<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
DENBURY RESOURCES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
DENBURY RESOURCES INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 9, 1996
TO: THE SHAREHOLDERS OF DENBURY RESOURCES INC.
TAKE NOTICE that a Special Meeting (the "Meeting") of the shareholders
of Denbury Resources Inc. ("Denbury" or the "Corporation") will be held in the
Banff Room at The Westin Hotel Calgary, 320 4th Ave., S.W., Calgary, Alberta on
Wednesday, the 9th day of October, 1996 at 10:00 o'clock in the morning
(Calgary time) for the following purposes:
1. To consider and, if thought fit, pass a Special Resolution, in the
form of the Special Resolution attached as Appendix 1 to the
Information Circular, amending the Articles of Continuance of the
Corporation to consolidate the number of issued and outstanding Common
Shares of the Corporation on the basis of one (1) Common Share for
each two (2) Common Shares outstanding;
2. To consider and, if thought fit, pass a Special Resolution, in the
form of the Special Resolution attached as Appendix 2 to the
Information Circular, amending the Articles of Continuance of the
Corporation by modifying the conversion provisions attaching to the
Convertible First Preferred Shares, Series A (the "Preferred Shares")
which will give the Corporation the right to require the holders of
the Preferred Shares to convert their Preferred Shares into Common
Shares at any time, provided that the conversion rate in effect as of
January 1, 1999 will be used for any required conversion prior to such
date;
3. To consider and, if though fit, pass an Ordinary Resolution, in the
form of the Ordinary Resolution attached as Appendix 3 to the
Information Circular, to authorize the Corporation to issue Common
Shares at an issue price of Cdn. $7.36 per share in payment of the
interest that would be due on the 9 1/2% Convertible Debentures of the
Corporation from the conversion date (following shareholder approval
of the Ordinary Resolution), to and including April 13, 1997, if the
holders of such debentures convert their debentures into Common Shares
prior to April 13, 1997; and
4. To transact such other business as may properly be brought before the
Meeting or any adjournment thereof.
The specific details of the matters proposed to be put before the
Meeting are set forth in the Information Circular - Proxy Statement
accompanying and forming part of this Notice.
SHAREHOLDERS OF DENBURY WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON
ARE REQUESTED TO DATE AND SIGN THE ENCLOSED INSTRUMENT OF PROXY AND TO MAIL IT
TO, OR DEPOSIT IT WITH, THE SECRETARY OF DENBURY, C/O THE R-M TRUST COMPANY,
CORPORATE TRUST DEPARTMENT, 600 DOME TOWER, 333 - 7 AVENUE S.W., CALGARY,
ALBERTA, T2P 2Z1. IN ORDER TO BE VALID AND ACTED UPON AT THE MEETING, FORMS OF
PROXY MUST BE RETURNED TO THE AFORESAID ADDRESS NOT LESS THAN 48 HOURS
(EXCLUDING SATURDAYS, SUNDAYS AND HOLIDAYS) BEFORE THE TIME SET FOR THE HOLDING
OF THE MEETING OR ANY ADJOURNMENT THEREOF.
SHAREHOLDERS ARE CAUTIONED THAT THE USE OF THE MAILS TO TRANSMIT
PROXIES IS AT EACH SHAREHOLDER'S RISK.
The Board of Directors of Denbury has fixed the record date for the
Meeting at the close of business on August 30, 1996 (the "Record Date"). Only
shareholders of Denbury of record as at that date are entitled to receive
notice of the Meeting. Shareholders of record will be entitled to vote those
shares included in the list of shareholders entitled to vote at the Meeting
prepared as at the Record Date, unless any such shareholder transfers his
shares after the Record Date and the transferee of those shares establishes
that he owns the shares and demands, not later than the close of business on
October 1, 1996, that the transferee's name be included in the list of
shareholders entitled to vote at the Meeting, in which case such transferee
shall be entitled to vote such shares at the Meeting.
DATED at Calgary, Alberta, this 30th day of August, 1996.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PHIL RYKHOEK
Phil Rykhoek
Chief Financial Officer and Secretary
<PAGE> 3
DENBURY RESOURCES INC.
INFORMATION CIRCULAR - PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, OCTOBER 9, 1996
INTRODUCTION AND GENERAL PROXY MATTERS
THIS INFORMATION CIRCULAR-PROXY STATEMENT ("INFORMATION CIRCULAR") IS
FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE MANAGEMENT OF
DENBURY RESOURCES INC. ("Denbury" or the "Corporation") for use at the Special
Meeting of the Shareholders of Denbury (the "Meeting") to be held on the 9th
day of October, 1996 at the time and place and for the purposes set out in the
accompanying Notice of Special Meeting, and any adjournments thereof. The
approximate date on which this Information Circular - Proxy Statement and the
enclosed Instrument of Proxy will first be sent to shareholders is September 4,
1996. The monetary disclosures contained herein are reported in U.S. dollars
unless otherwise noted.
RECORD DATE
The Board of Directors of Denbury has fixed the record date for the
Meeting at the close of business on Friday, August 30, 1996 (the "Record
Date"). Only shareholders of Denbury of record as at the Record Date are
entitled to receive notice of the Meeting unless such person transfers their
shares after the Record Date and the transferee of those shares establishes
that they own the shares and demands, not later than the close of business on
October 1, 1996, that the transferee's name be included in the list of
shareholders entitled to vote.
APPOINTMENT AND REVOCATION OF PROXIES
An Instrument of Proxy accompanies the Notice of Special Meeting and
this Information Circular. In order to be valid and acted upon at the Meeting,
Instruments of Proxy must be received by the Secretary of Denbury c/o The R-M
Trust Company, Corporate Trust Department, 600 Dome Tower, 333 - 7th Avenue
S.W., Calgary, Alberta T2P 2Z1, not less than 48 hours (excluding Saturdays,
Sundays and holidays) before the time set for the holding of the Meeting or any
adjournment thereof.
The instrument appointing a proxy shall be in writing and shall be
executed by the shareholder or his attorney authorized in writing or, if the
shareholder is a corporation, under its corporate seal or by an officer or
attorney thereof duly authorized.
THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY ARE DIRECTORS AND/OR
OFFICERS OF DENBURY. EACH SHAREHOLDER HAS THE RIGHT TO APPOINT A PROXYHOLDER
OTHER THAN THE PERSONS DESIGNATED IN THE FORM OF PROXY, WHO NEED NOT BE A
SHAREHOLDER, TO ATTEND AND TO ACT FOR THEM AND ON THEIR BEHALF AT THE MEETING.
TO EXERCISE SUCH RIGHT, THE NAME OF THE NOMINEES OF MANAGEMENT SHOULD BE
CROSSED OUT AND THE NAME OF THE SHAREHOLDER'S APPOINTEE SHOULD BE LEGIBLY
PRINTED IN THE BLANK SPACE PROVIDED.
A shareholder who has submitted a proxy may revoke it any time prior
to the exercise thereof. If a person who has given a proxy attends personally
at the Meeting at which such proxy is to be voted, such person may revoke the
proxy and vote in person. In addition to revocation in any other manner
permitted by law, a proxy may be revoked by instrument in writing executed by
the shareholder or his attorney authorized in writing or, if the shareholder is
a corporation, under its corporate seal by an officer or attorney thereof duly
authorized and deposited either at the registered office of Denbury at any time
up to and including the last business day preceding the day of the Meeting or
any adjournment thereof at which the proxy is to be used, or with the Chairman
of the Meeting on the day of the Meeting or any adjournment thereof and, upon
either of such deposits, the proxy is revoked.
2
<PAGE> 4
PERSONS MAKING THE SOLICITATION
THIS SOLICITATION IS MADE ON BEHALF OF THE MANAGEMENT OF DENBURY. The
costs incurred in the preparation and mailing of the Instrument of Proxy,
Notice of Special Meeting and this Information Circular will be borne by
Denbury. In addition to solicitation by mail, proxies may be solicited by
personal interviews, telephone or other means of communication by directors,
officers and employees of Denbury, who will not be specifically remunerated
therefor. While no arrangements have been made to date by Denbury, it may
contract for the distribution and solicitation of proxies for the Meeting, in
which event the costs incurred with respect to such solicitation will be borne
by Denbury.
EXERCISE OF DISCRETION BY PROXY
The shares represented by proxy in favor of the two Special
Resolutions and the Ordinary Resolution shall be voted on any ballot at the
Meeting and, where the shareholder specifies a choice with respect to any
matter to be acted upon, the shares shall be voted on any ballot in accordance
with the specification so made.
IN THE ABSENCE OF SUCH SPECIFICATION, THE COMMON SHARES OF DENBURY
("COMMON SHARES") WILL BE VOTED IN FAVOR OF THE MATTERS TO BE ACTED UPON. THE
PERSONS APPOINTED UNDER THE INSTRUMENT OF PROXY FURNISHED BY DENBURY ARE
CONFERRED WITH DISCRETIONARY AUTHORITY WITH RESPECT TO AMENDMENTS OR VARIATIONS
OF THOSE MATTERS SPECIFIED IN THE INSTRUMENT OF PROXY AND NOTICE OF SPECIAL
MEETING. AT THE TIME OF PRINTING THIS INFORMATION CIRCULAR, MANAGEMENT OF
DENBURY KNOWS OF NO SUCH AMENDMENT, VARIATION OR OTHER MATTER.
OUTSTANDING VOTING SHARES
As at August 30, 1996, 23,841,930 Common Shares were issued and
outstanding, each share carrying the right to one (1) vote on a ballot at the
Meeting. Broker non-votes and abstentions, if any, will not be included in
vote totals and, as such, will have no effect on any proposal. A quorum for
the transaction of business at the Meeting is not less than two (2) persons
present holding or representing not less than 5% of the Common Shares entitled
to be voted at the Meeting. Each of the Special Resolutions submitted to a
vote at the Meeting require the affirmative vote of two-thirds of the Common
Shares present in person or represented by proxy at the Meeting, for approval.
The Ordinary Resolution and any other matters that come before the Meeting
require the affirmative vote of a majority of the Common Shares present in
person or represented by proxy at the Meeting, for approval.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of July 31, 1996,
concerning the beneficial ownership of Common Shares held by (i) any
shareholders known to the Corporation to own beneficially more than 5% of the
issued and outstanding Common Shares, and (ii) all executive officers and
directors individually and as a group. Except as otherwise indicated and
except for those shares that are listed as being beneficially owned by more
than one shareholder, each shareholder identified in the table has sole voting
and investment power with respect to their shares.
<TABLE>
<CAPTION>
NUMBER OF COMMON
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
- --------------------------------- ---------------- --------------
<S> <C> <C>
Ronald Greene
Suite 700, 407 - 2nd Street
Calgary, Alberta T2P 2Y3 1,719,536 (1) 7.1% (1)
David Bonderman
201 Main Street, Suite 2420
Ft. Worth, TX 76102 13,956,511 (2) 47.6% (2)
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF COMMON
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
- --------------------------------- ---------------- --------------
<S> <C> <C>
Martin Fortier(9)
2550, 140 - 4 Avenue SW
Calgary, Alberta T2P 3N3 115,000 (3) 0.5% (3)
William S. Price, III
600 California Street, Suite 1850
San Francisco, CA 94108 13,956,511 (2) 47.6% (2)
David Stanton -
600 California Street, Suite 1850 - (4) (4)
San Francisco, CA 94108
Wieland Wettstein
2550, 140 - 4 Avenue SW
Calgary, Alberta T2P 3N3 539,828 (5) 2.3% (5)
Gareth Roberts
17304 Preston Rd., Suite 200
Dallas, TX 75252 1,028,479 (6) 4.3% (6)
Phil Rykhoek
17304 Preston Rd., Suite 200
Dallas, TX 75252 27,636 (3) 0.1% (3)
Mark Worthey
17304 Preston Rd., Suite 200
Dallas, TX 75252 152,739 (3) 0.6% (3)
Matthew Deso
17304 Preston Rd., Suite 200
Dallas, TX 75252 133,139 (3) 0.6% (3)
All of the executive officers and
directors as a group (10 persons) 17,672,868 (7) 58.4% (7)
TPG Advisors, Inc.
