<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 19, 1998
REGISTRATION NO. 333-43207
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DENBURY RESOURCES INC.
DENBURY MANAGEMENT, INC.
(Exact name of Registrants as specified in its charter)
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<S> <C> <C>
CANADA NOT APPLICABLE
TEXAS 1311 75-2294373
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
PHIL RYKHOEK, C.F.O.
DENBURY RESOURCES INC.
17304 PRESTON ROAD, SUITE 200 17304 PRESTON ROAD, SUITE 200
DALLAS, TEXAS 75252 DALLAS, TEXAS 75252
(972) 713-3000 (972) 713-3000; FACSIMILE: (972) 713-3051
(Address and telephone number of Registrants' (Name, address and telephone
principal executive offices) number of Agent for Service)
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Copies to:
<TABLE>
<S> <C>
DONALD W. BRODSKY STEPHEN L. BURNS
JENKENS & GILCHRIST, CRAVATH, SWAINE & MOORE
A PROFESSIONAL CORPORATION WORLDWIDE PLAZA
1100 LOUISIANA, SUITE 1800 825 EIGHTH AVENUE
HOUSTON, TX 77002 NEW YORK, NY 10019
(713) 951-3300; FACSIMILE: (713) 951-3314 (212) 474-1000; FACSIMILE: (212) 474-3700
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or
reinvestment plans, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement of the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
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=================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED PRICE PER SECURITY OFFERING PRICE(A) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Shares........................... 5,565,140(b) $17.969(c) $100,000,000 $29,500
% Senior Subordinated Notes Due
2008.................................. $125,000,000 100% $125,000,000 $36,875
Guarantee(d)............................ (e) (e) (e) (d)(e)
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Total......................... -- -- $225,000,000 $66,375(f)
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</TABLE>
(a) Estimated solely for purposes of calculating the registration fee.
(b) Includes an aggregate of 725,888 Common Shares subject to an Underwriters'
over-allotment option, and Common Shares to be sold directly by Denbury
Resources Inc. to its majority shareholder.
(c) Calculated by averaging the high ($18.0625) and low ($17.875) price of the
Common Shares of Denbury Resources Inc. on December 23, 1997 on the New York
Stock Exchange pursuant to Rule 457(c) under the Securities Act of 1933, as
amended.
(d) The Guarantee of the Senior Subordinated Notes by Denbury Resources Inc. is
also being registered hereby. Pursuant to Rule 457(n) under the Securities
Act of 1933, as amended, no registration fee is required with respect to the
Guarantee.
(e) No separate consideration will be received for the Guarantee from the
purchasers of the Notes.
(f) The Registrants have previously paid a filing fee of $59,000.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
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<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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<C> <S>
1(a) -- Form of Underwriting Agreement relating to Equity
Offering.
1(b) -- Form of Underwriting Agreement relating to Debt Offering.
3(a)* -- Articles of Continuance of Denbury Resources Inc., as
amended (incorporated by reference as Exhibits 3(a),
3(b), 3(c), 3(d) of DRI's Registration Statement on Form
F-1 dated August 25, 1995, Exhibit 4(e) of DRI's
Registration Statement on Form S-8 dated February 2, 1996
and Exhibit 3(a) of the Pre-effective Amendment No. 2 of
DRI's Registration Statement on Form S-1 dated October
22, 1996).
3(b)* -- General By-Law No. 1: A By-Law Relating Generally to the
Conduct of the Affairs of Denbury Resources Inc., as
amended (incorporated by reference as Exhibit 3(e) of
DRI's Registration Statement on Form F-1 dated August 25,
1995, Exhibit 4(d) of the Registrant's Registration
Statement on Form S-8 dated February 2, 1996.
3(c) -- Restated Articles of Incorporation of Denbury Management,
Inc.
3(d) -- Bylaws of Denbury Management, Inc.
4(a)* -- See Exhibits 3(a), 3(b), 3(c) and 3(d) for provisions of
the Articles of Continuance and General By-Law No. 1 of
DRI defining the rights of the holders of Common Shares.
4(b) -- Indenture dated as of , 1998, between DMI and
Chase Bank of Texas, National Association, as trustee.
5(a) -- Opinion of Burnet, Duckworth & Palmer.
5(b) -- Opinion of Jenkens & Gilchrist, a Professional
Corporation.
10(a)* -- Form of First Restated Credit Agreement, by and among
DMI, as borrower, DRI as guarantor, NationsBank of Texas,
N.A., as administrative agent, Nationsbanc Montgomery
Securities LLC, as syndication agent and arranger and the
financial institutions listed on Schedule I thereto, as
banks, to be executed on December 29, 1997.
10(b) -- First Amendment to First Restated Credit Agreement, by
and among DMI, as borrower, DRI, as guarantor,
NationsBank of Texas, N.A., as administrative agent, and
NationsBank of Texas, N.A., as bank, entered into as of
January 27, 1998.
12* -- Statement of Ratio of Earnings to Fixed Charges.
23(a)* -- Consent of Deloitte & Touche.
23(b)* -- Consent of Price Waterhouse LLP.
23(c)* -- Consent of Netherland, Sewell and Associates.
23(d) -- Consent of Burnet, Duckworth & Palmer (contained in its
opinion filed as Exhibit 5(a).
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II-1
<PAGE> 3
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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<C> <S>
23(e) -- Consent of Jenkens & Gilchrist, a Professional
Corporation (contained in its opinion filed as Exhibit
5(b)).
24(a)* -- Power of Attorney (contained on the signature page of
this Registration Statement).
25.1* -- Statement of Eligibility on Form T-1 of Chase Bank of
Texas, National Association, as Trustee.
</TABLE>
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* Previously filed.
II-2
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrants certified that they have reasonable grounds to believe that they
meet all of the requirements for filing on Form S-3 and have duly caused this
Registration Statement No. 333-43207 to be signed on their behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on February 19, 1998.
DENBURY RESOURCES INC.
By: /s/ PHIL RYKHOEK
---------------------------------
Phil Rykhoek
Chief Financial Officer
DENBURY MANAGEMENT, INC.
By: /s/ PHIL RYKHOEK
---------------------------------
Phil Rykhoek
Chief Financial Officer
Each person whose signature appears below as a signatory to this
Registration Statement constitutes and appoints Gareth Roberts and Phil Rykhoek,
or either one of them, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated, in multiple counterparts with the effect
of one original.
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SIGNATURES TITLE DATE
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<C> <S> <C>
GARETH ROBERTS * President, Chief Executive February 19, 1998
- ----------------------------------------------------- Officer and Director of
Gareth Roberts DRI (Principal Executive
Officer)
/s/ PHIL RYKHOEK Chief Financial Officer, February 19, 1998
- ----------------------------------------------------- Secretary and
Phil Rykhoek Authorized Representative
of DRI (Principal
Financial Officer)
BOBBY J. BISHOP * Controller and Chief February 19, 1998
- ----------------------------------------------------- Accounting Officer of DRI
Bobby J. Bishop (Principal Accounting
Officer)
RONALD G. GREENE * Chairman of the Board and February 19, 1998
- ----------------------------------------------------- Director of DRI
Ronald G. Greene
WIELAND WETTSTEIN * Director of DRI February 19, 1998
- -----------------------------------------------------
Wieland Wettstein
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
WILMOT MATTHEWS * Director of DRI February 19, 1998
- -----------------------------------------------------
Wilmot Matthews
GARETH ROBERTS * President, Chief Executive February 19, 1998
- ----------------------------------------------------- Officer and Director of
Gareth Roberts DMI (Principal Executive
Officer)
/s/ PHIL RYKHOEK Chief Financial Officer and February 19, 1998
- ----------------------------------------------------- Secretary and
Phil Rykhoek Director of DMI
(Principal Financial
Officer)
BOBBY J. BISHOP * Controller and Chief February 19, 1998
- ----------------------------------------------------- Accounting Officer of DMI
Bobby J. Bishop (Principal Accounting
Officer)
MATTHEW DESO * Vice President, Exploration February 19, 1998
- ----------------------------------------------------- and Director of DMI
Matthew Deso
MARK WORTHEY * Vice President, Operations February 19, 1998
- ----------------------------------------------------- and Director of DMI
Mark Worthey
By: /s/ PHIL RYKHOEK
-------------------------------------------------
Phil Rykhoek
Attorney-in-Fact pursuant to power
of attorney contained in original
filing of the Registration Statement.
</TABLE>
II-4
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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<C> <S>
1(a) -- Form of Underwriting Agreement relating to Equity
Offering.
1(b) -- Form of Underwriting Agreement relating to Debt Offering.
3(a)* -- Articles of Continuance of Denbury Resources Inc., as
amended (incorporated by reference as Exhibits 3(a),
3(b), 3(c), 3(d) of DRI's Registration Statement on Form
F-1 dated August 25, 1995, Exhibit 4(e) of DRI's
Registration Statement on Form S-8 dated February 2, 1996
and Exhibit 3(a) of the Pre-effective Amendment No. 2 of
DRI's Registration Statement on Form S-1 dated October
22, 1996).
3(b)* -- General By-Law No. 1: A By-Law Relating Generally to the
Conduct of the Affairs of Denbury Resources Inc., as
amended (incorporated by reference as Exhibit 3(e) of
DRI's Registration Statement on Form F-1 dated August 25,
1995, Exhibit 4(d) of the Registrant's Registration
Statement on Form S-8 dated February 2, 1996.
3(c) -- Restated Articles of Incorporation of Denbury Management,
Inc.
3(d) -- Bylaws of Denbury Management, Inc.
4(a)* -- See Exhibits 3(a), 3(b), 3(c) and 3(d) for provisions of
the Articles of Continuance and General By-Law No. 1 of
DRI defining the rights of the holders of Common Shares.
4(b) -- Indenture dated as of , 1998, between DMI and
Chase Bank of Texas, National Association, as trustee.
5(a) -- Opinion of Burnet, Duckworth & Palmer.
5(b) -- Opinion of Jenkens & Gilchrist, a Professional
Corporation.
10(a)* -- Form of First Restated Credit Agreement, by and among
DMI, as borrower, DRI as guarantor, NationsBank of Texas,
N.A., as administrative agent, Nationsbanc Montgomery
Securities LLC, as syndication agent and arranger and the
financial institutions listed on Schedule I thereto, as
banks, to be executed on December 29, 1997.
10(b) -- First Amendment to First Restated Credit Agreement, by
and among DMI, as borrower, DRI, as guarantor,
NationsBank of Texas, N.A., as administrative agent, and
NationsBank of Texas, N.A., as bank, entered into as of
January 27, 1998.
12* -- Statement of Ratio of Earnings to Fixed Charges.
23(a)* -- Consent of Deloitte & Touche.
23(b)* -- Consent of Price Waterhouse LLP.
23(c)* -- Consent of Netherland, Sewell and Associates.
23(d) -- Consent of Burnet, Duckworth & Palmer (contained in its
opinion filed as Exhibit 5(a).
23(e) -- Consent of Jenkens & Gilchrist, a Professional
Corporation (contained in its opinion filed as Exhibit
5(b)).
24(a)* -- Power of Attorney (contained on the signature page of
this Registration Statement).
25.1* -- Statement of Eligibility on Form T-1 of Chase Bank of
Texas, National Association, as Trustee.
</TABLE>
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* Previously filed.
<PAGE> 1
EXHIBIT 1(a)
[ ] Shares
DENBURY RESOURCES INC.
COMMON SHARES
UNDERWRITING AGREEMENT
February , 1998
<PAGE> 2
February , 1998
Morgan Stanley & Co.
Incorporated
Gordon Capital, Inc.
Johnson Rice & Company L.L.C.
Loewen, Ondaatje, McCutcheon USA Limited
and Certain Canadian Affiliates of the
Foregoing Listed in Schedule II
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
DENBURY RESOURCES INC., a Canadian corporation (the "Company"),
proposes to issue and sell to the several Underwriters (as defined below) [ ]
shares of its Common Shares, no par value (the "Firm Shares"). Morgan Stanley &
Co. Incorporated, Gordon Capital, Inc., Johnson Rice & Company L.L.C. and
Loewen, Ondaatje, McCutcheon USA Limited shall act as representatives (the
"Representatives") of the several Underwriters.
The Company also proposes to sell to the several Underwriters not more
than an additional [ ] shares of the Company's Common Shares, no par value (the
"Additional Shares"), if and to the extent that the Representatives shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such Additional Shares granted to the Underwriters in Section 2 hereof. The Firm
Shares and the Additional Shares are hereinafter collectively referred to as the
"Shares". The Common Shares, no par value, of the Company to be outstanding
after giving effect to the sales contemplated hereby are hereinafter referred to
as the "Common Shares". It is understood that the Shares will be offered and
sold in the United States and in Alberta, British Columbia, Manitoba, Ontario,
Quebec and Saskatchewan (the "Qualifying Provinces") and, subject to applicable
law, may be offered and sold outside of the United States and the Qualifying
Provinces.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement relating to the Shares. The registration
statement as amended at the time it becomes effective,
<PAGE> 3
2
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act"), and all documents
incorporated therein by reference, is hereinafter referred to as the
"Registration Statement"; the prospectus in the form first used to confirm sales
of Shares is hereinafter referred to as the "Prospectus". If the Company has
filed an abbreviated registration statement to register additional Common Shares
pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement. The Company has
also filed with the applicable securities regulatory authorities in each of the
Qualifying Provinces (each a "Canadian Commission") a preliminary prospectus and
will file with the Canadian Commissions, as soon as practicable following the
execution hereof, a final prospectus qualifying the Shares for distribution in
such Qualifying Province. The prospectus in the form first used to confirm sales
of Shares in the Qualifying Provinces and all documents incorporated therein by
reference is hereinafter referred to as the "Final Canadian Prospectus", the
preliminary version thereof is referred to as the "Preliminary Canadian
Prospectus" and the Final Canadian Prospectus and Preliminary Canadian
Prospectus are collectively referred to as the "Canadian Prospectus".
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters and their
respective Canadian affiliates set forth in Schedule II hereto (the "Canadian
Affiliates") 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.
(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 Registration Statement
and the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and
<PAGE> 4
3
the applicable rules and regulations of the Commission thereunder 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
1(b) do not apply to statements or omissions in the Registration Statement
or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Preliminary Canadian Prospectus has been filed and the Final
Canadian Prospectus will be filed with each Canadian Commission in
conformity with the applicable securities legislation of the Qualifying
Provinces and their respective rules, regulations and written published
policies (collectively, "Canadian Securities Laws") and receipts for the
Preliminary Canadian Prospectus have been obtained from or on behalf of
each of the Canadian Commissions and the Company will use its reasonable
efforts to obtain as soon as practicable following filing, receipts from
the Canadian Commission for the Final Canadian Prospectus.
(d) The Preliminary Canadian Prospectus, as of the time of filing
thereof, and the Final Canadian Prospectus, as of the time of filing
thereof, (i) did not, or will not, as applicable, contain a
misrepresentation (as such term is defined in Canadian Securities Laws),
(ii) constituted, or will constitute, as applicable, full, true and plain
disclosure of all material facts relating to the Shares and the Company and
its subsidiaries taken as a whole and (iii) did not, or will not, as
applicable, 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 light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph 1(d) do not
apply to statements or omissions in the Canadian Prospectus based upon
information relating to any Underwriter or Canadian Affiliate furnished to
the Company in writing by such Underwriter or Canadian Affiliate through
you expressly for use therein.
<PAGE> 5
4
(e) The listing of the Shares on the New York Stock Exchange (the
"NYSE") and The Toronto Stock Exchange (the "TSE") has been approved by
each such exchange subject only to the filing of documents and evidence of
satisfactory distribution in accordance with the requirements of each such
exchange on or before [ ] in the case of the NYSE and May 5, 1998 in the
case of the TSE.
(f) No order preventing or suspending the use of the Canadian
Prospectus has been issued by any of the Canadian Commissions.
(g) The Company has been duly incorporated and is validly existing as
a corporation under the federal laws of Canada, has the corporate power and
authority to own its property and to conduct its business as described in
the Prospectus and the Canadian Prospectus (collectively, the "North
American Prospectuses") and is duly registered to carry on business in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such registration, except to the extent that
the failure to be so registered would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(h) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the North
American Prospectuses and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole; all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly by the Company or
a subsidiary of the Company, free and clear of all liens, encumbrances,
equities or claims.
(i) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the North American
Prospectuses.
<PAGE> 6
5
(j) The Common Shares of the Company outstanding prior to the issuance
of the Shares have been duly authorized and are validly issued, fully paid
and non-assessable.
(k) The Shares to be sold by the Company have been duly authorized by
the Company and, when issued and delivered in accordance with the terms of
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, except for the right of the Texas Pacific Group to maintain
its pro rata ownership interest in the equity securities of the Company on
the terms described in the Registration Statement.
(l) This Agreement has been duly authorized, executed and delivered by
the Company.
(m) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the articles of amalgamation or by-laws
of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of the various
states or the Canadian Securities Laws and the rules and regulations of the
TSE in connection with the offer and sale of the Shares.
(n) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the North American Prospectuses (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement).
(o) The Company is presently eligible to participate in the POP System
(as such term is defined in National Policy 47 of the Canadian Securities
<PAGE> 7
6
Administrators), and at the date hereof the Company is in compliance in all
material respects with its timely disclosure obligations under Canadian
Securities Laws and its obligations as a listed Company on the TSE.
(p) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which the Company or any of its subsidiaries is subject that are required
to be described in the Registration Statement or the North American
Prospectuses and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the North American Prospectuses or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(q) Each preliminary prospectus filed as part of the registration
statement as originally filed with the Commission or as part of any
amendment thereto, or filed with the Commission pursuant to Rule 424 under
the Securities Act, complied when so filed in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder.
(r) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, provincial, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the North American Prospectuses, except
to the extent that the failure to obtain or file would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(s) The Company is not and, after giving effect to the offering and
sales of the Shares and the application of the proceeds thereof as
described in the North American Prospectuses, will not be an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(t) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state, provincial and local laws and
<PAGE> 8
7
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(u) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
(other than those required in the ordinary course of the Company's
operations) required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities (other than those encountered in the
ordinary course of the Company's operations) and any potential liabilities
to third parties) which would, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(v) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and the Underwriters, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agree, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedule I hereto
opposite their names at $[ ] a share (the "purchase price"). In consideration
for your services hereunder, the Company shall pay to the Underwriters or to
their order, a commission in immediately available funds equal to $[ ] a Share
in respect of each Share which is sold pursuant to this Agreement (the
"Underwriters' Commission").
<PAGE> 9
8
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares described in the last sentence of this
paragraph, and the Underwriters shall have a one-time right to purchase,
severally and not jointly, up to [ ] Additional Shares at the purchase price. If
you, on behalf of the Underwriters, elect to exercise such option, you shall so
notify the Company in writing not later than 30 days after the date of this
Agreement, which notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days after the
date of such notice. Additional Shares may be purchased as provided in Section 5
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Additional Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as the Representatives may determine) that bears the same proportion to
the total number of Additional Shares to be purchased as the total number of
Firm Shares set forth in both parts of Schedule I hereto opposite the name of
such Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 120 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
Common Shares or any securities convertible into or exchangeable for Common
Shares or (ii) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the Common Shares,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Shares or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold
hereunder, (B) the issuance by the Company of Common Shares upon the exercise of
any option or warrant or the conversion of a security outstanding on the date
hereof which are either disclosed in the Prospectus or of which the Underwriters
have been advised in writing, (C) the issuance by the Company of Common Shares
under its existing stock
<PAGE> 10
9
purchase plans or the grant of stock options to new employees hired by the
Company during such 120-day period or (D) transactions by any person other than
the Company relating to Common Shares or other securities acquired in open
market transactions after the completion of the offering of the Shares.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares: (a) in the United States, as soon after the Registration Statement
and this Agreement have become effective as in your judgment is advisable and
(b) in Canada, as soon after receipts are obtained for the Final Canadian
Prospectus from or on behalf of the Canadian Commissions in each of the
Qualifying Provinces as in your judgment is advisable, and in effecting the
distribution of the Shares in the Qualifying Provinces, you will offer and sell
the Shares through your respective Canadian Affiliates. The Company is further
advised by you that the Shares are to be offered to the public initially at $[ ]
a share (the public offering price) and to certain dealers selected by you at a
price that represents a concession not in excess of $[ ] a share under the
public offering price, and that any Underwriter may allow, and such dealers may
re-allow, a concession, not in excess of $[ ] a share, to any Underwriter or to
certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares, net of the
applicable Underwriters' Commission, shall be made in Federal or other funds
immediately available in New York City against delivery of such Firm Shares for
the respective accounts of the several Underwriters at 8:30 a.m., New York City
time, on [ ], 1998, or at such other time on the same or such other date, not
later than [ ], 1998, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "Closing Date".
