-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BZtMvwbKC3YVHNDgXIvC+7//gocRhBNoYbCLyRYYm7F0sW2Jp+R2gufM4zM+3uWH 34H8xyK7esBvQo36KFQxkw== 0001108425-04-000001.txt : 20040108 0001108425-04-000001.hdr.sgml : 20040108 20040107185144 ACCESSION NUMBER: 0001108425-04-000001 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20040108 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EDGE PETROLEUM CORP CENTRAL INDEX KEY: 0001021010 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760511037 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-50653 FILM NUMBER: 04514069 BUSINESS ADDRESS: STREET 1: 1111 BAGBY STREET 2: SUITE 2100 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7136548960 MAIL ADDRESS: STREET 1: 1111 BAGBY STREET 2: SUITE 2100 CITY: HOUSTON STATE: TX ZIP: 77002 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MARLIN CAPITAL CORP CENTRAL INDEX KEY: 0001086443 IRS NUMBER: 363663837 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 11 SOUTH LASALLE STREET SUITE 3310 CITY: CHICAGO STATE: IL ZIP: 60603 BUSINESS PHONE: 3124191880 MAIL ADDRESS: STREET 1: 11 SOUTH LASALLE STREET SUITE 3310 STREET 2: 11 SOUTH LASALLE STREET SUITE 3310 CITY: CHICAGO STATE: IL ZIP: 60603 SC 13D 1 edgesectxtfile13d08.txt SC 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 - ---- SCHEDULE 13D (RULE 13D-102) INFORMATION STATEMENT PURSUANT TO RULES 13D-1 (c) AND 13D-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934 EDGE PETROLEUM CORP. TAX ID NO 76-0511-037 (Name of issuer) COMMON STOCK, $0.01 PAR VALUE PER SHARE (Title of Class of securities) 279862106 CUSIP NUMBER January 7, 2004 DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of sec 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. 1 NAME OF REPORTING PERSONS MARLIN CAPITAL CORP. TAX ID NO 36-366-3837 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ x ] (B) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2D OR 2E 6 CITIZENSHIP OR PLACE OF ORGANIZATION ILLINOIS 7 SOLE VOTING POWER 8 SHARED VOTING POWER 915,300 9 SOLE DISPOSITIVE POWER 10 SHARED DISPOSITIVE POWER 915,300 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 915,300 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 9 EXCLUDES CERTAIN SHARES N/A 13 PERCENT OF CLASS REPRESENTED BY THE AMOUNT IN ROW 9 6.83% (PER SHARES OUTSTANDING AS OF RECENT 8-K) 14 TYPE OF REPORTING PERSON CO 1 NAME OF REPORTING PERSONS THE PRIVATE INVESTMENT FUND 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ] (B) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2D OR 2E 6 CITIZENSHIP OR PLACE OF ORGANIZATION ILLINOIS 7 SOLE VOTING POWER 8 SHARED VOTING POWER 915,300 9 SOLE DIPOSITIVE POWER 10 SHARED DISPOSITIVE POWER 915,300 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSONS 915,300 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 9 EXCLUDES CERTAIN SHARES N/A 13 PERCENT OF CLASS REPREESENTED BY AMOUNT IN ROW 9 6.83% (PER SHARES OUTSTANDING AS OF RECENT 8-K) 14 TYPE OF REPORTING PERSON PN 1 NAME OF REPORTING PERSONS MARK G. EGAN 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ] (B) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2D OR 2E 6 CITIZENSHIP OR PLACE OF ORGANIZATION ILLINOIS 7 SOLE VOTING POWER 25,700 8 SHARED VOTING POWER 915,300 9 SOLE DISPOSITIVE POWER 25,700 10 SHARED DISPOSITIVE POWER 915,300 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 941,000 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 9 EXCLUDES CERTAIN SHARES N/A 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 7.02% (PER SHARES OUTSTANDING AS OF RECENT 8-K) 14 TYPE OF REPORTING PERSON IN ITEM 1A NAME OF ISSUER: EDGE PETROLEUM CORP. ITEM 1B ADDRESS OF ISSUERS PRINCIPAL EXECUTIVE OFFICES: 1301 TRAVIS SUITE 2000, HOUSTON, TX 77002 ITEM 2A NAME OF PERSON FILING: THIS STATEMENT IS FILED ON BEHALF OF 1) MARLIN CAPITAL CORP, AN ILLINOIS CORPORATION 2) THE PRIVATE INVESTMENT FUND, AN ILLINOIS LIMITED PARTNERSHIP AND 3) MARK G. EGAN, AN INDIVIDUAL. MARLIN CAPITAL CORP AND THE PRIVATE INVESTMENT FUND LP WERE FORMED TO ENGAGE IN THE BUSINESS OF ACQUIRING, HOLDING AND DISPOSING OF INVESTMENTS. MR. EGANS PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT IS AS PRESIDENT OF MARLIN CAPITAL CORP. MR. EGAN IS A CITIZEN OF THE UNITED STATES. NONE OF THE REPORTING ENTITIES IS REQUIRED TO DISCLOSE LEGAL PROCEEDINGS PURSUANT TO ITEMS 2D OR 2E. ITEM 2B ADDRESS OR PRINCIPAL BUSINESS