201 Main Street, Suite 2420
Ft. Worth, TX 76102 13,956,511 (2) 47.6% (2)
Mackenzie Financial Corporation
150 Bloor Street West, Suite M111
Toronto, Ontario M5S 3B5 1,343,400 (8) 5.7%(8)
</TABLE>
(1) After giving effect to the pro forma conversion of Cdn. $2,000,000 of
the 9 1/2% Convertible Debentures into 493,820 Common Shares. Includes
60,300 Common Shares held by Mr. Greene's wife in her retirement plan
and 1,041,666 Common Shares held by Tortuga Investment Corp., which is
solely owned by Mr. Greene. Ownership does not include any shares
which may be issued in lieu of interest on the 9 1/2% Convertible
Debentures if the shareholders approve the Ordinary Resolution attached
as Appendix 3 to this Information Circular.
4
<PAGE> 6
(2) After giving effect to (i) the pro forma conversion of the 1,500,000
Convertible First Preferred Shares, Series A of the Corporation (the
"Preferred Shares") into 4,373,178 Common Shares using the current
conversion rate which is in effect until September 30, 1996, and (ii)
the pro forma exercise of the outstanding 1,250,000 Common Share
Purchase Warrants of the Corporation. Ownership does not include the
additional 1,259,567 Common Shares which would be acquired if the
Special Resolution attached hereto as Appendix 2 regarding the
Preferred Shares is approved by the shareholders and the Corporation
elects to require an early conversion. None of Mr. Bonderman, Mr.
Price or TPG Advisors, Inc. is the owner of record of any securities of
the Corporation. However, Mr. Bonderman and Mr. Price are directors,
executive officers and shareholders of TPG Advisors, Inc., which is the
general partner of TPG GenPar, L.P., which in turn is the general
partner of both TPG Partners, L.P., and TPG Parallel, L.P.
(collectively, TPG), which are the direct beneficial owners of these
securities.
(3) After giving effect to the pro forma exercise, as applicable, of the
60,000, 26,875, 146,500 and 125,000 Common Shares which Mr. Fortier,
Mr. Rykhoek, Mr. Worthey and Mr. Deso, respectively, have the right to
acquire pursuant to stock options which are currently vested or which
vest within sixty days of the date hereof.
(4) Although Mr. Stanton is not considered to be a "beneficial owner" as
that term is defined by the United States Securities and Exchange
Commission, Mr. Stanton is a managing director of TPG Partners, L.P.
(5) After giving effect to the pro forma exercise of 65,850 Common Shares
which Mr. Wettstein has the right to acquire pursuant to vested stock
options. Also includes 420,978 Common Shares held by S.P. Hunt
Holdings Ltd., which is solely owned by a trust of which Mr. Wettstein
is a trustee, and 39,200 Common Shares owned by his wife.
(6) After giving effect to the pro forma exercise of the 55,500 Common
Shares which Mr. Roberts has the right to acquire pursuant to vested
stock options. Also includes 276,660 Common Shares held by Ashley
Petroleum, Inc., which is solely owned by Mr. Roberts, and 2,853 Common
Shares owned by his wife.
(7) After giving effect to (i) the pro forma conversion of Cdn. $2,000,000
of the 9 1/2% Convertible Debentures into 493,820 Common Shares, (ii)
the pro forma conversion of 1,500,000 Preferred Shares into 4,373,178
Common Shares using the current conversion rate which is in effect
until September 30, 1996, (iii) the pro forma exercise of 1,250,000
Common Share Purchase Warrants of the Corporation, and (iv) the pro
forma exercise of the 479,725 Common Shares which the officers and
directors as a group have the right to acquire pursuant to stock
options which are currently vested or which vest within sixty days of
the date hereof. Ownership does not include the additional 1,259,567
Common Shares which would be acquired if the Special Resolution
attached hereto as Appendix 2 regarding the Preferred Shares is
approved by the shareholders and the Corporation elects to require an
early conversion. Ownership does include the shares held by TPG,
although Mr. Price and Mr. Bonderman, who are directors of the
Corporation, are not the owners of record of these securities. Mr.
Price and Mr. Bonderman are directors, executive officers and
shareholders of TPG Advisors, Inc., which is the general partner of TPG
GenPar, L.P., which in turn is the general partner of both TPG
Partners, L.P. and TPG Parallel, L.P., which are the direct beneficial
owners of these same securities.
(8) Based upon the latest Schedule 13G filed by Mackenzie Financial
Corporation, ownership includes Common Shares held in several accounts
managed by Mackenzie Financial Corporation, none of which individually
owns more than 5% of the outstanding Common Shares.
(9) Mr. Fortier resigned from his position as a director of the Company
effective August 30, 1996.
5
<PAGE> 7
BUSINESS TO BE CONDUCTED AT THE MEETING
GENERAL PURPOSE OF THE BUSINESS TO BE CONDUCTED AT THE MEETING
The Corporation became a Canadian listed company in 1984, but since
1992 when the Corporation acquired its U.S. subsidiary, the Corporation has
operated exclusively in the United States. Management is of the view that this
situation has limited the Corporation's analytical and investment community
following and its ability to finance and meet its growing capital needs.
During 1995, the Corporation launched a number of initiatives designed to align
its shareholder base with its U.S. asset base, with the intention of providing
better access to the U.S. markets for the Corporation's future capital
requirements. The above referenced initiatives were also designed to
strengthen the Corporation and position it for growth in the U.S. oil and gas
industry. These initiatives included (i) a new listing on NASDAQ with the
intention of facilitating the raising of capital in the U.S. public equity
markets at some point in the future, (ii) a name change to Denbury Resources
Inc., to parallel the name of its U.S. operating subsidiary, Denbury
Management, Inc., (iii) the completion of a private placement of $40 million
with TPG, (iv) the reorganization of the Corporation's Board of Directors and
the appointment of Mr. R.G. Greene as Chairman and Messrs. B. Price and D.
Stanton as new directors, and (v) in 1996, the expansion of the Board of
Directors and the nomination and election of Mr. D. Bonderman as a director.