Payment for any Additional Shares, net of the applicable Underwriters'
Commission, shall be made in Federal or other funds immediately available in New
York City against delivery of such Additional Shares for the respective accounts
of the several Underwriters at 8:30 a.m., New York City time, on the date
specified in the notice described in Section 2 or at such other time on the same
or on such other date, in any event not later than [ ], 1998 as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Option Closing Date".
<PAGE> 11
10
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Conditions. The several obligations of the Company hereunder and
the several obligations of the Underwriters hereunder are subject to the
condition that the Registration Statement shall have become effective not later
than 5 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters hereunder are subject to
the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
North American Prospectuses (exclusive of any amendment or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus; and
<PAGE> 12
11
(iii) there shall not have developed, occurred, or come into
effect, any occurrence of national or international consequence or any
action, governmental regulation, inquiry or other occurrence of any
nature whatsoever which, in the opinion of the Underwriters, seriously
effects or may seriously effect the Canadian financial markets or the
business of the Company and its subsidiaries on a consolidated basis.
(b) The Canadian Prospectus shall have been filed with the Canadian
Commissions of each of the Qualifying Provinces in accordance with
applicable Canadian Securities Laws and receipts therefore shall have been
issued by such Canadian Commissions.
(c) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that the Company has
complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or before the Closing
Date.
The officer signing and delivering such certificate may rely upon the
best of his knowledge as to proceedings threatened.
(d) You and the Canadian Affiliates shall have received on the Closing
Date an opinion of Jenkens & Gilchrist, a Professional Corporation, U.S.
counsel for the Company, dated the Closing Date, to the effect that:
(i) each U.S. subsidiary of the Company is a corporation validly
existing in good standing under the laws of the jurisdiction of its
U.S. incorporation and has the corporate power and authority to own
its property and to conduct its business as described in the North
American Prospectuses and is duly qualified to transact business and
is in good standing in each U.S. jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the
<PAGE> 13
12
Company and its U.S. subsidiaries, taken as a whole;
(ii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of U.S. law applicable to the
Company or, to such counsel's knowledge, any agreement or other
instrument binding upon the Company or any of its subsidiaries filed
as an exhibit to the Registration Statement or the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, or, to such
counsel's knowledge, any judgment, or decree of any U.S. governmental
body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of or
qualification with any U.S. governmental body or agency is required
for the performance by the Company of its obligations under this
Agreement, except such as may be required by the securities or Blue
Sky laws of the various states of the U.S. in connection with the
offer and sale of the Shares;
(iii) the statements (1) in the Prospectus under the captions
"Business and Properties-- Regulations" and "Description of Capital
Stock" and in the first, second, fourth and sixth paragraphs under the
caption "Underwriters" and (2) in the Registration Statement under
Item 15, in each case only insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents and proceedings and fairly summarize the
matters referred to therein;
(iv) the Shares have been conditionally approved for listing by
the NYSE;
(v) after due inquiry, such counsel does not know of any legal
or governmental proceeding pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
North American Prospectuses and are not so
<PAGE> 14
13
described or of any U.S. statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;
(vi) the Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended; and
(vii) the Registration Statement and Prospectus (except for
financial statements and schedules and other financial and statistical
data and the reserve or related data and information included therein
as to which such counsel need not express any opinion) comply as to
form in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder.
In such opinion such counsel will state that (i) it has no reason to
believe that (except for financial statements and schedules and other
financial and statistical data and the reserve or related data and
information included therein as to which such counsel need not express any
belief) the Registration Statement and the prospectus included therein at
the time the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and (ii) has no reason to believe(except for financial
statements and schedules and other financial and statistical data included
therein as to which such counsel need not express any belief) the
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
light of the circumstances under which they were made, not misleading.
(e) You and the Canadian Affiliates shall have received on the Closing
Date an opinion of Burnet, Duckworth & Palmer, Canadian counsel for the
Company, dated the Closing Date, to the effect that:
<PAGE> 15
14
(i) the Company is a corporation duly incorporated 10 and
validly existing under the federal laws of Canada and has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly registered to
carry on business in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
registered would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(ii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained under the heading
"Description of Capital Stock" in the Prospectus and the heading
"Description of Share Capital" in the Canadian Prospectus;
(iii) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of
such Shares will not, as at the date of issuance, be subject to any
statutory preemptive or similar rights, except for the preemptive
rights held by the Texas Pacific Group (or affiliates thereof) on the
terms described in the Registration Statement;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable Canadian law or any
charter documents or by-laws of the Company or, to such counsel's
knowledge, any agreement or other instrument binding upon the Company
filed as an exhibit to the Registration Statement or the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, or,
to such counsel's knowledge, any judgment, or decree of any Canadian
governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or
order of or qualification with any Canadian governmental body or
agency is required for the performance by the Company of its
<PAGE> 16
15
obligations under this Agreement, except such as may be required by
The Toronto Stock Exchange and the securities laws of the various
Canadian provinces in connection with the offer and sale of the
Shares;
(vi) the statements (1) in the Prospectus under the captions
"Canadian Taxation and the Investment Canada Act" and "Service and
Enforcement of Legal Process" and (2) in the Canadian Prospectus under
the captions "Plan of Distribution" and "Description of Share
Capital", in each case only insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents and proceedings and fairly summarize the
matters referred to therein;
(vii) subject to general investment provisions, the Shares are
eligible investments under the statutes listed in the Canadian
Prospectus under the heading "Eligibility for Investment" without the
investor having recourse to the so-called "basket" provisions of such
statutes;
(viii) the Shares have been conditionally approved for listing by
the TSE, subject to the Company fulfilling all of the requirements of
the TSE in the manner and within the time limites set forth in the
Letter of the TSE dated February 5, 1998;
(ix) after due inquiry, such counsel does not know of any legal
or governmental proceeding pending or threatened to which the Company
is a party or to which any of the properties of the Company is subject
that are required to be described in the Canadian Prospectuses and are
not so described; and
(x) the Canadian Prospectus (except for financial statements
and schedules and other financial and statistical data and the reserve
or related data and information included therein to which counsel need
not express any opinion) complies as to form in all material respects
with Appendix B of National Policy Statement No. 47 of the Canadian
Securities Laws.
<PAGE> 17
16
In such opinion such counsel will state that (i) it has no reason to
believe that (except for financial statements and schedules and other
financial and statistical data and the reserve or related data and
information included therein as to which such counsel need not express any
belief) the Canadian Prospectus at the time the Canadian Prospectus was
filed contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) has no reason to believe(except
for financial statements and schedules and other financial and statistical
data included therein as to which such counsel need not express any belief)
the Canadian 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 light of the circumstances under which they were made, not
misleading.
(f) You shall have received on the Closing Date an opinion of Cravath,
Swaine & Moore, special counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (iii) (but only as
to the statements in the Prospectus under "Description of Capital Stock"
and "Underwriters"), (vii) and the last paragraph of Section 5(d) above.
(g) You shall have received on the Closing Date an opinion of Osler,
Hoskin & Harcourt, special counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (iii), (iv) and the
last paragraph of Section 5(e) above.
With respect to the last paragraph of Section 5(d) and Section 5(e)
above, Jenkens & Gilchrist, a Professional Corporation, Burnet, Duckworth &
Palmer, Cravath, Swaine & Moore and Osler, Hoskin & Harcourt may state that
their opinion and belief are based upon their participation in the
preparation of the Registration Statement, the Prospectus and, as
applicable, the Canadian Prospectus, and any amendments or supplements
thereto and review and discussion of the contents thereof with officers of
the Company, but are without independent check or verification except as
specified.
(h) You shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form
<PAGE> 18
17
and substance satisfactory to you, from Deloitte & Touche, Chartered
Accountants, Calgary, Alberta, independent public accountants for the
Company, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in the
Registration Statement and the North American Prospectuses; provided that
the letter delivered on the Closing Date shall use a "cut-off" date not
earlier than the date hereof.
(i) The Underwriters and the Canadian Affiliates shall have received
on the Closing Date a legal opinion dated the Closing Date, in form and
substance satisfactory to counsel to the Underwriters, addressed to the
Underwriters and the Canadian Affiliates and counsel to the Underwriters
from Byers Casgrain, Montreal, Quebec:
(i) regarding compliance with the laws of Quebec relating to the use
of the French language in connection with the documents
(including the Canadian Prospectus and any amendments or
supplements thereto and certificates representing the Shares) to
be delivered to purchasers in Quebec in connection with the
offering of the Shares; and
(ii) to the effect that the French language version of the Canadian
Prospectus (including any supplement or amendment thereto), other
than with respect to the financial information contained in the
Canadian Prospectus under the headings o, o and o (collectively,
the "Financial Information"), is in all material respects a
complete and accurate translation of the English language version
thereof and that such versions are not susceptible to any
materially different interpretation with respect to material
matter contained therein.
(j) The Underwriters and the Canadian Affiliates shall have received
on the Closing Date an opinion of Deloitte Touche, Chartered Accountants,
and Price Waterhouse, Chartered Accountants, dated the Closing Date, in
form and substance satisfactory to counsel to the Underwriters, addressed
to the Underwriters and the Canadian Affiliates and counsel to the
Underwriters to
<PAGE> 19
18
the effect that the French language version of the Financial Information
(in respect of which such firm has responsibility for translating)
contained in the Canadian Prospectus (including any supplement or amendment
thereto) is in all material respects a complete and accurate translation of
the English language version thereof and that such versions are not
susceptible of any materially different interpretation with respect to a
material matter contained therein.
(k) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales of Common Shares of the Company
or any securities convertible into or exercisable or exchangeable for such
Common Shares, delivered to you on or before the date hereof, shall be in
full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to the Representatives on the
Option Closing Date of such documents as they may reasonably request with
respect to the good standing of the Company, the valid and unencumbered title of
the Additional Shares and other matters related to the issuance of the
Additional Shares.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters and Canadian Affiliates herein contained, the
Company covenants with each Underwriter and Canadian Affiliate as follows:
(a) As soon as practicable, and in any event not later than one
business day after the date of this Agreement, the Company will prepare the
Final Canadian Prospectus and file such Canadian Prospectus with the
Canadian Commissions in each of the Qualifying Provinces and use its
reasonable efforts to obtain from or on behalf of such Canadian Commissions
receipts for such Canadian Prospectus dated as of such date.
(b) To furnish to the Representatives, without charge, five copies of
the conformed EDGAR submission copy of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a
conformed EDGAR submission copy of the Registration Statement (without
exhibits thereto) and (i) to furnish to the Representatives in New York
City, without charge, prior to 10:00 a.m. New York City time on the second
business day next succeeding the date of this
<PAGE> 20
19
Agreement and during the period mentioned in paragraph (d) below, as many
copies of the Prospectus and any supplements and amendments thereto or to
the Registration Statement as you may reasonably request and (ii) to
furnish to the Canadian Affiliates in [ ], without charge, prior to 12:00
noon New York City time on the third business day next succeeding the date
of this Agreement, as many copies of the Final Canadian Prospectus and any
supplements or amendments thereto as the Final Canadian Affiliates may
reasonably request.
(c) Before amending or supplementing the Registration Statement, the
Prospectus or the Canadian Prospectus, to furnish you a copy of each such
proposed amendment or supplement and to file no such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
or each Canadian Commission within the applicable period specified in Rule
424(b) under the Securities Act or under the applicable provisions of
Canadian Securities Laws any prospectus, amended prospectus, amendment or
supplement required to be filed pursuant to such Rule or laws.
(d) If, during such period after the first date of the public offering
of the Shares as in the opinion of your counsel the Prospectus is required
by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if, in the opinion of your
counsel, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers (whose
names and addresses you will furnish to the Company) to which Shares may
have been sold by you on behalf of the Underwriters and to any other
dealers upon request, either amendments or supplements to the Prospectus so
that the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances when the Prospectus is delivered to
a purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(e) If at any time after the date of the Canadian Prospectus: (i) any
material change (actual,
<PAGE> 21
20
anticipated, contemplated or threatened, financial or otherwise, in the
business, affairs, operations, assets, liabilities (contingent or
otherwise) or capital of the Company and its subsidiaries, taken as a
whole, shall have occurred; (ii) any material fact has arisen or is
discovered which would have been required to have been stated in the Final
Canadian Prospectus had it arisen or been discovered on or prior to the
date of the Final Canadian Prospectus; or (iii) any change in any material
fact contained in the Final Canadian Prospectus or any amendments or
supplements thereto arises or is discovered, which change is, or could
reasonably be expected to be, of such a nature as to render any statement
in the Canadian Prospectus or any amendments or supplements thereto
misleading or untrue or which would result in a misrepresentation in the
Canadian Prospectus or any amendments or supplements thereto or which would
result in the Canadian Prospectus or any amendments or supplements thereto
not complying (to the extent that such compliance is required) with
Canadian Securities Laws, then the Company shall promptly, and in any event
within any applicable time limitation, comply, to the satisfaction of the
Underwriters and the Canadian Affiliates, acting reasonably, with all
applicable filings and other requirements under Canadian Securities Laws as
a result of such fact or change. Notwithstanding the foregoing, the Company
shall not file any amendments or supplements to the Canadian Prospectus to
which the Underwriters and the Canadian Affiliates, acting reasonably,
object. The Company shall, in good faith, discuss with the Underwriters and
the Canadian Affiliates any fact or change in circumstances (actual,
anticipated, contemplated or threatened, financial or otherwise) which is
of such a nature that there is reasonable doubt as to whether any action
need be taken pursuant to the operation of this paragraph.
(f) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(g) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the
twelve-month period ending March 31, 1999 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
<PAGE> 22
21
7. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration, qualification and delivery of the Shares under the
Securities Act and Canadian Securities Laws and all other fees or expenses in
connection with the preparation and filing of the Registration Statement, any
preliminary prospectus, the North American Prospectuses and amendments and
supplements to any of the foregoing (collectively, the "Offering Documents"),
including all printing costs associated therewith, and the mailing and
delivering of copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or other
taxes payable thereon, (iii) all expenses in connection with the qualification
of the Shares for offer and sale under the securities laws of other
jurisdictions as provided in Section 6(f) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification, (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters incurred in connection with the
review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all costs and expenses incident to
listing the Shares on the NYSE and TSE, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer agent,
registrar or depositary, (viii) the costs and expenses of the Company relating
to investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, and (ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise made
in this Section. It is understood, however, that except as provided in this
Section, Section 9 entitled "Indemnity and Contribution", and the last paragraph
of Section 11 below, the Underwriters will pay all of their costs and expenses,
including fees and
<PAGE> 23
22
disbursements of their counsel, stock transfer taxes payable on resale of any of
the Shares by them and any advertising expenses connected with any offers they
may make.
The provisions of this Section 7 shall not affect any agreement that
the Sellers may otherwise have for the allocation of such expenses among
themselves.
8. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter (including its respective Canadian Affiliate) and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred by any Underwriter or any such controlling
person in connection with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Offering Document, 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 or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in any Offering Document.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party,
<PAGE> 24
23
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and (b) the fees and expenses
of more than one separate firm (in addition to any local counsel) for the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section. In the case of any such separate firm for the Underwriters and such
control persons of Underwriters, such firm shall be designated in writing by
Morgan Stanley & Co. Incorporated. In the case of any such separate firm for the
Company, and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify each indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such
<PAGE> 25
24
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request 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.
(d) To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such subsection, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties 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 indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other hand in connection with the
offering of the Shares shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate public offering price of the
Shares. The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The
<PAGE> 26
25
Underwriters' respective obligations to contribute pursuant to this Section 8
are several in proportion to the respective number of shares they have purchased
hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 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 that 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 and liabilities 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 8, 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 that 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 Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may
<PAGE> 27
26
be, any of the NYSE, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange, the Chicago Board of Trade or the TSE, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York or Toronto shall have been declared by the applicable
authorities or (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis that,
in your judgment, is material and adverse, and (b) in the case of any of the
events specified in clauses (a)(i) through (iv), such event singly or together
with any other such event makes it, in your judgment, impracticable to market
the Shares on the terms and in the manner contemplated in the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the later of (x) execution and delivery hereof by the
parties hereto and (y) release of notification of the effectiveness of the
Registration Statement by the Commission.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date or the Option Closing Date, as the case may be, any Underwriter
or Underwriters shall fail or refuse to purchase Shares and the aggregate number
of Shares with respect to which such default occurs is more than one-tenth of
the aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to you and the Company
<PAGE> 28
27
for the purchase of such Shares are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date or the 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 Offering Documents or in any 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 such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, 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 Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
<PAGE> 29
28
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of references only and shall not be deemed a part of
this Agreement.
Very truly yours,
DENBURY RESOURCES INC.,
By
-----------------------------------
Name:
Title:
Accepted, February , 1998
MORGAN STANLEY & CO.
INCORPORATED
GORDON CAPITAL, INC.
JOHNSON RICE & COMPANY L.L.C.
LOEWEN, ONDAATJE,
MCCUTCHEON USA LIMITED
Acting severally on behalf of themselves and the several
Underwriters
Morgan Stanley & Co.
Incorporated
By
-----------------------------------
Name:
Title:
<PAGE> 30
Schedule I
Firm Shares
<TABLE>
<CAPTION>
Number of
Firm Shares
to be
Underwriter Purchased
----------- ---------------
<S> <C>
Morgan Stanley & Co. Incorporated
Gordon Capital, Inc.
Johnson, Rice & Company L.L.C.
Loewen, Ondaatje, McCutcheon USA Limited
---------------
Total Shares................................................
===============
</TABLE>
<PAGE> 31
Schedule II
Canadian Affiliates
<TABLE>
<CAPTION>
Respective
Underwriter Canadian Affiliate
- ----------- ------------------
<S> <C>
</TABLE>
<PAGE> 32
Exhibit A
[FORM OF LOCK-UP LETTER]
, 1998
Denbury Resources Inc.
17304 Preston Road, Suite 200
Dallas, TX 75252
Morgan Stanley & Co. Incorporated
Gordon Capital, Inc.
Johnson Rice & Company L.L.P.
Loewen, Ondaatje, McCutcheon USA Limited
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Denbury Resources Inc., a Canadian corporation
(the "COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by
the several Underwriters, including Morgan Stanley (the "UNDERWRITERS"), of up
to [ ] shares (the "SHARES") of the Common Stock of the Company (the "COMMON
STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, it will not during the period commencing
on the date hereof and ending 120 days after the date of the final prospectus
relating to the Public offering (the "PROSPECTUS"), (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exchangeable for Common Stock, or
(ii) enter into any swap or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the Common Stock, whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) the sale of any Shares to the
<PAGE> 33
2
Underwriters pursuant to the Underwriting Agreement or (b) transactions relating
to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. In addition, the
undersigned agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 120 days after the date of the Prospectus, make any
demand for or exercise any right with respect to, the registration of any shares
of Common Stock or any security convertible into or exchangeable for Common
Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
----------------------------------------
(Name)
----------------------------------------
(Address)
<PAGE> 1
EXHIBIT 1(b)
[ ]% Senior Subordinated Notes Due 2008
DENBURY MANAGEMENT, INC.
UNDERWRITING AGREEMENT
February, 1998
<PAGE> 2
February, 1998
Morgan Stanley & Co.
Incorporated
NationsBanc Montgomery
Securities LLC
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, NY 10020
Dear Sirs:
DENBURY MANAGEMENT, INC., a Texas corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") $125 million principal amount of its [ ]% Senior
Subordinated Notes Due 2008 (the "Securities") to be issued pursuant to the
provisions of an Indenture dated as of February [ ], 1998 (the "Indenture")
between the Company and ChaseBank of Texas, National Association, as Trustee
(the "Trustee"). The Securities will be guaranteed on a senior subordinated
basis (the "Guaranty") by Denbury Resources Inc., a Canadian corporation and
the parent of the Company (the "Guarantor").
The Company and the Guarantor have filed with the Securities
and Exchange Commission (the "Commission") a registration statement, including
a prospectus, relating to the Securities. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act"), and all documents incorporated therein by reference, is
hereinafter referred to as the "Registration Statement"; the prospectus in the
form first used to confirm sales of Securities is hereinafter referred to as
the "Prospectus." If the Company has filed an abbreviated registration
statement to register additional securities pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such
Rule 462 Registration Statement.
<PAGE> 3
2
1. Representations and Warranties of the Company and the
Guarantor. Each of the Company and the Guarantor represents and warrants to
and agrees with each of the Underwriters 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.
