1
EXHIBIT 1
Draft of October 22, 1996
3,600,000 Shares
DENBURY RESOURCES, INC.
Common Stock
UNDERWRITING AGREEMENT
__________, 1996
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ RICE & COMPANY L.L.C.
As representatives of the
several underwriters
named in Schedule I hereto
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Denbury Resources, Inc., a corporation organized under the
Canada Business Corporations Act (the "Company"), proposes to issue and sell
3,600,000 shares of its Common Shares (the "Firm Shares") to the several
underwriters named in Schedule I hereto (the "Underwriters"). The Company also
proposes to issue and sell to the several Underwriters not more than 540,000
additional shares of its Common Shares (the "Additional Shares") if requested
by the Underwriters as provided in Section 2 hereof. The Firm Shares and the
Additional Shares are herein collectively called the Shares. The common shares
of the Company to be outstanding after giving effect to the sales contemplated
hereby are hereinafter referred to as the Common Shares.
1. Registration Statement and Prospectus. The Company
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "1933 Act"), a registration statement on Form S-1
(File No. 333-12005) including a prospectus relating to the Shares, which may
be amended. The registration statement as amended at the time when it becomes
effective, including a registration statement (if any) filed pursuant to Rule
462(b) under the 1933 Act increasing the size of the offering
2
registered under the 1933 Act and information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A or
Rule 434 under the 1933 Act, is hereinafter referred to as the Registration
Statement; and the prospectus (including any prospectus subject to completion
taken together with any term sheet meeting the requirements of Rule 434(b) or
Rule 434(c) under the ▇▇▇▇ ▇▇▇) in the form first used to confirm sales of
Shares is hereinafter referred as the Prospectus. The Company has also
prepared and filed a short form preliminary prospectus (the "Canadian
Preliminary Prospectus") relating to the Shares with the securities commissions
(the "Canadian Securities Commissions" and, together with the Commission, the
"Securities Commissions") of the provinces of British Columbia, Alberta and
Ontario (the "Offering Provinces") in accordance with the provisions of the
securities legislation, rules and regulations applicable therein, including
National Policy No. 47 (collectively, the "Canadian Securities Legislation"),
and shall prepare and file a final short form prospectus (the "Canadian Final
Prospectus") as soon as possible and in any event not later than 5:00 p.m.
(local time) on __________, 1996, or such other time and date as the Company
and the Underwriters may agree in writing with the Canadian Securities
Commissions and the Company shall have obtained either (a) a final expedited
review receipt (the "Expedited Review Receipt") that evidences a final receipt
has been issued for the Canadian Final Prospectus by each of the Canadian
Securities Commissions under the expedited review system and procedures
provided for in the Memorandum of Understanding for Expedited Review of Short
Form Prospectus and Renewal Annual Information Forms dated November 15, 1994
(the "Expedited Review Process") or (b) a receipt from each of the Canadian
Securities Commissions, dated the date of filing, and shall have taken all
other steps and proceedings as may be necessary to enable the Shares to be
offered and sold to the public in all of the Offering Provinces through First
Energy Capital Corp. (the "Canadian Underwriter") or any other registrants who
comply with the relevant provisions of the applicable Canadian Securities
Legislation, not later than the close of business on the date of filing (or
such other time and date as the Company and the Underwriters may agree to in
writing) and, if an Expedited Review Receipt is issued, the Company shall file
within three (3) business days the material required in accordance with the
Expedited Review Process in the "Participating Jurisdictions" other than the
"Designated Jurisdiction" (as those terms are defined in the Expedited Review
Process). Any amendment to the Canadian Final Prospectus, any amended
prospectus or auxiliary material, information, evidence, return, report,
application, statement or document that may be filed by or on behalf of the
Company under the Canadian Securities Legislation prior to the Closing Time or
prior to the expiry of the period of distribution of the Shares in the Offering
Provinces, is referred to herein collectively as the "Supplementary Material."
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell, and each
Underwriter agrees, severally and not jointly, to purchase from the Company at
a price per share of U.S. $______ (the "Purchase Price") the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Company agrees
to issue and sell the Additional Shares and
2
3
the Underwriters shall have the right to purchase, severally and not jointly,
up to 540,000 Additional Shares from the Company at the Purchase Price.
Additional Shares may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. The
Underwriters may exercise their right to purchase Additional Shares in whole or
in part from time to time by giving written notice thereof to the Company
within 30 days after the date of this Agreement. You shall give any such
notice on behalf of the Underwriters and such notice shall specify the
aggregate number of Additional Shares to be purchased pursuant to such exercise
and the date for payment and delivery thereof. The date specified in any such
notice shall be a business day (i) no earlier than the Closing Date (as
hereinafter defined), (ii) no later than ten business days after such notice
has been given and (iii) no earlier than two business days after such notice
has been given. If any Additional Shares are to be purchased, each
Underwriter, severally and not jointly, agrees to purchase from the Company the
number of Additional Shares (subject to such adjustments to eliminate
fractional shares as you may determine) which bears the same proportion to the
total number of Additional Shares to be purchased from the Company as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I bears to the total number of Firm Shares.
The Company hereby agrees and the Company shall, concurrently
with the execution of this Agreement, deliver an agreement executed by (i) each
of the directors and officers of the Company, and (ii) the Texas Pacific Group,
pursuant to which each such person agrees, not to offer, sell, contract to
sell, grant any option to purchase, or otherwise dispose of any Common Shares
of the Company or any securities convertible into or exercisable or
exchangeable for such Common Shares or in any other manner transfer all or a
portion of the economic consequences associated with the ownership of any such
Common Shares, except to the Underwriters pursuant to this Agreement, for a
period of 120 days after the date of the Prospectus without the prior written
consent of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation.
Notwithstanding the foregoing, during such period (i) the Company may grant
stock options pursuant to the Company's existing stock option plan and (ii) the
Company may issue Common Shares upon the exercise of an option or warrant or
the conversion of a security outstanding on the date hereof or pursuant to the
Company's Employee Stock Purchase Plan.
3. Terms of Public Offering. The Company is advised by
you that (i) the Underwriters, other than the Canadian Underwriter, propose to
make a public offering of their respective portions of the Shares in the United
States as soon as you deem advisable after the Registration Statement has been
declared effective and initially to offer such Shares upon the terms set forth
in the Prospectus and (ii) the Canadian Underwriter proposes to make a public
offering of its portion of the Shares in the Offering Provinces as soon as you
deem advisable after an Expedited Review Receipt has been obtained from the
Alberta Securities Commission or a receipt for the Canadian Final Prospectus
has been issued by each of the Canadian Securities Commissions and to offer
such Shares upon the terms set forth in the Canadian Final Prospectus.
The Company understands that the Shares allotted to the
Canadian Underwriter will be offered and sold only in the Offering Provinces
pursuant to the Canadian Final Prospectus and that the Firm Shares allocated to
the other Underwriters will not be offered and sold in the Offering
3
4
Provinces unless such Firm Shares are reallotted by the other Underwriters to
the Canadian Underwriter.
