of Additional Units	8
ARTICLE 11 Dissolution and Liquidation		8
	11.1 Dissolution and Liquidation	8
	11.2 Method of Winding Up	8
	11.3 Filing Articles of Dissolution	9
	11.4 Return of Capital	9
ARTICLE 12 Amendment of Agreement; Meetings; Record Date		9
	12.1 Amendments	9
	12.2 Limitations on Amendments	9
	12.4 Waiver of Notice; Consent to Meeting; Approval of Minutes	9
	12.5 Quorum	10
	12.6 Action Without a Meeting	10
ARTICLE 13 Certificates		10
	13.1 Issuance of Certificates	10
	13.2 Legend on Certificates	10
	13.3 Lost, Stolen or Destroyed Certificates	10
ARTICLE 14 Indemnification		11
	14.1 General	11
	14.2 Expenses	11
	14.3 Advances	11
	14.4 Repayment of Advances or Other Expenses	11
	14.5 Request for Indemnification	12
	14.6 Determination of Entitlement; No Change of Control	12
	14.7 Determination of Entitlement; Change of Control	12
	14.8 Procedures of Independent Counsel	12
	14.9 Independent Counsel Expenses	13
	14.10 Adjudication	14
	14.11 Participation by the Company	14
	14.12 Nonexclusivity of Rights	15
	14.13 Insurance and Subrogation	15
	14.14 Severability	16
	14.15 Certain Actions For Which Indemnification Is Not Provided	16
	14.16 Definitions	16
	14.17 Notices	17
	14.18 Contractual Rights	17
	14.19 Indemnification of Employees, Agents and Fiduciaries	18
ARTICLE 15 General Provisions		18
	15.1 Notices	18

		Page
	15.2 Further Action	18
	15.3 Binding Effect	18
	15.4 Integration	18
	15.5 Waiver	18
	15.6 Counterparts	18
	15.7 Applicable Law; Construction	18
	15.8 Invalidity of Provisions	19
	15.9 Conveyances	19
	15.10 Specific Performance	19
	15.11 Power of Attorney	19

LIMITED LIABILITY COMPANY

AGREEMENT

OF

CHAPARRAL EXPLORATION, L.L.C.

This Limited Liability Company Agreement (this “Agreement”) is entered into as of June 16, 2008, by and between Chaparral Energy, Inc. (“Chaparral Energy”), Chaparral Exploration, L.L.C., a Delaware limited liability company (the “Company”) and Xxxx X. Xxxxxxx (the “Manager”). In consideration of the mutual promises contained herein, the parties agree as follows:

ARTICLE 1

Organizational Matters

1.1 Formation. The Company was formed by filing the Certificate of Formation with the Delaware Secretary of State on June 16, 2008.

1.2 Name. The name of the Company shall be “Chaparral Exploration, L.L.C.”

1.3 Principal Office. The principal office (the “Principal Office”) of the Company shall be located at 000 Xxxxx Xxxx Xxxxxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000. The Company may change the location of the Principal Office and may also maintain offices at such other place or places as determined by the Majority Vote of the Members.

1.4 Resident Agent. The name and address of the resident agent of the Company in the State of Delaware are:

Capitol Services, Inc.

000 X. Xxxxxx Xxx.

Xxxxx, Xxxxxxxx 00000

1.5 Term. The term of the Company shall commence upon the filing of the Company’s Certificate of Formation with the Delaware Secretary of State, and shall continue until terminated as herein provided or by operation of law.

ARTICLE 2

Definitions

For purposes of this Agreement, the following terms shall have the following meanings:

“Act” means the Delaware Limited Liability Company Act, codified at Delaware Code, Title 6 § 18-101, et seq., as it may be amended from time to time, and any successor to such act.

“Affiliate” means any Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. As used in this definition of “Affiliate,” the term “control” means either: (a) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting

securities, by contract or otherwise; or (b) a direct or indirect equity interest of ten percent (10%) or more in the entity.

“Agreement” means this Limited Liability Company Agreement, as it may be amended, supplemented and/or restated from time to time.

 “Assignee” means a Person to whom one or more Units have been transferred, by transfer, assignment or otherwise, in a manner permitted under this Agreement, and who has agreed to be bound by the terms of this Agreement but who has not become a Substitute Member.

“Business Day” means Monday through Friday of each week, except legal holidays recognized as such by either the United States Government or the State of Delaware.

“Capital Account” means each capital account maintained for a Member pursuant to Section 4.2.

“Capital Contributions” means the sum of the cash and the value of property contributed or services rendered, or a promissory note or other binding obligation to contribute cash or property or to perform services contributed to the Company by all Members, or any one Member, as the case may be (or the predecessor holders of any Units of any such Members).

“Certificate of Formation” means the Certificate of Formation, as amended, supplemented and/or restated from time to time, filed by the Company with the Delaware Secretary of State under the Act.

 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Company” means Chaparral Exploration, L.L.C., a Delaware limited liability company.

“Company Property” means all property owned, leased or otherwise acquired by the Company from time to time.

“Edge” means Edge Petroleum Corporation, a Delware corporation.

 “Majority Vote of the Members” means the affirmative vote of the holders of a majority of the Outstanding Units held by the Members, which may be evidenced by the written consent of such Members.

“Manager” means the Person or Persons appointed as manager or managers of the Company pursuant to Article 6.

“Mandatory Provisions of the Act” means those provisions of the Act which may not be waived by the Members acting unanimously or otherwise.

“Member” means each Person executing this Agreement as a Member of the Company.

2

“Outstanding” means the number of Units issued by the Company as shown on the Company’s books and records, minus any Units held by the Company.

“Person” means a natural person, partnership, domestic or foreign limited partnership, domestic or foreign limited liability company, trust, estate, association or corporation.

“Record Holder” means the Person in whose name such Unit is registered on the books and records of the Company as of the close of business on a particular Business Day.

“Substitute Member” means a transferee of a Unit who is admitted as a Member to the Company pursuant to Section 10.1 in place of and with all the rights of a Member.

“Unit” means a Unit representing an interest in the Company.

ARTICLE 3
Purpose of the Company

The purpose of the Company shall be as stated in the Certificate of Formation, as amended, supplemented and/or restated from time to time.

ARTICLE 4
Capital Contributions

4.1 Units. There shall be an aggregate of 1,000,000 Units in the Company.

4.2 Capital Accounts.

4.2.1 Calculation. The Company shall maintain for each Member a separate Capital Account. The term “Capital Account” means as to any Member and as to any Units held by such Member the amount of the initial Capital Contribution attributable to the Units held by such Member, which amount shall be: (a) increased by subsequent Capital Contributions by such Member; and (b) decreased by distributions to such Member pursuant to Article 5.

4.2.2 In-Kind Contributions. If in-kind contributions or contributions in the form of property or services are made, the Capital Account of the Member shall be increased by an amount equal to the fair market value of the property or services contributed by such Member.

4.2.3 Assignee’s Capital Account. An Assignee of a Unit will succeed to the Capital Account relating to the Unit transferred.

4.3 Interest. No interest shall be paid by the Company on Capital Contributions, on balances in a Member’s Capital Account or on any other funds distributed or distributable under this Agreement.

3

ARTICLE 5
Distributions

Distributions shall be made at such times as determined by the Majority Vote of the Members. Any distribution of property shall be treated as a distribution of cash equal in amount to the fair market value of such property. Distributions shall be made to all Members and Assignees pro rata in accordance with the number of Units held by each.

ARTICLE 6
Management by Managers

6.1 Managers. Management of the Company shall be vested in one or more Managers, as are elected by the Members from time to time pursuant to this Agreement. If no Managers are elected, or all Managers have been removed from office, management of the Company shall be vested in the Members, and in such case, all decisions affecting the Company shall be determined by the Majority Vote of the Members.

6.2 Initial Number of Managers; Initial Manager. The initial number of Managers shall be one (1) and the initial Manager shall be Xxxx X. Xxxxxxx.

6.3 Powers and Authority of Manager. A Manager may exercise all the powers of the Company whether derived from law, the Certificate of Formation or this Agreement, except such powers as are by statute, by the Certificate of Formation or by this Agreement vested solely in the Members. Notwithstanding any other provision hereof, the Members hereby confer on the Manager such powers and authority as may be required for the Manager to conduct the daily affairs and business of the Company. All other decisions shall be made only with the Majority Vote of the Members.

6.4 Number, Term and Qualifications; Removal. The Company may have one (1) or more Managers. Election of a Manager or increases or decreases in the number of Managers may be made as the Members shall from time to time determine by the Majority Vote of the Members. Each Manager shall hold office until such Manager’s successor shall have been elected. A Manager may be removed, with or without cause, upon the Majority Vote of the Members. Managers need not be Members of the Company.

6.5 Manner of Acting. Each Manager, if more than one (1), may exercise the powers described in Section 6.3.

6.6 Manager’s Permissible Business Activities. Each Manager and such Manager’s Affiliates may have business interests and engage in business activities in addition to those relating to the Company, including, without limitation, business interests and activities in direct competition with the Company for such Manager’s or such Manager’s Affiliates’ own account or for the account of others, and no provision of this Agreement shall be deemed to prohibit such Manager or such Manager’s Affiliates from conducting such businesses and activities. Neither the Company, the Members nor any other Manager shall have any rights by virtue of this Agreement or the relationship contemplated herein in any business ventures of such Manager or such Manager’s Affiliates.