OFFICE 875 N MICHIGAN AVE SUITE 3412 CHICAGO ILLINOIS 60611 ITEM 2C CITIZENSHIP: MARLIN CAPITAL ILLINOIS THE PRIVATE INVESTMENT FUND - ILLINOIS MARK G. EGAN - U.S. CITIZEN ITEM 2D TITLE OF CLASS OF SECURITIES: COMMON STOCK, $0.01 PAR VALUE PER SHARE ITEM 2E CUSIP NUMBER: 279862106 ITEM 3 NOT APPLICABLE ITEM 4 PURPOSE OF TRANSACTION On March 24, 2003, Mark G. Egan sent correspondence to the Corporation on behalf of the Reporting Entities requesting that the Corporations board of directors include several proposals in the Corporations proxy materials to be put to a stockholder vote at the 2003 Annual Meeting (a copy of which is attached hereto as Exhibit 1). The proposals were an acknowledgement that fundamental changes in the Companys corporate governance were necessary to stop the Corporations slide in market capitalization. The Reporting Entities proposals set forth in the March 24th letter included proposals to decrease the number of directors, to allow for cumulative voting, to declassify the board and to increase independent directors on the board including in the position of Chairperson. The Reporting Entities also requested in the March 24th letter that a proposal be put forth that would encourage the board to remove change of control clauses in the Corporations employment agreements that allowed for accelerated vesting of options and which acted as an impediment to a future sale of the Corporation. By correspondence dated April 14, 2003, the Corporations board of directors rejected the Reporting Entities proposals due to technicalities related to filing deadlines (a copy of which is attached hereto as Exhibit 2). Intent on airing the issues Mr. Egan perceived as being central to slowing the Corporations deterioration in market capitalization, a representative of the Reporting Entities addressed the Corporations stockholders, management and board of directors on May 7, 2003 during the 2003 Annual Meeting (a copy of transcript is attached hereto as Exhibit 3). In the address, the Reporting Entities once again stressed their core proposals and their continued belief that such proposals should be put to a vote of the Corporations shareholders. Again the board of directors rejected the Reporting Entities proposals due to technicalities and then proceeded to erect further barriers to stockholder proposals by amending the Corporations By-laws to make it more difficult to submit future proposals. These actions were outlined in correspondence from the Corporations board of directors dated June 4, 2003 (a copy of which is attached hereto as Exhibit 4). On December 10, 2003, Mr. Egan personally addressed the board of directors to discuss his proposals. At this meeting Mr. Egan provided the directors with a detailed memorandum outlining a method for the Corporation to better calculate the return on its investment in various well drilling activities. A copy of the memorandum is attached hereto as Exhibit 5. On January 7, 2004, the Reporting Entities sent notice to the Corporation, a copy of which is attached hereto as Exhibit 6, notifying the Corporation of their intent to present business at the 2004 Annual Meeting and submitting a stockholder proposal to reduce the number of directors on the Corporations board. The Reporting Entities currently intend to continue their efforts to resolve their concerns cooperatively with Company management and board members. Depending on the results of these efforts, the Reporting Entities may, in the future, determine to take further actions (through discussions with other stockholders, through discussions with persons considering an investment in the Company, or otherwise) in order to maximize stockholder value. Depending on market conditions and other factors the Reporting Entities deem material, the Reporting Entities may purchase additional Common Stock or dispose of all or a portion of the Common Stock that they now own or any Common Stock that they may hereafter acquire. Except as set forth in this Item 4, the Reporting Entities do not have any present plans or proposals which would result in any of the actions enumerated in clauses (a) through (j) of Item 4 of Schedule 13D (although they reserve the right to develop such plans). ITEM 5 OWNERSHIP PROVIDE THE FOLLOWING INFORMATION REGARDING THE AGGREGATE NUMBER AND PERCENTAGE OF THE CLASS OF SECURITIES OF THE ISSUER IDENTIFIED IN