4. Delivery and Payment. Delivery to the Underwriters
of and payment for the Firm Shares shall be made at 10:00 A.M., New York City
time, on the third or fourth business day unless otherwise permitted by the
Commission pursuant to Rule 15c6-1 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")(the "Closing Date") following the date of the
initial public offering, and in any event not later than _________, 1996, at
such place as you shall designate. The Closing Date and the location of
delivery of and the form of payment for the Firm Shares may be varied by
agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at such place as you
shall designate at 10:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (an "Option
Closing Date"). Subject to Section 2 hereof, any such Option Closing Date and
the location of delivery of and the form of payment for such Additional Shares
may be varied by agreement between you and the Company.
Certificates for the Shares shall be registered in such names
and issued in such denominations as you shall request in writing not later than
two full business days prior to the Closing Date or an Option Closing Date, as
the case may be. Such certificates shall be made available to you for
inspection not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date or the applicable Option Closing Date, as the
case may be. Certificates in definitive form evidencing the Shares shall be
delivered to you on the Closing Date or the applicable Option Closing Date, as
the case may be, with any transfer taxes thereon duly paid by the Company, for
the respective accounts of the several Underwriters, against payment of the
Purchase Price therefor by wire or certified or official bank checks payable in
Federal funds to the order of the Company.
5. Agreements of the Company. The Company agrees with
you:
(a) To use its best efforts to cause the
Registration Statement to become effective at the earliest possible
time and to obtain an Expedited Review Receipt from the Alberta
Securities Commission or receipts from the Canadian Securities
Commissions for the Canadian Final Prospectus at the earliest possible
time.
(b) To advise you promptly and, if requested by
you, to confirm such advice in writing, (i) when the Registration
Statement has become effective and when any post-effective amendment
to it becomes effective, (ii) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information, (iii) when the
Expedited Review Receipt has been obtained from the Alberta Securities
Commission or receipts have been obtained from each of the Canadian
Securities Commissions for the Canadian Final Prospectus or any
Supplementary
4
5
Material has been filed with the Canadian Securities Commissions, (iv)
any request from the Canadian Securities Commissions for amendments or
supplements to the Canadian Final Prospectus; (v) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purposes, (vi) of the issuance by any Canadian
Securities Commission of any order having the effect of ceasing or
suspending the distribution of the Shares or ceasing or suspending the
trading of the common shares of the Company in any of the Offering
Provinces or preventing or suspending the use in any of the Offering
Provinces of the Canadian Preliminary Prospectus or the Canadian Final
Prospectus, or of the institution or, to the knowledge of the Company,
threatening of any proceedings for any such purpose, and (vii) of the
happening of any event during the period referred to in paragraph (f)
below which makes any statement of a material fact made in the
Registration Statement, the Prospectus or the Canadian Final
Prospectus untrue or which requires the making of any additions to or
changes in the Registration Statement, the Prospectus or the Canadian
Final Prospectus in order to make the statements therein not
misleading. The Company will use every reasonable effort to prevent
the issuance of any such stop order or of any such order ceasing or
suspending the distribution of the Shares, ceasing or suspending the
trading of the common shares of the Company in any of the Offering
Provinces or preventing or suspending such use in any of the Offering
Provinces of the Canadian Preliminary Prospectus or the Canadian Final
Prospectus and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(c) To furnish to you, without charge, four
signed copies of the Registration Statement as first filed with the
Commission and of each amendment to it, including all exhibits, and to
furnish to you and each Underwriter designated by you such number of
conformed copies of the Registration Statement as so filed and of each
amendment to it, without exhibits, as you may reasonably request.
(d) To furnish ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation and the Canadian Underwriter contemporaneously
with the filing thereof with the Alberta Securities Commission, a copy
of the Canadian Final Prospectus and any Supplementary Material,
approved, signed and certified as required by the securities laws of
the Offering Provinces, and shall cause commercial copies of the
Canadian Final Prospectus and any Supplementary Material to be
delivered to the Canadian Underwriter without charge in such cities in
the Offering Provinces and in such numbers as the Canadian Underwriter
may reasonably request as soon as possible and in any event within 24
hours of the time such material shall have been filed with the Alberta
Securities Commission.
(e) Not to file any amendment or supplement to
the Registration Statement, whether before or after the time when it
becomes effective, or to make any amendment or supplement to the
Prospectus or the Canadian Final Prospectus (including the issuance or
filing of any term sheet within the meaning of Rule 434) or to file
any other Supplementary Material of which you shall not previously
have been advised or to which
5
6
you shall reasonably object; and to prepare and file with the
Securities Commissions, promptly upon your reasonable request, any
amendment to the Registration Statement or Canadian Final Prospectus
or supplement to the Prospectus (including the issuance or filings of
any term sheet within the meaning of Rule 434) which may be necessary
or advisable in connection with the distribution of the Shares by you,
and to use its best efforts to cause the same to become promptly
effective.
(f) Promptly after the Registration Statement
becomes effective and an Expedited Review Receipt or receipts for the
Canadian Final Prospectus have been obtained from the Canadian
Securities Commissions, and from time to time thereafter for such
period as in the opinion of counsel for the Underwriters a prospectus
is required by law to be delivered in connection with sales by an
Underwriter or a dealer, to furnish to each Underwriter and dealer as
many copies of the Prospectus or the Canadian Final Prospectus (and of
any amendment or supplement to the Prospectus or the Canadian Final
Prospectus) as such Underwriter or dealer may reasonably request.
(g) If during the period specified in paragraph
(f) any event shall occur as a result of which, in the opinion of
counsel for the Underwriters it becomes necessary to amend or
supplement the Prospectus and/or the Canadian Final Prospectus in
order to make the statements therein, in the light of the
circumstances when the Prospectus or the Canadian Final Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus and/or the Canadian Final
Prospectus to comply with any law, forthwith to prepare and file with
the appropriate Securities Commission an appropriate amendment or
supplement to the Prospectus and/or the Canadian Final Prospectus so
that the statements in the Prospectus and/or the Canadian Final
Prospectus, as so amended or supplemented, will not in the light of
the circumstances when it is so delivered, be misleading, or so that
the Prospectus and/or the Canadian Final Prospectus will comply with
law, and to furnish to each Underwriter and to such dealers as you
shall specify, such number of copies thereof as such Underwriter or
dealers may reasonably request.
(h) Prior to any public offering of the Shares,
to cooperate with you and counsel for the Underwriters in connection
with the registration or qualification of the Shares for offer and
sale by the several Underwriters and by dealers under the state
securities or Blue Sky laws of such jurisdictions as you may request,
to continue such qualification in effect so long as required for
distribution of the Shares and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification.
(i) To mail and make generally available to its
stockholders as soon as reasonably practicable an earnings statement
covering a period of at least twelve months after the effective date
of the Registration Statement (but in no event commencing later than
90 days after such date) which shall satisfy the provisions of Section
11(a) of the 1933 Act, and to advise you in writing when such
statement has been so made available.