(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 Registration Statement and the Prospectus comply,
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder 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 1(b) do not apply (A) to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein or (B) to that
part of the Registration Statement that constitutes the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), of the Trustee.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Texas and the Guarantor has been duly incorporated and is validly
existing as a corporation under the federal laws of Canada, each has
the corporate power and authority to own its property and to conduct
its business as described in the Prospectus, the Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification,
<PAGE> 4
3
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Guarantor and
the Company and its subsidiaries, taken as a whole and the Guarantor
is duly registered to carry on business in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such registration, except to the extent that the failure to
be so registered would not have a material adverse effect on the
Guarantor and the Company and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole; all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly by the Company or
a subsidiary of the Company, free and clear of all liens,
encumbrances, equities or claims. The Company is the sole direct
subsidiary of the Guarantor.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantor.
(f) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms except as (i) enforceability
thereof may be limited by bankruptcy, fraudulent conveyance,
reorganization, insolvency or similar laws affecting creditors' rights
generally, (ii) rights of acceleration, if applicable, and the
availability of equitable remedies may be limited by equitable
principles of general applicability and (iii) general principles of
equity may affect such matters.
<PAGE> 5
4
(g) The Securities have been duly authorized by the Company
and, when executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be valid and binding obligations of
the Company, enforceable in accordance with their terms except as (i)
enforceability thereof may be limited by bankruptcy, fraudulent
conveyance, reorganization, insolvency or similar laws affecting
creditors' rights generally, (ii) rights of acceleration, if
applicable, and the availability of equitable remedies may be limited
by equitable principles of general applicability and (iii) general
principles of equity may affect such matters.
(h) The Guaranty has been duly authorized by the Company and,
when the Indenture has been duly executed and delivered by the
Guarantor, the Guaranty will be a valid and binding agreement of the
Guarantor, enforceable in accordance with its terms except as (i)
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, (ii) rights of
acceleration, if applicable, and the availability of equitable
remedies may be limited by equitable principles of general
applicability and (iii) general principles of equity may affect such
matters.
(i) The execution and delivery by each of the Company and the
Guarantor of, and the performance by each of the Company and the
Guarantor of their respective obligations under, this Agreement, the
Indenture and the Securities, as the case may be, will not contravene
any provision of applicable law or the articles or certificate of
incorporation or amalgamation or by-laws of the Guarantor or the
Company, as the case may be, or any agreement or other instrument
binding upon the Guarantor or the Company or any of its subsidiaries
that is material to the Guarantor or the Company and its subsidiaries,
taken as a whole, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Guarantor, the
Company or any subsidiary, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by the Guarantor and the Company of their
respective obligations under this Agreement, the Indenture or the
Securities, as the case
<PAGE> 6
5
may be, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of
the Securities.
(j) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Guarantor or the Company and its subsidiaries, taken
as a whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement).
(k) There are no legal or governmental proceedings pending or
threatened to which the Guarantor, the Company or any of its
subsidiaries is a party or to which any of the properties of the
Guarantor, the Company or any of its subsidiaries is subject that are
required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required.
(l) 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 Securities Act,
complied when so filed in all material respects with the Securities
Act and the applicable rules and regulations of the Commission
thereunder.
(m) Each of the Guarantor and the Company and its
subsidiaries has all necessary consents, authorizations, approvals,
orders, certificates and permits of and from, and has made all
declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all
courts and other tribunals, to own, lease, license and use its
properties and assets and to conduct its business in the manner
described in the Prospectus, except to the extent that the failure to
obtain or file would not have a material adverse effect on the
Guarantor and the Company and its subsidiaries, taken as a whole.
(n) None of the Company and the Guarantor is and, after
giving effect to the offering and sale of the
<PAGE> 7
6
Securities and the application of the proceeds thereof as described in
the Prospectus, will be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(o) The Guarantor and the Company and its subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the
Guarantor or the Company and its subsidiaries, taken as a whole.
(p) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures (other than those required in the ordinary
course of the Company's operations) required for clean-up, closure of
properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities
(other than encountered in the ordinary course of the Company's
operations) and any potential liabilities to third parties) which
would, singly or in the aggregate, have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(q) The Guarantor and the Company have each complied with all
provisions of Section 517.075, Florida Statutes relating to doing
business with the Government of Cuba or with any person or affiliate
located in Cuba.
2. Agreements to Sell and Purchase. The Company hereby
agrees to sell to the several Underwriters, and the Underwriters, upon the
basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agree, severally and not jointly, to
<PAGE> 8
7
purchase from the Company the respective principal amounts of Securities set
forth in Schedule I hereto opposite their names at [ ]% of their
principal amount (the "purchase price") plus accrued interest, if any, from
[ ], 1998 to the date of payment and delivery.
3. Terms of Public Offering. The Company is advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable. The Company
is further advised by you that the Securities are to be offered to the public
initially at [ ]% of their principal amount--the public offering price-- plus
accrued interest, if any, and to certain dealers selected by you at a price
that represents a concession not in excess of [ ]% of their principal amount
under the public offering price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of [ ]% of their principal
amount, to any Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Securities shall be
made in Federal or other funds immediately available in New York City against
delivery of such Securities for the respective accounts of the several
Underwriters at 10:30 a.m., New York City time, on [ ], 1998, or at
such other time on the same or such other date, not later than [ ],
1998, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "Closing Date".
Payment for the Securities shall be made against delivery to
you on the Closing Date for the respective accounts of the several Underwriters
of the Securities registered in such names and in such denominations as you
shall request in writing not less than one full business day prior to the
Closing Date, with any transfer taxes payable in connection with the transfer
of the Securities to the Underwriters duly paid.
5. Conditions of the Underwriters' Obligations. The
obligations of the Company and the several obligations of the Underwriters to
purchase and pay for the Securities on the Closing Date are subject to the
condition that the Registration Statement shall have become effective not later
than 5:00 p.m. (New York City time) on the date hereof.
<PAGE> 9
8
The several obligations of the Underwriters hereunder are
subject to the following further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date,
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations, of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of
this Agreement), that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to
market the Securities on the terms and in the manner
contemplated in the Prospectus.
(b) You shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in clause (a)(i) above and to
the effect that the representations and warranties of the Company and
the Guarantor contained in this Agreement are true and correct as of
the Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion of
Jenkens & Gilchrist, a Professional Corporation, counsel for the
Company and U.S. counsel
<PAGE> 10
9
for the Guarantor, dated the Closing Date, to the effect that:
(i) the Company is a corporation validly existing in
good standing under the laws of the State of Texas, it has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus and it is
duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be
in good standing would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole;
(ii) each subsidiary of the Company is a corporation
validly existing in good standing under the laws of the U.S.
jurisdiction of its incorporation and has the corporate power
and authority to own its property and to conduct its business
as described in the Prospectus and is duly qualified to
transact business and is in good standing in each U.S.
jurisdiction in which the conduct of business or its ownership
or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(iii) this Agreement has been duly authorized,
executed and delivered by the Company;
(iv) the Indenture has been duly qualified under the
Trust Indenture Act and has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement
of each of the Company and the Guarantor, enforceable in
accordance with its terms except as (i) enforceability thereof
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, (ii) rights of
acceleration, if applicable, and the availability of equitable
remedies may be limited by equitable principles of general
applicability and (iii) general principles of equity may
affect such matters;
<PAGE> 11
10
(v) the Securities have been duly authorized and,
when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by
the Underwriters in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture
and will be valid and binding obligations of the Company,
enforceable in accordance with their terms except as (i)
enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights
generally, (ii) rights of acceleration, if applicable, and the
availability of equitable remedies may be limited by equitable
principles of general applicability and (iii) general
principles of equity may affect such matters;
(vi) the execution and delivery by the Company of,
and the performance by the Company of its obligations under,
this Agreement, the Securities and the Indenture, will not
contravene any provision of law applicable to the Company or
the articles, the certificate of incorporation, by-laws or
other charter documents of the Company or any agreement or
other instrument binding upon the Guarantor, the Company or
any of its subsidiaries filed as an exhibit to the
Registration Statement or the Company's Annual Report on Form
10-K for the year ended December 31, 1996, or, to such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, the
Securities and the Indenture, except such as may be required
by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities;
(vii) the statement (1) in the Prospectus under the
captions "Business and Properties-- Regulations" and
"Description of the Securities" and in the first, second and
fourth paragraphs under the caption "Underwriters" and (2) in
the Registration Statement under Items 15, in each case only
insofar as such statements constitute summaries of the legal
matters, documents and proceedings referred to therein, fairly
present
<PAGE> 12
11
the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters
referred to therein;
(viii) after due inquiry, such counsel does not know
of any legal or governmental proceedings pending or threatened
to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so
described or of any statutes, regulations, contracts or other
documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required;
(ix) the Company is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus, will not
be an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended; and
(x) the Registration Statement and Prospectus (except
for financial statements and schedules and other financial and
statistical data and the reserve or related data and
information included therein as to which such counsel need not
express any opinion) comply as to form in all material
respects with the Securities Act and the rules and regulations
of the Commission thereunder.
In such opinion, such counsel will state that it (i)
has no reason to believe that (except for financial statements
and schedules and other financial and statistical data and the
reserve or related data and information included therein as to
which such counsel need not express any belief and except for
that part of the Registration Statement that constitutes the
Form T-1 heretofore referred to) the Registration Statement
and the prospectus included therein at the time the
Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) has no reason to
<PAGE> 13
12
believe (except for financial statements and schedules and
other financial and statistical data as to which such counsel
need not express any belief) the Prospectus as of the Closing
Date contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(d) You shall have received on the Closing Date an opinion of
Burnet, Duckworth & Palmer, Canadian counsel for the Company and the
Guarantor, dated the Closing Date, to the effect that:
(i) the Guarantor is a corporation duly incorporated
and validly existing under the federal laws of the Canada, it
has the corporate power and authority to own its property and
to conduct its business as described in the Prospectus and it
is duly registered to carry on business and is in good
standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
registered would not have a material adverse effect on the
Guarantor and its subsidiaries, taken as a whole;
(ii) this Agreement has been duly authorized,
executed and delivered by the Guarantor;
(iii) the Indenture has been duly authorized,
executed and delivered by the Guarantor;
(iv) the execution and delivery by the Guarantor of,
and the performance by the Guarantor of its obligations under,
this Agreement, the Securities and the Indenture, will not
contravene any provision of applicable Canadian Law or the
articles, the certificate of incorporation, by-laws or other
charter documents of the Guarantor, or, to such counsel's
knowledge, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Guarantor
or any subsidiary, and no consent, approval, authorization or
order of, or qualification with, any governmental body or
agency is required for the performance by the Guarantor of its
obligations under this Agreement, the Securities
<PAGE> 14
13
and the Indenture, except such as may be required by The
Toronto Stock Exchange and the securities laws of the Canadian
provinces in connection with the offer and sale of the
Securities;
(v) the statements in the Prospectus under the
captions "Canadian Taxation and the Investment Canada Act" and
"Service and Enforcement of Legal Process", in each case only
insofar as such statements constitute summaries of the legal
matters, documents and proceedings referred to therein, fairly
present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the
matters referred to therein;
(vi) after due inquiry, such counsel does not know of
any legal or governmental proceedings pending or threatened to
which the Guarantor is a party or to which any of the
properties of the Guarantor is subject that are required to be
described in the Canadian Prospectus and are not so described
or of any statutes, regulations, contracts or other documents
that are required to be described in the Prospectus that are
not so described;
(e) You shall have received on the Closing Date an opinion of
Cravath, Swaine & Moore, special counsel for the Underwriters, dated
the Closing Date, covering the matters referred to in subparagraphs
(iii), (iv), (v), (vii) (but only as to the statements in the
Prospectus under "Description of the Securities" and "Underwriters"),
(x) and the last paragraph of Section 5(c) above.
With respect to the last paragraph of Section 5(c) and Section
5(d) above, Jenkens & Gilchrist, a Professional Corporation, Burnet,
Duckworth & Palmer and Cravath, Swaine & Moore 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 with officers of the Company, but are without
independent check or verification except as specified.
(f) You shall have received, on each of the date hereof and
the Closing Date, a letter dated the date
<PAGE> 15
14
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to you, from Deloitte & Touche, Chartered Accountants,
Calgary, Alberta, independent public accountants for the Guarantor and
the Company, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(g) The Equity Offering (as defined in the Prospectus) shall
have been consummated substantially on the terms described in the
Registration Statement.
(h) The TPG Purchase (as defined in the Prospectus) shall
have been consummated substantially on the terms described in the
Registration Statement.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, three copies of the
conformed EDGAR submission copy of the Registration Statement
(including exhibits thereto) and for delivery to each other
Underwriter a conformed EDGAR submission copy of the Registration
Statement (without exhibits thereto) and, to furnish to you in New
York City, without charge, prior to 10:00 a.m. New York City time on
the business day next succeeding the date of this Agreement and during
the period mentioned in paragraph (c) below, as many copies of the
Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
<PAGE> 16
15
(c) If, during such period after the first date of the public
offering of the Securities as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to
a purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the
Company) to which Securities may have been sold by you on behalf of
the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in
the Prospectus as so amended or supplemented will not, in the light of
the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement
covering the twelve-month period ending March 31, 1999 that satisfies
the provisions of Section 11(a) of the Securities Act and the rules
and regulations of the Commission thereunder.
(f) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell,
contract to sell or otherwise dispose of any debt securities of the
Company or the Guarantor or warrants to purchase debt securities of
the Company or the Guarantor substantially similar to the Securities
or the Guaranty in respect thereof (other than (i) the Securities and
(ii) commercial paper issued in the ordinary course of business),
without your prior written consent.
(g) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses
<PAGE> 17
16
incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's
counsel and the Company's accountants in connection with the
registration and delivery of the Securities under the Securities Act
and all other fees or expenses in connection with the preparation and
filing of the Registration Statement, any preliminary prospectus, the
Prospectus and amendments and supplements to any of the foregoing,
including all printing costs associated therewith, and the mailing and
delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related
to the transfer and delivery of the Securities to the Underwriters,
including any transfer or other taxes payable thereon, (iii) all
expenses in connection with the qualification of the Securities for
offer and sale under state law as provided in section 6(d) hereof,
including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification,
(iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Securities by the National
Association of Securities Dealers, Inc.(the "NASD"), including any
counsel fees incurred on behalf of or disbursements by Morgan Stanley
& Co. Incorporated ("Morgan Stanley") in its capacity as "qualified
independent underwriter", (v) any fees charged by the rating agencies
for the rating of the Securities, (vi) all costs and expenses incident
to listing the Securities on the Luxembourg Stock Exchange, (vii) the
cost of printing certificates representing the Securities, (viii) the
costs and charges of any trustee, transfer agent, registrar or
depositary, (ix) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection
with the marketing of the offering of the Securities, including
without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval
of the Company, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, and (x) all other
costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in
this Section. It is understood, however that
<PAGE> 18
17
except as provided in this Section, Section 7 entitled "Indemnity and
Contribution", and the last paragraph of Section 9 below, the
Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, transfer taxes payable on resale
of any of the Securities by them and any advertising expenses
connected with any offers they may make.
7. Indemnity and Contribution. (a) Each of the Company and
the Guarantor agrees, jointly and severally, to indemnify and hold harmless
each Underwriter and each person, if any, who controls such Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all losses, claims, damages and liabilities (including any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or supplement
if the Company shall have furnished any amendments or supplements thereto), 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 or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
Each of the Company and the Guarantor also agrees to indemnify and hold
harmless Morgan Stanley and each person, if any, who controls Morgan Stanley
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments incurred as a result of Morgan Stanley's
participation as a "qualified independent underwriter" within the meaning of
Rule 2720 of the NASD's Conduct Rules in connection with the offering of the
Securities, except for any losses, claims, damages, liabilities and judgments
resulting from Morgan Stanley's, or such controlling person's, willful
misconduct.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless each of the Company and the Guarantor, their
respective directors, their respective officers who sign the Registration
Statement and each person, if any, who controls the Company and the
<PAGE> 19
18
Guarantor within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either of the two preceding paragraphs,
such person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Notwithstanding anything contained herein to the contrary,
if indemnity may be sought pursuant to the second preceding paragraph in
respect of such action or proceeding, then in addition to such separate firm
for the indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one separate firm (in addition to
any local counsel) for Morgan Stanley in its capacity as a "qualified
independent underwriter" and all persons, if any, who control Morgan Stanley
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act. Any such firm(s) shall be
<PAGE> 20
19
designated in writing by Morgan Stanley, in the case of parties indemnified
pursuant to the second preceding paragraph, and by the Company, in the case of
parties indemnified pursuant to the first preceding paragraph. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request 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.
(d) To the extent the indemnification provided for in Section
7(a) or 7(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor on the one hand and the
Underwriters on the other hand from the offering of the Securities 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 Guarantor on the one hand and of the Underwriters on the other hand in
connection with the statement or omissions that resulted in such losses,
claims, damages or
<PAGE> 21
20
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Guarantor on the one hand and
the Underwriters on the other hand in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate public offering price of the
Securities. The relative fault of the Company and the Guarantor on the one
hand and of the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Guarantor or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the respective principal amounts of Securities
they have purchased hereunder, and not joint.
The Company, the Guarantor and the Underwriters agree that it
would not be just or equitable if contribution pursuant to this Section 7 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 that 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 and liabilities 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 Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that 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 Securities Act) shall be entitled to contribution from any person
who was not guilty of such
<PAGE> 22
21
fraudulent misrepresentation. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this
Section 7 and the representations and warranties of the Company and the
Guarantor contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (iii) acceptance of and payment for any
of the Securities.
8. Termination. This Agreement shall be subject to
termination by notice given by you to the Company, if (a) after the execution
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in your judgment, is material and adverse and (b) in
the case of any of the events specified in clauses (a)(i) through (iv), such
event singly or together with any other such event makes it, in your judgment,
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date, any one or more of the Underwriters
shall fail or refuse to purchase Securities that it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Securities to be
<PAGE> 23
22
purchased on such date, the other Underwriters shall be obligated severally in
the proportion that the principal amount of Securities set forth opposite their
respective names in Schedule I bears to the principal amount of Securities set
forth opposite the names of all such nondefaulting Underwriters, or in such
other proportions as you may specify, to purchase the Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the principal amount of
Securities that any Underwriter has agreed to purchase pursuant to Section 2 be
increased pursuant to this Section 9 by an amount in excess of one-ninth of
such principal amount of Securities without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Securities and the aggregate principal amount of
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Securities to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such
Securities are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any nondefaulting Underwriter
or the Company. In any such case either you or the Company shall have the
right to postpone the Closing Date but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and
in the Prospectus or in any 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 such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or
any of them, 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 Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder.
10. Counterparts. This Agreement may be signed in two or
more counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
<PAGE> 24
23
11. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
<PAGE> 25
24
12. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
Very truly yours,
DENBURY MANAGEMENT, INC.
By
------------------------------
Name:
Title:
DENBURY RESOURCES INC.
By
------------------------------
Name:
Title:
Accepted, February , 1998
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC MONTGOMERY
SECURITIES LLC
Acting severally on behalf
of themselves and the
several Underwriters
named herein.
By Morgan Stanley & Co.
Incorporated
By
------------------------------
Name:
Title:
<PAGE> 26
25
Schedule I
<TABLE>
<CAPTION>
Principal Amount
Underwriter of Securities
----------- -----------------
<S> <C>
Morgan Stanley & Co.
Incorporated
NationsBanc Montgomery
Securities LLC
------------
$125,000,000
============
</TABLE>
<PAGE> 1
EXHIBIT 3(c)
RESTATED ARTICLES OF INCORPORATION
OF
DENBURY MANAGEMENT, INC.
(WITH AMENDMENTS)
Pursuant to the provisions of the Texas Business Corporation Act (the
"TBCA"), Denbury Management, Inc., a Texas corporation (the "Corporation"),
hereby adopts these Restated Articles of Incorporation (the "Restated
Articles"), which accurately reflect the original Articles of Incorporation and
all amendments thereto that are in effect to date (collectively, the "Original
Articles") and as further amended by such Restated Articles as hereinafter set
forth and which contain no other change in any provision thereof.
ARTICLE I
The name of the Corporation is Denbury Management, Inc.
ARTICLE II
The Original Articles of the Corporation are amended by these Restated
Articles as follows: (a) ARTICLE THREE is amended and restated in its entirety
to read as set forth in ARTICLE THREE of the Restated Articles so as to revise
the purposes of the Corporation; (b) ARTICLE SEVEN is amended and restated in
its entirety to read as set forth in ARTICLE SEVEN of the Restated Articles to
include the current members of the Board of Directors; (c) ARTICLE EIGHT is
amended and restated in its entirety to read as set forth in ARTICLE EIGHT of
the Restated Articles to delete incorporator information and add provisions
regarding interested directors; (d) ARTICLE NINE is amended and restated in its
entirety to delete close corporation status provisions and add indemnification
provisions; (e) ARTICLE TEN is added to set forth requirements for quorum
voting; (f) ARTICLE ELEVEN is added to deny preemptive rights; (g) ARTICLE
TWELVE is added to deny cumulative voting; (h) ARTICLE THIRTEEN is added to
provide for maximum protection against director liability; and (i) ARTICLE
FOURTEEN is added to allow less than unanimous written consents of shareholder
actions.