ITEM 1. A) AMOUNT BENEFICIALLY OWNED: 941,000 B) PERCENT OF CLASS: 7.02% (PER SHARES OUTSTANDING AS OF RECENT 8-K) ITEM 6 OWNERSHIP MORE THAN FIVE PERCENT ON BEHALF OF ANOTHER PERSON MARLIN CAPITAL CORP. IS THE GENERAL PARTNER OF THE PRIVATE INVESTMENT FUND. MARLIN CAPITAL CORP HAS THE AUTHORITY TO DIRECT THE INVESTMENTS OF THE PRIVATE INVESTMENT FUND AND CONSEQUENTLY TO AUTHORIZE THE DISPOSITION AND VOTE OF THE ISSUER'S SHARES. MARK G. EGAN IS THE SOLE SHAREHOLDER AND PRESIDENT OF MARLIN CAPITAL CORP. AND IS A LIMITED PARTNER OF THE PRIVATE INVESTMENT FUND. MR. EGAN INDIVIDUALLY OWNS 25,700 SHARES OF COMMON STOCK OF THE ISSUER AND MAY BE DEEMED TO HAVE INDIRECT BENEFICIAL OWNERSHIP OF 915,300 SHARES OF COMMON STOCK OF THE ISSUER OWNED BY THE PRIVATE INVESTMENT FUND. THE AGGREGATE NUMBER AND PERCENTAGE OF THE ISSUER'S SECURITIES TO WHICH THIS SCHEDULE 13D RELATES IS 941,000 REPRESENTING 7.02% OF THE ISSUER'S SHARES OUTSTANDING AS OF RECENT 8-K. ITEM 7 MATERIAL TO BE FILED AS EXHIBITS The following documents are filed as exhibits: 1. Letter to the Company from Mark G. Egan dated March 24, 2003. 2. Letter to Mark G. Egan from the Company dated April 14, 2003. 3. Transcript of remarks delivered by a representative of Mark G. Egan to the Corporations management, board of Directors and stockholders at the 2003 annual meeting. 4. Letter to Mark G. Egan from the Company dated June 4, 2003. 5. Memorandum to the Company from Marlin Capital Corp. entitled Risk and Return which was discussed with board members at a December 10, 2003 board meeting. 6. Notice of Intention to Present Business at 2004 Annual Meeting, dated January 7, 2004, submitted by the Reporting Entities. ITEM 8 CERTIFICATIONS. BY SIGNING BELOW I CERTIFY THAT, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THE SECURITIES REFERED TO ABOVE WERE NOT ACQUIRED AND ARE NOT HELD FOR THE PURPOSE OF OR WITH THE EFFECT OF CHANGING OR INFLUENCING THE CONTROL OF THE ISSUER OF THE SECURITIES AND WERE NOT ACQUIRED AND ARE NOT HELD IN CONNECTION WITH OR AS A PARTICIPANT IN ANY TRANSACTION HAVING THAT PURPOSE OR EFFECT. SIGNATURE AFTER REASONABLE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY THAT THE INFORMATION SET FORTH IN THE STATEMENT IS TRUE, COMPLETE AND CORRECT. DATED: January 7, 2004 MARLIN CAPITALCORP. /S/ MARK G. EGAN MARK G. EGAN, PRESIDENT THE PRIVATE INVESTMENT FUND BY ITS GENERAL PARTNER, MARLING CAPITAL CORP. /S/ MARK G. EGAN MARK G. EGAN, PRESIDENT /S/ MARK G. EGAN MARK G. EGAN AGREEMENT OF THE JOINT FILING. IN ACCORDANCE WITH RULE 13D 1 F UNDER THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, THE UNDERSIGNED HEREBY AGREE TO THE JOINT FILING WITH ALL OTHER PERSONS SIGNATORY BELOW OF A STATEMENT ON SCHEDULE 13D OR ANY AMENDMENTS THERETO, WITH RESPECT TO THE COMMON STOCK OF EDGE PETROLUEM CORP. AND THAT THIS AGREEMENT BE INCLUDED AS AN ATTACHMENT OF SUCH FILING. THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH TOGETHER SHALL BE DEEMED TO CONSTITUTE ONE AND THE SAME AGREEMENT. IN WITNESS WHEREOF, THE UNDERDESIGNED HEREBY EXECUTES THIS AGREEMENT ON THE 7TH DAY OF JANUARY, 2004. MARLIN CAPITAL CORP. /S/ MARK G. EGAN MARK G. EGAN, PRESIDENT THE PRIVATE INVESTMENT FUND BY ITS GENERAL PARTNER, MARLIN CAPITAL CORP. /S/ MARK G. EGAN MARK G. EGAN, PRESIDENT /S/ MARK G. EGAN MARK G. EGAN EX-1 3 edgeletterexhmar2401.txt March 24, 2003 Mr. Robert C. Thomas Corporate Secretary Edge Petroleum Corp. 1301 Travis Suite 2000 Houston, TX 77002 Mr. Thomas: I am writing to you in your official capacity as corporate secretary. I am a three and three quarter year holder of Edges common stock and warrants entitling me to vote 9.9% of your potential shares. I want the following proposals put to the shareholders for a vote up or down at the annual meeting. 1.) Board to be reduced to four, three directors to be independent. 2.) Cumulative voting to be adopted; 25% of the shares could elect a director. 3.) All four directors stand for re-election annually. 4.) The title of Chairman to go to an independent director. 5.) The boards nominating committee to be composed of independent directors. 6.) The audit committee to be composed of independent directors. 7.) The compensation committee to be composed of independent directors. 