6
7
(j) During the period of five years after the
date of this Agreement, (i) to mail as soon as reasonably practicable
after the end of each fiscal year to the registered holders of its
Common Shares a financial report of the Company and its subsidiaries
on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to
include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated
statement of shareholders' equity as of the end of and for such fiscal
year, together with comparable information as of the end of and for
the preceding year, certified by independent certified public
accountants, and (ii) to make generally available as soon as
practicable after the end of each quarterly period (except for the
last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and
a consolidated statement of cash flows (and similar financial reports
of all unconsolidated subsidiaries, if any) as of the end of and for
such period, and for the period from the beginning of such year to the
close of such quarterly period, together with comparable information
for the corresponding periods of the preceding year.
(k) During the period referred to in paragraph
(j), to furnish to you as soon as available a copy of each report or
other publicly available information of the Company mailed to the
registered holders of Common Shares or filed with the Securities
Commissions or any of them and such other publicly available
information concerning the Company and its subsidiaries as you may
reasonably request.
(l) To pay all costs, expenses, fees and taxes
incident to (i) the preparation, printing, filing and distribution
under the 1933 Act of the Registration Statement (including financial
statements and exhibits), each preliminary prospectus and all
amendments and supplements to any of them prior to or during the
period specified in paragraph (f), (ii) the printing and delivery of
the Prospectus, the Canadian Preliminary Prospectus and the Canadian
Final Prospectus and all amendments or supplements to any of them
during the period specified in paragraph (f), (iii) the printing and
delivery of this Agreement, the Preliminary and Supplemental Blue Sky
Memoranda and all other agreements, memoranda, correspondence and
other documents printed and delivered in connection with the offering
of the Shares (including in each case any disbursements of counsel for
the Underwriters relating to such printing and delivery), (iv) the
registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states (including in
each case the reasonable fees and disbursements of counsel for the
Underwriters relating to such registration or qualification and
memoranda relating thereto), (v) the registration or qualification of
the Shares for offer and sale in the Offering Provinces (including in
each case the reasonable fees and disbursements of Canadian counsel
for the Underwriters relating to such registration of qualification
and opinions relating thereto), (vi) filings and clearance with the
National Association of Securities Dealers, Inc. ("NASD") in
connection with the offering, (vii) the listing of the Shares on the
National Association of Securities Dealers Automated Quotation system
("Nasdaq") National Market and The Toronto Stock Exchange and (viii)
furnishing such copies of the Registration
7
8
Statement, the Prospectus, the Canadian Preliminary Prospectus, the
Canadian Final Prospectus and all amendments and supplements thereto
as may be requested for use in connection with the offering or sale of
the Shares by the Underwriters or by dealers to whom Shares may be
sold. Except as otherwise provided in this Section 5(l), the
Underwriters shall pay their own costs and expenses, including the
costs and expenses of their counsel, any transfer taxes on the Shares
which they may sell and the expenses of advertising any offering of
the Shares made by the Underwriters.
(m) To use its best efforts to maintain the
inclusion of such Common Shares in the Nasdaq National Market (or on a
national securities exchange) for a period of three years after the
effective date of the Registration Statement.
(n) The Company will use the net proceeds
received by them from the sale of the Shares in the manner specified
in the Prospectus under "Use of Proceeds."
(o) Prior to the time at which the distribution
of the Shares is completed, the Company shall not, directly or
indirectly, (i) take any action designed to cause or result in, or
that constitutes or might reasonably be expected to constitute,
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares or (ii) bid
for, purchase or pay anyone any compensation for soliciting purchases
of, the Shares.
(p) To use its best efforts to do and perform all
things required or necessary to be done and performed under this
Agreement by the Company prior to the Closing Date or any Option
Closing Date, as the case may be.
6. Representations and Warranties of the Company. The
Company represents and warrants to each Underwriter that:
(a) The Registration Statement has become
effective; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such
purpose are pending before or threatened by the Commission; and no
Canadian Securities Commission has issued any order having the effect
of ceasing or suspending the distribution of the Shares or ceasing or
suspending the trading of the common shares of the Company in any of
the Offering Provinces or preventing or suspending the use in any of
the Offering Provinces of the Canadian Preliminary Prospectus or the
Canadian Final Prospectus and, to the knowledge of the Company, no
proceedings for any such purpose have been instituted or threatened.
(b) (i) Each part of the Registration Statement,
when such part became effective, did not contain and each such part,
as amended or supplemented, if applicable, will not contain any 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 not
misleading, (ii) the
8
9
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with
the 1933 Act and (iii) the Prospectus does not contain and, as amended
or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph (b) do not apply to statements
or omissions in the Registration Statement or the Prospectus based
upon information furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(c) (i) At the time that the Canadian Securities
Commissions issue an Expedited Review Receipt or receipts for the
Canadian Final Prospectus, the Canadian Final Prospectus, as
subsequently amended, if applicable, will not contain any 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 not
misleading in the light of the circumstances under which they were
made and (ii) the Canadian Final Prospectus complies and, as amended,
if applicable, will comply in all material respects with the Canadian
Securities Legislation as interpreted and applied by the Canadian
Securities Commissions.
(d) Each preliminary prospectus filed as part of
the registration statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
and each Registration Statement filed pursuant to Rule 462(b) under
the 1933 Act, if any, complied when so filed in all material respects
with the 1933 Act; and did not contain 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 the light of
the circumstances under which they were made, not misleading.
(e) The Company does not own or control, directly
or indirectly, any corporation, association, trust or other entity
other than those entities listed on Schedule II hereto. Such Schedule
II lists under the caption "U.S. SUBSIDIARIES" those subsidiaries that
are organized in the United States (the "U.S. Subsidiaries") and under
the caption "CANADIAN SUBSIDIARIES" those subsidiaries that are
organized in Canada (the "Canadian Subsidiaries," and together with
the U.S. Subsidiaries, the "Subsidiaries"). The Company and each of
the Subsidiaries has been duly organized, is validly existing as a
corporation or limited liability company in good standing under the
laws of its jurisdiction of incorporation and has full power and
authority to carry on its business as it is currently being conducted
and to own, lease and operate its properties, and each is duly
qualified and is in good standing as an extraprovincial or foreign
corporation or limited liability company authorized to do business in
each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the Company and the Subsidiaries, taken as a whole.
9
10
(f) All of the outstanding shares of capital
stock of, or other ownership interests in, each of the Subsidiaries
have been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any
nature, except for the lien of Nationsbank of Texas, N.A., with
respect to the Company's $150 million credit facility described in the
Prospectus.
(g) All the outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive or
similar rights (except for preemptive rights granted to the TPG
Partners, L.P. and TPG Parallel, L.P. (collectively, "TPG") pursuant
to the Securities Purchase Agreement, dated as of November 13, 1995
(the "Securities Purchase Agreement"), between the Company and TPG,
which rights have been duly and effectively waived); and the Shares
have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement,
will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or
similar rights.
(h) The authorized capital stock of the Company,
including the Common Shares, conforms as to legal matters to the
description thereof contained in the Prospectus and the Canadian Final
Prospectus.