4

6.7 Company Funds. The funds of the Company shall be deposited in an account or accounts designated by the Manager and shall not be commingled with any other funds.

6.8 Limitation on Liability of Manager. No Manager of the Company shall be liable to the Company or its Members for monetary damages for breach of fiduciary duty as a Manager; provided that nothing contained herein shall eliminate or limit the liability of a Manager: (a) for any breach of the Manager’s duty of loyalty to the Company or its Members; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; and (c) for any transaction from which the Manager derived an improper personal benefit.

6.9 Manager’s Compensation. The Manager shall receive such compensation as may be determined by the Majority Vote of the Members.

6.10 Officers. The Manager may appoint, in the Manager’s discretion, a Chairman and/or Vice-Chairman of the Managers, a President, an Executive Vice-President, one or more Vice-Presidents, a Secretary, a Treasurer, one or more Assistant Secretaries and one or more Assistant Treasurers. One person may hold two or more offices.

6.11 Term The officers of the Company shall hold office until their successors are chosen and qualify, or until their earlier resignation or removal (by the Manager, with or without cause). Any vacancy occurring in any office shall be filled by the Manager.

6.12 Chairman. The Chairman, or, in the absence of the Chairman, a Vice-Chairman of the Managers, if chosen, shall preside at all meetings of the Manager, and shall perform such other duties and have such other powers as the Manager may from time to time prescribe.

6.13 President. The President shall be the chief executive officer of the Company, shall preside at all meetings of the Members and, unless a Chairman or Vice-Chairman has been chosen, at all meetings of the Manager, and shall have general and active management of the business of the Company and shall see that all orders and resolutions of the Manager are carried into effect.

6.14 Vice-President. The Vice-President, or if there shall be more than one, the Vice-Presidents in the order determined by the Manager, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President and shall perform such other duties and have such other powers as the Manager may from time to time prescribe.

6.15 Secretary. The Secretary shall attend all meetings of the Manager and all meetings of the Members and record all the proceedings of the meetings of the Company.

6.16 Treasurer. The Treasurer shall supervise and be responsible for the fiscal affairs of the Company and perform all duties as may be assigned to him by the Manager.

5

ARTICLE 7
Rights and Obligations of the Members

7.1 Limitation of Liability. Notwithstanding anything herein to the contrary, except as otherwise expressly provided herein or in the Act, a Member shall not be personally liable for any debts, liabilities or obligations of the Company, whether to the Company, to any of the other Members, or to creditors of the Company, beyond the Capital Account of the Member, together with the Member’s share of the assets and undistributed profits of the Company.

7.2 Rights of Member Relating to the Company. In addition to other rights provided by this Agreement or by applicable law, a Member shall have the right, upon demand and at such Member’s own expense, to:

(a)           obtain any and all information regarding the status of the business and financial condition of the Company;

(b)           obtain a copy of the Company’s federal, state and local income tax returns for each year promptly after becoming available;

(c)           have furnished to the Member a current list of the name and last known business, residence or mailing address of each Member;

(d)           obtain information regarding the Capital Contributions made by each Member;

(e)           have furnished to the Member a copy of this Agreement and the Certificate of Formation and all amendments hereto and thereto, together with copies of any powers of attorney pursuant to which this Agreement, the Certificate of Formation, and all amendments hereto and thereto have been executed; and

(f)            inspect and copy any of the Company’s books and records and obtain such other information regarding the affairs of the Company.

7.3 Restrictions on Powers. Except as otherwise provided herein or by the Mandatory Provisions of the Act, a Member shall not have the authority or power to act on behalf of, or to bind, the Company, or any other Member, and a Member shall not have the right or power to take any action which would change the Company to a general partnership, change the limited liability of a Member, or affect the status of the Company for federal income tax purposes.

7.4 Member’s Permissible Business Activities. Each Member and such Member’s Affiliates may have business interests and engage in business activities in addition to those relating to the Company, including, without limitation, business interests and activities in direct competition with the Company for such Member’s or such Member’s Affiliates’ own account or for the account of others, and no provision of this Agreement shall be deemed to prohibit such Member or such Member’s Affiliates from conducting such businesses and activities. Neither the Company, the Members nor any other Member shall have any rights by virtue of this Agreement or the relationship contemplated herein in any business ventures of such Member or such Member’s Affiliates.

6

ARTICLE 8

Books, Records, Accounting and Reports

8.1 Books and Records. Appropriate books and records with respect to the Company’s business, including, without limitation, all books and records necessary to provide to the Member any information, lists and copies of documents required to be provided pursuant to Section 7.2, shall at all times be kept at the Principal Office or at such other places as determined by the Majority Vote of the Members. Without limiting the foregoing, the following shall be maintained at the Principal Office: (a) a current list of the full name and last known business address of each Manager; (b) copies of records that would enable a Member to determine the relative voting rights of the Members; (c) a copy of the Certificate of Formation, and any amendments thereto; (d) copies of the Company’s federal, state and local income tax returns and reports, if any, for the three (3) most recent years; and (e) copies of any financial statements of the Company for the three (3) most recent fiscal years. Any records maintained by the Company in the regular course of its business may be kept on, or be in the form of, magnetic tape, photographs or any other information storage device, provided that the records so kept are convertible into clearly legible written form within a reasonable period of time.

8.2 Fiscal Year. The fiscal year of the Company shall be the calendar year, ending December 31, except as otherwise determined by the Majority Vote of the Members.

ARTICLE 9
Tax Matters

9.1 Taxable Year. The taxable year of the Company shall be the calendar year, ending December 31, except as otherwise determined by the Majority Vote of the Members.

9.2 Financial Statements and Tax Return Information. The Manager shall use its best efforts to cause to be prepared and furnished to each of the Members on or before seventy-five (75) days after the close of the taxable year of the Company an unaudited income statement for such calendar year and a balance sheet as of the end of such calendar year, a copy of the Company’s federal and state income tax returns and all other information reasonably requested by a Member.

9.3 Tax Returns. The Manager shall file on behalf of the Company all required federal and state income tax returns.

ARTICLE 10
Admission of Substitute and Additional Members

10.1 Admission of Substitute Members. Upon a transfer of a Unit by a Member, the transferor shall have the power to give, and by transfer of any certificate issued shall be deemed to have given, the transferee the right to apply to become a Substitute Member with respect to the Unit acquired, subject to the conditions of and in the manner permitted under this Agreement. A transferee of a certificate representing a Unit shall be an Assignee with respect to the transferred Unit (whether or not such transferee is a Member or Substitute Member with respect to other previously acquired Units) and shall not become a Substitute Member unless and until all of the following conditions are satisfied:

7

(a)           the instrument of assignment sets forth the intentions of the assignor that the Assignee succeed to the assignor’s interest as a Substitute Member in the assignor’s place;

(b)           the assignor and Assignee shall have fulfilled all other requirements of this Agreement;

(c)           the Assignee shall have paid all reasonable legal fees and filing costs incurred by the Company in connection with such Assignee’s substitution as a Member; and

(d)           the Members shall have unanimously approved such substitution in writing, which approval may be granted or withheld by each Member in each Member’s sole discretion and may be arbitrarily withheld, and the books and records of the Company have been modified to reflect the admission.

The admission of an Assignee as a Substitute Member with respect to a transferred Unit shall become effective on the date the Members give their unanimous written consent to the admission and the books and records of the Company have been modified to reflect such admission. Any Member who transfers all of such Member’s Units with respect to which the Member had been admitted as a Member shall cease to be a Member of the Company upon a transfer of such Units in accordance with Article 10 and the execution of a counterpart of this Agreement by the transferee and shall have no further rights as a Member in or with respect to the Company (whether or not the Assignee of such former Member is admitted to the Company as a Substitute Member).

10.2 Issuance of Additional Units. Additional Units may be authorized and issued by the Company upon such terms and conditions as may be approved by a Majority Vote of the Members. Upon the proposed issuance of any such additional Units, each existing Member shall have the preemptive right, but not the obligation, to purchase such portion of the newly issued Units as the ratio of the number of Units then held by such Member bears to the total number of Units held by Members and Outstanding before the issuance of the new Units, together with such Member’s proportionate share of the other newly issued Units as to which other Members fail to exercise their preemptive rights. Each such new Member shall, as a condition precedent to admission to the Company as a Member, execute a counterpart of this Agreement and execute all necessary certificates and other documents and perform all acts in accordance with the Act to the full extent necessary to constitute such persons a Member and to preserve the status of the Company as a partnership for income tax purposes upon completion of such person’s admission.

ARTICLE 11

Dissolution and Liquidation

11.1 Dissolution and Liquidation. The Company shall be dissolved and its affairs shall be wound up upon the written consent of Members holding more than fifty percent (50%) of Outstanding Units.

11.2 Method of Winding Up. Upon dissolution of the Company pursuant to Section 11.1, the Company shall immediately commence to liquidate its assets and wind up its affairs. The proceeds from the liquidation and winding up shall be applied in the following order of priority:

8

(a)           to creditors, including Members who are creditors, to the extent permitted by law, in satisfaction of liabilities of the Company other than liabilities to Members on account of their Capital Contributions or on account of a Member’s withdrawal from the Company or pursuant to a withdrawal of capital; and

(b)           the balance, to the Members pro rata in accordance with the number of Units held by each Member.

Unless the Members shall unanimously determine otherwise, all distributions will be made in cash, and none of the Company Property will be distributed in kind to the Members.