ARTICLE III
Each such amendment and addition made by these Restated Articles has
been effected in conformity with the provisions of the TBCA, and these Restated
Articles and each such amendment made by these Restated Articles were duly
adopted and approved by the shareholders of the Corporation on February __,
1998.
ARTICLE IV
The holder of all of the shares outstanding and entitled to vote on said
amendments has signed a consent in writing pursuant to Article 9.10.A of the
TBCA adopting said amendments.
ARTICLE V
The Original Articles are hereby superseded by the following Restated
Articles, which accurately copy the entire text thereof as amended as set forth
above.
<PAGE> 2
RESTATED ARTICLES OF INCORPORATION
OF
DENBURY MANAGEMENT, INC.
ARTICLE ONE
The name of the Corporation is Denbury Management, Inc.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is to transact any
and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act (the "TBCA").
ARTICLE FOUR
The aggregate number of shares which the Corporation shall have
authority to issue is 2,000,000 at $0.10 par value.
ARTICLE FIVE
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of $1,000.00.
ARTICLE SIX
The address of its registered office is 1100 Louisiana, Suite 1800,
Houston, Texas 77002-5214, and the name of its registered agent at such address
is Donald W. Brodsky.
ARTICLE SEVEN
The number of directors constituting the current Board of Directors is
four (4), and the names and addresses of the directors are:
Gareth Roberts Phil Rykhoek
17304 Preston Road 17304 Preston Road
Suite 200 Suite 200
Dallas, Texas 75252, Dallas, Texas 75252
Matthew Deso Mark Worthey
17304 Preston Road 17304 Preston Road
Suite 200 Suite 200
Dallas, Texas 75252 Dallas, Texas 75252
2
<PAGE> 3
ARTICLE EIGHT
No contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers or have a financial
interest, shall be void or voidable solely for this reason, solely because the
director or officer is present at or participates in the meeting of the Board
of Directors or committee thereof which authorizes the contract or transaction,
or solely because his or their votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board of Directors or
committee in good faith authorizes the contract or transaction by the
affirmative vote of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or
(b) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the disinterested
shareholders; or
(c) The contract or transaction is fair as to the Corporation
as of the time it is authorized, approved, or ratified by the Board of
Directors, a committee thereof, or the shareholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
This provision shall not be construed to invalidate a contract or
transaction which would be valid in the absence of this provision or to subject
any director or officer to any liability that he would not be subject to in the
absence of this provision.
ARTICLE NINE
The Corporation shall indemnify any person who was, is, or is threatened
to be made a named defendant or respondent in a proceeding (as hereinafter
defined) because the person (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent that a corporation may grant indemnification to a director under
the TBCA, as the same exists or may hereafter be amended. Such right shall be
a contract right and as such shall run to the benefit of any director or
officer who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this Article Nine is in effect. Any repeal or amendment of
this Article Nine shall be prospective only and shall not limit the rights of
any such director or officer or the obligations of the Corporation with respect
to any claim arising from or related to the services of such director or
officer in any of the foregoing capacities prior to any such
3
<PAGE> 4
repeal or amendment of this Article Nine, or any of their rights pursuant to
any indemnification agreement in effect at the time of such repeal or
amendment. Such right shall include the right to be paid or reimbursed by the
Corporation for expenses incurred in defending any such proceeding in advance
of its final disposition to the maximum extent permitted under the TBCA, as the
same exists or may hereafter be amended. If a claim for indemnification or
advancement of expenses hereunder is not paid in full by the Corporation within
90 days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim, and if successful in whole or in part,
the claimant shall be entitled to be paid also the expenses of prosecuting such
claim. It shall be a defense to any such action that such indemnification or
advancement of costs of defense are not permitted under the TBCA, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors or any committee
thereof, special legal counsel, or shareholders) to have made its determination
prior to the commencement of such action that indemnification of, or
advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
Board of Directors or any committee thereof, special legal counsel, or
shareholders) that such indemnification or advancement is not permissible,
shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death
of any person having a right of indemnification under the foregoing provisions,
such right shall inure to the benefit of his heirs, executors, administrators,
and personal representatives. The rights conferred above shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, bylaw, resolution of shareholders or directors, agreement,
or otherwise.
The Corporation may additionally indemnify any person covered by the
grant of mandatory indemnification contained above to such further extent as is
permitted by law and may indemnify any other person to the fullest extent
permitted by law and may enter into indemnification agreements with any person
covered by this Article Nine.
To the extent permitted by then applicable law, the grant of mandatory
indemnification to any person pursuant to this Article Nine shall extend to
proceedings involving the negligence of such person.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
ARTICLE TEN
Any action of the Corporation which, under the provisions of the TBCA or
any other applicable law, is required to be authorized or approved by the
holders of any specified fraction which is in excess of one-half or any
specified percentage which is in excess of 50% of the outstanding shares (or of
any class or series thereof) of the Corporation shall, notwithstanding any law,
be deemed effectively and properly authorized or approved if authorized or
approved by the vote of the holders of more than 50% of the outstanding shares
entitled to vote thereon (or, if the holders of any class or series of the
Corporation's shares shall be entitled by the TBCA or any other applicable law
to vote thereon separately as a class, by the vote of the holders of more than
50% of the outstanding shares of each such class or series). Without limiting
the generality of the foregoing, the foregoing provisions of this Article
4
<PAGE> 5
Ten shall be applicable to any required shareholder authorization or approval
of: (a) any amendment to these Restated Articles; (b) any plan of merger,
share exchange, or reorganization involving the Corporation; (c) any sale,
lease, exchange, or other disposition of all, or substantially all, the
property and assets of the Corporation; and (d) any voluntary dissolution of
the Corporation.
Directors of the Corporation shall be elected by a plurality of the
votes cast by the holders of shares entitled to vote in the election of
directors of the Corporation at a meeting of shareholders at which a quorum is
present.
Except as otherwise provided in this Article Ten or as otherwise
required by the TBCA or other applicable law, with respect to any matter, the
affirmative vote of the holders of a majority of the Corporation's shares
entitled to vote on that matter and represented in person or by proxy at a
meeting of shareholders at which a quorum is present shall be the act of the
shareholders.
Nothing contained in this Article Ten is intended to require shareholder
authorization or approval of any action of the Corporation whatsoever unless
such approval is specifically required by the other provisions of these
Articles of Incorporation, the bylaws of the Corporation, or by the TBCA or
other applicable law.
ARTICLE ELEVEN
No holder of any shares of capital stock of the Corporation, whether now
or hereafter authorized, shall, as such holder, have any preemptive or
preferential right to receive, purchase, or subscribe to (a) any unissued or
treasury shares of any class of stock (whether now or hereafter authorized) of
the Corporation, (b) any obligations, evidences of indebtedness, or other
securities of the Corporation convertible into or exchangeable for, or carrying
or accompanied by any rights to receive, purchase, or subscribe to, any such
unissued or treasury shares, (c) any right of subscription to or to receive, or
any warrant or option for the purchase of, any of the foregoing securities, or
(d) any other securities that may be issued or sold by the Corporation.
ARTICLE TWELVE
Cumulative voting for the election of directors is expressly denied and
prohibited.
ARTICLE THIRTEEN
To the fullest extent permitted by applicable law, a director of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director, except that this Article Thirteen does not eliminate or limit the
liability of a director of the Corporation to the extent the director is found
liable for:
(a) a breach of the director's duty of loyalty to the
Corporation or its shareholders;
(b) an act or omission not in good faith that constitutes a
breach of duty of the director to the Corporation or an act or omission
that involves intentional misconduct or a knowing violation of the law;
5
<PAGE> 6
(c) a transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action taken within
the scope of the director's office; or
(d) an act or omission for which the liability of a director
is expressly provided by an applicable statute.
Any repeal or amendment of this Article Thirteen by the shareholders of
the Corporation shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or
amendment. In addition to the circumstances in which a director of the
Corporation is not personally liable as set forth in the foregoing provisions
of this Article Thirteen, a director shall not be liable to the Corporation or
its shareholders to such further extent as permitted by any law hereafter
enacted, including without limitation any subsequent amendment to the Texas
Miscellaneous Corporation Laws Act or the TBCA.
ARTICLE FOURTEEN
Any action which may be taken, or which is required by law or the
Articles of Incorporation or bylaws of the Corporation to be taken, at any
annual or special meeting of shareholders may be taken without a meeting,
without prior notice, and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall have been signed by the holder or
holders of shares having not less than the minimum number of votes that would
be necessary to take such action at a meeting at which the holders of all
shares entitled to vote on the action were present and voted.
EXECUTED this 18th day of February, 1998.
/s/ GARETH ROBERTS
-------------------------------------
Gareth Roberts, President
6
<PAGE> 1
EXHIBIT 3(d)
BYLAWS OF
DENBURY MANAGEMENT, INC.
ARTICLE ONE
Registered Office
1.01. The registered office of the corporation is located at 605 S. Sherman
St., Suite 705 1/2, Richardson, Texas 75081 and the name of the registered
agent of the corporation at such address is Gary R. Hoskins.
1.02. The principal place of business of the corporation is 605 S. Sherman
St., Suite 705 1/2 Richardson, Texas 75081.
ARTICLE TWO
Place of Meetings
2.01. All meetings of the shareholders shall be held at the principle place
of business of the corporation, or any other place within or without this
State, as may be designated for the purpose from time to time by the
shareholders.
Time of Annual Meeting
2.02. The annual meetings of the shareholders shall be held each year at 4:00
P.M. on the second Wednesday in January. If this day falls of a legal holiday,
the annual meeting shall be held at the same time on the next following
business day thereafter.
Notice of Meeting
2.03. Notice of the meeting, stating the place, day, and hour of the meeting,
and in case of special meeting, the purposes for which the meeting is called,
shall be given in writing to each shareholder entitled to vote at the meeting
at least ten (10) but not more than fifty (50) days before the date of the
meeting either personally or by mail or other means of written communication,
addressed to the shareholder at his address appearing on the books of the
corporation or given by him to the corporation for the purpose of notice.
Notice of adjourned meetings is not necessary unless the meeting is adjourned
for thirty (30) days or more, in which case notice of the adjourned meeting
shall be given as in the case of any special meeting.
Special Meetings
2.04. Special meetings of the shareholders for any purpose or
<PAGE> 2
purposes whatsoever may be called at any time by the President or by the Board
of Directors, or by any two (2) or more Directors, or by one or more
shareholders holding not less than one-tenth (1/10) of all the shares entitled
to vote at the meeting.
Quorum
2.05. Fifty one percent (51%) of the voting shares constitutes a quorum for
the transaction of business. Business may be continued after withdrawal of
enough shareholders to leave less than a quorum.
Voting
2.06. Only persons in whose name shares appear on the share records of the
corporation on the date on which notice of the meeting is mailed shall be
entitled to vote at such meeting, unless some other day is fixed by the Board
of Directors for the determination of shareholders of record.
Proxies
2.07. Every person entitled to vote or execute consents may do so either in
person or by written proxy executed in writing by the shareholder or his duly
authorized attorney in fact.
Consent of Absentees
2.08. No defect in the calling or noticing of a shareholders' meeting will
affect validity of any action at the meeting if a quorum was present, and if
each shareholder not present in person or by proxy signs a written waiver of
notice, consent to the holding of the meeting, or approval of the minutes,
either before or after the meeting, and such waivers, consents, or approvals
are filed with the corporate records or made a part of the minutes of the
meeting.
Action Without Meeting
2.09. Action may be taken by shareholders without a meeting if each
shareholder entitled to vote signs a written consent to the action and such
consents are filed with the Secretary of the corporation.
ARTICLE THREE
Management of Corporation
3.01. During such period as the corporation maintains its status as a closed
corporation the business and affairs of the corporation shall be managed at all
times by the Board of Directors.
-2-
<PAGE> 3
Board Action Without Meeting
3.02. Any action required or permitted to be taken by the Board of Directors
may be taken without a meeting and with the same force and effect as a
unanimous vote of Directors, if all members of the Board shall individually or
collectively consent in writing to such action.
Adjournment -- Notice
3.03. A quorum of the Directors may adjourn any Directors' meeting to meet
again at a stated day and hour. Notice of the time and place of holding an
adjourned meeting need not be given to absent Directors if the time and place
is fixed at the meeting adjourned. In the absence of a quorum, a majority of
the Directors present at any Directors' meeting, either regular or special, may
adjourn from time to time until the time fixed for the next regular meeting of
the Board.
Conduct of Meeting
3.04. The President or any Director selected by the Directors present, shall
preside at meetings of the Board of Directors. The Secretary of the corporation
or, in his absence, any person appointed by the presiding officer, shall act as
Secretary of the Board of Directors.
Compensation
3.05. Directors and members of committees may receive such compensation, if
any, for their services, and such reimbursement for expenses, as may be fixed
or determined by resolution of the Board.
Indemnification of Directors and Officers
3.06. The Board of Directors may authorize the corporation to pay expenses
incurred by, or to satisfy a judgement or fine rendered or levied against
present or former Directors, officers, or employees of this corporation as
provided by Article 2.02(A)(16) of the Business Corporation Act.
ARTICLE FOUR
Officers
Title and Appointment
4.01. The officers of the corporation shall be a President, one Vice
President, a Secretary, a Treasurer, and such assistants and other officers as
the Board of Directors shall from time to time determine. Any two offices,
except President and Secretary, may be held by one person. All officers shall
be elected by and hold office at the pleasure of the Board of Directors, which
shall fix the compensation and tenure of all officers.
-3-
<PAGE> 4
Powers and Duties of Officers
4.02. The officers of the corporation shall have the powers and duties
generally ascribed to the respective offices, and such additional authority or
duty as may from time to time be established by the Board of Directors.
ARTICLE FIVE
Execution of Instruments
Certificates for Paid Shares
5.01. Certificates for shares of the corporation shall be issued only when
fully paid.
Share Certificates
5.02. The corporation shall deliver certificates representing all shares to
which shareholders are entitled, which certificates shall be in such form and
device as the Board may provide. Each certificate shall bear upon its face the
statement that the corporation is organized in Texas, the name in which it is
issued, the number and class of shares and series, and the par value or a
statement that the shares are without par value. The certificates shall be
signed by the President or a Vice President and the Secretary or an Assistant
Secretary, which signatures may in facsimile to those of the certificates to be
countersigned by a transfer agent or registered by a registrar, and the seal of
the corporation shall be affixed thereof. The certificates shall contain on the
faces or backs such recitations or references as are required by law for a
close corporation.
Replacement of Certificates
5.03. No new certificates shall be issued until the former certificate for
the shares represented thereby shall have been surrendered and canceled, except
in the case of lost or destroyed certificates to be issued on such terms,
conditions, and guarantees as the Board may see fit to impose including the
filing of sufficient indemnity.
Transfer of Shares
5.04. Except as hereinafter provided, shares of the corporation may be
transferred by endorsement by the signature of the owner, his agent, attorney or
legal representative, and the delivery of the certificate. The transferee in any
transfer of shares shall be deemed to have full notice of, and to consent to,
the Bylaws of the corporation to the same extent as if he had signed a written
assent thereto.
-4-
<PAGE> 5
ARTICLE SIX
Records and Report
Inspection of Books and Records
6.01. All books and records provided for by statute shall be open to
inspection of the shareholders at all reasonable times.
Closing Stock Transfer Books
6.02. The Board of Directors may close the transfer books in their discretion
for a period not exceeding fifty (50) days preceding any meeting, annual or
special, of the shareholders, or the day appointed for the payment of a
dividend.
ARTICLE SEVEN
Transfer Restrictions
7.01. Before there can be a valid sale or transfer of any of the common
shares of the corporation by any holder thereof, such holder shall first offer
said shares to the corporation and then to the other holders of common shares
in the following manner:
(A) Such offering Shareholder shall deliver a notice in writing by mail or
otherwise to the Secretary of the corporation stating the price, terms, and
condition of such proposed sale or transfer, the number of shares to be sold or
transfered and his intention to so sell or transfer such shares. Within sixty
(60) days thereafter, the corporation shall have the right to purchase such
shares at the price, and on the terms and conditions stated in the notice;
provided, however, that the corporation shall not at any time be permitted to
purchase all of its outstanding voting shares. Should the corporation fail to
purchase the shares at the expiration of the 60 day period, or prior thereto
decline to purchase the shares, the Secretary or the corporation shall, within
five (5) days thereafter, mail or deliver to each of the common Shareholders of
record a copy of the notice given by the Shareholder to the Secretary. Such
notice may be delivered to the Shareholders personally, or may be mailed to
them at their last known address as such address may appear on the books of the
corporation. Within sixty (60) days after mailing or delivering of the copies
of the offers to the Shareholders, any such Shareholder or Shareholders
desiring to acquire any part or all of the shares referred to in the notice
shall deliver by mail, or otherwise, to the Secretary of the corporation a
written offer or offers, expressed to be acceptable immediately, to purchase a
specified number of such shares at the price and on the terms stated in the
notice. Each such offer shall be accompanied by the purchase price therefor with
authorization to pay such price against delivery of the shares.
-5-
<PAGE> 6
(B) If the total number of shares specified in the offers to purchase exceed
the number of shares to be sold or transferred, each offering Shareholder shall
be entitled to purchase such proportion of such shares as the number of shares
of the corporation which he holds bears to the total number of shares held by
all Shareholders desiring to purchase the shares.
(C) If all the shares to be sold or transferred are not disposed of under
such apportionment, each Shareholder desiring to purchase shares in a number in
excess of his proportionate share, as provided above, shall be entitled to
purchase such proportion of those shares which remain thus undisposed of, as
the total number of shares which he holds bears to the total number of shares
held by all of the Shareholders desiring to purchase share in excess of those
to which they are entitled under such apportionment.
(D) If within said (60) day period the offer or offers to purchase aggregate
less than the number of shares to be sold or transferred, the Shareholder
desiring to sell or transfer such shares shall not be obligated to accept any
such offer or offers and may dispose of all of the shares referred to in his
notice to any person or persons whomever; provided, however, that he shall not
sell or transfer such shares at a lower price or on terms more favorable to the
purchaser or transferee than those specified in his notice to the Secretary of
the corporation.
(E) The preceding procedure applies also to any community property interest
held by the spouse of a named Shareholder in the event of dissolution of
marriage, or division of community property. That is to say that in such event
or events that said shares are to remain under the management and control of
the Shareholder named on the transfer books of the corporation and are not to
be transferred to the other spouse. Nothing herein limits the inclusion of the
value of the stock for consideration in the evaluating the community property
and to offset against other property, real or personal.
ARTICLE EIGHT
Amendment of Bylaws
8.01. The power to alter, amend, or repeal these Bylaws is vested in the
shareholders.
-6-
<PAGE> 7
SIGNATURES AND ATTESTATION
Adopted by the Director on October 19, 1989.
/s/ GARY R. HOSKINS
--------------------------------
Gary R. Hoskins
ATTEST:
/s/ CHERYL WAGLIAIDO
- ------------------------------
Acting Secretary
Adopted by the shareholders on November 22, 1989.
/s/ GARETH ROBERTS
--------------------------------
Gareth Roberts, Shareholder
ATTEST:
/s/ CHERYL WAGLIAIDO
- ------------------------------
Secretary
-7-
<PAGE> 1
EXHIBIT 4(B)
[CS&M Draft--02/13/98]
============================================================
DENBURY MANAGEMENT, INC.,
Issuer
DENBURY RESOURCES INC.,
Guarantor
% Senior Subordinated Notes Due 2008
_________________________
INDENTURE
Dated as of February [ ], 1998
________________________
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
Trustee
============================================================
<PAGE> 2
2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . 13.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . 13.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . 13.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . 4.02; 4.13; 13.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . 13.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . 13.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . 13.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 13.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . 13.06
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . 6.07
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . 13.01
</TABLE>
N.A. means Not Applicable.