(i) Neither the Company nor any of the
Subsidiaries is in violation of its respective charter or by-laws or
other organizational documents or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any other agreement,
indenture or instrument material to the conduct of the business of the
Company and the Subsidiaries, taken as a whole, to which the Company
or any of the Subsidiaries is a party or by which it or any of its
subsidiaries or their respective property is bound.
(j) The execution, delivery and performance of
this Agreement, compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated hereby
will not require any consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other
governmental body (except as such may be required under the securities
or Blue Sky laws of the various states, the NASD and the Canadian
Securities Legislation) and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
charter or by-laws or other organizational documents of the Company or
any of the Subsidiaries or any agreement, indenture or other
instrument material to the conduct of the business of the Company or
the Subsidiaries to which it or any of the Subsidiaries is a party or
by which it or any of the Subsidiaries or their respective property is
bound, or violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the Company, any
of the Subsidiaries or their respective property.
10
11
(k) Except as otherwise set forth in the
Prospectus and the Canadian Final Prospectus, there are no material
legal or governmental proceedings pending to which the Company or any
of the Subsidiaries is a party or of which any of their respective
property is the subject, and, to the best of the Company's knowledge,
no such proceedings are threatened or contemplated; the aggregate of
all pending legal or governmental proceedings that are not described
in the Prospectus and the Canadian Final Prospectus to which the
Company or any Subsidiary is a party or which affect any of their
respective properties, including ordinary routine litigation
incidental to the business of the Company or any Subsidiary, would not
have a material adverse change in the business, prospects, financial
condition or results of operation of the Company and the Subsidiaries,
taken as a whole. No contract or document of a character required to
be described in the Registration Statement, the Prospectus or the
Canadian Final Prospectus or to be filed as an exhibit to the
Registration Statement is not so described or filed as required.
(l) Neither the Company nor any of the
Subsidiaries has violated in any material respect any foreign,
federal, state or local law or regulation relating to the protection
of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), nor any federal or state law relating to discrimination in the
hiring, promotion or pay of employees nor any applicable federal or
state wages and hours laws, nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations
promulgated thereunder, which in each case might result in any
material adverse change in the business, prospects, financial
condition or results of operation of the Company and the Subsidiaries,
taken as a whole.
(m) The Company and each of the Subsidiaries has
such permits, licenses, franchises and authorizations of governmental
or regulatory authorities ("permits"), including, without limitation,
under any applicable Environmental Laws, as are necessary to own,
lease and operate its respective properties and to conduct its
business; the Company and each of the Subsidiaries has fulfilled and
performed all of its material obligations with respect to such permits
and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such
permit; and, except as described in the Prospectus, such permits
contain no restrictions that are materially burdensome to the Company
or any of the Subsidiaries.
(n) Based on the prior experience of the Company
and the Subsidiaries with respect to compliance with Environmental
Laws, the Company reasonably has concluded that the costs and
liabilities associated with compliance by the Company and the
Subsidiaries with Environmental Laws are not likely to have, singly or
in the aggregate, a material adverse effect on the Company and the
Subsidiaries, taken as a whole.
(o) The Company and each of the Subsidiaries has
(i) generally satisfactory title to all its interests in its oil and
gas properties material to the conduct of its
11
12
business, title investigations having been carried out by the Company
and each of the Subsidiaries in accordance with the general practice
in the oil and gas industry, (ii) good and indefeasible title in fee
simple to all other real property owned by it and (iii) good and
indefeasible title to all personal property owned by it, in each case
free and clear of all liens, encumbrances, claims, security interests,
subleases and defects except such as are described in the Prospectus
or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries; and any real property
and buildings held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings of the Company
and the Subsidiaries;
(p) The Company and each of the Subsidiaries
maintains commercially reasonable amounts of adequate insurance for
the protection of its assets material to the conduct of its business.
(q) Deloitte & Touche are independent public
accountants with respect to the Company as required by the 1933 Act.
(r) The financial statements, together with
related schedules and notes forming part of the Registration
Statement, the Prospectus and the Canadian Final Prospectus (and any
amendment or supplement thereto), present fairly the consolidated
financial position, results of operations and changes in financial
position of the Company and the Subsidiaries on the basis stated in
the Registration Statement and the Canadian Final Prospectus at the
respective dates or for the respective periods to which they apply;
such statements and related schedules and notes have been prepared in
accordance with Canadian generally accepted accounting principles
consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information
and data set forth in the Registration Statement, the Prospectus and
the Canadian Final Prospectus (and any amendment or supplement
thereto) is, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the
books and records of the Company.
(s) The Company is not an "investment company" or
a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(t) Except as described in the Prospectus, no
holder of any security of the Company has any right to require
registration of Common Shares or any other security of the Company.
(u) The Company has complied with all provisions
of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida).
12
13
(v) There are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities, commitments
of sale or liens related to or entitling any person to purchase or
otherwise to acquire any shares of the capital stock of, or other
ownership interest in, the Company or any Subsidiary except as
otherwise disclosed in the Registration Statement and the Canadian
Final Prospectus.
(w) Except as disclosed in the Prospectus, there
are no business relationships or related party transactions required
to be disclosed therein by Item 404 of Regulation S-K of the
Commission.
(x) The Company and each of the Subsidiaries
maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(y) All material tax returns required to be filed
by the Company and each of the Subsidiaries in any jurisdiction have
been filed, other than those filings being contested in good faith,
and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due pursuant to such
returns or pursuant to any assessment received by the Company or any
of the Subsidiaries have been paid, other than those being contested
in good faith and for which adequate reserves have been provided.
(z) No stamp or other issuance, goods or services
or transfer taxes or duties and no capital gains, income, withholding
or other taxes are payable by or on behalf of the Underwriters to the
Government of Canada or any political subdivision or taxing authority
thereof or therein in connection with (i) the sale and delivery by the
Company of the Shares to or for the respective accounts of the
Underwriters or (ii) the sale and delivery outside of Canada by the
Underwriters of the Shares to the initial purchasers thereof.
(aa) The Company has filed a registration
statement pursuant to Section 12(g) of the Exchange Act, to register
the Common Shares and has filed applications to list the Shares on the
Nasdaq National Market and The Toronto Stock Exchange, and has
received notification that the listings have been approved, subject to
notice of issuance of the Shares and subject to the Company fulfilling
all of the requirements of the Toronto Stock Exchange as set forth in
the letter of The Toronto Stock Exchange dated October 16, 1996.
7. Indemnification.
13
14
(a) The Company agrees to indemnify and hold
harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the officers, directors, employees, agents and
partners of each Underwriter from and against any and all losses,
claims, damages, liabilities and judgments (including, but not limited
to, losses, claims, damages, liabilities and judgments under the 1933
Act, the Exchange Act or under the Canadian Securities Legislation)
caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Prospectus,
the Canadian Preliminary Prospectus and the Canadian Final Prospectus
(as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or
caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based
upon information furnished in writing to the Company by or on behalf
of any Underwriter through you expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims,
damages, liabilities or judgments purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus or the
Canadian Final Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto)
was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to
the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended and supplemented) or the Canadian
Final Prospectus would have cured the defect giving rise to such loss,
claim, damage, liability or judgment.