11.3 Filing Articles of Dissolution. Upon completion of the distribution of Company Property as provided in this Article 11, Articles of Dissolution shall be filed as required by the Act, and each Member agrees to take such action as may be advisable or proper to carry out the provisions of this Article 11.

11.4 Return of Capital. The return of Capital Contributions shall be made solely from Company Property.

ARTICLE 12
Amendment of Agreement; Meetings; Record Date

12.1 Amendments. All amendments to this Agreement shall require a Majority Vote of the Members.

12.2 Limitations on Amendments. Notwithstanding any other provision of this Agreement, no amendment to this Agreement may, without the unanimous approval of the Members:

(a)           enlarge the obligations of any Member under this Agreement; or

(b)           amend this Section 12.2 or Sections 12.1, 7.3 and 7.4.

12.3 Meetings. Meetings may be called by any Member, by giving at least ten (10) days’ prior notice of the time, place and purpose of the meeting to all Members.

12.4 Waiver of Notice; Consent to Meeting; Approval of Minutes. The transactions of any meeting of the Company, however called and noticed, and whenever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the Members entitled to vote, but not present in person or by proxy, approves by signing a written waiver of notice or an approval to the holding of the meeting or an approval of the minutes thereof. All waivers, consents, and approvals shall be filed with the Company records or made a part of the minutes of the meeting. Attendance of a Member at a meeting shall constitute a waiver of notice of the meeting, except when such Member objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened; and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required to be included in the notice of the meeting, but not so included, if the objection is expressly made at the meeting.

9

12.5 Quorum. The holders of more than fifty percent (50%) of the Units entitled to vote represented in person or by proxy, shall constitute a quorum at a meeting of Members. The Members present at a duly called or held meeting at which a quorum is present may continue to participate at such meeting until adjournment, notwithstanding the withdrawal of enough Members to leave less than a quorum, if any action taken (other than adjournment) is approved by the requisite percentage of Units of Members specified in this Agreement. In the absence of a quorum, any meeting of Members may be adjourned from time to time by a Majority Vote of the Members represented either in person or by proxy entitled to vote, but no other matters may be proposed, approved or disapproved.

12.6 Action Without a Meeting. Any action that may be taken by any vote of the Members may be taken without a meeting if a consent to such action is signed by Members holding Units representing not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Units entitled to vote thereon were present and voted. Prompt notice of the taking of any action without a meeting shall be given to those Members who have not consented in writing.

ARTICLE 13
Certificates

13.1 Issuance of Certificates. The Company may issue one or more certificates in the name of the Member evidencing the number of Units issued. Upon the transfer of a Unit in accordance with Article 10, the Company shall, if certificates have been issued, issue replacement certificates. All certificates shall contain legends required by this Agreement or otherwise required by law.

13.2 Legend on Certificates. The Company shall endorse on each certificate representing Units owned by a Member a legend reading substantially as follows:

The Units represented by this Certificate are subject to the terms of a Limited Liability Company Agreement dated June 16, 2008, between Chaparral Exploration, L.L.C., Chaparral Energy, Inc. and the then manager of Chaparral Exploration, L.L.C., a copy of which is on file at the principal office of the Company.

A copy of this Agreement shall be filed at the Principal Office. During the term of this Agreement, the foregoing legend shall be endorsed on each certificate representing Units hereafter issued by the Company to any Member and to any transferee of a Member whose Units are subject to the terms of this Agreement. No Member shall cause or permit the removal of the legend from the certificates representing the Units owned by such Member.

13.3 Lost, Stolen or Destroyed Certificates. The Company shall issue a new certificate in place of any certificate previously issued if the Record Holder of the certificate: (a) makes proof by affidavit that a previously issued certificate has been lost, stolen, or destroyed; (b) requests the issuance of a new certificate before the Company has notice that the Units evidenced by such certificate have been acquired by a purchaser for value in good faith and without notice of an adverse claim; and (c) if required by the Company, delivers to the Company a bond with surety

10

or sureties acceptable to the Company, to indemnify the Company against any claim that may be made on account of the alleged loss, destruction or theft of the certificate. The Company shall be entitled to treat each Record Holder as the Member or Assignee in fact of any Units and, accordingly, shall not be required to recognize any equitable or other claim or interest in or with respect to the Units on the part of any other Person, regardless of whether it has actual or other notice thereof.

ARTICLE 14
Indemnification

14.1  General. The Company shall, to the fullest extent permitted by applicable law in effect on the date of effectiveness of this Agreement, and to such greater extent as applicable law may thereafter permit, indemnify and hold an Indemnitee harmless from and against any and all losses, liabilities, claims, damages and, subject to Section 14.2, Expenses (as this and all other capitalized words used in this Article 14 not previously defined in this Agreement are defined in Section 14.16 hereof), whatsoever arising out of any event or occurrence related to the fact that an Indemnitee is or was a manager or officer of the Company or is or was serving in another Company Status.

14.2  Expenses. If an Indemnitee is, by reason of his Company Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If an Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to any Matter in such Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf relating to such Matter. The termination of any Matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such Matter. To the extent that the Indemnitee is, by reason of his Company Status, a witness in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

14.3  Advances. In the event of any threatened or pending action, suit or proceeding in which an Indemnitee is a party or is involved and that may give rise to a right of indemnification under this Article 14, following written request to the Company by Indemnitee, the Company shall promptly pay to the Indemnitee amounts to cover expenses reasonably incurred by the Indemnitee in such proceeding in advance of its final disposition upon the receipt by the Company of (i) a written undertaking executed by or on behalf of the Indemnitee providing that the Indemnitee will repay the advance if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Company as provided in this Agreement and (ii) satisfactory evidence as to the amount of such expenses.

14.4  Repayment of Advances or Other Expenses. Each Indemnitee agrees that such Indemnitee shall reimburse the Company for all Expenses paid by the Company in defending any civil, criminal, administrative or investigative action, suit or proceeding against the Indemnitee in the event and only to the extent that it shall be determined pursuant to the provisions of this Article 14 or by final judgment or other final adjudication under the provisions of any applicable law that the Indemnitee is not entitled to be indemnified by the Company for such Expenses.

11

14.5  Request for Indemnification. To obtain indemnification, an Indemnitee shall submit to the Secretary of the Company a written claim or request. Such written claim or request shall contain sufficient information to reasonably inform the Company about the nature and extent of the indemnification or advance sought by the Indemnitee. The Secretary of the Company shall promptly advise the Members of the Company and the Board of Directors of Chaparral Energy of such request.

14.6  Determination of Entitlement; No Change of Control. If there has been no Change of Control at the time the request for indemnification is submitted, an Indemnitee’s entitlement to indemnification shall be determined by the Manager of the Company, or if the Manager so directs, by Independent Counsel in legal opinion; provided, however, that an Indemnitee’s entitlement to indemnification shall be determined  by the Board of Directors of Chaparral Energy in  accordance   with  Section   145(d)  of  the  DGCL if such Indemnitiee’s Company Status is established by virtue of clause (ii) of the definition of Company Status.

If the Manager is the person submitting a request for Indemnification, the Manager’s entitlement to indemnification shall be determined by a Majority Vote of the Members. If entitlement to indemnification is to be determined by Independent Counsel, the Company shall furnish notice to the Indemnitee within 10 days after receipt of the request for indemnification, specifying the identity and address of Independent Counsel. The Indemnitee may, within 14 days after receipt of such written notice of selection, deliver to the Company a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of Independent Counsel and the objection shall set forth with particularity the factual basis for such assertion. If there is an objection to the selection of Independent Counsel, either the Company or the Indemnitee may petition the Court for a determination that the objection is without a reasonable basis and/or for the appointment of Independent Counsel selected by the Court.

14.7  Determination of Entitlement; Change of Control. If there has been a Change of Control at the time the request for indemnification is submitted, an Indemnitee’s entitlement to indemnification shall be determined in a written opinion by Independent Counsel selected by the Indemnitee. The Indemnitee shall give the Company written notice advising of the identity and address of the Independent Counsel so selected. The Company may, within seven days after receipt of such written notice of selection, deliver to the Indemnitee a written objection to such selection. The Indemnitee may, within five days after the receipt of such objection from the Company, submit the name of another Independent Counsel and the Company may, within seven days after receipt of such written notice of selection, deliver to the Indemnitee a written objection to such selection. Any objections referred to in this Section 14.7 may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of Independent Counsel and such objection shall set forth with particularity the factual basis for such assertion. The Indemnitee may petition the Court for a determination that the Company’s objection to the first and/or second selection of Independent Counsel is without a reasonable basis and/or for the appointment as Independent Counsel of a person selected by the Court.

14.8  Procedures of Independent Counsel. If a Change of Control shall have occurred before the request for indemnification is sent by an Indemnitee, the Indemnitee shall be presumed (except as otherwise expressly provided in this Article 14) to be entitled to

12

indemnification upon submission of a request for indemnification in accordance with Section 14.5 hereof, and thereafter the Company shall have the burden of proof to overcome the presumption in reaching a determination contrary to the presumption. The presumption shall be used by Independent Counsel as a basis for a determination of entitlement to indemnification unless the Company provides information sufficient to overcome such presumption by clear and convincing evidence or the investigation, review and analysis of Independent Counsel convinces him by clear and convincing evidence that the presumption should not apply. Except in the event that the determination of entitlement to indemnification is to be made by Independent Counsel, if the person or persons empowered under Section 14.6 or 14.7 hereof to determine entitlement to indemnification shall not have made and furnished to the Indemnitee in writing a determination within 60 days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Indemnitee shall be entitled to such indemnification unless the Indemnitee knowingly misrepresented a material fact in connection with the request for indemnification or such indemnification is prohibited by applicable law. The termination of any Proceeding or of any Matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Article 14) of itself adversely affect the right of the Indemnitee to indemnification or create a presumption that the Indemnitee did not act in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company or Edge, as applicable, or with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful. A person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan of the Company or Edge, as applicable, shall be deemed to have acted in a manner not opposed to the best interests of the Company or Edge, as applicable.