<PAGE> 3
3
_____________________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE 1 Page
---
Definitions and Incorporation by Reference
------------------------------------------
<S> <C> <C>
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 2
The Securities
--------------
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . . . . . 36
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . 37
SECTION 2.04. Paying Agent To Hold Money in Trust . . . . . . . . . . . . . . 37
SECTION 2.05. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.07. Replacement Securities . . . . . . . . . . . . . . . . . . . . 39
SECTION 2.08. Outstanding Securities . . . . . . . . . . . . . . . . . . . . 39
SECTION 2.09. Temporary Securities . . . . . . . . . . . . . . . . . . . . . 39
SECTION 2.10. Cancelation . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 2.13. Issuance of Additional Securities . . . . . . . . . . . . . . . 40
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.02. Selection of Securities To Be
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . 42
SECTION 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . 42
SECTION 3.06. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . 42
</TABLE>
1
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<TABLE>
<S> <C> <C>
ARTICLE 4
Covenants
---------
SECTION 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.03. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . 44
SECTION 4.04. Incurrence of Layered Indebtedness . . . . . . . . . . . . . . 46
SECTION 4.05. Limitation on Restricted Payments . . . . . . . . . . . . . . . 46
SECTION 4.06. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.07. Limitation on Sales of Assets and
Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.08. Limitation on Affiliate Transactions . . . . . . . . . . . . . 53
SECTION 4.09. Change of Control . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.10. Limitation on the Sale or Issuance
of Capital Stock of Restricted
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 4.11. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.12. Compliance Certificate . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.13. Further Instruments and Acts . . . . . . . . . . . . . . . . . 56
SECTION 4.14. Future Subsidiary Guarantors . . . . . . . . . . . . . . . . . 56
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. When Company May Merge or Transfer
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 5.02. When Guarantors May Merge or
Transfer Assets . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.07. Rights of Holders To Receive
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
2
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<TABLE>
<S> <C> <C>
SECTION 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . 64
SECTION 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . 64
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.12. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . 65
ARTICLE 7
Trustee
-------
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . 68
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . 69
SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . 69
SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.09. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . 71
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . 71
SECTION 7.11. Preferential Collection of Claims
Against Company . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities;
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 8.02. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . 73
SECTION 8.03. Application of Trust Money . . . . . . . . . . . . . . . . . . 74
SECTION 8.04. Repayment to Company . . . . . . . . . . . . . . . . . . . . . 75
SECTION 8.05. Indemnity for Government
Obligations . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 8.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . 75
SECTION 9.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . 77
SECTION 9.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . . 78
</TABLE>
3
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<TABLE>
<S> <C> <C>
SECTION 9.04. Revocation and Effect of Consents
and Waivers . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 9.05. Notation on or Exchange of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 9.06. Trustee To Sign Amendments . . . . . . . . . . . . . . . . . . 79
SECTION 9.07. Payment for Consent . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE 10
Subordination of the Securities
-------------------------------
SECTION 10.01. Agreement To Subordinate . . . . . . . . . . . . . . . . . . . 79
SECTION 10.02. Liquidation, Dissolution,
Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 10.03. Default on Designated Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 10.04. Acceleration of Payment of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 10.05. When Distribution Must Be Paid Over . . . . . . . . . . . . . . 81
SECTION 10.06. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.07. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.08. Subordination May Not Be Impaired by
Company . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.09. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . 82
SECTION 10.10. Distribution or Notice to
Representative . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.11. Article 10 Not To Prevent Events of
Default or Limit Right To
Accelerate . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . . . . . . . . 83
SECTION 10.13. Trustee Entitled To Rely . . . . . . . . . . . . . . . . . . . 83
SECTION 10.14. Trustee To Effectuate Subordination . . . . . . . . . . . . . . 84
SECTION 10.15. Trustee Not Fiduciary for Holders
of Senior Indebtedness of the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 10.16. Reliance by Holders of Senior
Indebtedness of the Company on
Subordination Provisions . . . . . . . . . . . . . . . . . . 84
ARTICLE 11
DRI Guaranty
------------
SECTION 11.01. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.02. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 87
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C> <C>
SECTION 11.03. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 11.04. Modification . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 11.05. Additional Amounts . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE 12
Subordination of DRI Guaranty
-----------------------------
SECTION 12.01. Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 12.02. Liquidation, Dissolution,
Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 12.03. Default on Designated Senior
Indebtedness of DRI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 12.04. Demand for Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 12.05. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 12.06. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 12.07. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 12.08. Subordination May Not Be Impaired
by DRI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 12.09. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 12.10. Distribution or Notice to
Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 12.11. Article 12 Not To Prevent Defaults
Under the DRI Guaranty or Limit
Rights to Demand Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 12.12. Trustee Entitled to Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 12.13. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 12.14. Trustee Not Fiduciary for Holders of
Senior Indebtedness of DRI . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 12.15. Reliance by Holders of Senior
Indebtedness of DRI on Subordination
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE 13
Miscellaneous
-------------
SECTION 13.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . 97
SECTION 13.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 13.03. Communication by Holders with Other
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 13.04. Certificate and Opinion as to
Conditions Precedent . . . . . . . . . . . . . . . . . . . . 98
</TABLE>
5
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<TABLE>
<S> <C> <C>
SECTION 13.05. Statements Required in Certificate
or Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 13.06. When Securities Disregarded . . . . . . . . . . . . . . . . . . 99
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 13.08. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 13.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 13.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . 99
SECTION 13.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . 100
SECTION 13.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . 100
SECTION 13.13. Table of Contents; Headings . . . . . . . . . . . . . . . . . . 100
</TABLE>
EXHIBITS
Exhibit A Form of Security
Exhibit B Guarantee Agreement
6
<PAGE> 10
1
INDENTURE dated as of February [ ], 1998, among
DENBURY MANAGEMENT, INC., a Texas corporation (the "Company"),
DENBURY RESOURCES INC., a Canadian corporation ("DRI" or the
"Guarantor"), and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of the Company's [
]% Senior Subordinated Notes Due 2008 (the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
Section 1.01. Definitions.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in the Oil and Gas Business; (ii) the
Capital Stock of a Person that becomes a Restricted Subsidiary as a result of
the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that
any such Restricted Subsidiary described in clauses (ii) or (iii) above is
primarily engaged in the Oil and Gas Business.
"Adjusted Consolidated Assets" means at any time the total
amount of assets of the Company and its Restricted Subsidiaries (less
applicable depreciation, amortization and other valuation reserves), after
deducting therefrom all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items), all as set forth on the
consolidated balance sheet of the Company and its Restricted Subsidiaries as of
the end of the most recent fiscal quarter ended at least 45 days prior to the
date of determination.
"Adjusted Consolidated Net Tangible Assets" or "ACNTA" means
(without duplication), as of the date of determination, (a) the sum of (i) the
discounted future net
<PAGE> 11
2
revenue from proved crude oil and natural gas reserves of the Company and its
Restricted Subsidiaries calculated in accordance with SEC guidelines before any
state or federal income taxes, as estimated in a reserve report prepared as of
the end of the Company's most recently completed fiscal year, which reserve
report is prepared or reviewed by independent petroleum engineers, as increased
by, as of the date of determination, the discounted future net revenue of (A)
estimated proved crude oil and natural gas reserves of the Company and its
Restricted Subsidiaries attributable to acquisitions consummated since the date
of such year-end reserve report, and (B) estimated crude oil and natural gas
reserves of the Company and its Restricted Subsidiaries attributable to
extensions, discoveries and other additions and upward determinations of
estimates of proved crude oil and natural gas reserves (including previously
estimated development costs Incurred during the period and the accretion of
discount since the prior year end) due to exploration, development or
exploitation, production or other activities which reserves were not reflected
in such year-end reserve report which would, in the case of determinations made
pursuant to clauses (A) and (B), in accordance with standard industry practice,
result in such determinations, in each case calculated in accordance with SEC
guidelines (utilizing the prices utilized in such year-end reserve report), and
decreased by, as of the date of determination, the discounted future net
revenue attributable to (C) estimated proved crude oil and natural gas reserves
of the Company and its Restricted Subsidiaries reflected in such year-end
reserve report produced or disposed of since the date of such year-end reserve
report and (D) reductions in the estimated crude oil and natural gas reserves
of the Company and its Restricted Subsidiaries reflected in such year-end
reserve report since the date of such year-end reserve report attributable to
downward determinations of estimates of proved crude oil and natural gas
reserves due to exploration, development or exploitation, production or other
activities conducted or otherwise occurring since the date of such year-end
reserve report which would, in the case of determinations made pursuant to
clauses (C) and (D), in accordance with standard industry practice, result in
such determinations, in each case calculated in accordance with SEC guidelines
(utilizing the prices utilized in such year-end reserve report); provided,
however, that, in the case of each of the determinations made pursuant to
clauses (A) through (D), such increases and decreases shall be as estimated by
the
<PAGE> 12
3
Company's engineers, except that if as a result of such acquisitions,
dispositions, discoveries, extensions or revisions, there is a Material Change
which is an increase, then such increases and decreases in the discounted
future net revenue shall be confirmed in writing by an independent petroleum
engineer, (ii) the capitalized costs that are attributable to crude oil and
natural gas properties of the Company and its Restricted Subsidiaries to which
no proved crude oil and natural gas reserves are attributed, based on the
Company's books and records as of a date no earlier than the date of the
Company's latest annual or quarterly financial statements, (iii) the Net
Working Capital on a date no earlier than the date of the Company's latest
annual or quarterly financial statements and (iv) the greater of (I) the net
book value on a date no earlier than the date of the Company's latest annual or
quarterly financial statements and (II) the appraised value, as estimated by
independent appraisers, of other tangible assets of the Company and its
Restricted Subsidiaries as of a date no earlier than the date of the Company's
latest audited financial statements (provided that the Company shall not be
required to obtain such an appraisal of such assets if no such appraisal has
been performed), minus (b) to the extent not otherwise taken into account in
the immediately preceding clause (a), the sum of (i) minority interests, (ii)
any natural gas balancing liabilities of the Company and its Restricted
Subsidiaries reflected in the Company's latest audited financial statements,
(iii) the discounted future net revenue, calculated in accordance with SEC
guidelines (utilizing the same prices utilized in the Company's year-end
reserve report), attributable to reserves subject to participation interests,
overriding royalty interests or other interests of third parties, pursuant to
participation, partnership, vendor financing or other agreements then in
effect, or which otherwise are required to be delivered to third parties, (iv)
the discounted future net revenue, calculated in accordance with SEC guidelines
(utilizing the same prices utilized in the Company's year-end reserve report),
attributable to reserves that are required to be delivered to third parties to
fully satisfy the obligations of the Company and its Restricted Subsidiaries
with respect to Volumetric Production Payments on the schedules specified with
respect thereto and (v) the discounted future net revenue, calculated in
accordance with SEC guidelines, attributable to reserves subject to
Dollar-Denominated Production Payments that, based on the estimates of
production included in determining the discounted future
<PAGE> 13
4
net revenues specified in the immediately preceding clause (a)(i) (utilizing
the same prices utilized in the Company's year-end reserve report), would be
necessary to satisfy fully the obligations of the Company and its Restricted
Subsidiaries with respect to Dollar-Denominated Production Payments on the
schedules specified with respect thereto.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Sections 4.05, 4.07 and 4.08 only, "Affiliate"
shall also mean any beneficial owner of Capital Stock representing 10% or more
of the total voting power of the Voting Stock (on a fully diluted basis) of the
Company or of rights or warrants to purchase such Capital Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary), (ii) all or substantially all the assets of any
division or line of business of the Company or any Restricted Subsidiary or
(iii) any other assets of the Company or any Restricted Subsidiary outside of
the ordinary course of business of the Company or such Restricted Subsidiary.
Notwithstanding the foregoing, none of the following shall be deemed to be an
Asset Disposition: (1) a disposition by a Restricted Subsidiary to the Company
or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary, (2)
for purposes of Section 4.07 only, a disposition that constitutes a Restricted
Payment permitted by Section 4.05, a disposition
<PAGE> 14
5
of all or substantially all the assets of the Company in compliance with
Section 5.01 or a disposition that constitutes a Change of Control pursuant to
clause (iii) of the definition thereof, (3) the sale or transfer (whether or
not in the ordinary course of business) of crude oil and natural gas properties
or direct or indirect interests in real property; provided, however, that at
the time of such sale or transfer such properties do not have associated with
them any proved reserves, (4) the abandonment, farm-out, lease or sublease of
developed or undeveloped crude oil and natural gas properties in the ordinary
course of business, (5) the trade or exchange by the Company or any Restricted
Subsidiary of any crude oil and natural gas property owned or held by the
Company or such Restricted Subsidiary for any crude oil and natural gas
property owned or held by another Person or (6) the sale or transfer of
hydrocarbons or other mineral products or surplus or obsolete equipment, in
each case in the ordinary course of business.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate implicit in the Sale/Leaseback Transaction, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all
such payments.
"Banks" has the meaning specified in the Credit Agreement.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such
Board.
"Business Day" means each day which is not a Legal Holiday.
<PAGE> 15
6
"Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under
such lease prior to the first date upon which such lease may be terminated by
the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
for purposes of this clause (i) such person shall be deemed to have
"beneficial ownership" of all shares that such person has the right to
acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 40% of the
total voting power of the Voting Stock of the Company (for the
purposes of this clause (i), such person shall be deemed to
beneficially own any Voting Stock of a specified corporation held by a
parent corporation, if such person is the beneficial owner (as defined
in this clause (i)), directly or indirectly, of more than 40% of the
voting power of the Voting Stock of such parent corporation);
(ii) during any period of two consecutive years from and after
the Issue Date, individuals who at the beginning of such period
constituted the Board of Directors of DRI (together with any new
directors whose election by such Board of Directors or whose
nomination for election by the shareholders of DRI was approved by a
vote of a majority of the directors of DRI then still in office who
were either directors at the beginning of
<PAGE> 16
7
such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors then in office;
(iii) the shareholders of DRI or the Company shall have
approved any plan of liquidation or dissolution of DRI or the Company;
or
(iv) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale, lease, conveyance or transfer of all or
substantially all the assets of the Company and its Restricted
Subsidiaries, taken as a whole, to another Person, and, in the case of
any such merger or consolidation, the securities of the Company that
are outstanding immediately prior to such transaction and which
represent 100% of the aggregate voting power of the Voting Stock of
the Company are changed into or exchanged for cash, securities or
property, unless pursuant to such transaction such securities are
changed into or exchanged for, in addition to any other consideration,
securities of the surviving corporation that represent immediately
after such transaction, at least a majority of the aggregate voting
power of the Voting Stock of the surviving corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in the preamble to
this Indenture until a successor replaces it and, thereafter, means the
successor and, for purposes of any provision contained herein and required by
the TIA, each other obligor on the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the
most recent four consecutive fiscal quarters ending at least 45 days prior to
the date of such determination to (ii) Consolidated Interest Expense for such
four fiscal quarters; provided, however, that (1) if the Company or any
Restricted Subsidiary has Incurred any Indebtedness since the beginning of such
period that remains outstanding or if the transaction giving rise to the need
to calculate the Consolidated Coverage Ratio is an Incurrence
<PAGE> 17
8
of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day of such
period and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period, (2) if the
Company or any Restricted Subsidiary has repaid, repurchased, defeased or
otherwise discharged any Indebtedness since the beginning of such period or if
any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged
on the date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such
period shall be calculated on a pro forma basis as if such discharge had
occurred on the first day of such period and as if the Company or such
Restricted Subsidiary had not earned the interest income actually earned during
such period in respect of cash or Temporary Cash Investments used to repay,
repurchase, defease or otherwise discharge such Indebtedness, (3) if since the
beginning of such period the Company or any Restricted Subsidiary shall have
made any Asset Disposition (other than an Asset Disposition involving assets
having a fair market value of less than the greater of two and one-half percent
(2.5%) of Adjusted Consolidated Net Tangible Assets as of the end of the
Company's then most recently completed fiscal year and $3.0 million), then
EBITDA for such period shall be reduced by an amount equal to EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to EBITDA
(if negative) directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period (or, if
the Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after such
sale), (4) if since the beginning of such period the Company or any Restricted
Subsidiary (by
<PAGE> 18
9
merger or otherwise) shall have made an Investment in any Restricted Subsidiary
(or any Person which becomes a Restricted Subsidiary) or an acquisition
(including by way of lease) of assets, including any acquisition of assets
occurring in connection with a transaction requiring a calculation to be made
hereunder, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the Incurrence of
any Indebtedness) as if such Investment or acquisition occurred on the first
day of such period and (5) if since the beginning of such period any Person
(that subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such period)
shall have made any Asset Disposition, any Investment or acquisition of assets
that would have required an adjustment pursuant to clause (3) or (4) above if
made by the Company or a Restricted Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or
acquisition occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest of such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).
"Consolidated Current Liabilities" as of the date of
determination means the aggregate amount of liabilities of the Company and its
Restricted Subsidiaries which would properly be classified as current
liabilities (including taxes accrued as estimated) on a consolidated balance
sheet of the Company and its Restricted Subsidiaries at such date, after
eliminating (i) all intercompany items between the Company and any Restricted
Subsidiary and (ii) all current maturities of long-term Indebtedness, all as
determined in accordance with GAAP consistently applied.
<PAGE> 19
10
"Consolidated Indebtedness" at any date of determination means
the amount of Indebtedness of the Company and its Restricted Subsidiaries
outstanding on such date determined on a consolidated basis in accordance with
GAAP.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the Company or its Restricted Subsidiaries, without duplication,
(i) interest expense attributable to capital leases and imputed interest with
respect to Attributable Debt, (ii) capitalized interest, (iii) non-cash
interest expense, (iv) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (v) net
costs (including amortization of fees and up-front payments) associated with
interest rate caps and other interest rate and currency options that, at the
time entered into, resulted in the Company and its Restricted Subsidiaries
being net payees as to future payouts under such caps or options, and interest
rate and currency swaps and forwards for which the Company or any of its
Restricted Subsidiaries has paid a premium, (vi) dividends (excluding dividends
paid in shares of Capital Stock which is not Disqualified Stock) in respect of
all Disqualified Stock held by Persons other than the Company or a Wholly Owned
Subsidiary, (vii) interest accruing on any Indebtedness of any other Person to
the extent such Indebtedness is Guaranteed by the Company or any Restricted
Subsidiary or secured by a Lien on assets of the Company or any Restricted
Subsidiary to the extent such Indebtedness constitutes Indebtedness of the
Company or any Restricted Subsidiary (whether or not such Guarantee or Lien is
called upon); provided, however, "Consolidated Interest Expense" shall not
include any (x) amortization of costs relating to original debt issuances other
than the amortization of debt discount related to the issuance of zero coupon
securities or other securities with an original issue price of not more than
90% of the principal thereof, (y) Consolidated Interest Expense with respect to
any Indebtedness Incurred pursuant to Section 4.03(b)(8) and (z) noncash
interest expense Incurred in connection with interest rate caps and other
interest rate and currency options that, at the time entered into, resulted in
the Company and its Restricted Subsidiaries
<PAGE> 20
11
being either neutral or net payors as to future payouts under such caps or
options.
"Consolidated Net Income" means, for any period, the net
income of the Company and its Subsidiaries determined on a consolidated basis
in accordance with GAAP; provided, however, that there shall not be included in
such Consolidated Net Income: (i) any net income of any Person (other than the
Company) if such Person is not a Restricted Subsidiary, except that (A) subject
to the exclusion contained in clause (iv) below, the Company's equity in the
net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Person during such period to the Company or a Restricted Subsidiary as
a dividend or other distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any such
Person for such period shall be included in determining such Consolidated Net
Income; (ii) any net income (or loss) of any Person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition; (iii) any net income of any Restricted Subsidiary
(other than a Subsidiary Guarantor) if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the exclusion contained in clause (iv)
below, the Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the limitation contained
in this clause) and (B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining such
Consolidated Net Income; (iv) any gain or loss realized upon the sale or other
disposition of any assets of the Company or its Subsidiaries (including
pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise
disposed of in the ordinary course of business and any gain or loss realized
upon the sale or other disposition of any Capital Stock of any Person;
<PAGE> 21
12
(v) extraordinary gains or losses; (vi) any non-cash compensation expense
realized for grants of performance shares, stock options or stock awards to
officers, directors and employees of the Company or any of its Restricted
Subsidiaries; (vii) any write-downs of non-current assets; provided, however,
that any ceiling limitation write-downs under SEC guidelines shall be treated
as capitalized costs, as if such write-downs had not occurred; and (viii) the
cumulative effect of a change in accounting principles. Notwithstanding the
foregoing, for the purposes of Section 4.05 only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances or other
transfers of assets from Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted under Section
4.05(a)(3)(E).