Since 1992, the Corporation has experienced rapid expansion through a
combination of producing property acquisitions and development of existing and
acquired properties, as evidenced by the growth from $8.2 million of total
assets at December 31, 1992 to $77.6 million of total assets at December 31,
1995. During the three year period ended December 31, 1995, capital
expenditures of the Corporation have exceeded cash flow from operations by more
than 400%, with total capital expenditures in excess of $75 million during such
period. The Corporation has budgeted capital expenditures of approximately $80
million for 1996 of which approximately $61 million had been spent as of June
30, 1996. In order to fund these expenditures and maintain the Corporation's
fast rate of growth, the Corporation has historically raised capital through
the issuance of additional equity on a periodic basis from either public
offerings in Canada or through private placements in Canada and the U.S.,
supplemented by debt during interim periods.
Due to the recent acquisition of the Amerada Hess properties for
approximately $37 million and other acquisition and development expenditures,
the Corporation's bank debt has increased from $100 thousand at December 31,
1995 to $42 million as of August 30, 1996. The Board of Directors believes
that it is in the Corporation's best interest to raise additional equity and
reduce its debt levels in order to better position the Corporation for future
acquisition and development opportunities. Consequently, the Corporation is
planning to raise approximately $50 million from a public equity offering
during the fourth quarter of 1996. As part of the Corporation's strategy, such
an equity offering will likely be conducted primarily in the U.S. with the
principal objectives of (i) improving the Corporation's trading volume and
liquidity on NASDAQ, (ii) broadening its U.S. shareholder base, and (iii)
providing a more efficient market for its Common Shares.
In order to position the Corporation for such an U.S. offering, the
Board of Directors and its financial advisors believe that it is in the best
interests of the Corporation to (i) increase the market price per Common Share
to levels significantly above U.S. $5.00, the level below which certain stocks
are subject to the Penny Stock Rules ("Low-Priced Securities"), (ii) simplify
the capital structure of the Corporation, and (iii) reduce the overhang that
exists as a result of existing convertible securities. The Board of Directors
believe that these goals are best achieved by the following resolutions which
propose to (i) consolidate the number of Common Shares on a one-for-two basis,
(ii) modify the terms of the Preferred Shares such that the Preferred Shares
may be converted to Common Shares at the election of the Corporation prior to
January 1, 1999, and (iii) issue Common Shares to the holders of the 9 1/2%
Convertible Debentures in order to induce such holders to convert their
debentures to Common Shares prior to their mandatory redemption date.
6
<PAGE> 8
1. CONSOLIDATION OF SHARE CAPITAL
At the Meeting, shareholders of the Corporation will be asked to
consider and, if thought fit, pass a Special Resolution amending the Articles
of Continuance of the Corporation to consolidate the number of issued and
outstanding Common Shares of the Corporation on the basis of one (1) Common
Share for each two (2) Common Shares outstanding (the "Consolidation"). The
text of the Special Resolution is attached to this Information Circular as
Appendix 1.
As of August 30, 1996, the Corporation had 23,841,930 Common Shares
issued and outstanding and approximately 1,200 holders of record. The proposed
one-for-two Consolidation would reduce by one-half the number of Common Shares
of the Corporation outstanding to approximately 11,920,965 Common Shares. The
number of holders of record is not expected to materially change as a result of
Consolidation. If the Consolidation is approved by the shareholders and
implemented, the Corporation will adjust accordingly the conversion or exercise
price and the number of Common Shares issuable upon conversion of the Preferred
Shares, the 9 1/2% Convertible Debentures, and upon exercise of outstanding
warrants and options.
The effective date of the Consolidation will be the date of issuance of
the Certificate of Amendment by the Director appointed under the Canada
Business Corporations Act and such date is herein referred to as the "Effective
Date." The Effective Date is expected to occur within a few days following
approval of the Consolidation by the shareholders of the Corporation.
On the Effective Date, the Common Shares of the Corporation will be
consolidated on a one-for-two basis. As soon as practicable after the
Effective Date, a letter of transmittal containing instructions with respect to
the surrender of the Corporation's share certificates will be furnished to the
Corporation's shareholders for use in exchanging their share certificates.
Upon the return of a properly completed letter of transmittal together with the
share certificates for the Common Shares, certificates for an appropriate
number of Common Shares following their consolidation will be issued. As
provided in the Special Resolution attached as Appendix 1, fractional shares
will not be issued in connection with the Consolidation and the Corporation
will make a cash payment in lieu thereof equal to the fair market value of such
fractional shares, based upon the average closing price of the Common Shares on
the NASDAQ for the 10 trading days preceding the Consolidation. In calculating
fractional share interests, all Common Shares registered in the name of each
holder of Common Shares or nominee of such holder shall be aggregated.
Management and its financial advisors believe that the current price of
the Corporation's Common Shares (recently at or below U.S. $6.50 per share)
impairs an efficient U.S. market in the Corporation's stock. This is due to
several factors which management believes impact lower priced stocks including
(1) a reluctance or restriction among certain institutions to invest in
Low-Priced Securities, (2) internal restrictions imposed by many securities
firms on the solicitation of orders of Low-Priced Securities by stockbrokers,
(3) a reluctance among analysts to write research reports on Low-Priced
Securities due to the preceding factors and (4) high transaction costs relative
to share price due to the prevailing rule that commissions charged on the
purchase and sale of stock, as a percentage of share price, are higher on lower
priced stocks. Management and its financial advisors believe that the
consolidated number of Common Shares and the resulting higher market price will
be more appropriate for the Corporation's market capitalization and should
enable the Corporation to have greater flexibility with respect to future
financings.
Management and its financial advisors believe that the Consolidation
will have the effect of increasing the market price per share of the Common
Shares and that such increase may, over time, alleviate some or all of the
factors noted above and lead to a more efficient market in the Common Shares.
There can, however, be no assurance as to the amount of increase in the market
price per share, nor any assurance that the factors discussed above will be
alleviated. Holders should also be aware that the Consolidation may result in
a decrease in the trading volume of the Common Shares due to the decrease in
the number of outstanding shares.
7
<PAGE> 9
DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS ADOPT THE SPECIAL
RESOLUTION SET OUT IN APPENDIX 1 TO THE INFORMATION CIRCULAR APPROVING THE
CONSOLIDATION OF THE COMMON SHARES OF THE CORPORATION ON THE BASIS OF ONE (1)
COMMON SHARE FOR EACH TWO (2) ISSUED AND OUTSTANDING COMMON SHARES. The
resolution must be approved by a two-thirds majority of votes cast by
shareholders who vote in person or by proxy at the Meeting. In addition, the
Consolidation is conditional upon the approval of The Toronto Stock Exchange.