For purposes of any determination hereunder, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or Proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Company or another enterprise or on information supplied to him by the officers of the Company or another enterprise in the course of their duties or on the advice of legal counsel for the Company or another enterprise or on information or records given or reports made to the Company or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or another enterprise. The term “another enterprise” as used in this Section shall mean Edge or any other limited liability company or any corporation, partnership, association, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Company as a director, officer, employee or agent. The provisions of this paragraph shall not be deemed to be exclusive or to limit in any way the circumstances in which an Indemnitee may be deemed to have met the applicable standards of conduct for determining entitlement to rights under this Article.

14.9  Independent Counsel Expenses. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred acting pursuant to this Article 14 and in any proceeding to which it is a party or witness in respect of its investigation and written report and shall pay all reasonable fees and expenses incident to the procedures in which such Independent

13

Counsel was selected or appointed. No Independent Counsel may serve if a timely objection has been made to his selection until a court has determined that such objection is without a reasonable basis.

14.10  Adjudication. In the event that (i) a determination is made pursuant to Section 14.6 or 14.7 hereof that an Indemnitee is not entitled to indemnification under this Article 14; (ii) advancement of Expenses is not timely made pursuant to Section 14.3 hereof; (iii) Independent Counsel has not made and delivered a written opinion determining the request for indemnification (a) within 90 days after being appointed by the Court, (b) within 90 days after objections to his selection have been overruled by the Court or (c) within 90 days after the time for the Company or the Indemnitee to object to his selection; or (iv) payment of indemnification is not made within five days after a determination of entitlement to indemnification has been made or deemed to have been made pursuant to Section 14.6, 14.7 or 14.8 hereof, the Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advancement of Expenses. In the event that a determination shall have been made that an Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14.10 shall be conducted in all respects as a de novo trial on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, in any judicial proceeding commenced pursuant to this Section 14.10, the Company shall have the burden of proving that the Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. If a determination shall have been made or deemed to have been made that the Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 14.10, or otherwise, unless the Indemnitee knowingly misrepresented a material fact in connection with the request for indemnification, or such indemnification is prohibited by law.

The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 14.10 that the procedures and presumptions of this Article 14 are not valid, binding and enforceable and shall stipulate in any such proceeding that the Company is bound by all provisions of this Article 14. In the event that an Indemnitee, pursuant to this Section 14.10, seeks a judicial adjudication to enforce his rights under, or to recover damages for breach of, this Article 14, the Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him in such judicial adjudication, but only if he prevails therein. If it shall be determined in such judicial adjudication that the Indemnitee is entitled to receive part but not all of the indemnification or advancement of Expenses sought, the Expenses incurred by the Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

14.11  Participation by the Company. With respect to any such claim, action, suit, proceeding or investigation as to which an Indemnitee notifies the Company of the commencement thereof:  (a) the Company will be entitled to participate therein at its own expense; (b) except as otherwise provided below, to the extent that it may wish, the Company (jointly with any other indemnifying party similarly notified) will be entitled to assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee. After receipt of notice

14

from the Company to the Indemnitee of the Company’s election so to assume the defense thereof, the Company will not be liable to the Indemnitee under this Article 14 for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. The Indemnitee shall have the right to employ his own counsel in such action, suit, proceeding or investigation but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there is a conflict of interest between the Company and the Indemnitee in the conduct of the defense of such action or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel employed by the Indemnitee shall be subject to indemnification pursuant to the terms of this Article 14. The Company shall not be entitled to assume the defense of any action, suit, proceeding or investigation brought in the name of or on behalf of the Company or as to which the Indemnitee shall have made the conclusion provided for in (ii) above; and (c) the Company shall not be liable to indemnify an Indemnitee under this Article 14 for any amounts paid in settlement of any action or claim effected without its written consent, which consent shall not be unreasonably withheld. The Company shall not settle any action or claim in any manner that would impose any limitation or unindemnified penalty on an Indemnitee without that Indemnitee’s written consent, which consent shall not be unreasonably withheld.

14.12  Nonexclusivity of Rights. The rights of indemnification and advancement of Expenses as provided by this Article 14 shall not be deemed exclusive of any other rights to which an Indemnitee may at any time be entitled to under applicable law, the Certificate of Formation, this Agreement, any agreement, a Majority Vote of Members, or otherwise. No amendment, alteration or repeal of this Article 14 or any provision hereof shall be effective as to any Indemnitee for acts, events and circumstances that occurred, in whole or in part, before such amendment, alteration or repeal. The provisions of this Article 14 shall continue as to an Indemnitee whose Company Status has ceased for any reason and shall inure to the benefit of his heirs, executors and administrators. Neither the provisions of this Article 14 or those of any agreement to which the Company is a party shall be deemed to preclude the indemnification of any person who is not specified in this Article 14 as having the right to receive indemnification or is not a party to any such agreement, but whom the Company has the power or obligation to indemnify under the provisions of the Delaware Limited Liability Company Act.

14.13  Insurance and Subrogation. The Company shall not be liable under this Article 14 to make any payment of amounts otherwise indemnifiable hereunder if, but only to the extent that, an Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

In the event of any payment hereunder, the Company shall be subrogated to the extent of such payment to all the rights of recovery of the Indemnitee, who shall execute all papers required and take all action reasonably requested by the Company to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

15

14.14  Severability. If any provision or provisions of this Article 14 shall be held to be invalid, illegal or unenforceable for any reason whatsoever, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby; and, to the fullest extent possible, the provisions of this Article 14 shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

14.15  Certain Actions For Which Indemnification Is Not Provided. Notwithstanding any other provision of this Article 14, no person shall be entitled to indemnification or advancement of Expenses under this Article 14 with respect to any Proceeding, or any Matter therein, brought or made by such person against the Company.

14.16  Definitions. For purposes of this Article 14:

“Change of Control” with respect to any Indemnitee, means a change in control of the Company after the date such Indemnitee acquired his Company Status, which shall be deemed to have occurred in any one of the following circumstances occurring after such date: (i) there shall have occurred an event required to be reported with respect to the Company in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; (ii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) shall have become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company’s then Outstanding voting securities without prior approval of at least two-thirds of the Managers in office immediately prior to such person attaining such percentage interest; (iii) the Company is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which the Managers in office immediately prior to such transaction or event constitute less than a majority of the Managers thereafter; or (iv) during any period of two consecutive years, individuals who at the beginning of such period constituted the Managers (including, for this purpose, any new director whose election or nomination for election by the Company’s Members was approved by a vote of at least two-thirds of the Managers then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Managers; provided, however, that this definition shall not apply to any Indemnitee whose Company Status is established by virtue of clause (ii) of the definition of Company Status until after the effective date of the merger described therein.

“Company Status” describes the status of an Indemnitee as (i) a manager, officer, employee, agent or fiduciary of the Company or of any other limited liability company, corporation, partnership, association, joint venture, trust, employee benefit plan or other enterprise that the Indemnitee is or was serving at the request of the Company or (ii) effective as of the closing of the proposed merger of Edge with and into the Company, a former director, manager, officer, employee, agent or fiduciary of Edge or any subsidiary of Edge or of any other corporation, limited liability company, partnership, association, joint venture, trust, employee benefit plan or other enterprise that the Indemnitee was serving at the request of Edge.

“Court” means the Court of Chancery of the State of Delaware or any other court of competent jurisdiction.

16

“Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

“Indemnitee” includes any officer or manager of the Company or, effective as of the closing of the proposed merger of Edge with and into the Company, any former officer or director of Edge, in any case, who is, or is threatened to be made, a witness in or a party to any Proceeding as described in Section 14.1 or 14.2 hereof by reason of his Company Status.

“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation and limited liability company law and neither presently is, nor in the five years previous to his selection or appointment has been, retained to represent: (i) the Company, Chaparral Energy or an Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.

“Matter” is a claim, a material issue or a substantial request for relief.

“Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee pursuant to Section 14.10 hereof to enforce his rights under this Article 14.

14.17  Notices. Promptly after receipt by an Indemnitee of notice of the commencement of any action, suit or proceeding, the Indemnitee shall, if he anticipates or contemplates making a claim for expenses or an advance pursuant to the terms of this Article 14, notify the Company of the commencement of such action, suit or proceeding; provided, however, that any delay in so notifying the Company shall not constitute a waiver or release by the Indemnitee of rights hereunder and that any omission by the Indemnitee to so notify the Company shall not relieve the Company from any liability that it may have to the Indemnitee otherwise than under this Article 14. Any communication required or permitted to the Company shall be addressed to the Secretary of the Company and any such communication to the Indemnitee shall be addressed to the Indemnitee’s address as shown on the Company’s records unless he specifies otherwise and shall be personally delivered or delivered by overnight mail delivery. Any such notice shall be effective upon receipt.