8.) All impediments to a sale of Edge are eliminated: no compensation schemes tied to change of control, no vesting of options, and no post-acquisition consulting fees. I realize that Edge can stand behind time line requirements and trash my proposals. I think it would be arrogance, not fairness. These proposals should be put to a shareholder vote. Edge as we all know sells below liquidation value and below PV 10. Under the direction of the current board the market capitalization of Edge has shrunk from over $100,000,000 to less than $50,000,000. I feel long term directors have not done the job and should be eliminated. Four qualified directors are enough for a company with little market presence. Give us our vote. Sincerely, Mark G. Egan President Marlin Capital Corp. General Partner of the Private Investment Fund, LP EX-2 4 edgeletterexhapr1401.txt April 14, 2003 Mr. Mark G. Egan Marlin Capital Corporation 875 North Michigan Avenue Chicago, IL 60611-1896 Dear Mark, This will confirm our telephone conversation with regard to your letter of March 24, 2003. Edge is very appreciative of your investment in our company and is mindful of your views and concerns. While we welcome constructive interaction with our shareholders, especially the larger ones, our annual meetings are formal events that must be conducted in accordance with numerous state and federal laws as well as the Companys charter and bylaws. As we discussed during our conversation, for several reasons, your letter by itself does not meet the requirements for inclusion at this years shareholders meeting. Therefore, we do not plan to submit your proposals for a vote at our 2003 annual meeting or include them in the proxy statement. Having said the foregoing, however, we are very interested in your ideas and invite you to meet with our Board to talk about your specific suggestions. Like you, we are also interested in adding shareholder value. To the extent your ideas would be beneficial to the shareholders, we would like to discuss with you how we might accomplish our common goal of increasing share price. If you are interested in meeting with our Board to discuss such a framework, please let me know and I will schedule a mutually convenient time. For your information, the next scheduled meetings of our Board during 2003 (after the May 7 annual meeting) will be August 27 and December 10. If either of these dates is suitable with your schedule, please let me know and I will make the appropriate arrangements. Thank you again for your letter. Judy joins me in conveying our best to you and Kitty. As always, John W. Elias Cc: Board of Directors EX-3 5 edgeannualmtgletter09.txt Address to the Mgmt. and Board of Edge Petroleum The remarks that I am going to deliver express the views of Mark G. Egan the president of Marlin Capital Corp the general partner of The Private Investment Fund L.P. He is a very large shareholder with voting authority for 9.9% of the shares of the company, taking into account warrants. Mr. Egan apologizes for not being able to attend the meeting, but he had prior obligations where he had larger positions. Mr. Egan states: I personally own more stock outright than anybody within management or on the board, so I expect my remarks to be taken seriously. First, the board should meet eyeball-to-eyeball more than 3 times per year, conference calls are not enough. If this is difficult to accomplish, then the board should be made up of local residents with knowledge of the oil and gas industry that also have a significant stake in the company. I feel that a truly independent director will have a significant stake in the company and a significant stake would equal at a minimum 5x directors fees, in shares not options. Second, I wrote to the board of directors requesting proposals be put to a vote. Since my proposals were not filed before the deadline, you decided to sidestep it. The real reason you did not put my proposals before the shareholders, I believe, is because you were apprehensive as to how the vote would turn out. The proposals included: * The board reduced to four; three independent * Cumulative voting adopted, 25% could elect a director * All 4 directors stand for re-election annually * The title of Chairman go to an independent * The boards nominating comm. composed of independent directors * Audit comm. independent directors * Compensation comm. independent directors * All impediments to a sale of Edge eliminated: no compensation schemes, no vesting of options, and no