"Consolidated Net Tangible Assets", as of any date of
determination, means the total amount of assets (less accumulated depreciation
and amortization, allowances for doubtful receivables, other applicable
reserves and other properly deductible items) which would appear on a balance
sheet of the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, and after giving effect to purchase
accounting and after deducting therefrom Consolidated Current Liabilities and,
to the extent otherwise included, the amounts of: (i) minority interests in
Restricted Subsidiaries held by Persons other than the Company or a Restricted
Subsidiary; (ii) excess of cost over fair value of assets of businesses
acquired, as determined in good faith by the Board of Directors; (iii) any
revaluation or other write-up in book value of assets subsequent to the Issue
Date as a result of a change in the method of valuation in accordance with GAAP
consistently applied; (iv) unamortized debt discount and expenses and other
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, licenses, organization or developmental expenses and
other intangible items; (v) treasury stock; (vi) cash set apart and held in a
sinking or other analogous fund established for the purpose of redemption or
other retirement of Capital Stock to the extent such obligation is not
reflected in Consolidated Current Liabilities; and (vii) Investments in and
assets of Unrestricted Subsidiaries.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its
<PAGE> 22
13
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of the Company ending at least 45
days prior to the taking of any action for the purpose of which the
determination is being made, as (i) the par or stated value of all outstanding
Capital Stock of the Company plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Credit Agreement" means that certain Credit Agreement, dated
as of December 29, 1997, as amended, by and among the Company and NationsBank
of Texas, N.A. (or any successor thereto or replacement thereof), as agent and
as a lender, and certain other institutions, as lenders, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, restated, modified, renewed,
refunded, replaced or refinanced, in whole or in part, from time to time.
"Credit Facilities" means, with respect to the Company or any
Restricted Subsidiary, one or more debt facilities (including the Credit
Agreement) or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, production payments,
receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement to which
such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Indebtedness" in respect of a Person means
(i) all the obligations of such Person under any Credit Facility (including the
Credit Agreement) and (ii) any other Senior Indebtedness of such Person which,
at
<PAGE> 23
14
the date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $20 million and is specifically designated by such Person
in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock to the extent that by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable) or upon the
happening of any event, it (i) matures or is mandatorily redeemable pursuant to
a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock or (iii) is redeemable, whole or in part, at
the option of the holder thereof, in each case described in the immediately
preceding clauses (i), (ii) or (iii), on or prior to the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
Stated Maturity of the Securities shall not constitute Disqualified Stock if
(x) the "asset sale" or "change of control" provisions applicable to such
Capital Stock are not more favorable to the holders of such Capital Stock than
the provisions of Sections 4.07 and 4.09 and (y) any such requirement only
becomes operative after compliance with such corresponding terms applicable to
the Securities, including the purchase of any Securities tendered pursuant
thereto.
"Dollar-Denominated Production Payments" means production
payment obligations recorded as liabilities in accordance with GAAP, together
with all undertakings and obligations in connection therewith.
"DRI" means Denbury Resources Inc., a Canadian corporation,
and any successor corporation.
"DRI Guaranty" means the Guarantee of the Securities by DRI
pursuant to the DRI Guaranty, as described under Article 11.
<PAGE> 24
15
"EBITDA" for any period means the sum of Consolidated Net
Income, plus Consolidated Interest Expense plus the following to the extent
deducted in calculating such Consolidated Net Income: (a) provision for taxes
based on income or profits, (b) depletion and depreciation expense, (c)
amortization expense, (d) exploration expense (if applicable to the Company
after the Issue Date), (e) unrealized foreign exchange losses and (f) all other
non-cash charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period except
such amounts as the Company determines in good faith are nonrecurring), and
less, to the extent included in calculating such Consolidated Net Income and in
excess of any costs or expenses attributable thereto and deducted in
calculating such Consolidated Net Income, the sum of (x) the amount of deferred
revenues that are amortized during such period and are attributable to reserves
that are subject to Volumetric Production Payments, (y) amounts recorded in
accordance with GAAP as repayments of principal and interest pursuant to
Dollar-Denominated Production Payments. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depletion,
depreciation, amortization, exploration and other non-cash charges of, a
Restricted Subsidiary shall be added to Consolidated Net Income to compute
EBITDA only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income
and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders and (z) unrealized foreign exchange gains.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exempt Foreign Subsidiary" means (i) any Subsidiary engaged
in the Oil and Gas Business exclusively outside the United States of America,
irrespective of its jurisdiction of incorporation and (ii) any other Subsidiary
whose assets (excluding any cash and Temporary Cash
<PAGE> 25
16
Investments) consist exclusively of Capital Stock or Indebtedness of one or
more Subsidiaries described in clause (i) of this definition, that, in any case
is so designated by the Company in an Officers' Certificate delivered to the
Trustee and (a) is not a Guarantor of, and has not granted any Lien to secure,
any Indebtedness of the Company or any Subsidiary other than another Exempt
Foreign Subsidiary and (b) does not have total assets that, when aggregated
with the assets of any other Exempt Foreign Subsidiary, exceed 25% of the
Company's consolidated total assets, as determined in accordance with GAAP, as
reflected on the Company's most recent quarterly or annual balance sheet. The
Company may revoke the designation of any Exempt Foreign Subsidiary by notice
to the Trustee.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect on the Issue Date, including those set
forth in (i) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession, and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC.
"Guarantee" means, without duplication, any obligation,
contingent or otherwise, of any Person directly or indirectly guaranteeing any
Indebtedness of any Person and any obligation, direct or indirect, contingent
or otherwise, of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness of such Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services, to take-or-pay or to
maintain financial statement conditions or otherwise) or (ii) entered into for
the purpose of assuring in any other manner the obligee of such Indebtedness of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business.
<PAGE> 26
17
The term "Guarantee" used as a verb has a corresponding meaning.
"Guaranties" means the DRI Guaranty and each Subsidiary
Guaranty. Each of the Guaranties is referred to individually as a "Guaranty".
"Guarantors" means DRI and each Subsidiary Guarantor. Each of
the Guarantors is referred to individually as a "Guarantor".
"Guaranty Agreement" means a supplemental indenture, in a form
satisfactory to the Trustee, pursuant to which DRI, a Subsidiary Guarantor or
any other Person becomes subject to the applicable terms and conditions of this
Indenture.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Oil and Gas Hedging Contract, Interest Rate
Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence"
when used as a noun shall have a correlative meaning. The accretion of
principal of a non-interest bearing or other discount security shall not be
deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication), (i) the principal of and premium (if
any) in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person and all Attributable Debt in respect of
Sale/Leaseback Transactions entered into by such Person; (iii) all obligations
of such Person issued or
<PAGE> 27
18
assumed as the deferred purchase price of property (which purchase price is due
more than six months after the date of taking delivery of title to such
property), including all obligations of such Person for the deferred purchase
price of property under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business); (iv) all
obligations of such Person for the reimbursement of any obligor on any letter
of credit, banker's acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (i) through (iii) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the tenth Business Day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit); (v) the amount of
all obligations of such Person with respect to the redemption, repayment or
other repurchase of any Disqualified Stock (but excluding any accrued
dividends); (vi) all obligations of such Person relating to any Production
Payments; (vii) all obligations of the type referred to in clauses (i) through
(vi) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee (including, with respect to any Production Payment, any warranties or
guarantees of production or payment by such Person with respect to such
Production Payment but excluding other contractual obligations of such Person
with respect to such Production Payment); (viii) all obligations of the type
referred to in clauses (i) through (vii) of other Persons secured by any Lien
on any property or asset of such first-mentioned Person (whether or not such
obligation is assumed by such first-mentioned Person), the amount of such
obligation being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured and (ix) to the extent not
otherwise included in this definition, Hedging Obligations of such Person. The
amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and
the maximum liability, assuming the contingency giving rise to the obligation
was to have occurred on such date, of any Guarantees outstanding at such date.
<PAGE> 28
19
None of the following shall constitute Indebtedness: (i)
indebtedness arising from agreements providing for indemnification or
adjustment of purchase price or from guarantees securing any obligations of the
Company or any of its Subsidiaries pursuant to such agreements, incurred or
assumed in connection with the disposition of any business, assets or
Subsidiary of the Company, other than guarantees or similar credit support by
the Company or any of its Subsidiaries of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or Subsidiary for the
purpose of financing such acquisition; (ii) any trade payables or other similar
liabilities to trade creditors and other accrued current liabilities incurred
in the ordinary course of business as the deferred purchase price of property;
(iii) any liability for Federal, state, local or other taxes owed or owing by
such Person; (iv) amounts due in the ordinary course of business to other
royalty and working interest owners; (v) obligations arising from guarantees to
suppliers, lessors, licensees, contractors, franchisees or customers incurred
in the ordinary course of business; (vi) obligations (other than express
Guarantees of indebtedness for borrowed money) in respect of Indebtedness of
other Persons arising in connection with (A) the sale or discount of accounts
receivable, (B) trade acceptances and (C) endorsements of instruments for
deposit in the ordinary course of business; (vii) obligations in respect of
performance bonds provided by the Company or its Subsidiaries in the ordinary
course of business and refinancing thereof; (viii) obligations arising from the
honoring by a bank or other financial institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary course of business,
provided, however, that such obligation is extinguished within two Business
Days of its Incurrence; and (ix) obligations in respect of any obligations
under workers' compensation laws and similar legislation.
"Indenture" means this Indenture as amended or supplemented
from time to time, including the provisions of the TIA that are deemed to be a
part of and govern this Indenture and any supplemental indenture, respectively.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the
<PAGE> 29
20
Company or any Restricted Subsidiary against fluctuations in interest rates.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers or joint interest partners or
drilling partnerships sponsored by the Company or any Restricted Subsidiary in
the ordinary course of business that are recorded as accounts receivable on the
balance sheet of the lender) or other extensions of credit (including by way of
Guarantee or similar arrangement) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person.
For purposes of the definition of "Unrestricted Subsidiary", the definition of
"Restricted Payment" and Section 4.05, (i) "Investment" shall include the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of any Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary equal to an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
Board of Directors.
"Issue Date" means the date on which the Securities are
originally issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Limited Recourse Production Payments" means, with respect to
any Production Payments, Indebtedness, the terms of which limit the liability
of the Company and its
<PAGE> 30
21
Restricted Subsidiaries solely to the hydrocarbons covered by such Production
Payments; provided, however, that no default with respect to such Indebtedness
would permit any holder of any other Indebtedness of the Company or any
Restricted Subsidiary to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity.
"Material Change" means an increase or decrease (excluding
changes that result solely from changes in prices and changes resulting from
the Incurrence of previously estimated future development costs) of more than
25% during a fiscal quarter in the discounted future net revenues from proved
crude oil and natural gas reserves of the Company and its Restricted
Subsidiaries, calculated in accordance with clause (a)(i) of the definition of
Adjusted Consolidated Net Tangible Assets; provided, however, that the
following will be excluded from the calculation of Material Change: (i) any
acquisitions during the fiscal quarter of oil and gas reserves that have been
estimated by independent petroleum engineers and with respect to which a report
or reports of such engineers exist and (ii) any disposition of properties
existing at the beginning of such fiscal quarter that have been disposed of in
compliance with Section 4.07.
"Moody's" means Moody's Investor's Service, Inc. and its
successors.
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or
other obligations relating to such properties or assets or received in any
other noncash form) in each case net of (i) all legal, title and recording tax
expenses, commissions and other fees (including financial and other advisory
fees) and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a consequence
of such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with respect to
such assets, or which must by its terms, or in order to obtain a necessary
consent to such
<PAGE> 31
22
Asset Disposition, or by applicable law, be repaid out of the proceeds from
such Asset Disposition, (iii) all distributions and other payments required to
be made to minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Disposition and (iv) the deduction of appropriate amounts
provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the property or other assets disposed in such Asset
Disposition and retained by the Company or any Restricted Subsidiary after such
Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Net Present Value" means, with respect to any proved
hydrocarbon reserves, the discounted future net cash flows associated with such
reserves, determined in accordance with the rules and regulations (including
interpretations thereof) of the SEC in effect on the Issue Date.
"Net Working Capital" means (a) all current assets of the
Company and its Restricted Subsidiaries minus (b) all current liabilities of
the Company and its Restricted Subsidiaries, except current liabilities
included in Indebtedness, determined in accordance with GAAP.
"Non-recourse Purchase Money Indebtedness" means Indebtedness
(other than Capital Lease Obligations) of the Company or any Subsidiary
Guarantor incurred in connection with the acquisition by the Company or such
Subsidiary Guarantor in the ordinary course of business of fixed assets used in
the Oil and Gas Business (including office buildings and other real property
used by the Company or such Subsidiary Guarantor in conducting its operations)
with respect to which (i) the holders of such Indebtedness agree that they will
look solely to the fixed assets so acquired which secure such Indebtedness, and
neither the Company nor any Restricted Subsidiary (a) is directly or indirectly
liable for such Indebtedness or (b) provides credit support, including any
undertaking, Guarantee, agreement or instrument that would constitute
Indebtedness (other than
<PAGE> 32
23
the grant of a Lien on such acquired fixed assets), and (ii) no default or
event of default with respect to such Indebtedness would cause, or permit
(after notice or passage of time or otherwise), any holder of any other
Indebtedness of the Company or a Subsidiary Guarantor to declare a default or
event of default on such other Indebtedness or cause the payment, repurchase,
redemption, defeasance or other acquisition or retirement for value thereof to
be accelerated or payable prior to any scheduled principal payment, scheduled
sinking fund payment or maturity.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of DRI or the Company, as applicable.
"Officers' Certificate" means a certificate signed by two
Officers.
"Oil and Gas Business" means the business of the exploration
for, and exploitation, development, acquisition, production, processing (but
not refining), marketing, storage and transportation of, hydrocarbons, and
other related energy and natural resource businesses (including oil and gas
services businesses related to the foregoing).
"Oil and Gas Hedging Contract" means any oil and gas purchase
or hedging agreement, and other agreement or arrangement, in each case, that is
designed to provide protection against oil and gas price fluctuations.
"Oil and Gas Liens" means (i) Liens on any specific property
or any interest therein, construction thereon or improvement thereto to secure
all or any part of the costs incurred for surveying, exploration, drilling,
extraction, development, operation, production, construction, alternation,
repair or improvement of, in, under or on such property and the plugging and
abandonment of wells located thereon (it being understood that, in the case of
oil and gas producing properties, or any interest therein, costs incurred for
"development" shall include costs incurred for all facilities relating to such
properties or to projects, ventures or other arrangements of which such
properties form a part or which relate to such properties or interests); (ii)
Liens on an oil or gas producing property to secure obligations Incurred or
guarantees of obligations Incurred in connection with or
<PAGE> 33
24
necessarily incidental to commitments for the purchase or sale of, or the
transportation or distribution of, the products derived from such property;
(iii) Liens arising under partnership agreements, oil and gas leases,
overriding royalty agreements, net profits agreements, production payment
agreements, royalty trust agreements, incentive compensation programs on terms
that are reasonably customary in the Oil and Gas Business for geologists,
geophysicists and other providers of technical services to the Company or a
Restricted Subsidiary, master limited partnership agreements, farm-out
agreements, farm-in agreements, division orders, contracts for the sale,
purchase, exchange, transportation, gathering or processing of oil, gas or
other hydrocarbons, unitizations and pooling designations, declarations, orders
and agreements, development agreements, operating agreements, production sales
contracts, area of mutual interest agreements, gas balancing or deferred
production agreements, injection, repressuring and recycling agreements, salt
water or other disposal agreements, seismic or geophysical permits or
agreements, and other agreements which are customary in the Oil and Gas
Business; provided, however, that in all instances such Liens are limited to
the assets that are the subject of the relevant agreement, program, order or
contract; (iv) Liens arising in connection with Production Payments; and (v)
Liens on pipelines or pipeline facilities that arise by operation of law.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Business Investment" means any investment made in
the ordinary course of, and of a nature that is or shall have become customary
in, the Oil and Gas Business, including investments or expenditures for
actively exploiting, exploring for, acquiring, developing, producing,
processing, gathering, marketing or transporting oil and gas through
agreements, transactions, interests or arrangements which permit one to share
risks or costs, comply with regulatory requirements regarding local ownership
or satisfy other objectives customarily achieved through the conduct of Oil and
Gas Business jointly with third parties, including (i) ownership interests in
oil and gas properties, processing facilities, gathering systems, pipelines or
ancillary real property interests and (ii) Investments in the form of or
pursuant to operating agreements, processing
<PAGE> 34
25
agreements, farm-in agreements, farm-out agreements, development agreements,
area of mutual interest agreements, unitization agreements, pooling agreements,
joint bidding agreements, service contracts, joint venture agreements,
partnership agreements (whether general or limited), subscription agreements,
stock purchase agreements and other similar agreements (including for limited
liability Companies) with third parties, excluding, however, Investments in
corporations other than Restricted Subsidiaries.
"Permitted Holders" means TPG Advisors, Inc. or any Person who
on the Issue Date is an affiliate thereof or any person controlled by TPG
Advisors, Inc.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is an Oil and
Gas Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is an Oil and Gas
Business; (iii) Temporary Cash Investments; (iv) receivables owing to the
Company or any Restricted Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary
deems reasonable under the circumstances; (v) payroll, travel and similar
advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vi) loans or advances to employees made in
the ordinary course of business; (vii) stock, obligations or securities
received in settlement of debts created in the ordinary course of business and
owing to the Company or any Restricted Subsidiary or in satisfaction of
judgments; (viii) any Person to the extent such Investment represents the non-
cash portion of the consideration received for an Asset Disposition as
permitted pursuant to Section 4.07; (ix) Permitted Business Investments; (x)
Investments intended to promote the Company's strategic objectives in the Oil
and Gas Business in an aggregate amount not to
<PAGE> 35
26
exceed 5.0% of ACNTA (determined as of the date of the making of any such
Investment) at any one time outstanding (which Investments shall be deemed to
be no longer outstanding only upon and to the extent of the return of capital
thereof); and (xi) Investments made pursuant to Hedging Obligations of the
Company and the Restricted Subsidiaries.
"Permitted Liens" means, with respect to any Person, (a) Liens
existing as of the Issue Date; (b) Liens securing the Securities, the DRI
Guaranty, any Subsidiary Guaranty and other obligations arising under the
Indenture; (c) any Lien existing on any property of a Person at the time such
Person is merged or consolidated with or into the Company or a Restricted
Subsidiary or becomes a Restricted Subsidiary (and not incurred in anticipation
of or in connection with such transaction), provided that such Liens are not
extended to other property of the Company or the Restricted Subsidiaries; (d)
any Lien existing on any property at the time of the acquisition thereof (and
not incurred in anticipation of or in connection with such transaction),
provided that such Liens are not extended to other property of the Company or
the Restricted Subsidiaries; (e) any Lien incurred in the ordinary course of
business incidental to the conduct of the business of the Company or the
Restricted Subsidiaries or the ownership of their property including (i)
easements, rights of way and similar encumbrances, (ii) rights or title of
lessors under leases (other than Capital Lease Obligations), (iii) rights of
collecting banks having rights of setoff, revocation, refund or chargeback with
respect to money or instruments of the Company or the Restricted Subsidiaries
on deposit with or in the possession of such banks, (iv) Liens imposed by law,
including Liens under workers' compensation or similar legislation and
mechanics', carriers', warehousemen's, materialmen's, suppliers' and vendors'
Liens, (v) Liens incurred to secure performance of obligations with respect to
statutory or regulatory requirements, performance or return-of-money bonds,
surety bonds or other obligations of a like nature and incurred in a manner
consistent with industry practice and (vi) Oil and Gas Liens, in each case
which are not incurred in connection with the borrowing of money, the obtaining
of advances or credit or the payment of the deferred purchase price of property
(other than trade accounts payable arising in the ordinary course of business);
(f) Liens for taxes, assessments and governmental charges not yet due or the
validity of which are being
<PAGE> 36
27
contested in good faith by appropriate proceedings, promptly instituted and
diligently conducted, and for which adequate reserves have been established to
the extent required by GAAP as in effect at such time; (g) Liens incurred to
secure appeal bonds and judgment and attachment Liens, in each case in
connection with litigation or legal proceedings that are being contested in
good faith by appropriate proceedings, so long as reserves have been
established to the extent required by GAAP as in effect at such time and so
long as such Liens do not encumber assets by an aggregate amount (together with
the amount of any unstayed judgments against the Company or any Restricted
Subsidiary but excluding any such Liens to the extent securing insured or
indemnified judgments or orders) in excess of $10.0 million; (h) Liens securing
Hedging Obligations of the Company and its Restricted Subsidiaries; (i) Liens
securing purchase money Indebtedness or Capital Lease Obligations, provided
that such Liens attach only to the property acquired with the proceeds of such
purchase money Indebtedness or the property which is the subject of such
Capital Lease Obligations ; (j) Liens securing Non-recourse Purchase Money
Indebtedness granted in connection with the acquisition by the Company or any
Restricted Subsidiary in the ordinary course of business of fixed assets used
in the Oil and Gas Business (including the office buildings and other real
property used by the Company or such Restricted Subsidiary in conducting its
operations), provided that (i) such Liens attach only to the fixed assets
acquired with the proceeds of such Non-recourse Purchase Money Indebtedness and
(ii) such Non-recourse Purchase Money Indebtedness is not in excess of the
purchase price of such fixed assets; (k) Liens resulting from the deposit of
funds or evidences of Indebtedness in trust for the purpose of decreasing or
legally defeasing Indebtedness of the Company or any Restricted Subsidiary so
long as such deposit of funds is permitted under Section 4.05; (l) Liens
resulting from a pledge of Capital Stock of a Person that is not a Restricted
Subsidiary to secure obligations of such Person and any refinancings thereof;
(m) Liens to secure any permitted extension, renewal, refinancing, refunding or
exchange (or successive extensions, renewals, refinancings, refundings or
exchanges), in whole or in part, of or for any Indebtedness secured by Liens
referred to in clauses (a), (b), (c), (d), (i) and (j) above; provided,
however, that (i) such new Lien shall be limited to all or part of the same
property (including future improvements thereon and accessions thereto) subject
to the original Lien and (ii) the Indebtedness secured by such Lien at such
time is
<PAGE> 37
28
not increased to any amount greater than the sum of (A) the outstanding
principal amount or, if greater, the committed amount of the Indebtedness
secured by such original Lien immediately prior to such extension, renewal,
refinancing, refunding or exchange and (B) an amount necessary to pay any fees
and expenses, including premiums, related to such refinancing, refunding,
extension, renewal or replacement; and (n) Liens in favor of DRI, the Company,
or a Restricted Subsidiary. Notwithstanding anything in this paragraph to the
contrary, the term "Permitted Liens" shall not include Liens resulting from the
creation, Incurrence, issuance, assumption or Guarantee of any Production
Payments other than (i) any such Liens existing as of the Issue Date, (ii)
Production Payments in connection with the acquisition of any property after
the Issue Date, provided that any such Lien created in connection therewith is
created, incurred, issued, assumed or Guaranteed in connection with the
financing of, and within 60 days after the acquisition of, such property and
(iii) Production Payments other than those described in clauses (i) and (ii) of
this sentence, to the extent such Production Payments constitute Asset
Dispositions made pursuant to and in compliance with Section 4.07 and (iv)
incentive compensation programs for geologists, geophysicists and other
providers of technical services to the Company and any Restricted Subsidiary;
provided, however, that, in the case of the immediately foregoing clauses (i),
(ii), (iii) and (iv), any Lien created in connection with any such Production
Payments shall be limited to the property that is the subject of such
Production Payments.