(b) In case any action shall be brought against
any Underwriter or any person controlling such Underwriter, based upon
any preliminary prospectus, the Canadian Preliminary Prospectus, the
Registration Statement, the Prospectus, the Canadian Final Prospectus
or any amendment or supplement thereto and with respect to which
indemnity may be sought against the Company, such Underwriter shall
promptly notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and
expenses. Any Underwriter or any such controlling person shall have
the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the employment of such counsel shall
have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defense and employ counsel or
(iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and
the Company and such Underwriter or such controlling person shall have
been advised in writing by such counsel that there may be one or more
legal defenses available to it which are different from or
14
15
additional to those available to the Company (in which case the
Company shall not have the right to assume the defense of such action
on behalf of such Underwriter or such controlling person, it being
understood, however, that the Company shall not, in connection with
any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local
counsel) for all such Underwriters and controlling persons, which firm
shall be designated in writing by ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation and that all such fees and expenses shall be
reimbursed as they are incurred). The Company shall not be liable for
any settlement of any such action effected without its written consent
but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such
controlling person from and against any loss or liability by reason of
such settlement. Notwithstanding the immediately preceding sentence,
if in any case where the fees and expenses of counsel are at the
expense of the indemnifying party and an indemnified party shall have
requested the indemnifying party to reimburse the indemnified party
for such fees and expenses of counsel as incurred, such indemnifying
party agrees that it shall be liable for any settlement of any action
effected without its written consent if (i) such settlement is entered
into more than ten business days after the receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying
party shall have failed to reimburse the indemnified party in
accordance with such request for reimbursement prior to the date of
such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors,
its officers who sign the Registration Statement and any person
controlling the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter but only with
reference to information furnished in writing by or on behalf of such
Underwriter through you expressly for use in the Registration
Statement, the Prospectus, the Canadian Preliminary Prospectus, the
Canadian Final Prospectus or any preliminary prospectus. In case any
action shall be brought against the Company, any of its directors, any
such officer or any person controlling the Company based on the
Registration Statement, the Prospectus, the Canadian Preliminary
Prospectus, the Canadian Final Prospectus or any preliminary
prospectus and in respect of which indemnity may be sought against any
Underwriter, the Underwriter shall have the rights and duties given to
the Company (except that if the Company shall have assumed the defense
thereof, such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of
such Underwriter), and the Company, its directors, any such officers
and any
15
16
person controlling the Company shall have the rights and duties given
to the Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this
Section 7 is unavailable to an indemnified party in respect of any
losses, claims, damages, liabilities or judgments referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand
and the Underwriters on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company and the Underwriters in
connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative benefits
received by the Company and the Underwriters shall be deemed to be in
the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company, and the total
underwriting discounts and commissions received by the Underwriters,
bear to the total price to the public of the Shares, in each case as
set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and the Underwriters shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7(d) are several in proportion to the
respective number of Shares purchased by each of the Underwriters hereunder and
not joint.
16
17
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the
Company contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of
the Closing Date.
(b) The Registration Statement shall have become
effective not later than 5:00 p.m. (and in the case of a Registration
Statement filed under Rule 462 (b) of the 1933 Act, not later than
10:00 p.m.), New York City time, on the date of this Agreement and an
Expedited Review Receipt shall be obtained from the Alberta Securities
Commission or receipts shall be obtained from each of the Canadian
Securities Commissions for the Canadian Final Prospectus not later
than 5:00 p.m. on the business day immediately following the date of
this Agreement or at such later date and time as you may approve in
writing, and at the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been commenced or shall be
pending before or contemplated by the Commission and no Canadian
Securities Commission shall have issued any order having the effect of
ceasing or suspending the distribution of the Shares or ceasing or
suspending the trading of the common shares of the Company in any of
the Offering Provinces or preventing or suspending the use in any of
the Offering Provinces of the Canadian Final Prospectus and, to the
knowledge of the Company, no proceedings for such purpose shall have
been instituted or threatened.
(c) (i) Since the date of the latest balance
sheet included in the Registration Statement, the Prospectus and the
Canadian Final Prospectus there shall not have been any material
adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in the
ordinary course of business, of the Company and the Subsidiaries,
taken as a whole, (ii) since the date of the latest balance sheet
included in the Registration Statement, the Prospectus and the
Canadian Final Prospectus there shall not have been any change, or any
development involving a prospective material adverse change, in the
capital stock or in the long-term debt of the Company from that set
forth in the Registration Statement, the Prospectus and the Canadian
Final Prospectus, (iii) the Company and its Subsidiaries shall have no
liability or obligation, direct or contingent, which is material to
the Company and its Subsidiaries, taken as a whole, other than those
reflected in the Registration Statement, the Prospectus and the
Canadian Final Prospectus and (iv) on the Closing Date you shall have
received a certificate dated the Closing Date, signed by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇, in their capacities as the President, Chief
Executive Officer and Director and the Chief Financial Officer and
Secretary of the Company, confirming the matters set forth in
paragraphs (a), (b), and (c) of this Section 8.