post-acquisition consulting fees. You were able to sidestep my proposals for this years annual meeting, but they have been filed and I expect them to be put to a vote at next years annual meeting. Third, I am afraid that Edges tombstone will read: Louisiana. If management has any sense, no more wells will be drilled in Louisiana. It is clear that Edges expertise in interpreting 3-d seismic graphs is not as it was thought to be. Worse yet, when you did happen to find gas in Louisiana, you had to find it twice. Lastly, I would like to extend an offer to the chairman John Elias and to him alone which will allow him to demonstrate to shareholders the belief he has in Edge Petroleum. I would like to offer John all of the Edge stock I personally own and all of the stock for which I have voting authority (totaling 731,000 shares) at $8, a 20% discount to Edges PV-10 on 12/31/02 and 3x my estimated cash flow for 2003. This is a small commitment as far as your net worth, but a large commitment to the company. This offer will extend through midnight tonight to give you time to think about it and settled within 10 days. The question in the back of my mind is why should not it be your money and your ego rather then my money and your ego. You have, I presume, just given a dignified and quite optimistic address on the companys future prospects. Here is your chance to validate them. EX-4 6 edgeletterexhjun403.txt June 4, 2003 Mr. Mark Egan Marlin Capital Corporation General Partner of The Private Investment Fund, LP 875 N. Michigan Avenue Chicago, IL 60611-1896 Dear Mr. Egan, This letter is in further response to your letter to me of March 24, 2003 and the question asked by your representative, Mr. Logan, at the annual meeting of shareholders of Edge Petroleum Corporation (the Company) on May 7, 2003. As Mr. Elias advised Mr. Logan at the annual meeting, we do not view your March 24, 2003 letter to constitute continuing shareholder proposals for consideration at the Companys 2004 annual meeting. You should be aware that shareholder proposals for an annual meeting must be made in accordance with the bylaws of the Company of Delaware state law. Our bylaws require, among other things, that the proposal include a representation that the stockholder intends to appear in person or by proxy at the meeting to bring the proposed business before the annual meeting and that the proposal be a proper subject for stockholder action. In addition, there are other legal requirements to keep in mind, including without limitation that some matters, including cumulative voting of shares and the term of directors would require changes to the Companys charter, which under Delaware law would have to be proposed and approved by the Board, and that the proposal when adapted must work with the Companys charter and bylaws. Furthermore, on May 7, 2003, the Board of Directors amended the provisions of the Companys bylaws to change the deadline by which advance notice by a stockholder of any business to be brought before an annual meeting of stockholders must be given to the Secretary of the Company. Generally, the new deadline provides that for business to be brought by a stockholder before an annual meeting, written notice of the stockholder proposals must be given not less than 120 days prior to the anniversary of the prior years meeting, with certain exceptions if the date of the annual meeting is different by more than specified amounts from the anniversary date of the prior years meeting. Similar changes were made for shareholder nominations for election to the Board. We did this because management and the Board believed that the original deadline for submission of the shareholder proposals, as set forth in our bylaws, did not give enough time to adequately address and respond to such proposals given the pressures and exigencies of proxy season, 10K preparation and earnings release, all of which have been made more tedious by the added requirements of Sarbanes-Oxley. A copy of this bylaw amendment is filed as an exhibit to our latest Quarterly Report on Form 10Q for your reference. As a result of these changes, if the date of the 2004 Annual Meeting of Stockholders is not more than 30 days before, nor more than 60 days after, the first anniversary of the date of the 2003 Annual Meeting, stockholders who wish to nominate directors or to bring other business