2. THE PREFERRED AMENDMENT
At a Special Meeting of the Corporation held on December 21, 1995, the
shareholders approved the issuance of 1,500,000 Preferred Shares for $15
million as part of a $40 million private placement of securities with TPG. In
addition to the Preferred Shares, the private placement included 8.333 million
Common Shares issued at $2.925 per share and 1.25 million warrants at a price
of $.50 per warrant entitling the holder to purchase 1.25 million Common Shares
at $3.70 per share. As a result of this private placement, TPG, on a fully
diluted basis, owns 43% of the issued and outstanding Common Shares. Under the
terms of the private placement, TPG also received the right to nominate three
out of seven directors of the Corporation. In addition, the Corporation's
Articles of Continuance were amended to provide for certain matters to be
approved by a majority of not less than two-thirds of the members of the Board
of Directors, one of which would be any amendment to the Articles of
Continuance, which applies to both Special Resolutions being considered at the
Meeting.
The Preferred Shares were initially convertible at $3.70 per Common
Share (equivalent to approximately 2.70 Common Shares for each Preferred Share)
with such conversion rate declining 2.5% per quarter. If TPG elected to
convert the Preferred Shares during the third quarter of 1996, these Preferred
Shares would convert into 4,373,178 Common Shares. The Preferred Shares also
have a mandatory redemption at a 63.86% premium at December 21, 2000, and
currently provide that the Corporation can cause a mandatory conversion of all,
but not less than all, the Preferred Shares after January 1, 1999, if the price
of the Common Shares exceeds $5.00 per share for a period of 40 consecutive
trading days. The Preferred Shares do not have any cash or other stated
dividend requirements although the Corporation is making an accrual each
quarter to account for the mandatory redemption premium quarterly accretion.
This accrual correspondingly reduces the net income available to the common
shareholders and is considered in the Corporation's earnings per share
calculation.
At the Meeting, shareholders of the Corporation will be asked to
consider and, if thought fit, pass a Special Resolution amending the Articles
of Continuance of the Corporation modifying the conversion provisions attaching
to the outstanding Preferred Shares (the "Preferred Amendment"). The Preferred
Amendment would give the Corporation the right to require the holder of the
Preferred Shares, at the election of the Corporation, to convert the Preferred
Shares to Common Shares (the "Conversion"), provided that the conversion rate
which will be in effect as of January 1, 1999 shall be used in any Conversion
prior to such date. The Preferred Amendment would also remove the existing
requirement that the Common Shares trade above U.S. $5.00 per share for a 40
day period prior to the Corporation being entitled to force a conversion.
Currently the Corporation can not require a Conversion prior to January 1, 1999
and then, only if the market price of the Common Shares has been a minimum of
U.S. $5.00 per share for 40 trading days. TPG, as the sole holder of the
Preferred Shares, has already approved the Preferred Amendment and plans to
vote its Common Shares, representing 35% of the Common Shares outstanding and
entitled to vote at the Special Meeting, in favor of the Special Resolution
approving the Preferred Amendment. The text of the Special Resolution is
attached to this Information Circular as Appendix 2.
Even if the Preferred Amendment is approved by the shareholders of the
Corporation, no conversion of the Preferred Shares may occur without the
approval of two-thirds of the members of the Board of Directors, of which three
of the seven members represent TPG. The Board of Directors have unanimously,
with Messrs. Bonderman, Price and Stanton having disclosed their interest in
the transaction, approved the conversion of the Preferred Shares, subject to,
and simultaneously with, the completion of the public equity offering which is
currently being planned.
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<PAGE> 10
Based upon the conversion rate in effect as of January 1, 1999, this Conversion
would result in the issuance of 3.75 Common Shares of the Corporation for each
issued outstanding Preferred Share for an aggregate issuance of 5,632,745
Common Shares, and the outstanding Preferred Shares would be canceled. This
Conversion would increase the number of outstanding Common Shares from
23,841,930 to 29,474,675, on a pro forma basis as of August 30, 1996. Following
the Conversion, TPG would increase its Common Share ownership from 35% to 47%
on a primary basis and from 43% to 47% on a fully diluted basis assuming the
conversion or exercise of all convertible securities, warrants and options.
The Common Shares which will be issued to the holder of the Preferred Shares
will bear a restrictive legend prohibiting sale without registration under the
United States Securities Act of 1933, as amended (the "Act") or an exemption
therefrom, and such shares will not be freely tradeable. However, such shares
are subject to a registration rights agreement effective through December,
2000.
Advantages and Disadvantages of the Preferred Amendment
Management and its financial advisors believe that the adoption of the
Preferred Amendment and an associated Conversion would have the following
advantages and disadvantages with respect to the current holders of the Common
Shares, and TPG, the current holder of the Preferred Shares:
(a) With respect to the holders of the Common Shares, adoption of
the Preferred Amendment and a Conversion would be beneficial
in that it would: (i) enhance the Corporation's ability to
raise additional capital, which would enable the Corporation
to maintain and/or increase its level of acquisition and
development activities, (ii) eliminate the charge to earnings
for the imputed preferred dividend, which would increase both
net income and net income per Common Share based on the
results of operations for the six months ended June 30, 1996,
(iii) increase the net book value per Common Share from $2.46
to $2.53 as of June 30, 1996, (iv) remove the liquidation
preference of the Preferred Shares, and (v) allow the
Corporation to effectively eliminate the retraction
requirement to repurchase the Preferred Shares in December,
2000 by giving the Corporation the right to require a
Conversion at any time prior to that date. The adoption of
the Preferred Amendment and a Conversion could be
disadvantageous in that the issuance of 5,632,745 Common
Shares on a Conversion using the conversion rate which
previously would not have been applicable until January 1,
1999, is 1,259,567 (29%) more Common Shares than TPG would
receive using the third quarter of 1996 conversion rate. The
issuance of these incremental Common Shares would dilute the
cash flow from operations on a per share basis. Under normal
circumstances, however, the 5,632,745 Common Shares issuable
as of January 1, 1999 would be the minimum number of Common
Shares that would ever be issued upon a Conversion under the
existing Preferred Share provisions as TPG would not be likely
to convert its Preferred Shares prior to the mandatory
retraction date (December, 2000) unless required to do so by
the Corporation.