"Permitted Marketing Obligations" means Indebtedness of the
Company or any Restricted Subsidiary under letter of credit or borrowed money
obligations, or in lieu of or in addition to such letters of credit or borrowed
money, guarantees of such Indebtedness or other obligations of the Company or
any Restricted Subsidiary by any other Restricted Subsidiary, as applicable,
related to the purchase by the Company or any Restricted Subsidiary of
hydrocarbons for which the Company or such Restricted Subsidiary has contracts
to sell; provided, however, that in the event that such Indebtedness or
obligations are guaranteed by the Company or any Restricted Subsidiary, then
either (i) the Person with which the Company or such Restricted Subsidiary has
contracts to sell has an investment grade credit rating from S&P or Moody's, or
in lieu thereof, a Person guaranteeing the payment of such
<PAGE> 38
29
obligated Person has an investment grade credit rating from S&P or Moody's, or
(ii) such Person posts, or has posted for it, a letter of credit in favor of
the Company or such Restricted Subsidiary with respect to all such Person's
obligations to the Company or such Restricted Subsidiary under such contracts.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
The term "principal" of a Security means the principal of the
Security plus the premium, if any, payable on the Security which is due or
overdue or is to become due at the relevant time.
"Production Payments" means, collectively, Dollar-Denominated
Production Payments and Volumetric Production Payments.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company or any Restricted Subsidiary existing on the
Issue Date or Incurred in compliance with the Indenture including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life
<PAGE> 39
30
of the Indebtedness being Refinanced, (iii) such Refinancing Indebtedness has
an aggregate principal amount (or if Incurred with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate principal
amount (or if Incurred with original issue discount, the aggregate accreted
value) then outstanding or committed (plus fees and expenses, including any
premium and defeasance costs) under the Indebtedness being Refinanced and (iv)
if the Indebtedness being Refinanced is Non-recourse Purchase Money
Indebtedness, such Refinancing Indebtedness satisfies clauses (i) and (ii) of
the definition of "Non-recourse Purchase Money Indebtedness"; provided further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company or (y) Indebtedness of
the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Representative" means any trustee, agent or representative
(if any) for an issue of Senior Indebtedness of the Company or of any
Guarantor.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than (x) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock), (y) dividends or distributions payable solely to the Company or a
Restricted Subsidiary, and (z) pro rata dividends or other distributions made
by a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders
(or owners of an equivalent interest in the case of a Subsidiary that is an
entity other than a corporation)), (ii) the purchase, redemption or other
acquisition or retirement for value of any Capital Stock of the Company held by
any Person or of any Capital Stock of a Restricted Subsidiary held by any
Affiliate of the Company (other than a Restricted Subsidiary), including the
exercise of any option to exchange any Capital Stock (other than into Capital
Stock of the Company that is not Disqualified Stock), (iii) the purchase,
repurchase, redemption, defeasance or other acquisition or retirement for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment of any Subordinated Obligations of such Person
<PAGE> 40
31
(other than the purchase, repurchase or other acquisition of Subordinated
Obligations of such Person purchased in anticipation of satisfying a sinking
fund obligation, principal installment or final maturity, in each case due
within one year of the date of acquisition) or (iv) the making of any
Investment (other than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Company, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person, provided that the fair market value of
such property (as reasonably determined by the Board of Directors acting in
good faith) is $10 million or more.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien.
"Securities" means the Securities issued under this Indenture.
"Senior Indebtedness" means with respect to any Person (i)
Indebtedness of such Person, and all obligations of such Person under any
Credit Facility, whether outstanding on the Issue Date or thereafter Incurred
and (ii) accrued and unpaid interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating such
Person to the extent post-filing interest is allowed in such proceeding) in
respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable unless, with
respect to obligations described in the immediately preceding clause (i) or
(ii), in the instrument
<PAGE> 41
32
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that such obligations are not superior in right of payment to
the Securities or the applicable Guaranty; provided, however, that Senior
Indebtedness shall not include (1) any obligation of such Person to any
Subsidiary of such Person, (2) any liability for Federal, state, local or other
taxes owed or owing by such Person, (3) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
guarantees thereof or instruments evidencing such liabilities), (4) any
Indebtedness of such Person (and any accrued and unpaid interest in respect
thereof) which is subordinate or junior in any respect to any other
Indebtedness or other obligation of such Person or (5) that portion of any
Indebtedness which at the time of Incurrence is Incurred in violation of this
Indenture (other than, in the case of the Company or any Guarantor that
Guarantees any Credit Facility, Indebtedness under any Credit Facility that is
Incurred on the basis of a representation by the Company or the applicable
Guarantor to the applicable lenders that such Person is permitted to Incur such
Indebtedness under this Indenture).
"Senior Subordinated Indebtedness" means (i) with respect to
the Company, the Securities and any other Indebtedness of the Company that
specifically provides that such Indebtedness is to rank pari passu with the
Securities in right of payment and is not subordinated by its terms in right of
payment to any Indebtedness or other obligation of the Company which is not
Senior Indebtedness of the Company and (ii) with respect to each Guarantor, its
Guaranty of the Securities and any other Indebtedness of such Person that
specifically provides that such Indebtedness rank pari passu with its
applicable Guaranty in right of payment and is not subordinated by its terms in
right of payment to any Indebtedness or other obligation of such Person which
is not Senior Indebtedness of such Person.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
<PAGE> 42
33
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Stock Offering" means a primary offering, whether public or
private, of shares of common stock of DRI or the Company.
"Subordinated Obligation" means any Indebtedness of the
Company or any Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) which is subordinate or junior in right of payment to, in the case of
the Company, the Securities or, in the case of a Guarantor, its Guaranty
pursuant to a written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" means any Subsidiary of the Company
that Guarantees the Securities pursuant to a Subsidiary Guaranty.
"Subsidiary Guaranty" means a Guarantee by a Restricted
Subsidiary of the Company's Obligations with respect to the Securities, which
Guarantee shall be substantially in the form of the Guaranty Agreement attached
hereto as Exhibit B.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or any
agency thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within one year of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of
<PAGE> 43
34
America, and which bank or trust company has capital, surplus and undivided
profits aggregating in excess of $200.0 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such
similar equivalent rating) or higher by at least one nationally recognized
credit rating organization (as defined in Rule 436 under the Securities Act) or
any money-market fund sponsored by a registered broker dealer or mutual fund
distributor whose assets consist of obligations of the types described in
clauses (i), (ii), (iii), (iv) and (v) hereof, (iii) repurchase obligations
with a term of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 180 days after the date of acquisition, issued by
a Person (other than an Affiliate of the Company) organized and in existence
under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of
which any investment therein is made of "P-2" (or higher) according to Moody's
or "A-2" (or higher) according to S&P or "R-1" (or higher) by Dominion Bond
Rating Service Limited or Canadian Bond Rating Service, Inc. (in the case of a
Canadian issuer), (v) investments in securities with maturities of six months
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or "A"
by Moody's and (vi) Investments in asset-backed securities maturing within one
year of the date of acquisition thereof with a long-term rating at the time as
of which any investment therein is made of "A3" (or higher) by Dominion Bond
Rating Service Limited or Canadian Bond Rating Service, Inc. (in the case of a
Canadian issuer).
"TIA" means the Trust Indenture Act of 1939, as amended (15
U.S.C. Sections 77aaa-77bbbb), as in effect on the date of this Indenture
except as provided in Section 9.03; provided, however, that, in the event the
Trust Indenture Act of 1939 is amended after such date, "TIA" means, to the
extent required by any such amendments, the Trust Indenture Act of 1939 as so
amended.
"Trustee" means the party named as such in the preamble to
this Indenture until a successor replaces it and, thereafter, means the
successor.
<PAGE> 44
35
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the
Trustee to administer this Indenture.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien
on any property of, the Company or any other Subsidiary of the Company that is
not a Subsidiary of the Subsidiary to be so designated; provided, however, that
either (A) the Subsidiary to be so designated has total assets of $1,000 or
less or (B) if such Subsidiary has assets greater than $1,000, such designation
would be permitted under Section 4.05. The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however,
that immediately after giving effect to such designation (x) the Company could
Incur $1.00 of additional Indebtedness under Section 4.03(a) and (y) no Default
shall have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced by the Company to the Trustee by promptly filing
with the Trustee a copy of the board resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Volumetric Production Payments" means production payment
obligations recorded as deferred revenue in accordance with GAAP, together with
all undertakings and obligations in connection therewith.
<PAGE> 45
36
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares and shares
held by other Persons to the extent such shares are required by applicable law
to be held by a Person other than the Company or a Restricted Subsidiary) is
owned by the Company or one or more Wholly Owned Subsidiaries.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Section Term
- ------- ----
<S> <C>
"Additional Amounts" . . . . . . . . . . . . . . 11.05(a)
"Affiliate Transaction" . . . . . . . . . . . . 4.08
"Bankruptcy Law" . . . . . . . . . . . . . . . . 6.01(a)
"Blockage Notice" . . . . . . . . . . . . . . . 10.03
"covenant defeasance option" . . . . . . . . . . 8.01(b)
"Custodian" . . . . . . . . . . . . . . . . . . 6.01
"DRI Blockage Notice" . . . . . . . . . . . . . 12.03
"DRI Payment Blockage Period . . . . . . . . . . 12.03
"Event of Default" . . . . . . . . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . . . . . . . 4.07(a)
"Excess Proceeds Offer" . . . . . . . . . . . . 4.07(b)(i)
"Excess Proceeds Payment" . . . . . . . . . . . 4.07(b)(i)
"Excess Proceeds Payment Date" . . . . . . . . . 4.07(b)(ii)
"Excluded Holder" . . . . . . . . . . . . . . . 11.05(a)
"Guaranteed Obligations" . . . . . . . . . . . . 11.01
"legal defeasance option" . . . . . . . . . . . 8.01(b)
"Legal Holiday" . . . . . . . . . . . . . . . . 13.08
"pay the Securities" . . . . . . . . . . . . . . 10.03
"Paying Agent" . . . . . . . . . . . . . . . . . 2.03
"Payment Blockage Period" . . . . . . . . . . . 10.03
"Registrar" . . . . . . . . . . . . . . . . . . 2.03
"Successor Company" . . . . . . . . . . . . . . 5.01
"Taxes" . . . . . . . . . . . . . . . . . . . . 11.05(a)
"Unrestricted Affiliate" . . . . . . . . . . . . 4.08(b)
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory
<PAGE> 46
37
provisions of the TIA which are incorporated by reference in and made a part of
this Indenture. The following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities and, to the extent
the a Guaranty is given, such Guaranty.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities, including any Guarantor.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
Section 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
<PAGE> 47
38
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the Company dated such date
prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater.
ARTICLE 2
The Securities
Section 2.01. Form and Dating. The Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company is subject, if
any, or usage (provided that any such notation, legend or endorsement is in a
form acceptable to the Company). Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in Exhibit A are part of
the terms of this Indenture.
Section 2.02. Execution and Authentication. Two Officers
shall sign the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall upon receipt of a
written order
<PAGE> 48
39
of the Company signed by two Officers or by an Officer and either an Assistant
Secretary or an Assistant Treasurer of the Company authenticate for original
issue Securities in the aggregate principal amount specified in such order;
provided that the Trustee shall be entitled to receive an Officers' Certificate
and an Opinion of Counsel of the Company that it may reasonably request in
connection with such authentication of Securities. Such order shall specify
the amount of Securities to be authenticated, the date on which the original
issue of Securities is to be authenticated and the aggregate principal amount
of Securities then authorized and in case of an issuance of Securities pursuant
to Section 2.13 after the date of execution of this Indenture, shall certify
that such issuance is in compliance with Article 4.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by
the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or
agent for service of notices and demands.
Section 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement
the provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.07. The Company or any of its
<PAGE> 49
40
domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
Section 2.04. Paying Agent To Hold Money in Trust. Prior to
11:00 a.m., New York City time, on each due date of the principal and interest
on any Security, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The
Company shall require each Paying Agent (other than the Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed by the Paying Agent. Upon complying with
this Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
Section 2.05. Securityholder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee
is not the Registrar, the Company shall furnish to the Trustee, in writing at
least five Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Securityholders.
Section 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of
a Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the
Registrar shall register the transfer as requested if the requirements of
Section 8-401(1) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar or a co-registrar with a request
<PAGE> 50
41
to exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's or co-registrar's request. The Company or the Registrar may
require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or exchange pursuant to
this Section. The Company shall not be required to make and the Registrar need
not register transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities for a period of 15 days before a
selection of Securities to be redeemed or 15 days before an interest payment
date.
Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall
be affected by notice to the contrary.
All Securities issued upon any registration of transfer or
exchange pursuant to the terms of this Indenture will evidence the same debt
and will be entitled to the same benefits under this Indenture as the
Securities surrendered upon such registration of transfer or exchange.
Section 2.07. Replacement Securities. If a mutilated
Security is surrendered to the Registrar or if the Holder of a Security claims
that the Security has been lost, destroyed or wrongfully taken, the Company
shall issue and the Trustee shall authenticate and deliver a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial Code
are met and the Holder satisfies any other reasonable requirements of the
Trustee. If required by the Trustee or the Company, such Holder shall furnish
an indemnity bond sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, the Paying Agent, the Registrar and any co-
registrar from any loss which any of them may suffer if a Security is replaced.
The
<PAGE> 51
42
Company and the Trustee may charge the Holder for their expenses in replacing a
Security.
Every replacement Security is an additional obligation of the
Company.
Section 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancelation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
Section 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate and deliver temporary Securities. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities and deliver them in exchange for temporary
Securities.
Section 2.10. Cancelation. The Company at any time may
deliver Securities to the Trustee for cancelation. The Registrar and the
Paying Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention
<PAGE> 52
43
requirements of the Exchange Act) all Securities surrendered for registration
of transfer, exchange, payment or cancelation and deliver a certificate of such
destruction to the Company unless the Company directs the Trustee to deliver
canceled Securities to the Company. The Company may not issue new Securities
to replace Securities it has redeemed, paid or delivered to the Trustee for
cancelation.
Section 2.11. Defaulted Interest. If the Company defaults in
a payment of interest on the Securities, the Company shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the Persons who
are Securityholders on a subsequent special record date. The Company shall fix
or cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall mail promptly to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
Section 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
Section 2.13. Issuance of Additional Securities. The Company
may, subject to Article 4, issue additional Securities under this Indenture.
The Securities issued on the Issue Date and any additional Securities
subsequently issued shall be treated as a single class for all purposes under
this Indenture.
ARTICLE 3
Redemption
Section 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the
<PAGE> 53
44
Securities, it shall notify the Trustee in writing of the redemption date, the
principal amount of Securities to be redeemed and the paragraph of the
Securities pursuant to which the redemption will occur.
The Company shall give each notice to the Trustee provided for
in this Section at least 45 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
Section 3.02. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion considers fair and appropriate. The Trustee
shall make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple
of $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company, the Registrar and each Paying Agent promptly
of the Securities or portions of Securities to be redeemed.
Section 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
<PAGE> 54
45
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on
Securities (or portions thereof) called for redemption ceases to
accrue on and after the redemption date; and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
Section 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice,
subject to any condition or contingency stated therein. Upon surrender to the
Paying Agent, such Securities shall be paid at the redemption price stated in
the notice, plus accrued interest to the redemption date. Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
Section 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to
the Trustee for cancelation.
Section 3.06. Securities Redeemed in Part. Upon surrender of
a Security that is redeemed in part, the
<PAGE> 55
46
Company shall execute and the Trustee shall authenticate and deliver to the
Holder (at the Company's expense) a new Security equal in principal amount to
the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
Section 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and
in the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee
or the Paying Agent holds in accordance with this Indenture money sufficient to
pay all principal and interest then due and the Trustee or the Paying Agent, as
the case may be, is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Section 4.02. SEC Reports. Notwithstanding that the Company
may not at any time be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the SEC and provide the
Trustee and Securityholders with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections,
such information, documents and other reports to be so filed and provided at
the times specified for the filing of such information, documents and reports
under such Sections; provided, however, that so long as DRI is a Guarantor of
the Securities, the reports, information and other documents required to be
filed and provided as described hereunder may, at the Company's option, be
filed by and be those of DRI rather than the Company; provided further,
however, that in the event DRI conducts any business or holds any significant
assets other than the capital stock of the Company at the time of filing and
providing any such report, information or other document containing financial
<PAGE> 56
47
statements of DRI, DRI shall include in such report, information or other
document summarized financial information (as defined in Rule 1-02(bb) of
Regulation S-X promulgated by the SEC) with respect to the Company.
Section 4.03. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur, directly
or indirectly, any Indebtedness; provided, however, that the Company or a
Restricted Subsidiary may Incur Indebtedness if, on the date of such Incurrence
and after giving effect thereto, either (i) the Consolidated Coverage Ratio
equals or exceeds 2.25 to 1.0.