before the 2004 Annual Meeting of Stockholders must notify the Company no later than January 8, 2004. Please note that compliance with the above procedures does not require the Company to include the proposal in the Companys proxy solicitation material, which is a separate matter governed by Rule 14a-8 under the Securities Exchange Act of 1934, as amend. Rule 14a-8 addresses when a company must include a stockholders proposal in its proxy statement and identify the proposal in its form of proxy when the company holds an annual or special meeting of stockholders. We refer you to the Companys Proxy Statement dated April 7, 2003 in this regard. Stockholder proposals must also be otherwise eligible for inclusion under federal law. The foregoing information supersedes some of the information included under Additional Information Stockholder Proposals in the Companys Proxy Statement dated April 7, 2003. I hope the foregoing information is helpful to you. However, this letter is not intended to be a full discussion or acknowledgement of your rights or those of the Company in this area, or to address all of the issues arising under your March 24, 2003 letter or to limit the Companys further actions. You are encouraged to seek your own legal counsel in that regard. Very Truly Yours, Robert C. Thomas RCT/km Cc: Edge Directors EX-5 7 edgeriskreward05.txt Edge Petroleum Risk and Return. Marlin Capital Corp. The decision making process whereby EPEX decides whether or not to invest in a particular well is the primary determinant in realizing return on equity. The key point is that if EPEX has a hurdle rate of return of say 15% and their estimates are good, their realized rate of return, i.e. return on equity, should equal or exceed the hurdle rate. Given that the realized rate of return has been rather low, trailing 12 month ROE = 7% and 5 year average ROE = (neg)1.7%, and certainly lower that each projects hurdle rate or return, the only conclusion is that the estimates are off the mark. There are roughly six main estimates that drive the return calculation: 1. Drilling cost 2. Prospect volume 3. Prospect duration 4. Probability of success 5. Gas and oil price 6. Operating costs, including taxes (ad valorem and income) Of these elements, the probability of success (POS) is likely the key driver. It is useful at this point to make a slight digression into a little notation that will help to make clear the analytical nature of the decisions being made and how these decisions might be improved. If {E_i|i = 1 thru N} represents the set of all estimates, e.g. E_4 = mean value of POS, then we can make the assumptions explicit by denoting estimated return on investment by ROI^est (E_1,thru,E_N). Since actual returns have lagged estimated returns, i.e. ROI^actual < ROI^est, we must have that E_i is not equal to A_i, where A_i is the realized value. One of the key points is that the A_i variables are random, and in some cases EPEX has developed probability distributions for the E_i. This implies that both ROI^actual and ROI^est are also random variables. Based on the Economic Summary Sheet we have seen, probability distributions are developed for some of the estimates. However, when it comes to computing ROI^est, only the first moment of the distribution is used. It is quite likely that there is far more information in the higher order moments. For example, if we focus on POS and P_4 is denoted as the normalized probability distribution for POS, then we can compute the nth moment of the distribution for ROI^est as: 1 / _n = / dxP_4(x)ROI_n(x), / 0 The key point is that making a point estimate for POS and using this to compute ROI is not really the same as assessing risk in a very sophisticated manner, especially if the POS estimates deviate from reality, which is likely. In the language above, the point estimate would be similar to utilizing information from the first moment, i.e. n = 1, but it is highly likely that there is a great deal of information in the higher order as well. As an example, the standard deviation of ROI^est can be computed using the first and second moments and may be indicative of hidden estimates of risk that are not apparent in the mean values being used. Furthermore, running Monte Carlo simulations to generate distributions and then only using the mean value is potentially throwing away incredibly useful