17
18
(d) You shall have received on the Closing Date
an opinion (satisfactory to you), dated the Closing Date, of Burnet,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Canadian counsel for the Company, to the effect
that:
(i) the Company and each of the Canadian
Subsidiaries has been incorporated, is validly existing as a
corporation under the laws of its jurisdiction of
incorporation and has the corporate power and authority
required to carry on its business as it is currently being
conducted and to own, lease and operate its properties;
(ii) the Company and each of the Canadian
Subsidiaries is duly qualified and is registered as an extra
provincial or foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a
material adverse effect on the Company and the Canadian
Subsidiaries, taken as a whole;
(iii) all of the outstanding shares of
capital stock of each of the Canadian Subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company, free and clear
to the knowledge of such counsel of any security interest,
claim, lien, encumbrance or adverse interest of any nature;
(iv) The authorized share capital of the
Company consists of an unlimited number of common shares,
_________ of which are issued and outstanding, and two classes
of preferred shares, unlimited in number and issuable in
series, _________ of which are issued and outstanding, and all
outstanding Common Shares have been duly authorized and
validly issued and are fully-paid and non- assessable;
(v) the form of definitive share
certificate representing the Common Shares has been duly
approved and adopted by the Company, and complies with all
legal requirements including the legal requirements of The
Toronto Stock Exchange;
(vi) the Shares have been duly
authorized, and when issued and delivered to the Underwriters
against payment therefor as provided by this Agreement, will
have been validly issued and will be fully paid and
non-assessable, and the issuance of such Shares is not subject
to any preemptive or similar rights arising by operation of
law, under the charter or by-laws of the Company or, to the
best of such counsel's knowledge, after due inquiry, otherwise
(except for pre-emptive rights granted to TPG pursuant to the
Security Purchase Agreement, which rights have been waived by
TPG in connection with the offering of the Shares);
18
19
(vii) the Common Shares are listed and
posted for trading on The Toronto Stock Exchange and the
Shares have been conditionally approved for listing subject to
the Company fulfilling all of the requirements of The Toronto
Stock Exchange as set forth in the letter of The Toronto Stock
Exchange dated October 16, 1996;
(viii) this Agreement has been duly
authorized, executed and, to the extent delivery is a matter
governed by the laws of the province of Alberta, delivered by
the Company and is a valid and binding agreement of the
Company enforceable in accordance with its terms (except as
rights to indemnity and contribution hereunder may be limited
by applicable law);
(ix) the authorized capital stock of the
Company, including the Common Shares, conforms as to legal
matters to the description thereof contained in the Prospectus
and the Canadian Final Prospectus;
(x) the statements under the captions
"Description of Capital Stock," "Canadian Taxation and the
Investment Canada Act" and "Service and Enforcement of Legal
Process" of Securities" in the Prospectus and the Canadian
Final Prospectus and Items 14 and 15 of Part II of the
Registration Statement insofar as such statements constitute a
summary of legal matters documents or proceedings referred to
therein, fairly present the information called for with
respect to such legal matters, documents and proceedings;
(xi) neither the Company nor any of the
Canadian Subsidiaries is in violation of its respective
charter or by-laws;
(xii) the execution, delivery and
performance of this Agreement by the Company, compliance by
the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not
require any consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other
governmental body (other than the Canadian Securities
Commissions and the Toronto Stock Exchange) and will not
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of
the Company or any of the Canadian Subsidiaries, or violate or
conflict with any laws, administrative regulations or, to the
best of such counsel's knowledge, after due inquiry, rulings
or court decrees applicable to the Company or any of the
Subsidiaries or their respective properties;
(xiii) all approvals, permits, consents and
authorizations of the Canadian Securities Commissions have
been obtained to qualify the issuance and sale of the Shares
to the public in the Offering Provinces through registrants
19
20
registered under the applicable laws of the Offering Provinces
who have complied with the relevant provisions of such
applicable laws;
(xiv) to the best of such counsel's
knowledge, after due inquiry, other than as described in the
Registration Statement and the Prospectus, no holder of any
security of the Company has any right to require registration
of Common Shares or any other security of the Company;
(xv) to the best of such counsel's
knowledge, no action, suit or proceeding is pending or
threatened against or affecting the Company or any of the
Subsidiaries or any of their respective properties before or
by any court, governmental official, commission, board or
other administrative agency wherein an unfavorable decision,
order, ruling or finding would have a material adverse effect
on the business, prospects, financial condition or results of
operation of the Company and the Subsidiaries, taken as a
whole;
(xvi) no stamp or other issuance, goods or
services or transfer taxes or duties and no capital gains,
income, withholding or other taxes are payable by or on behalf
of the Underwriters to the Government of Canada or any
political subdivision or taxing authority thereof or therein
in connection with (i) the sale and delivery by the Company of
the Shares to or for the respective accounts of the
Underwriters or (ii) the sale and delivery outside of Canada
by the Underwriters of the Shares to the initial purchasers
thereof;
(xvii) insofar as matters of federal
Canadian and Alberta law are concerned, (A) the Registration
Statement and the filing of the Registration Statement with
the Commission have been duly authorized by and on behalf of
the Company and the Registration Statement has been duly
executed pursuant to such authorization by and on behalf of
the Company and (B) the Canadian Final Prospectus and the
filing of the Canadian Final Prospectus has been duly
authorized by and on behalf of the Company, and the Canadian
Final Prospectus has been duly executed pursuant to such
authorization by and on behalf of the Company;
(xviii) the Shares are eligible for
investment as set forth under the heading "Eligibility for
Investment" in the Canadian Final Prospectus;
(xix) such counsel is of the opinion that
the Canadian Final Prospectus and any amendments thereto
(excluding the financial statements and other financial and
statistical data included or incorporated by reference therein
or omitted therefrom, as to which such counsel need express no
opinion) appears on its face to have been appropriately
responsive in all material respects as to the requirements of
the securities laws, rules and regulations of the Offering
Provinces as interpreted and applied by the relevant Canadian
Securities Commission;
20
21
(xx) nothing has come the to attention of
such counsel which would lead such counsel to believe that
(except for the financial statements and other financial,
accounting or statistical data included or incorporated in the
Canadian Final Prospectus or omitted therefrom, and other than
with respect to information which is related solely to the
Underwriters) the Canadian Final Prospectus contains any
untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and
(xxi) the consent to jurisdiction in New
York of the Company contained herein will be valid and binding
on the Company; in an action on a final judgment in personam
against the Company of a New York court that is not
impeachable as void or voidable under New York law, a court in
any of the Offering Provinces (a "Canadian Court") would give
effect to the appointment by the Company of
___________________ as its agent for service and to the
service of process in the manner set forth in the relevant
section of such agreements, whereby the Company has submitted
to the jurisdiction in any New York court and to the terms of
the relevant section, assuming its validity under New York
law; should enforcement of this Agreement be sought in any of
the Offering Provinces (each a "Relevant Province") in
accordance with the laws of New York, a Canadian Court would
recognize the choice of New York law (other than for matters
of procedure, in respect of which the laws of the Relevant
Province would be applied), and, upon appropriate evidence as
to such law being adduced, apply such law, provided that none
of the provisions of this Agreement or of applicable New York
law is contrary to public policy as that term is understood
under the laws of the Relevant Province and the federal laws
of Canada applicable therein; provided, however, that a
Canadian Court would retain discretion to decline to hear such
action if it is contrary to public policy, as that term is
understood under the laws of the Relevant Province and the
federal laws of Canada applicable therein, or if it is not the
proper forum to hear such an action or if concurrent
proceedings are being brought elsewhere, and they are not
aware of any reason why, in the circumstances, contemplated by
this Agreement a Canadian Court would decline to apply New
York law or to hear such an action based on public policy; the
laws of Canada and the laws of the Relevant Province would
permit an action to be brought in a Canadian Court on a final
and conclusive judgment in personam of a New York court
respecting the enforcement of this Agreement for a sum certain
if: (a) the court rendering such judgment properly exercised
jurisdiction over the judgment debtor as recognized by the
courts of the Relevant Province (and submission to the
non-exclusive jurisdiction of the New York court by the
Company pursuant to this Agreement will be sufficient for the
purpose); (b) such judgment was not obtained by fraud or in a
manner contrary to natural justice and the enforcement thereof
would not be inconsistent with public policy, as that term is
understood under the laws of the Relevant Province and the
federal laws of Canada considered applicable therein or
contrary to an order made by
21
22
the Attorney General of Canada under the Foreign
Extraterritorial Measures Act (Canada); (c) the enforcement of
such judgment does not constitute, directly or indirectly, the
enforcement of foreign revenue, expropriatory or penal laws;
(d) no new admissible evidence relevant to the action is
discovered prior to the rendering of the judgment by the
Canadian Court; (e) the action to enforce such judgment is
commenced within six years of the date of such judgment; and
(f) in the case of judgment obtained by default, there has
been no manifest error in the granting of such judgment, and
that they are not aware of any reason why, in the
circumstances contemplated by this Agreement, such an action
could not be brought in the Relevant Province based on public
policy (provided that the opinion given in this clause may be
qualified to the extent that a court may decline to enforce
rights of indemnity and contribution and that judgments are
subject to the Currency Act (Canada)).