(b) With respect to TPG, the holder of the Preferred Shares,
adoption of the Preferred Amendment and a Conversion would be
beneficial in that it would (i) enhance the Corporation's
ability to raise additional capital, which would enable the
Corporation to maintain and/or increase its level of
acquisition and development activities, and (ii) accelerate
its imputed earnings on the Preferred Shares by potentially
giving TPG the January 1, 1999 conversion rate prior to that
date. The adoption of the Preferred Amendment and a
Conversion would be disadvantageous in that TPG would (i)
effectively lose its right to a mandatory cash retraction in
December, 2000 due to the Corporation's ability to force a
Conversion at any time, (ii) lose its right to additional
imputed dividends after January 1, 1999, and (iii) lose its
liquidation priority.
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<PAGE> 11
DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS ADOPT THE SPECIAL
RESOLUTION SET OUT IN APPENDIX 2 TO THE INFORMATION CIRCULAR MODIFYING THE
CONVERSION PROVISIONS OF THE PREFERRED SHARES. The resolution must be approved
by a two-thirds majority of votes cast by shareholders who vote in person or by
proxy at the Meeting. In addition, the Preferred Amendment is conditional upon
the approval of The Toronto Stock Exchange.
3. EARLY RETIREMENT OF 9 1/2% CONVERTIBLE DEBENTURES
On January 17, 1995, the Corporation issued Cdn. $2,500,000 principal
amount of unsecured convertible debentures ("Convertible Debentures"). The
Convertible Debentures are due on January 17, 2000, have an interest rate of 9
1/2% per annum, and are convertible at any time by the holders into Common
Shares at a conversion price of Cdn. $4.05 per Common Share. The Company has
the right to require an early redemption after April 13, 1997, if after that
date, the price of the Common Shares exceeds Cdn. $5.10 per share for a period
of 30 consecutive trading days on The Toronto Stock Exchange.
At the Meeting, shareholders of the Corporation will be asked to
consider and, if thought fit, approve an Ordinary Resolution authorizing the
Corporation to issue Common Shares at an issue price of Cdn. $7.36 per share
for the interest that would be due on the 9 1/2% Convertible Debentures from
the conversion date (following shareholder approval of the Ordinary Resolution)
to and including April 13, 1997, if the holders of the debentures agree to
convert their debentures early (the "Retirement"). The text of the Ordinary
Resolution is attached to this Information Circular as Appendix 3.
The Board of Directors, with Mr. Ronald Greene an 80% holder of the 9
1/2% Convertible Debentures abstaining from the vote, approved a resolution on
July 29, 1996 approving the Retirement. Mr. Greene is also a significant
shareholder of the Company and is entitled to vote his 1,225,716 Common Shares
at the Meeting (see also "Security Ownership of Certain Beneficial Owners and
Management"). Mr. Greene and the other holder of the debentures have accepted
the proposed terms and have agreed to the early Retirement, subject to
shareholder approval.
If approved, the Corporation would issue a total of 15,915 Common
Shares for the interim interest, assuming a Retirement date of October 15,
1996, plus an additional 617,284 Common Shares to be issued in redemption of
the Cdn. $2,500,000 principal amount of 9 1/2% Convertible Debentures in
accordance with the existing terms of such debentures. The number of Common
Shares proposed to be issued for interest is based on the Common Share average
closing price on The Toronto Stock Exchange during the 30 days prior to the
board meeting on July 29, 1996, at which time the board approved the
Retirement.
For many of the same reasons previously discussed, Management is of the
opinion that the Retirement is in the best interests of the Corporation and its
shareholders in order to further reduce the overhang that would otherwise exist
at the time of the public equity offering as a result of the outstanding
convertible securities.
DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS ADOPT THE ORDINARY
RESOLUTION SET OUT IN APPENDIX 3 TO THE INFORMATION CIRCULAR APPROVING THE
ISSUANCE OF COMMON SHARES FOR INTEREST AND THE EARLY RETIREMENT OF THE 9 1/2%
CONVERTIBLE DEBENTURES. The resolution must be approved by a simple majority
of votes cast by shareholders who vote in person or by proxy at the Meeting.
In addition, the Retirement is conditional upon the approval of The Toronto
Stock Exchange.
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<PAGE> 12
DIRECTORS AND OFFICERS INSURANCE
Effective in September, 1995, the Corporation purchased directors and
officers insurance covering each of its officers and directors at an annual
cost of $119,000. The insurance provides up to $5 million of coverage for the
officers and directors with deductibles up to $350,000, depending on the type
of claim, and $5 million coverage for the Corporation with a 25% co-insurance
provision. The Corporation has paid for 100% of the cost of this insurance.
INTEREST OF CERTAIN PERSONS AND COMPANIES IN MATTERS
TO BE ACTED UPON
Certain members of the Board of Directors, Mr. Bonderman, Mr. Stanton
and Mr. Price, are affiliated with TPG which is the sole holder of the
Preferred Shares. For information regarding the stock ownership, approval
rights, and board seats of TPG and the advantages and disadvantages of the
early conversion to both TPG and the common shareholders, see "Business to be
Conducted at the Meeting - The Preferred Amendment." Mr. Ronald Greene,
Chairman of the Board, owns 80% of the outstanding 9 1/2% Convertible
Debentures. See "Business to be Conducted at the Meeting - Early Retirement of
the 9 1/2% Convertible Debentures."
Management of the Corporation is not aware of any other material
interest of any director, nominee for director, senior officer or anyone who
has held office as such since the beginning of the Corporation's last financial
year or of any associate or affiliate of any of the foregoing persons in any
matter to be acted on at the Meeting except as disclosed herein.
INTEREST OF MANAGEMENT AND OTHER IN MATERIAL TRANSACTIONS
No director or senior officer of the Corporation, insider of the
Corporation. or any associate or affiliate of any of the following persons, has
or had any material interest in any transaction since the beginning of the
Corporation's last completed financial year or in any proposed transaction that
has materially affected, or will materially affect the Corporation or any of
its affiliates, except as disclosed elsewhere in this Information Circular.