14.18  Contractual Rights. The right to be indemnified or to the advancement or reimbursement of Expenses (i) is a contract right based upon good and valuable consideration, pursuant to which an Indemnitee may xxx as if these provisions were set forth in a separate written contract between the Indemnitee and the Company, (ii) is and is intended to be retroactive and shall be available as to events occurring prior to the adoption of these provisions and (iii) shall continue after any rescission or restrictive modification of such provisions as to events occurring prior thereto.

17

14.19  Indemnification of Employees, Agents and Fiduciaries. The Company, by adoption of a resolution of the Managers, may indemnify and advance expenses to a person who is an employee, agent or fiduciary of the Company including any such person who is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of any other corporation, partnership, joint venture, limited liability company, trust, employee benefit plan or other enterprise to the same extent and subject to the same conditions (or to such lesser extent and/or with such other conditions as the Managers may determine) under which it may indemnify and advance expenses to an Indemnitee under this Article 14.

ARTICLE 15
General Provisions

15.1  Notices. Any notice, demand, request or report required or permitted to be given or made to a Person under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when transmitted postage prepaid by first-class certified mail, return receipt requested, to the Person at the address set forth on Exhibit A attached hereto. Any notice, payment, or report to be given to a Person hereunder shall be deemed conclusively to have been given, upon mailing of such notice, payment, or report to the address shown on the records of the Company, regardless of any claim of any Person who may have an interest in the Unit by reason of an assignment or otherwise.

15.2  Further Action. The parties to this Agreement shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

15.3  Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and each party’s heirs, successors, personal or legal representatives and permitted assignees.

15.4  Integration. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

15.5  Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

15.6  Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto, independently of the signature of any other party.

15.7  Applicable Law; Construction. This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to its principles of conflict of laws. The rights and obligations of the Members and the affairs of the Company shall be governed first by the mandatory provisions of the Act, second by the Company’s Certificate

18

of Formation, third by this Agreement and fourth by the optional provisions of the Act. In the event of any conflict among the foregoing, the conflict shall be resolved in the order of priority set forth in the preceding sentence. All article and section captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” and “Sections” are to Articles and Sections of this Agreement. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

15.8 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein shall not be affected thereby.

15.9 Conveyances. All of the assets of the Company shall be held in the name of the Company, unless the Members shall determine that a Manager or a Manager’s designee may hold title to any property as nominee for the Company. Any deed, xxxx of sale, mortgage, lease, contract of sale or other instrument purporting to convey or encumber the interest of the Company of all or any portion of the assets of the Company shall be sufficient if signed on behalf of the Company by one (1) or more Managers. No person shall be required to inquire into the authority of any individual to sign any instrument which is executed pursuant to the provisions of this Section 15.9.

15.10 Specific Performance. The parties acknowledge that it is impossible to measure in money the damages which will accrue to a party hereto or to a successor in interest to a Member by reason of a failure to perform any of the obligations under this Agreement. Therefore, if any party hereto or any successor in interest to a Member shall institute any action or proceeding to enforce the provisions hereof, any person (including the Company) against whom such action or proceeding is brought hereby waives the claim or defense therein that such party or such successor has an adequate remedy at law, and such person shall not urge in any such action or proceeding the claim or defense that such remedy at law exists.

15.11 Power of Attorney.

15.11.1 Managers as Attorneys-in-Fact. By the execution of this Agreement, or a counterpart hereof, each Member irrevocably constitutes and appoints the Manager as the Member’s true and lawful attorneys-in-fact and agent to effectuate, with full power and authority to act in such Member’s name, place, and stead in effectuating, the purposes of the Company pursuant to the terms and conditions of this Agreement, including the execution, acknowledgment, delivery, filing, and recording of all certificates, documents, contracts, loan documents, or counterparts thereof, and all other documents which the Managers deem necessary or reasonably appropriate to do any of the following: (a) organize, qualify, or continue the Company as a limited liability company, including qualification of the Company in such other jurisdictions as the Company’s activities may require; (b) reflect an amendment to this Agreement or the Company’s Certificate of Formation required by a change in the name of the Company, a change in the principal place of business of the Company or, subject to the provisions of this Agreement, the admission of a new Member to the Company, if such admission is in compliance with the applicable provisions hereof; (c) accomplish the purposes

19

and carry out the powers of the Company as set forth herein; and (d) subject to the provisions of this Agreement, effect the dissolution and termination of the Company.

15.11.2 Nature of Special Power. The power of attorney granted herein: (a) shall be deemed to be coupled with an interest, shall be irrevocable and shall survive the death, incompetency, or legal disability of a Member; (b) may be exercised only by the Manager (and such Manager’s successors and assigns), for each Member, or any or all of them, by listing all, or any, of the Members required to execute any such instrument and executing such instrument as attorney-in-fact for all, or any one, of such Members; and (c) shall be binding upon any transferee of a membership interest of a Member hereunder, or any portion thereof, except that where such transferee is qualified as a Substitute Member under this Agreement, the power of attorney shall survive the delivery of such Units for the sole purpose of enabling the Manager to execute, acknowledge and file any instrument on behalf of the transferor of the Units necessary to effect such substitution.

In Witness Whereof, the parties hereto have executed this Agreement as of the date first above set forth.

THE MEMBER INTERESTS DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES ACTS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THE CONDITIONS OF ARTICLE 10 OF THE AGREEMENT ARE SATISFIED.

20

SIGNATURE PAGE

ATTACHED TO AND MADE A PART OF

THE LIMITED LIABILITY COMPANY AGREEMENT OF

CHAPARRAL EXPLORATION, L.L.C.

EFFECTIVE JUNE 16, 2008

The undersigned hereby: (a) acknowledges receipt of a copy of the Limited Liability Company Agreement of Chaparral Exploration, L.L.C. (“Agreement”); and (b) executes and swears to the Agreement, thereby agreeing and consenting to all the terms and provisions thereof.

	Chaparral Energy, Inc.,
	a Delaware corporation, Member
	By	/s/ Xxxx X. Xxxxxxx
		Xxxx X. Xxxxxxx, President and Chief Executive Officer

	Chaparral Exploration, L.L.C.,
	a Delaware limited liability company
	By	/s/ Xxxx X. Xxxxxxx
		Xxxx X. Xxxxxxx, Manager
		/s/ Xxxx X. Xxxxxxx
		Xxxx X. Xxxxxxx, Manager

EXHIBIT A

TO

LIMITED LIABILITY COMPANY AGREEMENT

OF

CHAPARRAL EXPLORATION, L.L.C.

Name and Address of Member		Number of Units		Percentage of Units
Chaparral Energy, Inc. Attn: Xxxx X. Xxxxxxx 000 Xxxxx Xxxx Xxxxxxxxx Xxxxxxxx Xxxx, XX 00000		1,000,000		100	%
TOTALS		1,000,000		100	%

Exhibit 1.6(b)

CERTIFICATE OF DESIGNATIONS OF

5.75% SERIES A CUMULATIVE CONVERTIBLE PERPETUAL PREFERRED STOCK

OF CHAPARRAL ENERGY, INC.

Pursuant to Section 151 of the
General Corporation Law of the State of Delaware

Chaparral Energy, Inc., a Delaware corporation (the “Company”), certifies that pursuant to the authority contained in Article FOURTH of its Second Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”), the Board of Directors of the Company [in a meeting held] [by resolution adopted by unanimous written consent, pursuant to Section 141(f) of the DGCL,] on [                  ], duly approved and adopted the following resolution, which resolution remains in full force and effect on the date hereof:

RESOLVED, that pursuant to the authority vested in the Board of Directors by the Certificate of Incorporation, the Board of Directors does hereby designate, create, authorize and provide for the issue of a series of the Company’s preferred stock, par value $0.01 per share, with a liquidation preference of $50 per share, plus an amount equal to the sum of all accumulated and unpaid dividends, subject to adjustment as provided in Section 15(ii) hereof, which shall be designated as 5.75% Series A Cumulative Convertible Perpetual Preferred Stock (the “Series A Preferred Stock”) consisting of 2,875,000 shares, no shares of which have heretofore been issued by the Company, having the following powers, designations, preferences and relative, participating, optional and other special rights, and qualifications, limitations and restrictions thereof:

Section 1. Ranking.  The Series A Preferred Stock will rank, with respect to payment of dividends and distribution of assets upon the liquidation, winding-up or dissolution of the Company: (i) senior to all Junior Stock, (ii) on parity with all Parity Stock and (iii) junior to all Debt Obligations and Senior Stock.  The Company’s ability to issue Capital Stock that ranks senior to its Series A Preferred Stock shall be subject to the provisions of Section 4 hereof.

Section 2. Dividends.