In rendering such opinion, such counsel may state
that they express no opinion as to matters governed by laws other than
the federal laws of Canada and the laws of the Offering Provinces.
The opinion of Burnet, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ described
in paragraph (d) above shall be rendered to you at the request of the
Company and shall so state therein.
(e) You shall have received on the Closing Date
an opinion (satisfactory to you), dated the Closing Date, of Jenkens &
▇▇▇▇▇▇▇▇▇, a Professional Corporation, counsel for the Company, to the
effect that:
(i) the Company has been duly
incorporated, is validly existing as a corporation under the
laws of its jurisdiction of organization and has full power
and authority required to carry on its business as it is
currently being conducted and to own, lease and operate its
properties;
(ii) Denbury Management, Inc. has been
duly incorporated, is validly existing as a corporation in
good standing under the laws of its jurisdiction of
organization and has full power and authority required to
carry on its business as it is currently being conducted and
to own, lease and operate its properties; each of the other
U.S. Subsidiaries is validly existing as a corporation or
limited liability company in good standing under the laws of
its jurisdiction of organization;
(iii) Denbury Management, Inc. is duly
qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole;
22
23
(iv) all of the outstanding shares of
capital stock of, or other ownership interests in, Denbury
Management, Inc. have been duly and validly authorized and
issued and are fully paid and non-assessable, and, to such
counsel's knowledge, are owned by the Company, free and clear
of any security interest, claim, lien, encumbrance or adverse
interest of any nature (except for the lien of Nationsbank of
Texas, N.A., with respect to the Company's $150 million credit
facility described in the Prospectus);
(v) to the knowledge of such counsel,
the issuance of the Shares is not subject to any preemptive or
similar rights (except for preemptive rights granted to TPG
pursuant to the Securities Purchase Agreement, which rights
have been duly and effectively waived by TPG in connection
with the offering of the Shares);
(vi) assuming due authorization,
execution and delivery of this Agreement under Canadian
federal and Alberta law, this Agreement has been duly executed
and delivered by the Company;
(vii) the Registration Statement has
become effective under the 1933 Act, no stop order suspending
its effectiveness has been issued and no proceedings for that
purpose are, to the knowledge of such counsel, pending before
or contemplated by the Commission;
(viii) the statements under the captions
"Risk Factors -- Governmental and Environmental Regulation",
"Business and Properties -- Regulations", and "Shares Eligible
for Future Sale" in the Prospectus and Items 14 and 15 of Part
II of the Registration Statement insofar as such statements
constitute a summary of legal matters, documents or
proceedings referred to therein, fairly present in all
material respects, the information called for with respect to
such legal matters, documents and proceedings;
(ix) to the knowledge of such counsel,
Denbury Management, Inc. is not in violation of its charter or
by-laws;
(x) the execution, delivery and
performance of this Agreement by the Company, compliance by
the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not
require any consent, approval, authorization or other order of
any U.S. court, regulatory body, administrative agency or
other governmental body (except as such may be required under
the 1933 Act or other securities or Blue Sky laws) and will
not conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the charter or by-laws
of Denbury Management, Inc. or any agreement, indenture or
other instrument which is an exhibit to the Registration
Statement or a document
23
24
incorporated by reference therein, or violate or conflict with
any laws, administrative regulations or rulings or, to the
knowledge of such counsel, court decrees applicable to the
Company or any of the Subsidiaries or their respective
properties;
(xi) to the knowledge of such counsel,
there are not any legal or governmental proceedings pending or
threatened to which the Company or any of the Subsidiaries is
a party or to which any of their respective property is
subject which is required to be described in the Registration
Statement or the Prospectus and is not so described, or of any
contract or other document which is required to be described
in the Registration Statement or the Prospectus or is required
to be filed as an exhibit to the Registration Statement which
is not described or filed as required;
(xii) the Company is not an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended;
(xiii) to the knowledge of such counsel,
except as described in the Prospectus, no holder of any
security of the Company has any right to require registration
of Common Shares or any other security of the Company;
(xiv) the Registration Statement
(including any Registration Statement filed under 462 (b) of
the 1933 Act, if any) and the Prospectus and any supplement or
amendment thereto (except for financial statements and reserve
information as to which no opinion need be expressed) comply
as to form in all material respects with the 1933 Act;
(xv) such counsel shall state that such
counsel has participated in conferences with officers and
representatives of the Company, representatives of the
independent public accountants for the Company and the
Underwriters at which the contents of the Registration
Statement and the Prospectus and related matters were
discussed, and, although such counsel is not passing upon and
does not assume any responsibility for and have not verified
the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus,
and have not made any independent check or verification
thereof, on the basis of the foregoing no facts have come to
the attention of such counsel that lead such counsel to
believe that either the Registration Statement at the time it
became effective (including the information deemed to be part
of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b), if applicable), or any amendment
thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or
omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date (or any
amendment thereof or supplement thereto made prior to the
Closing Date as of the date of such amendment or supplement)
and as of the
24
25
Closing Date contained or contains an untrue statement of a
material fact or omitted or omits to state any 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 (it being understood that such
counsel need express no belief or opinion with respect to the
exhibits and the financial statements and other financial and
statistical data included therein).
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws other than the laws of
the United States and jurisdictions in which they are admitted, to the
extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance
reasonably satisfactory to Underwriters' Counsel) of other counsel
reasonably acceptable to Underwriters' Counsel, familiar with the
applicable laws; (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company and its
subsidiaries, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel. The opinion
of such counsel for the Company shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and, in
their opinion, you and they are justified in relying thereon.
The opinion of Jenkens & ▇▇▇▇▇▇▇▇▇, a Professional
Corporation described in paragraph (d) above shall be rendered to you
at the request of the Company and shall so state therein.
(f) You shall have received on the Closing Date
an opinion, dated the Closing Date, of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., counsel
for the Underwriters, as to the matters referred to in clauses (i),
(v) (solely as to preemptive rights arising by operation of law or
under the charter or by-laws of the Company), (vi), (viii), (ix) (but
only with respect to the statements under the caption "Underwriting")
and (xvii) of the foregoing paragraph (e). In giving such opinion
with respect to the matters covered by clause (xvii) such counsel may
state that their opinion and belief are based upon their participation
in the preparation of the Registration Statement and Prospectus and
any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification
except as specified.