OTHER MATTERS
Management knows of no amendment, variation or other matters to come
before the Meeting other than the matters referred to in the Notice of Special
Meeting. However, if any other matter properly comes before the Meeting, the
accompanying proxy will be voted on such matter in accordance with the best
judgment of the person or persons voting the proxy.
All information contained in this Information Circular relating to the
occupations, affiliations and securities holdings of directors and officers of
the Corporation and their relationship and transactions with the Corporation is
based upon information received from the individual directors and officers.
All information relating to any beneficial owner of more than 5% of the
Corporation's Common Shares is based upon information contained in reports
filed by such owner with the SEC.
APPROVAL AND CERTIFICATION
The contents and sending of this Information Circular has been approved
by the directors of Denbury.
The foregoing contains no untrue statement of a material fact and does
not omit to state a material fact that is required to be stated or that is
necessary to make a statement not misleading in light of the circumstances in
which it was made.
DATED at Calgary, Alberta as of the 30th day of August, 1996.
11
<PAGE> 13
DENBURY RESOURCES INC.
/s/ Gareth Roberts /s/ Phil Rykhoek
- --------------------------------- ---------------------------------
Gareth Roberts Phil Rykhoek
President and Corporation Secretary and
Chief Executive Officer Chief Financial Officer
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<PAGE> 14
APPENDIX 1
ATTACHED TO AND FORMING PART OF THE INFORMATION CIRCULAR - PROXY STATEMENT OF
DENBURY RESOURCES INC.
DATED AUGUST 30, 1996
CONSOLIDATION OF SHARES
BE IT RESOLVED, as a special resolution of the shareholders of the
Corporation, that:
1. pursuant to section 173(1)(h) of the Canada Business Corporation Act,
the issued and outstanding Common Shares of the Corporation be changed
by the consolidation of the issued and outstanding Common Shares on the
basis of one (1) Common Share for each two (2) issued and outstanding
Common Shares;
2. no fractional shares shall be issued upon the aforesaid consolidation
and, in the case of the consolidation resulting in a shareholder
otherwise becoming entitled to a fractional Common Share, the
Corporation will make a cash payment in lieu thereof equal to the fair
market value of such fractional shares, as determined by the Board of
Directors based upon the average closing price of the Common Shares on
the NASDAQ for the 10 trading days preceding the consolidation and, in
calculating fractional share interests, all Common Shares registered in
the name of a holder of Common Shares or nominee of such holder, shall
be aggregated.
3. any one director or officer of the Corporation is hereby authorized to
file Articles of Amendment to effect the aforesaid consolidation with
the Director appointed under the Canada Business Corporations Act and
to do and perform all such further acts and things and to execute all
such other deeds, documents, and other instruments as may be necessary
or desirable in order to carry out the provisions of this resolution;
4. the directors of the Corporation, in their sole discretion and
notwithstanding that this resolution has been duly passed by the
shareholders of the Corporation, may revoke this resolution before it
is acted upon without further approval of the shareholders; and
5. subject to the approval of this resolution by the shareholders of the
Corporation, the aforesaid consolidation is conditional upon the
approval of The Toronto Stock Exchange.
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<PAGE> 15
APPENDIX 2
ATTACHED TO AND FORMING PART OF THE INFORMATION CIRCULAR - PROXY STATEMENT OF
DENBURY RESOURCES INC.
DATED AUGUST 30, 1996
AMENDMENT TO PREFERRED SHARE CONVERSION TERMS
BE IT RESOLVED, as a special resolution of the shareholders of the
Corporation, that:
1. pursuant to section 173(1)(g) of the Canada Business Corporations Act,
the rights, privileges, restrictions and conditions (the "Preferred
Share Terms") attaching to the outstanding Convertible First Preferred
Shares, Series A ("Preferred Shares") of the Corporation be and the
same are hereby modified and amended to enable the Corporation to have
the right to require the holders of the Preferred Shares to exercise
their conversion rights set forth in Section 3.1 of the Preferred Share
Terms in respect of all, but not less than all, the Preferred Shares
held by such holders, at any time, provided that if such mandatory
conversion right is exercised by the Corporation at any time prior to
January 1, 1999, the Preferred Shares shall be convertible into Common
Shares at the conversion rate in effect as at January 1, 1999, and
specifically, the provisions of Section 3.3 of the Preferred Share
Terms be and the same are hereby amended by the deletion of the first
sentence thereof and the substitution therefor of the following:
"Notwithstanding the foregoing, the Corporation shall have the
right to require the holders of the First Preferred Shares,
Series A to exercise their conversion rights set forth in
Section 3.1 in respect of all, but not less than all, the
First Preferred Shares, Series A held by such holders provided
that if such right is exercised by the Corporation at any time
prior to January 1, 1999, the First Preferred Shares, Series A
shall be convertible into fully paid and non-assessable Common
Shares on the Current Conversion Basis in effect as at January
1, 1999."
2. the issuance of the Common Shares of the Corporation on conversion of
the Preferred Shares in accordance with the rights, privileges,
restrictions and conditions attached to such Preferred Shares, as
modified hereby, be and the same is hereby authorized and approved;
3. any one director or officer of the Corporation is hereby authorized to
file Articles of Amendment to effect the aforesaid amendment to the
Preferred Share Terms with the Director appointed under the Canada
Business Corporations Act and to do and perform all such further acts
and things and to execute all such other deeds, documents and other
instruments as may be necessary or desirable in order to carry out the
provisions of this resolution; and
4. the directors of the Corporation, in their sole discretion and
notwithstanding that this resolution has been duly passed by the
shareholders of the Corporation, may revoke this resolution before it
is acted upon without further approval of the shareholders.
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<PAGE> 16
APPENDIX 3
ATTACHED TO AND FORMING PART OF THE INFORMATION CIRCULAR - PROXY STATEMENT OF
DENBURY RESOURCES INC.