information. The simple act of using Monte Carlo simulations does not necessarily confer the full benefit. Rather, a more sophisticated approach to risk assessment would utilize the information embedded in the higher order moments of the various distributions. Along these same lines, it is likely that viewing each project in isolation in some cases underestimates risk and in some cases overestimates risk. This implies that certain low risk projects get rejected because risk is deemed to be too high, and vice versa. So we would recommend an analytical approach that is integrated across projects and across time. The time component is important in that if you are going to drill high risk projects, you better make sure that you are around long enough to make sure that you hit one of them (e.g. fourth quarter 2002). In addition to utilizing the higher order moment information, going back to all projects drilled and assessing the estimates relative to the actual results will likely uncover systematic biases. If there are no systematic biases and EPEXs probability assessments are simply randomly off then the escapable conclusion is that the company should be shut down. If there are systematic biases, which there better be, then identifying them will have the very pleasant result of boosting the returns. The manner in which the comparisons between estimates and reality are made is extremely important. It is crucial that objectivity be the rule of the day as it is not uncommon for those too close to the problem to find what they are looking for. We would be more than happy to assist in: (i) an analytical program that would assess the drilling estimates and performance since the company went public and (ii) the development of algorithms that would utilize the improved information coming from (i) combined with information embedded in the higher order moments of the estimated distributions to arrive at a more satisfying risk/reward profile. NOTE: DUE TO THE LIMITATIONS OF THE TYPSETTINGING IN THIS DOCUMENT, THE _ SYMBOL DENOTES A SUBSCRIPT AND THE ^ SYMBOL DENOTES A SUPERSCRIPT. EX-6 8 edgeproposalltrjan0405.txt Marlin Capital Corp. John Hancock Center C/O The Private Investment Fund, LP C/O Mark G. Egan 875 N. Michigan Ave., Suite 3412 Chicago, Illinois 60611 - 1896 January 7, 2004 VIA FedEX & VIA Facsimile Robert C. Thomas Corporate Secretary Edge Petroleum Corporation 1301 Travis Suite 2000 Houston, TX 77002 Re: Notice of Intention to Present Business at 2004 Annual Meeting Dear Mr. Thomas We have been advised that January 8, 2004 is the deadline for a stockholder to submit a proposal for inclusion in the 2004 Annual Meeting of Stockholders (the 2004 Annual Meeting) of Edge Petroleum Corporation (the Corporation). In accordance with Section 2.8(a) of the Corporations Second Amended Bylaws (the Bylaws) and pursuant to Rule 14a-8 of the Securities Exchange Act of 1934 (Rule 14a-8), this letter serves as notice that Marlin Capital Corp., The Private Investment Fund, LP and Mark G. Egan (collectively, the Holders), stockholders of record of the Corporation, respectfully submit a proposal to reduce the number of directors on the board of directors of the Corporation as set forth on Schedule 1 attached hereto (the Proposal) for inclusion in the Corporations proxy statement and proxy card for the 2004 Annual Meeting. The following is the information required by the Bylaws and Rule 14a-8 with respect to the Proposal: (i) A description of the Proposal and reason for submission at the 2004 Annual Meeting: See Schedule 1 attached hereto. (ii) Name and address of the stockholder(s) submitting the Proposal: Marlin Capital Corp. John Hancock Center 875 N. Michigan Ave., Suite 3412 Chicago, Illinois 60611 - 1896 The Private Investment Fund LP John Hancock Center 875 N. Michigan Ave., Suite 3412 Chicago, Illinois 60611 - 1896 Mark G. Egan John Hancock Center 875 N. Michigan Ave., Suite 3412 Chicago, Illinois 60611 - 1896 (iii) Class and number of shares of the Corporation which are owned beneficially by the Holders submitting the Proposal: The Holders hereby represent that they (a) are the beneficial owners of record of 941,000 of common stock of the Corporation entitled to vote for the election of directors on the date hereof, (b) have held such shares at all time since at least one year prior to the date hereof and that such shares have a market