(i) Each holder of shares of the outstanding Series A Preferred Stock (together, the “Holders”) shall be entitled, when, as and if declared by the Board of Directors out of assets of the Company legally available therefor, to receive cumulative dividends at the rate per annum of 5.75% per share on the liquidation preference thereof of $50 per share of Series A Preferred Stock subject to adjustment as provided in Section 15(ii) hereof (such liquidation preference, as adjusted from time to time, the “Liquidation Preference”), payable in cash, payable quarterly in arrears (such rate, the “Dividend Rate”).  Dividends payable for each full dividend period will be computed by dividing the Dividend Rate by four and shall be payable in arrears on each Dividend Payment Date commencing on the Dividend Payment Date next

following the Effective Time of the Merger (the “First Dividend Payment Date”) for the quarterly period ending immediately prior to such Dividend Payment Date, to the holders of record of Series A Preferred Stock at the close of business on the Dividend Record Date applicable to such Dividend Payment Date.  Such dividends shall accumulate from the most recent date as to which dividends shall have been paid or, if no dividends have been paid, from the Last Edge Payment Date (as defined below) (whether or not in any dividend period or periods there shall be assets of the Company legally available for the payment of such dividends in whole or in part).  The initial dividend on the Series A Preferred Stock, for the quarterly period commencing on the day after the quarterly period ending immediately prior to the Last Edge Payment Date and ending immediately prior to the First Dividend Payment Date, shall be $0.71875 per share and shall be payable, when, as and if declared, on the First Dividend Payment Date.  Each subsequent quarterly dividend on the Series A Preferred Stock, when, as and if declared, shall be $0.71875 per share.  Dividends payable for any partial dividend period shall be computed on the basis of days elapsed over a 360 day year consisting of twelve 30 day months.  The most recent date as to which dividends shall have been paid on the 5.75% Series A Cumulative Convertible Perpetual Preferred Stock of Edge Petroleum Corporation, a Delaware corporation (“Edge”), is referred to herein as (the “Last Edge Payment Date”).

(ii) No dividend will be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series A Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid or declared and a sufficient sum of money or number of shares of Common Stock have been set apart for the payment of such dividend, upon all outstanding shares of Series A Preferred Stock.

(iii) The Company is only obligated to pay a dividend on the Series A Preferred Stock if the Board of Directors declares the dividend payable and the Company has assets that legally can be used to the pay the dividend.

(iv) No dividends or other distributions (other than a dividend or distribution payable solely in shares of Parity Stock or Junior Stock (in the case of Parity Stock) or Junior Stock (in the case of Junior Stock), rights issued under “poison pill” rights plans to purchase Junior Stock and cash paid in lieu of fractional shares in accordance with Section 13 hereof) may be declared, made or paid, or set apart for payment upon, any Parity Stock or Junior Stock, nor may any Parity Stock or Junior Stock be redeemed, purchased or otherwise acquired for any consideration (or any money paid to or made available for a sinking fund for the redemption of any Parity Stock or Junior Stock) by or on behalf of the Company (except by conversion into or exchange for shares of Parity Stock or Junior Stock (in the case of Parity Stock) or Junior Stock (in the case of Junior Stock)), unless all accumulated and unpaid dividends shall have been or contemporaneously are declared and paid, or are declared and a sum of cash sufficient for the payment thereof is set apart for such payment, on the Series A Preferred Stock and any Parity Stock for all dividend payment periods terminating on or prior to the date of such declaration, payment, redemption, purchase or acquisition.  Notwithstanding the foregoing, if full dividends have not been paid on

2

the Series A Preferred Stock and any Parity Stock, dividends may be declared and paid on the Series A Preferred Stock and such Parity Stock so long as the dividends are declared and paid pro rata so that the amounts of dividends declared per share on the Series A Preferred Stock and such Parity Stock will in all cases bear to each other the same ratio that accumulated and unpaid dividends per share on the shares of Series A Preferred Stock and such other Parity Stock bear to each other.

(v) Holders shall not be entitled to any dividends on the Series A Preferred Stock in excess of full cumulative dividends calculated pursuant to this Section 2.  No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series A Preferred Stock that may be in arrears.

(vi) With respect to dividends that have been declared for payment, a Holder at the close of business on a Dividend Record Date will be entitled to receive the dividend payment on its Series A Preferred Stock on the next succeeding Dividend Payment Date notwithstanding the Company’s default in payment of the dividend due on that Dividend Payment Date.

(vii) Dividends in arrears on the Series A Preferred Stock in respect of a dividend period not declared for payment (“Delayed Dividends”) may be declared by the Board of Directors and paid on any date fixed by the Board of Directors, whether or not a Dividend Payment Date, to the Holders of record as they appear on the stock register of the Company on a record date selected by the Board of Directors, which shall (a) not precede the date the Board of Directors declares the dividend payable and (b) not be more than 60 days prior to the date the dividend is paid.

(viii) Holders will not have any right to receive dividends that may be declared on the Common Stock.  The right to receive dividends declared on the Common Stock will be realized only after conversion of a Holder’s shares of Series A Preferred Stock into shares of Common Stock.

Section 3. Liquidation Preference.

(i) In the event of any voluntary or involuntary liquidation, winding up or dissolution of the Company, each Holder shall be entitled to receive and to be paid out of the assets of the Company available for distribution to stockholders of the Company, before any payment or distribution of assets is made to holders of the Common Stock or any other Junior Stock but after any payment or distribution in respect of Debt Obligations or Senior Stock, the Liquidation Preference, plus accumulated and unpaid dividends (whether or not declared) thereon to the date fixed for liquidation, winding up or dissolution.

(ii) Neither the sale, conveyance or other transfer of all or substantially all of the assets or business of the Company (other than in connection with the liquidation, winding-up or dissolution of its business) nor the merger or consolidation

3

of the Company into or with any other Person shall be deemed to be a liquidation, winding-up or dissolution, voluntary or involuntary, for the purposes of this Section 3.

(iii) In the event the assets of the Company available for distribution to Holders upon any liquidation, winding-up or dissolution of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such Holders are entitled pursuant to Section 3(i) and amounts to which holders of Parity Stock are entitled, no such distribution shall be made on account of any shares of Parity Stock upon such liquidation, dissolution or winding-up unless proportionate distributable amounts shall be paid on account of the shares of Series A Preferred Stock and holders of Parity Stock, ratably, in proportion to the full distributable amounts for which Holders and holders of any Parity Stock are entitled upon such liquidation, winding-up or dissolution, with the amount allocable to each series of such stock determined on a pro rata basis of the aggregate liquidation preference of the outstanding shares of each series and accumulated and unpaid dividends to which each series is entitled.

(iv) After the payment to the Holders of full preferential amounts provided for in Sections 3(i) and 3(iii) hereof, the Holders as such shall have no right or claim to any of the remaining assets of the Company.

Section 4. Voting Rights.

(i) Holders shall have no voting rights, except as set forth in this Section 4 or as expressly required by Delaware law from time to time.

(ii) If and whenever (a) six full quarterly dividends, whether or not consecutive, payable on the Series A Preferred Stock, are not paid or (b) the Company fails to pay the purchase price on the Fundamental Change Purchase Date for shares of Series A Preferred Stock following a Fundamental Change, then, in each case, the number of directors constituting the Board of Directors will be increased by two and the holders of the Series A Preferred Stock, voting as a single class with any other class or series of preferred stock having similar voting rights that are exercisable, shall have a right to elect those additional directors to the Board of Directors until all accumulated and unpaid dividends on the Series A Preferred Stock have been paid in full or until the purchase price for shares of Series A Preferred Stock following a Fundamental Change has been paid in full, as the case may be.  The directors so elected shall not be divided into the classes of the Board of Directors, but shall serve for annual terms.  To exercise this right, any Holder may by written notice request that the Board of Directors call a special meeting of the holders of the Company’s preferred stock for the purpose of electing the additional directors and, if such non-payment of dividends is continuing, the Board of Directors shall call such meeting within 60 days after such written request.  The terms of the directors so elected will continue until such time as all accumulated and unpaid dividends on the Series A Preferred Stock have been paid in full or until the purchase price for shares of Series A Preferred Stock following a Fundamental Change has been paid in full, as the case

4

may be, and at such time, the number of directors will, without further action, be reduced by two.

(iii) So long as any shares of Series A Preferred Stock are outstanding, in addition to any other vote of stockholders of the Company required under applicable law or the Certificate of Incorporation, the affirmative vote or consent of the Holders of at least 66²/₃% of the then outstanding shares of the Series A Preferred Stock will be required to approve (a) any amendment of the Certificate of Incorporation, by merger or otherwise, if the amendment would alter or change the powers, preferences, privileges or rights of the Series A Preferred Stock so as to affect the Holders adversely, (b) the issuance, authorization or increase in the authorized amount of, or the issuance or authorization of any obligation or security convertible into or evidencing a right to purchase any class or series of Senior Stock or (c) any reclassification of any authorized stock of the Company into any class or series of, or any obligation or security convertible into or evidencing a right to purchase, any Senior Stock; provided that no such vote shall be required for the Company to issue, authorize or increase the authorized amount of, or issue or authorize any obligation or security convertible into or evidencing a right to purchase, any Parity Stock or Junior Stock.

(iv) In all cases where the Holders are entitled to vote, each share of Series A Preferred Stock shall be entitled to one vote.  When the Holders are entitled to vote as a class with holders of any other class or series of preferred stock having similar voting rights that are exercisable, each class or series shall have the number of votes proportionate to the aggregate liquidation preference of its outstanding shares.  Holders shall generally not have any vote in a merger or consolidation, including in any such transactions in which the Series A Preferred Stock is converted into the right to receive cash or securities; provided, however, that as described in Section 4(iii)(a), Holders shall be entitled to vote in mergers and consolidations that amend the powers, preferences, privileges or rights of the Holders so as to adversely affect them.

Section 5. Forced Conversion; Limited Optional Redemption.

(i) On or after January 20, 2010, the Company may at any time, by providing not less than 15 nor more than 45 days’ notice, cause the Series A Preferred Stock to be automatically converted at the applicable Conversion Rate (a “Forced Conversion”); provided that the Company may exercise this right only if the Closing Sale Price of the Common Stock for at least 20 Trading Days in a period of 30 consecutive Trading Days, including the last Trading Day of such 30-day period, ending on the Trading Day prior to the date the Company gives notice of its election to call a Forced Conversion (by press release as described in Section 5(ii) hereof), equals or exceeds 130% of the Conversion Price on each such Trading Day.