DATED AUGUST 30, 1996
ISSUANCE OF COMMON SHARES ON
EARLY RETIREMENT OF 9.5% CONVERTIBLE DEBENTURES
BE IT RESOLVED, as an ordinary resolution of the shareholders of the
Corporation, that:
1. in the event the holders of the outstanding 9.5% Convertible Debentures
("Debentures") convert such Debentures into Common Shares at any time
prior to April 13, 1997, the Corporation be and it is hereby
authorized to issue to the holders of such debentures, Common Shares
at an issue price of Cdn. $7.36 per share in payment of the interest
that would be due on the Debentures from the date of conversion of such
Debentures at any time following the approval of this ordinary
resolution to and including April 13, 1997 (the first date on which the
Corporation may redeem the Debentures), with the number of Common
Shares issuable calculated by dividing the aggregate amount of such
interest by $7.36;
2. any one director or officer of the Corporation is hereby authorized to
do and perform all such further acts and things and to execute all such
other deeds, documents and other instruments as may be necessary or
desirable in order to carry out the provisions of this resolution;
3. the directors of the Corporation, in their sole discretion and
notwithstanding that this resolution has been duly passed by the
shareholders of the Corporation, may revoke this resolution before it
is acted upon without further approval of the shareholders; and
4. the aforesaid issuance is conditional upon the approval of The Toronto
Stock Exchange.
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<PAGE> 17
DENBURY RESOURCES INC.
Suite 2550, 140 - 4th Avenue S.W.
Calgary, Alberta T2P 3N3
INSTRUMENT OF PROXY
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Denbury Resources Inc. ("Denbury" or
the "Corporation") hereby appoints Ronald G. Greene, Chairman of the Board of
Denbury, of the City of Calgary, in the Province of Alberta, or failing him,
Phil Rykhoek, Chief Financial Officer and Secretary of Denbury, of the City of
Dallas, in the State of Texas, or instead of either of the foregoing,
______________________________________________________, as proxyholder of the
undersigned, with full power of substitution, to attend, act and vote for and on
behalf of the undersigned at the Special Meeting of shareholders of Denbury
(the "Meeting"), to be held on Wednesday, October 9, 1996, at 10:00 a.m.
(Calgary time) and at any adjournment or adjournments thereof, and on every
ballot that may take place in consequence thereof, to the same extent and with
the same powers as if the undersigned were personally present at the Meeting
with authority to vote at the said proxyholder's discretion, except as otherwise
specified below.
Without limiting the general powers hereby conferred, the undersigned
hereby directs the said proxyholder to vote the shares represented by this
Instrument of Proxy in the following manner:
1. FOR [ ] OR AGAINST [ ] the Special Resolution amending the Articles
of Continuance of the Corporation to consolidate the number of issued
and outstanding Common Shares of the Corporation on the basis of one
(1) Common Share for each two (2) Common Shares outstanding;
2. FOR [ ] OR AGAINST [ ] the Special Resolution amending the Articles of
Continuance of the Corporation by modifying the conversion provisions
attaching to the Convertible First Preferred Shares, Series A (the
"Preferred Shares") which will give the Corporation the right to
require the holders of the Preferred Shares to convert their Preferred
Shares into Common Shares at any time, provided that the conversion
rate as of January 1, 1999 will be used for any required conversion
prior to that date;
3. FOR [ ] OR AGAINST [ ] the Ordinary Resolution to provide for the
Corporation to issue Common Shares at Cdn. $7.36 per share in payment
of the interest that would be due on the 9 1/2% Convertible Debentures
from the Conversion date (following the Meeting) to and including
April 13, 1997, if the holders of the debentures convert their
debentures into Common Shares prior to April 13, 1997; and
4. At the discretion of the said proxyholder, upon any amendment or
variation of the above matters or any other matter that may be
properly brought before the Meeting or any adjournment thereof in such
manner as such proxy, in such proxy's sole judgement, may determine.
THIS INSTRUMENT OF PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT OF
DENBURY. THE SHARES REPRESENTED BY THIS INSTRUMENT OF PROXY WILL, WHERE THE
SHAREHOLDER HAS SPECIFIED A CHOICE WITH RESPECT TO THE ABOVE MATTERS, BE VOTED
AS DIRECTED ABOVE, OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED IN FAVOR OF THE
ABOVE MATTERS.
EACH SHAREHOLDER HAS THE RIGHT TO APPOINT A PROXYHOLDER, OTHER THAN
THE PERSONS DESIGNATED ABOVE, WHO NEED NOT BE A SHAREHOLDER, TO ATTEND AND TO
ACT FOR HIM AND ON HIS BEHALF AT THE MEETING. TO EXERCISE SUCH RIGHT, THE
NAMES OF THE NOMINEES OF MANAGEMENT SHOULD BE CROSSED OUT AND THE NAME OF THE
SHAREHOLDER'S APPOINTEE SHOULD BE LEGIBLY PRINTED IN THE BLANK SPACE PROVIDED.
The undersigned hereby revokes any proxies heretofore given with
respect to the undersigned's Denbury common shares with respect to the said
Meeting.
Dated this _____day of__________________, 1996.
---------------------------------------------------
Shareholder's Signature
---------------------------------------------------
Name of Shareholder (Please Print)
(See over for notes)
<PAGE> 18
NOTES:
1. If the shareholder is a corporation, its corporate seal must be
affixed or it must be signed by an officer or attorney thereof duly
authorized.
2. This Instrument of Proxy must be dated and the signature hereon should
be exactly the same as the name in which the shares are registered.
If the instrument of proxy is undated, it shall be deemed to bear the
date on which it is mailed by the person making the solicitation.
3. Persons signing as executors, administrators, trustees, etc. should so
indicate and give their full title as such.
4. This instrument of proxy will not be valid and not be acted upon or
voted unless it is completed as outlined herein and delivered to the
attention of Denbury's Secretary, c/o The R-M Trust Company, Corporate
Trust Department, 600 Dome Tower, 333 - 7th Avenue S.W., Calgary,
Alberta, T2P 2Z1, Attention: Daneal McGeein or faxed to the attention
of Daneal McGeein at (403)264-2100, not less than 48 hours (excluding
Saturdays, Sundays and holidays) before the time set for the holding
of the Meeting or any adjournment thereof. A proxy is valid only at
the meeting in respect of which it is given or any adjournment(s) of
that meeting.