(g) You shall have received on the Closing Date
an opinion, dated the Closing Date, of ▇▇▇▇▇▇▇▇ Binch, Canadian
counsel for the Underwriters, as to the matters referred to in clauses
(i) (solely as to the Company), (vi) (solely as to preemptive rights
arising by operation of law or under the charter or by-laws of the
Company), (viii) (solely as to due authorization, execution, and
delivery), (ix) and (xiii) of the foregoing paragraph (d). In
rendering such opinion, such counsel may state that they express no
opinion as to matters governed by laws other than the federal laws of
Canada and the laws of the Offering
25
26
Provinces. In rendering their opinion with respect to the matters
referred to in clauses (viii) and (xiii) of the foregoing paragraph
(d), such counsel may rely on the opinion of Burnet, ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, Canadian counsel to the Company, to the extent that the
matters referred to therein are governed by the laws of the Provinces
of Alberta or British Columbia.
(h) You shall have received a letter on and as of
the Closing Date, in form and substance satisfactory to you, from
Deloitte & Touche, independent public accountants, with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by Deloitte & Touche
on the date of this Agreement.
(i) The Company shall have delivered to you the
agreements specified in Section 2 hereof.
(j) The sale by the Company of 800,000 of its
Common Shares to TPG pursuant to the Stock Purchase Agreement, dated
as of October 2, 1996, between the Company and TPG shall have been
consummated prior to or concurrently with the sale by the Company of
the Firm Shares pursuant to this Agreement.
(k) The Company shall not have failed at or prior
to the Closing Date to perform or comply with any of the agreements
herein contained and required to be performed or complied with by the
Company at or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of such Additional
Shares and other matters related to the issuance of such Additional Shares.
9. Effective Date of Agreement and Termination. This
Agreement shall become effective upon the later of (i) execution of this
Agreement and (ii) when notification of the effectiveness of the Registration
Statement has been released by the Commission and an Expedited Review Receipt
or receipts for the Canadian Final Prospectus has been obtained from the
Canadian Securities Commissions.
This Agreement may be terminated at any time prior to the
Closing Date by you by written notice to the Company if any of the following
has occurred or come into effect: (i) since the respective dates as of which
information is given in the Registration Statement, the Prospectus, Canadian
Final Prospectus, any material adverse change or development involving a
prospective material adverse change in the condition, financial or otherwise,
of the Company and its subsidiaries, taken as a whole, or the earnings,
affairs, or business prospects of the Company or any of its subsidiaries, taken
as a whole, whether or not arising in the ordinary course of business, which
would, in your judgment, make it impracticable to market the Shares on the
terms and in the manner
26
27
contemplated in the Prospectus or the Canadian Final Prospectus, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States, Canada or elsewhere that, in your judgment, is material
and adverse and would, in your judgment, make it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus or the
Canadian Final Prospectus, (iii) the suspension or material limitation of
trading in securities on the New York Stock Exchange, the American Stock
Exchange, The Toronto Stock Exchange or the Nasdaq National Market or
limitation on prices for securities on any such exchange or the Nasdaq National
Market, (iv) the enactment, publication, decree or other promulgation of any
United States or Canadian federal, state or provincial statute, regulation,
rule or order of any United States or Canadian court or other governmental
authority which in your opinion materially and adversely affects, or will
materially and adversely affect, the business or operations of the Company or
any Subsidiary, (v) the declaration of a banking moratorium by either United
States or Canadian federal or New York State authorities or (vi) the taking of
any action by any United States or Canadian federal, state, provincial or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States and/or Canada.
If on the Closing Date or on an Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase the Firm Shares or Additional Shares, as the case may be, which it or
they have agreed to purchase hereunder on such date and the aggregate number of
Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I bears to the total number of Firm
Shares which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase on such date; provided that in no event shall the number of Firm
Shares or Additional Shares, as the case may be, which any Underwriter has
agreed to purchase pursuant to Section 2 hereof be increased pursuant to this
Section 9 by an amount in excess of one-ninth of such number of Firm Shares or
Additional Shares, as the case may be, without the written consent of such
Underwriter. If on the Closing Date or on an Option Closing Date, as the case
may be, any Underwriter or Underwriters shall fail or refuse to purchase Firm
Shares, or Additional Shares, as the case may be, and the aggregate number of
Firm Shares or Additional Shares, as the case may be, with respect to which
such default occurs is more than one-tenth of the aggregate number of Shares to
be purchased on such date by all Underwriters and arrangements satisfactory to
you and the Company for purchase of such Shares are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter and the Company. In any such case which does
not result in termination of this Agreement, either you or the Company shall
have the right to postpone the Closing Date or the applicable Option Closing
Date, as the case may be, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement, the
Prospectus, the Canadian Final Prospectus or any
27
28
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of any such Underwriter under this Agreement.
10. Agent for Service; Submission to Jurisdiction. Each
of the parties hereto irrevocably (i) agrees that any legal suit, action or
proceeding against the Company brought by any Underwriter or by any person who
controls any Underwriter arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in any New York court, (ii)
waives to the fullest extent it may effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such proceeding and
(iii) submits to the exclusive jurisdiction (except for proceedings instituted
in regard to the enforcement of a judgement of any such court, as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. The Company has appointed CT Corporation System, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, as its authorized agent (the "Authorized Agent")
upon whom process may be served in any such action arising out of or based on
this Agreement or the transactions contemplated hereby which may be instituted
in any New York Court by any Underwriter or any person who controls any
Underwriter, expressly consents to the jurisdiction of any such court in
respect of any such action, and waives any other requirements of or objections
to personal jurisdiction with respect thereto. Such appointment shall be
irrevocable. The Company represents and warrants that the Authorized Agent has
agreed to act as such agent for service of process and agrees to take any and
all action, including the filing of any and all documents and instruments, that
may be necessary to continue such appointment in full force and effect as
aforesaid. Service of process upon the Authorized Agent and written notice of
such service to the Company shall be deemed, in every respect, effective
service of process upon the Company.
11. Miscellaneous. Notices given pursuant to any
provision of this Agreement shall be addressed as follows: (a) if to the
Company, to Denbury Resources, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, and (b) if to any Underwriter or to you, to you c/▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: Syndicate Department, or in any case to such other address
as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, its officers
and directors and of the several Underwriters set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter or by or on behalf of the Company, the officers or directors of
the Company or any controlling person of the Company, (ii) acceptance of the
Shares and payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this
28
29
Agreement, the Company agrees to reimburse the several Underwriters for all
out-of-pocket expenses (including the fees and disbursements of counsel)
reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
29
30
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the several Underwriters.
Very truly yours,
DENBURY RESOURCES, INC.
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ RICE & COMPANY L.L.C.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By: ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
30
31
SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
------------ ---------------------
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇, Securities Corporation . . . . . . . . . .
Prudential Securities Incorporated . . . . . . . . . . . . . . . . . . .
▇▇▇▇▇▇▇ Rice & Company L.L.C. . . . . . . . . . . . . . . . . . . . . . .
---------
Total 3,600,000
=========
31
32
SCHEDULE II
U.S. SUBSIDIARIES
Denbury Management, Inc.
Denbury Marine L.L.C.
Brymore Energy Corp.
CANADIAN SUBSIDIARIES
Denbury Holdings, Inc.
32