(ii)To exercise its right to call a Forced Conversion, the Company must issue a press release prior to the close of business on the first Trading Day following any date on which the conditions described in Section 5(i) hereof are met, announcing such election to call a Forced Conversion. The Company will also give notice by mail

5

or by publication (with subsequent prompt notice by mail) to the Holders (not more than seven Business Days after the date of the press release) of the election to call a Forced Conversion. The forced conversion date will be a date selected by the Company (the “Forced Conversion Date”) and will be no more than 45 days or less than 15 days after the date on which the Company issues the press release described in this Section 5(ii).

(iii) In addition to any information required by applicable law or regulation, the press release and notice of a Forced Conversion described in this Section 5 shall state, as appropriate:

(a) the Forced Conversion Date;

(b) the Conversion Rate and whether the conversion obligation will be satisfied in cash, shares of Common Stock or a combination of cash and shares of Common Stock; and

(c) that dividends on the Series A Preferred Stock to be converted will cease to accumulate on the Forced Conversion Date.

The provisions under Section 9 hereof shall apply as if the Forced Conversion Date were the date on which the Company received notice of conversion; provided that the provisions related to conversion retraction described in Section 9(ii)(b) shall not apply.

(iv) On and after the Forced Conversion Date, dividends shall cease to accumulate on the Series A Preferred Stock to be converted, all rights of Holders of such Series A Preferred Stock shall terminate and all outstanding shares of Series A Preferred Stock shall automatically convert at the applicable Conversion Rate.  The dividend payment with respect to the Series A Preferred Stock for which a Forced Conversion Date occurs during the period between the close of business on any Dividend Record Date to the close of business on the corresponding Dividend Payment Date will be payable on such Dividend Payment Date to the record holder of such share on such Dividend Record Date.  Except as provided in the immediately preceding sentence, with respect to a Forced Conversion, no payment or adjustment will be made upon conversion of Series A Preferred Stock for accumulated and unpaid dividends or for dividends with respect to the Common Stock issued upon such conversion.

(v) The Company may not authorize, issue a press release announcing or give notice of any Forced Conversion pursuant to Section 5(i) hereof unless, prior to giving the forced conversion notice, all accumulated and unpaid dividends on the Series A Preferred Stock for periods ended prior to the date of such press release or notice shall have been paid.

(vi) In addition to the Company’s right to call a Forced Conversion as described in Section 5(i) hereof, if fewer than 15% of the shares of Series A Preferred Stock issued by the Company on the Issue Date (plus 15% of any additional shares

6

issued by the Company pursuant to the underwriters’ over-allotment option with respect to such issuance) are outstanding, the Company shall have the right, at any time on or after January 20, 2010, at its option in accordance with this clause (vi), to redeem for cash all such outstanding shares of Series A Preferred Stock, to the extent of lawfully available funds therefor, at a redemption price per share of Series A Preferred Stock equal to the Liquidation Preference plus an amount equal to accumulated and unpaid dividends to, but excluding, the Redemption Date, for each share of Series A Preferred Stock.  If the Redemption Date falls after a Dividend Record Date and on or prior to the corresponding Dividend Payment Date, (a) the Company shall pay the full amount of accumulated and unpaid dividends payable on such Dividend Payment Date only to the holder of record at the close of business on the corresponding Dividend Record Date and (b) the purchase price payable on the Redemption Date shall include only the Liquidation Preference, but shall not include any amount in respect of dividends declared and payable on such corresponding Dividend Payment Date.  The provisions of Section 5(iv) and Section 5(v) shall apply to any such redemption as if the Redemption Date were the Forced Conversion Date.  To exercise the redemption right for the Series A Preferred Stock as set forth in this Section 5(vi), the Company shall issue a notice by press release setting forth a redemption date (the “Redemption Date”) for the Series A Preferred Stock, which shall be at least 15 days but no more than 45 days after the date of such notice, followed by a notice by mail or by publication (with subsequent prompt notice by mail) to Holders not more than seven Business Days after the date of such press release notice; provided that the Company may not issue a redemption notice or press release, or otherwise exercise its redemption right set forth in this Section 5(vi), if at such time 15% or more of the shares of Series A Preferred Stock issued by the Company on the Issue Date (plus 15% of any additional shares issued by the Company pursuant to the underwriters’ over-allotment option with respect to such issuance) are outstanding or the Company shall not have paid all accumulated and unpaid dividends on the Series A Preferred Stock for all dividend periods ended prior to the date of such press release or notice.  On and after the Redemption Date, all rights of Holders will terminate except for the right to receive the redemption price for the shares of Series A Preferred Stock redeemed.  For the avoidance of doubt, the designation of a Redemption Date by the Company pursuant to this Section 5(vi) shall not terminate any conversion right with respect to the Series A Preferred Stock as set forth in Section 6 below.

Section 6. Conversion at the Option of the Holder.

(i) Subject to the Company’s right to call a Forced Conversion as described in Section 5(i) hereof, each share of Series A Preferred Stock will be convertible at any time at the option of the Holder thereof into approximately 0.7581 shares of Common Stock based on an initial conversion price of $65.95 per share (as such conversion price may be adjusted, the “Conversion Price”) subject to adjustment as set forth in Section 7 hereof.  Upon conversion, the Company shall have the right to deliver, in lieu of shares of Common Stock, cash or a combination of cash and shares of Common Stock, as set forth in Section 9 hereof.  The conversion rate per share of Series A Preferred Stock at any time (as such conversion rate may be adjusted, the

7

“Conversion Rate”) is equal to $50 divided by the Conversion Price at such time rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655).  Upon any conversion at a Holder’s option, the Holder shall not receive any cash payment representing accumulated and unpaid dividends on the Series A Preferred Stock, whether or not in arrears, except as set forth in Section 6(ii) hereof.

(ii) Holders of shares of Series A Preferred Stock at the close of business on a Dividend Record Date will be entitled to receive the dividend payment, if declared and paid, on such shares on the corresponding Dividend Payment Date notwithstanding the conversion of such shares following such Dividend Record Date.  However, shares of Series A Preferred Stock surrendered for conversion during the period between the close of business on any Dividend Record Date and the close of business on the Business Day immediately preceding the applicable Dividend Payment Date must be accompanied by a payment in cash of an amount equal to the dividend payable on such shares of Series A Preferred Stock on that Dividend Payment Date (a) unless the Company has specified a Forced Conversion Date during such period and conversion occurs at any time after the Company has issued the press release announcing such Forced Conversion, (b) unless the Company has specified a Fundamental Change Purchase Date during such period or (c) except to the extent of any accumulated and unpaid dividends (for dividend periods other than the current dividend payment period).  A Holder on a Dividend Record Date who (or whose transferee) tenders any shares for conversion on the corresponding Dividend Payment Date shall receive the dividend payable by the Company if declared and paid on the Series A Preferred Stock on that date, and the converting holder shall not be required to include payment in the amount of such dividend upon surrender of shares of Series A Preferred Stock for conversion.

(iii) Subject to Section 15(i) hereof, the conversion right of a Holder shall be exercised by the Holder of shares of Series A Preferred Stock represented by physical certificates other than the Global Preferred Stock by the surrender to the Company of the certificates representing shares of Series A Preferred Stock to be converted at any time during usual business hours at its principal place of business or the offices of its duly appointed Transfer Agent to be maintained by it, accompanied by written notice to the Company in the form of Exhibit A that the Holder elects to convert all or a portion of the shares of Series A Preferred Stock represented by such certificate and specifying the name or names (with address) in which a certificate or certificates representing shares of Common Stock are to be issued and (if so required by the Company or its duly appointed Transfer Agent) by a written instrument or instruments of transfer in form reasonably satisfactory to the Company or its duly appointed Transfer Agent duly executed by the Holder or its duly authorized legal representative and, if required, by payment of funds equal to dividends payable on the next Dividend Payment Date to which such Holder is not entitled and by transfer tax stamps or funds therefor, if required pursuant to Section 15(vii) hereof.  Such conversion notice is irrevocable, unless the Company elects to settle all or a portion of the Conversion Value in cash, in which event such conversion notice may be retracted during the Conversion Retraction Period.  If a Holder’s shares of Series A Preferred

8

Stock are represented by Global Preferred Stock, such Holder must comply with the Depositary’s procedures for converting a beneficial interest in such Global Preferred Stock and, if required, pay funds equal to dividends payable on the next Dividend Payment Date to which such Holder is not entitled and, if required by Section 15(vii) hereof, pay all taxes or duties, if any.  The date on which a Holder satisfies the foregoing requirements for conversion is referred to herein as the “Conversion Date.”  If the Company elects to satisfy its conversion obligation only in shares of Common Stock, it will deliver the shares of Common Stock due upon conversion, together with any cash in lieu of fractional shares in accordance with Section 13 hereof, no later than the third Business Day following the Conversion Date, except as set forth in Section 8(iii) and Section 8(iv) hereof.  If the Company elects to satisfy any portion of its conversion obligation in cash, it will deliver the shares of Common Stock (if any) and cash due upon conversion on the third Business Day following the last Trading Day of the related Cash Settlement Averaging Period.  Immediately prior to the close of business on the Conversion Date, each converting Holder shall be deemed to be the holder of record of Common Stock issuable upon conversion of such Holder’s Series A Preferred Stock notwithstanding that the share register of the Company shall then be closed or that certificates representing such Common Stock shall not then be actually delivered to such Holder.  On the Conversion Date all rights with respect to the shares of Series A Preferred Stock so converted, including the rights, if any, to receive notices, will terminate, except the rights of Holders thereof to: (a) receive certificates representing the number of whole shares of Common Stock into which such shares of Series A Preferred Stock have been converted and cash, in lieu of any fractional shares, in accordance with Section 13 hereof; (b) receive Additional Shares, cash or Reference Property, as applicable, payable upon a Fundamental Change, in accordance with Section 8(iv); and (c) exercise the rights to which they are entitled as holders of Common Stock.