value of at least $2,000, and (c) intend to continue to hold such shares through at least the date following the date of the 2004 Annual Meeting. (iv) Financial or other interest in submitting the Proposal: Other than the Holders interest as stockholders of the Corporation in increasing the efficiency and effectiveness of the board of directors as referenced in the Proposal, the Holders have no financial or other interest in submitting the Proposal. (v) Intention to appear in person or by proxy: By signature below, the Holders represent that they intend to appear in person or by proxy through their authorized representative at the 2004 Annual Meeting to present the Proposal. The Holders request written notice as soon as practicable of any alleged defect in this Notice or the Proposal and reserve the right, following receipt of any such notice, to either challenge, or attempt as soon as practicable to cure, such alleged defect. The Holders reserve the right to give notice of their intention to present additional business for consideration at the 2004 Annual Meeting or other meeting of the Corporation's stockholders, or to revise the business described herein. Sincerely, MARLIN CAPITAL CORP. By: ____________________________________ Name: Mark G. Egan Its: President THE PRIVATE INVESTMENT FUND LP, BY ITS GENERAL PARTNER, MARLIN CAPITAL CORP. By:_____________________________________ Name: Mark G. Egan Its: President MARK G. EGAN, individually ________________________________________ SCHEDULE 1 Stockholder Proposal Concerning the Size of the Board of Directors Marlin Capital Corp., the Private Investment Fund LP and Mark G. Egan collectively have given notice that they intend to present for action at the 2004 Annual Meeting the following proposal: RESOLVED: The stockholders of Edge Petroleum Corporation (the Corporation) hereby request the board of directors take all steps necessary to change the composition of the board of directors by reducing the actual number of incumbent directors from the current number of eight to five directors. The board of directors should implement the proposal above by means of By-Law changes and/or other necessary procedures in accordance with applicable law. This proposal would be effective for nominees for director at meetings subsequent to the 2004 Annual Meeting and need, therefore, not affect the unexpired terms of the existing directors. SUPPORTING STATEMENT FROM SHAREHOLDERS The effective structure and functioning of the board of directors are considered by most observers to be of paramount importance in ensuring the long-term success of a company. Issues relating to the board are viewed as appropriate for shareholder involvement because directors are shareholders elected representatives. In order to promote a more efficient,functional and flexible board, there should be fewer directors. We believe that the current number of directors is excessive and not in the best interest of the Corporation and its stockholders. We believe that smaller boards are often more cohesive and work more effectively than large boards. In addition, a smaller board will permit The Corporation greater flexibility by allowing the directors to have more face-to-face meetings on shorter notice throughout the year. Currently the number of directors on the Corporations board is eight, which we believe is grossly out of proportion to the optimal size for a company with fewer than 35 employees in the oil and gas exploration industry, especially given the Corporations current market capitalization. Moreover the only reason that the Corporations board now has eight directors rather than nine, is because earlier this year one director resigned and the board decided not to fill the vacancy. This proposal is not intended to effectuate a change of control of the Corporation. Rather, we simply desire the Corporation to be more flexible by adopting a more cohesive and efficient structure for the board of directors. The current number of directors is unwieldy and only serves the entrenched interests of the current board, rather than the interests of the Corporation and its stockholders. We believe that five directors is the most favorable number and we therefore urge our fellow stockholders to support this reform. WE URGE YOU TO VOTE FOR THIS PROPOSAL. 207365/0001/626778/Version #:.1 -----END PRIVACY-ENHANCED MESSAGE-----