Section 7. Anti-Dilution Adjustments.

(i) Anti-Dilution Adjustments.  The Conversion Price shall be subject to the following adjustments from time to time:

(a) Stock Dividends.  In case the Company shall pay or make a dividend or other distribution to all holders of Common Stock in shares of Common Stock, the Conversion Price, as in effect at the opening of business on the Business Day following the date fixed for the determination of stockholders of the Company entitled to receive such dividend or other distribution, shall be decreased by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such decrease to become effective immediately after the opening of business on the Business Day following the date fixed for such determination.

9

(b) Stock Purchase Rights.  In case the Company shall issue to all holders of its Common Stock rights, options or warrants, entitling them to subscribe for or purchase shares of Common Stock for a period expiring within 60 days from the date of issuance of such rights, options or warrants at a price per share of common stock (or having a conversion price per share) less than the Market Value as of the date fixed for the determination of stockholders of the Company entitled to receive such rights, options or warrants (other than pursuant to a dividend reinvestment, share purchase or similar plan), the Conversion Price in effect at the opening of business on the Business Day following the date fixed for such determination shall be decreased by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate consideration expected to be received by the Company upon the exercise, conversion or exchange of such rights, options or warrants (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) would purchase at such Market Value and the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, either directly or indirectly, such decrease to become effective immediately after the opening of business on the Business Day following the date fixed for such determination; provided, however, that no such adjustment of Conversion Price shall be made if the Holders would be entitled to receive such rights, options or warrants without conversion and based on the applicable Conversion Rate; provided further, however, that if any of the foregoing rights, options or warrants is only exercisable upon the occurrence of a Triggering Event, then the Conversion Price will not be adjusted until such Triggering Event occurs.

(c) Stock Splits; Reverse Splits; Reclassifications and Combinations.  In case outstanding shares of Common Stock shall be subdivided, split or reclassified into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the Business Day following the day upon which such subdivision, split or reclassification becomes effective shall be proportionately decreased, and, conversely, in case outstanding shares of Common Stock shall each be combined or reclassified into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the Business Day following the day upon which such combination or reclassification becomes effective shall be proportionately increased, such increase or decrease, as the case may be, to become effective immediately after the opening of business on the Business Day following the day upon which such subdivision, split, reclassification or combination becomes effective.

(d) Cash Distributions.  In case the Company shall, by dividend or otherwise, make distributions to all holders of its Common Stock exclusively in cash (excluding any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, or any distribution consisting of cash

10

in part which is provided for in Section 7(i)(f) hereof) immediately after the close of business on such date for determination, the Conversion Price shall be adjusted by dividing the Conversion Price in effect immediately prior to the close of business on the date fixed for determination of the stockholders of the Company entitled to receive such distribution by a fraction, (A) the numerator of which shall be equal to the Market Value of a share of Common Stock as of the date fixed for such determination and (B) the denominator of which shall be equal to the Market Value of a share of Common Stock as of the date fixed for such determination less the per share amount of the dividend or distribution.

(e) Common Stock Repurchase Premiums.  In the case that a tender or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer (as amended through the expiration thereof) shall require the payment to stockholders of the Company (based on the acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares (as defined below)) of an aggregate consideration having a Fair Market Value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) per share of the Common Stock that exceeds the Closing Sale Price of the Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, then, immediately prior to the opening of business on the Business Day after the last day (such day, the “Expiration Time”) tenders could have been made pursuant to such tender or exchange offer (as amended through the expiration thereof), the Conversion Price shall be decreased by multiplying the Conversion Price immediately prior to the close of business on the Expiration Time by a fraction (1) the numerator of which shall be equal to (x) the product of (I) the Market Value as of the date of the Expiration Time and (II) the number of shares of Common Stock outstanding (including any Purchased Shares (as defined below)) on the Expiration Time less (y) the amount of cash plus the Fair Market Value (determined as aforesaid) of the aggregate consideration payable to stockholders of the Company pursuant to the tender or exchange offer (assuming the acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares (as defined below)), and (2) the denominator of which shall be equal to the product of (x) the Market Value as of the Expiration Time and (y) the number of shares of Common Stock outstanding (including any Purchased Shares (as defined below)) on the Expiration Time less the number of all shares validly tendered, not withdrawn and accepted for payment on the Expiration Time (such validly tendered shares, up to any such maximum, being referred to as the “Purchased Shares”).

(f) Debt, Asset or Security Distributions.  In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, assets or securities (but excluding any dividend or distributions referred to in Section 7(i)(a), 7(i)(b), 7(i)(c), 7(i)(d) or 7(ii)), the Conversion Price shall be decreased by multiplying the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination

11

of stockholders of the Company entitled to receive such distribution by a fraction, the numerator of which shall be the Market Value of a share of Common Stock as of the date fixed for such determination less the then Fair Market Value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator of which shall be the Market Value of a share of Common Stock as of the date fixed for such determination, such adjustment to become effective immediately prior to the opening of business on the Business Day following the date fixed for the determination of stockholders of the Company entitled to receive such distribution.

(ii) Right and Warrants.  If the Company distributes rights or warrants (other than those referred to above in Section 7(i)(b) hereof) pro rata to the holders of Common Stock, so long as such rights or warrants have not expired or been redeemed by the Company, the Holder of any shares of Series A Preferred Stock surrendered for conversion shall be entitled to receive upon such conversion, in addition to the shares of Common Stock then issuable upon such conversion (the “Conversion Shares”), a number of rights or warrants to be determined as follows:

(a) if such conversion occurs on or prior to the date for the distribution to the holders of rights or warrants of separate certificates evidencing such rights or warrants (the “Distribution Date”), the same number of rights or warrants to which a holder of a number of shares of Common Stock equal to the number of Conversion Shares is entitled at the time of such conversion in accordance with the terms and provisions applicable to the rights or warrants; and

(b) if such conversion occurs after the Distribution Date, the same number of rights or warrants to which a holder of the number of shares of Common Stock into which such Series A Preferred Stock was convertible immediately prior to such Distribution Date would have been entitled on such Distribution Date had such Series A Preferred Stock been converted immediately prior to such Distribution Date in accordance with the terms and provisions applicable to the rights and warrants.

The Conversion Price shall not be subject to adjustment on account of any declaration, distribution or exercise of such rights or warrants.

(iii) De Minimis Adjustments.  Notwithstanding anything herein to the contrary, no adjustment under this Section 7 shall be made to the Conversion Price unless such adjustment would require an increase or decrease of at least one percent (1.0%) of the Conversion Price then in effect.  Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, if any, which, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least one percent (1.0%) of such Conversion Price; provided, however, that notwithstanding the foregoing, all such carried forward adjustments shall be made at the time the Company shall have

12

designated a Forced Conversion Date or upon giving a Fundamental Change Notice, and at the time of conversion of Series A Preferred Stock.  No adjustment under this Section 7 shall be made if such adjustment will result in a Conversion Price that is less than the par value of the Common Stock.  All adjustments to the Conversion Price shall be calculated to the nearest 1/100th of a share of Common Stock (or if there is not a nearest 1/100th of a share to the next lower 1/100th of a share).

(iv) Tax-Related Adjustments.  The Company may make such decreases in the Conversion Price, in addition to those required by this Section 7, as the Board of Directors considers advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes.

(v) Stockholder Rights Plans.  Upon conversion of the Series A Preferred Stock, the Holders shall receive, in addition to the shares of Common Stock and any cash for fractional shares in accordance with Section 13 hereof, if any, the rights issued under any future stockholder rights plan the Company may establish whether or not such rights are separated from the Common Stock prior to conversion.  A distribution of rights pursuant to a stockholder rights plan will not result in an adjustment to the Conversion Price pursuant to Section 7(i)(b), 7(i)(f) or 7(ii) provided that the Company has provided for the Holders to receive such rights upon conversion.

(vi) Notice of Adjustment. Whenever the Conversion Price is adjusted in accordance with this Section 7, the Company shall (a) compute the Conversion Price in accordance with this Section 7 and prepare and transmit to the Transfer Agent an Officer’s Certificate setting forth the Conversion Price, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based and (b) as soon as practicable following the occurrence of an event that requires an adjustment to the Conversion Price pursuant to this Section 7 (or if the Company is not aware of such occurrence, as soon as practicable after becoming so aware), the Company or, at the request and expense of the Company, the Transfer Agent shall provide a written notice to the Holders of the occurrence of such event and a statement setting forth in reasonable detail the method by which the adjustment to the Conversion Price was determined and setting forth the adjusted Conversion Price.

(vii) Reversal of Adjustment.  If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter (and before the dividend or distribution has been paid or delivered to stockholders) legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the Conversion Price then in effect shall be required by reason of the taking of such record.

(viii) Exceptions to Adjustment.  The applicable Conversion Price shall not be adjusted:

13