(b) Notwithstanding Section 4.03(a), the Company and any
Restricted Subsidiary may Incur the following Indebtedness:
(1) Indebtedness Incurred pursuant to any Credit Facility, so long as
the aggregate amount of all Indebtedness outstanding under all Credit
Facilities does not, at any one time, exceed the aggregate amount of
borrowing availability as of such date under all Credit Facilities
that determine availability on the basis of a borrowing base or other
asset-based calculation; provided, however, that in no event shall
such amount exceed the greater of (x) $300 million and (y) 75% of
ACNTA as of the date of such Incurrence;
(2) Indebtedness owed to and held by the Company or a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or
transfer of any Capital Stock which results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or another
Wholly Owned Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness by the issuer thereof;
(3) The Securities issued on the Issue Date;
(4) Indebtedness outstanding on the issue Date (other than
Indebtedness described in paragraph (b) (1), (2) or (3) of this
Section 4.03);
(5) Indebtedness of (A) a Restricted Subsidiary Incurred and
outstanding on or prior to the date on
<PAGE> 57
48
which such Restricted Subsidiary was acquired by the Company (other
than Indebtedness Incurred in connection with, or to provide all or
any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired
by the Company) and (B) the Company or a Restricted Subsidiary
Incurred for the purpose of financing all or any part of the cost of
acquiring oil and gas properties, another Person (other than a Person
that was, immediately prior to such acquisition, a Subsidiary of the
Company) engaged in the Oil and Gas Business or all or substantially
all the assets of such a Person; provided, however, that in the case
of each of clause (A) and clause (B) above, on the date of such
Incurrence and after giving effect thereto, the Consolidated Coverage
Ratio equals or exceeds 2.0 to 1.0;
(6) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.03(a) or Section 4.03(b)(3), (4), (5), this
clause (6) or clause (7) below; provided, however, that to the extent
such Refinancing Indebtedness directly or indirectly Refinances
Indebtedness or Preferred Stock of a Restricted Subsidiary described
in Section 4.03(b)(5), such Refinancing Indebtedness shall be Incurred
only by such Restricted Subsidiary or the Company;
(7) Non-recourse Purchase Money Indebtedness;
(8) Indebtedness with respect to Production Payments; provided,
however, that any such Indebtedness shall be Limited Recourse
Production Payments; provided further, however, that the Net Present
Value of the reserves related to such Production Payments shall not
exceed 30% of ACNTA at the time of Incurrence;
(9) Indebtedness consisting of the Guaranties and any Guarantees by
DRI or any Restricted Subsidiary of Indebtedness Incurred by the
Company pursuant to paragraphs (b)(1) and (3) of this Section 4.03;
(10) Indebtedness consisting of Interest Rate Agreements directly
related to Indebtedness permitted to be Incurred by the Company and
its Restricted Subsidiaries pursuant to the Indenture;
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49
(11) Indebtedness under Oil and Gas Hedging Contracts and Currency
Agreements entered into in the ordinary course of business for the
purpose of limiting risks that arise in the ordinary course of
business of the Company and its Restricted Subsidiaries;
(12) Indebtedness in respect of bid, performance or surety
obligations issued by or for the account of the Company or any
Restricted Subsidiary in the ordinary course of business, including
Guarantees and letters of credit functioning as or supporting such
bid, performance or surety obligations (in each case other than for an
obligation for money borrowed);
(13) Indebtedness of the Company or a Restricted Subsidiary Incurred
to finance capital expenditures and Refinancing Indebtedness Incurred
in respect thereof in an aggregate amount which, when taken together
with the amount of all other Indebtedness Incurred pursuant to this
clause (13) and then outstanding, does not exceed $20 million;
(14) Permitted Marketing Obligations;
(15) In-kind obligations relating to oil and gas balancing positions
arising in the ordinary course of business; and
(16) Indebtedness in an aggregate amount which, together with the
amount of all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Indebtedness permitted by Section 4.03(a) or Section 4.03(b)(1)-(15))
does not exceed $30 million.
(c) Notwithstanding the foregoing, the Company shall not, and
shall not permit any Subsidiary Guarantor to, Incur any Indebtedness pursuant
to Section 4.03(b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Securities or the relevant Subsidiary Guaranty as the case
may be, to at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section
4.03, (i) in the event that an item of Indebtedness meets the criteria of more
than one of the
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50
types of Indebtedness described in this Section 4.03, the Company, in its sole
discretion, will classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses of
this Section 4.03 and (ii) an item of Indebtedness may be divided and
classified in more than one of the types of Indebtedness described in this
Section 4.03.
Section 4.04. Incurrence of Layered Indebtedness.
Notwithstanding paragraphs (a) and (b) of Section 4.03 above, DRI and the
Company shall not, and the Company shall not permit any Subsidiary Guarantor
to, Incur any Indebtedness if such Indebtedness is subordinate or junior in
ranking in any respect to any Senior Indebtedness of DRI, the Company or such
Subsidiary Guarantor, as applicable, unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness.
Section 4.05. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); (2) the Company is not
able to Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a);
or (3) the aggregate amount of such Restricted Payment and all other Restricted
Payments since the Issue Date would exceed the sum of: (A) 50% of the
aggregate Consolidated Net Income of the Company accrued on a cumulative basis
commencing on the last day of the fiscal quarter immediately preceding the
Issue Date, and ending on the last day of the fiscal quarter ending on or
immediately preceding the date of such proposed Restricted Payment (or, if such
aggregate Consolidated Net Income shall be a deficit, minus 100% of such
deficit); (B) the aggregate Net Cash Proceeds received by the Company from the
issuance or sale of its Capital Stock (other than Disqualified Stock)
subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of
the Company and other than an issuance or sale to an employee stock ownership
plan or to a trust established by the Company or any of its Subsidiaries for
the benefit of their employees); (C) the aggregate Net Cash Proceeds received
by the Company from the issue or sale subsequent to the Issue Date of its
Capital Stock (other than Disqualified Stock) to an employee stock ownership
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plan; provided, however, that if such employee stock ownership plan incurs any
Indebtedness with respect thereto, such aggregate amount shall be limited to an
amount equal to any increase in the Consolidated Net Worth of the Company
resulting from principal repayments made by such employee stock ownership plan
with respect to such Indebtedness; (D) the amount by which Indebtedness of the
Company is reduced on the Company's balance sheet upon the conversion or
exchange (other than by a Subsidiary of the Company) subsequent to the Issue
Date, of any Indebtedness of the Company convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company (less the amount
of any cash, or the fair value of any other property, distributed by the
Company upon such conversion or exchange); and (E) an amount equal to the sum
of (i) the net reduction in Investments in any Person resulting from dividends,
repayments of loans or advances or other transfers of assets, in each case to
the Company or any Restricted Subsidiary from such Person, and (ii) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of an Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is designated a Restricted Subsidiary; provided,
however, that the foregoing sum shall not exceed, in the case of any Person,
the amount of Investments previously made (and treated as a Restricted Payment)
by the Company or any Restricted Subsidiary in such Person.
(b) The provisions of Section 4.05(a) shall not prohibit: (i)
dividends paid within 60 days after the date of declaration thereof if at such
date of declaration such dividend would have complied with this Section 4.05;
provided, however, that at the time of payment of such dividend, no other
Default shall have occurred and be continuing (or result therefrom); provided
further, however, that such dividend shall be included in the calculation of
the amount of Restricted Payments; (ii) any purchase or redemption of Capital
Stock or Subordinated Obligations of the Company made by exchange for, or out
of the proceeds of the substantially concurrent sale of, Capital Stock of the
Company (other than Disqualified Stock and other than Capital Stock issued or
sold to a Subsidiary of the Company or an employee stock ownership plan or to a
trust established by the Company or any of its Subsidiaries for the benefit of
their employees); provided, however, that (A) such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments and (B) the
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Net Cash Proceeds from such sale shall be excluded from the calculation of
amounts under Section 4.05(a)(3)(B) (but only to the extent that such Net Cash
Proceeds were used to purchase or redeem such Capital Stock as provided in this
clause (ii)); (iii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the Company
made by exchange for, or out of the proceeds of the substantially concurrent
sale of, Subordinated Obligations of the Company; provided, however, that such
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value shall be excluded in the calculation of the amount of Restricted
Payments; (iv) the repurchase of shares of, or options to purchase shares of,
common stock of the Company or any of its Subsidiaries from employees, former
employees, directors or former directors of the Company or any of its
Subsidiaries (or permitted transferees of such employees, former employees,
directors or former directors), pursuant to the terms of the agreements
(including employment agreements) or plans (or amendments thereto) approved by
the Board of Directors under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of such common stock; provided,
however, that the aggregate amount of such repurchases shall not exceed $2.0
million in any calendar year; provided further, however, that such repurchases
shall be excluded in the calculation of the amount of Restricted Payments; (v)
loans made to officers, directors or employees of DRI, the Company or any
Restricted Subsidiary approved by the Board of Directors (or a duly authorized
officer), the net cash proceeds of which are used solely (A) to purchase common
stock of DRI in connection with a restricted stock or employee stock purchase
plan, or to exercise stock options received pursuant to an employee or director
stock option plan or other incentive plan, in a principal amount not to exceed
the exercise price of such stock options or (B) to refinance loans, together
with accrued interest thereon, made pursuant to item (A) of this clause (v);
provided, however, that such loans shall be excluded in the calculation of the
amount of Restricted Payments; or (vi) other Restricted Payments in an
aggregate amount not to exceed $20.0 million; provided, however, that such
Restricted Payments shall be excluded in the calculation of the amount of
Restricted Payments.
Section 4.06. Limitation on Restrictions on Distributions
from Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary
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53
to, create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary (a) to pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness owed to the Company or a Restricted Subsidiary,
(b) to make any loans or advances to the Company or a Restricted Subsidiary or
(c) to transfer any of its property or assets to the Company or a Restricted
Subsidiary, except: (i) any encumbrance or restriction in the Credit Agreement
on the Issue Date or pursuant to any other agreement in effect on the Issue
Date; (ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by
such Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by the Company) and outstanding on such date; (iii)
any encumbrance or restriction pursuant to an agreement effecting a Refinancing
of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or
(ii) of this covenant or this clause (iii) or contained in any amendment to an
agreement referred to in clause (i) or (ii) of this covenant or this clause
(iii); provided, however, that the encumbrances and restrictions with respect
to such Restricted Subsidiary contained in any such Refinancing agreement or
amendment are no less favorable to the Securityholders than encumbrances and
restrictions with respect to such Restricted Subsidiary contained in such
agreements; (iv) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests to the extent
such provisions restrict the transfer of the lease or the property leased
thereunder; (v) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages; and (vi) any
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the sale or disposition of all or substantially all
the Capital Stock or assets of such Restricted Subsidiary pending the closing
of such sale or disposition.
<PAGE> 63
54
Section 4.07. Limitation on Sales of Assets and Subsidiary
Stock. (a) In the event and to the extent that the Net Available Cash
received by the Company or any Restricted Subsidiary from one or more Asset
Dispositions occurring on or after the Issue Date in any period of 12
consecutive months exceeds 15% of Adjusted Consolidated Net Tangible Assets as
of the beginning of such 12-month period, then the Company shall (i) within 180
days (in the case of (A) below) or 18 months (in the case of (B) below) after
the date such Net Available Cash so received exceeds such 15% of Adjusted
Consolidated Net Tangible Assets (A) apply an amount equal to such excess Net
Available Cash to repay Senior Indebtedness of the Company or a Subsidiary
Guarantor or Indebtedness of a Restricted Subsidiary that is not a Subsidiary
Guarantor, in each case owing to a Person other than the Company or any
Affiliate of the Company or (B) invest an equal amount, or the amount not so
applied pursuant to clause (A), in Additional Assets or Permitted Business
Investments or (ii) apply such excess Net Available Cash (to the extent not
applied pursuant to clause (i)) as provided in Section 4.07(b). The amount of
such excess Net Available Cash required to be applied during the applicable
period and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
(b)(i) If, as of the first day of any calendar month, the
aggregate amount of Excess Proceeds not theretofore subject to an Excess
Proceeds Offer (as defined below) totals at least $10 million, the Company
must, not later than the fifteenth Business Day of such month, make an offer
(an "Excess Proceeds Offer") to purchase from the Holders on a pro rata basis
an aggregate principal amount of Securities equal to the Excess Proceeds
(rounded down to the nearest multiple of $1,000) on such date, at a purchase
price equal to 100% of the principal amount of such Securities, plus, in each
case, accrued interest (if any) to the date of purchase (the "Excess Proceeds
Payment"), but, if the terms of any Indebtedness ranking pari passu with the
Securities require that an offer be made for such Indebtedness
contemporaneously with the Excess Proceeds Offer, then the Excess Proceeds
shall be prorated between the Excess Proceeds Offer and such pari passu offer
in accordance with the aggregate outstanding principal amounts of the
Securities and such pari passu Indebtedness, and the aggregate principal amount
of Securities for which the Excess Proceeds Offer is made shall be reduced
accordingly.
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(ii) The Company shall commence any Excess Proceeds Offer
with respect to the Securities by mailing a notice to the Trustee and each
Holder stating: (A) that the Excess Proceeds Offer is being made pursuant to
this Section 4.07 and that all Securities validly tendered will be accepted for
payment on a pro rata basis; (B) the purchase price and the date of purchase
(which shall be a Business Day no earlier than 30 days nor later than 60 days
from the date such notice is mailed) (the "Excess Proceeds Payment Date"); (C)
that any Security not tendered will continue to accrue interest pursuant to its
terms; (D) that, unless the Company defaults in the payment of the Excess
Proceeds Payment, any Security accepted for payment pursuant to the Excess
Proceeds Offer shall cease to accrue interest on and after the Excess Proceeds
Payment Date; (E) that Holders electing to have a Security purchased pursuant
to the Excess Proceeds Offer will be required to surrender the Security,
together with the form entitled "Option of Holder to Elect Purchase" on the
reverse side of the Security completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day
immediately preceding the Excess Proceeds Payment Date; (F) that Holders will
be entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the third Business Day immediately preceding the
Excess Proceeds Payment Date, a telegram, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of Securities
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Securities purchased; and (G) that Holders whose
Securities are being purchased only in part will be issued new Securities equal
in principal amount to the unpurchased portion of the Securities surrendered;
provided, however, that each Security purchased and each new Security issued
shall be in a principal amount of $1,000 or integral multiples thereof.
(iii) On the Excess Proceeds Payment Date, the Company shall
(A) accept for payment on a pro rata basis Securities or portions thereof
tendered pursuant to the Excess Proceeds Offer, (B) deposit with the Paying
Agent money sufficient to pay the purchase price of all Securities or portions
thereof so accepted, and (C) deliver, or cause to be delivered, to the Trustee
all Securities or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof so accepted for
payment by the Company. The Paying Agent shall promptly
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56
mail to the Holders of Securities so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail to such
Holders a new Security equal in principal amount to any unpurchased portion of
the Security surrendered; provided, however, that each Security purchased and
each new Security issued shall be in a principal amount of $1,000 or integral
multiples thereof. The Company will publicly announce the results of the
Excess Proceeds Offer as soon as practicable after the Excess Proceeds Payment
Date. For purposes of this Section 4.07, the Trustee shall act as the Paying
Agent.
(c) In the event of the transfer of substantially all (but
not all) the property and assets of the Company as an entirety to a Person in a
transaction permitted by Section 5.01, the Successor Company shall be deemed to
have sold the properties and assets of the Company not so transferred for
purposes of this Section 4.07, and shall comply with the provisions of this
Section 4.07 with respect to such deemed sale as if it were an Asset
Disposition and the Successor Company shall be deemed to have received Net
Available Cash in an amount equal to the fair market value (as determined in
good faith by the Board of Directors) of the properties and assets not so
transferred or sold.
(d) In the event of an Asset Disposition by the Company or
any Restricted Subsidiary that consists of a sale of hydrocarbons and results
in Production Payments, the Company or such Restricted Subsidiary shall apply
an amount equal to the Net Available Cash received by the Company or such
Restricted Subsidiary to (i) reduce Senior Indebtedness of the Company or a
Subsidiary Guarantor or Indebtedness of a Restricted Subsidiary that is not a
Subsidiary Guarantor, in each case owing to a Person other than the Company or
any Affiliate of the Company, within 180 days after the date such Net Available
Cash is so received, or (ii) invest in Additional Assets or Permitted Business
Investments within 18 months after the date such Net Available Cash is so
received.
(e) The Company will comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations thereunder in the event that such Excess
Proceeds are received by the Company under this Section 4.07 and the Company is
required to repurchase Securities as described above. To the extent that the
provisions of any securities
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57
laws or regulations conflict with the provisions of this Section 4.07, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.07 by
virtue thereof.
Section 4.08. Limitation on Affiliate Transactions. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter
into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering
of any service) with any Affiliate of the Company (an "Affiliate Transaction")
unless the terms thereof (1) are no less favorable to the Company or such
Restricted Subsidiary than those that could be obtained at the time of such
transaction in arm's-length dealings with a Person who is not such an
Affiliate, (2) if such Affiliate Transaction involves an amount in excess of
$10.0 million, is set forth in writing and has been approved by the Board of
Directors, including a majority of the members of the Board of Directors having
no personal stake in such Affiliate Transaction, and (3) if such Affiliate
Transaction involves an amount in excess of $20.0 million, has been determined
by a nationally recognized investment banking firm or other qualified
independent appraiser to be fair, from a financial standpoint, to the Company
and its Restricted Subsidiaries.
(b) The provisions of Section 4.08(a) shall not prohibit (i)
any sale of hydrocarbons or other mineral products to an Affiliate of the
Company or the entering into or performance of Oil and Gas Hedging Contracts,
gas gathering, transportation or processing contracts or oil or natural gas
marketing or exchange contracts with an Affiliate of the Company, in each case,
in the ordinary course of business, so long as the terms of any such
transaction are approved by a majority of the members of the Board of Directors
who are disinterested with respect to such transaction, (ii) the sale to an
Affiliate of DRI or the Company of Capital Stock of the Company that does not
constitute Disqualified Stock, and the sale to an Affiliate of the Company of
Indebtedness (including Disqualified Stock) of the Company in connection with
an offering of such Indebtedness in a market transaction and on terms
substantially identical to those of other purchasers in such market
transaction, (iii) transactions contemplated by any employment agreement or
other compensation plan or
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arrangement existing on the Issue Date or thereafter entered into by DRI, the
Company or any of its Restricted Subsidiaries in the ordinary course of
business, (iv) the payment of reasonable fees to directors of DRI, the Company
and its Restricted Subsidiaries who are not employees of DRI, the Company or
any Restricted Subsidiary, (v) transactions between or among DRI, the Company
and its Restricted Subsidiaries, (vi) transactions between DRI, the Company or
any of its Restricted Subsidiaries and Persons that are controlled (as defined
in the definition of "Affiliate") by the Company (an "Unrestricted Affiliate");
provided that no other Person that controls (as so defined) or is under common
control (as so defined) with the Company holds any Investments in such
Unrestricted Affiliate; (vii) Restricted Payments that are permitted by the
provisions of Section 4.05 and (viii) loans or advances to employees in the
ordinary course of business and approved by the Company's Board of Directors in
an aggregate principal amount not to exceed $2.5 million in principal amount
outstanding at any one time.
Section 4.09. Change of Control. (a) Upon the occurrence of
a Change of Control, each Holder shall have the right to require that the
Company repurchase such Holder's Securities at a purchase price in cash equal
to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest on the relevant interest payment
date), in accordance with the terms contemplated in Section 4.09(b). In the
event that at the time of such Change of Control the terms of the Indebtedness
under the Credit Agreement restrict or prohibit the repurchase of Securities
pursuant to this Section, then prior to the mailing of the notice to Holders
provided for in Section 4.09(b) below, but in any event within 30 days
following any Change of Control, the Company shall (i) repay in full the
Indebtedness under the Credit Agreement or (ii) obtain the requisite consent
under the agreements governing the Indebtedness under the Credit Agreement to
permit the repurchase of the Securities as provided for in Section 4.09(b).
(b) Within 30 days following a Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee stating: (1) that
a Change of Control has occurred and that such Holder has the right to require
the Company to purchase such Holder's Securities at a purchase
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59
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest on the
relevant interest payment date); (2) the circumstances and relevant facts
regarding such Change of Control (including information with respect to pro
forma historical income, cash flow and capitalization after giving effect to
such Change of Control); (3) the repurchase date (which shall be no earlier
than 30 days nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with this Section
4.09, that a Holder must follow in order to have its Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business Day
prior to the purchase date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Security
which was delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for cancelation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.09. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.09, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this Section 4.09 by virtue
thereof.
(f) The Company will not be required to make an offer to
purchase Securities as a result of a Change of
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Control pursuant to this Section 4.09 if a third party (i) makes such offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in Section 4.09(b) and (ii) purchases all Securities validly tendered and
not withdrawn under such an offer.
Section 4.10. Limitation on the Sale or Issuance of Capital
Stock of Restricted Subsidiaries. The Company shall not sell or otherwise
dispose of any shares of Capital Stock of a Restricted Subsidiary, and shall
not permit any Restricted Subsidiary, directly or indirectly, to issue or sell
or otherwise dispose of any shares of its Capital Stock except (i) to the
Company or a Wholly Owned Subsidiary, (ii) if, immediately after giving effect
to such issuance, sale or other disposition, neither the Company nor any of its
Subsidiaries own any Capital Stock of such Restricted Subsidiary, (iii) if,
immediately after giving effect to such issuance, sale or other disposition,
such Restricted Subsidiary would no longer constitute a Restricted Subsidiary
and any Investment in such Person remaining after giving effect thereto would
have been permitted to be made under Section 4.05 if made on the date of such
issuance, sale or other disposition or (iv) to the extent such shares represent
directors' qualifying shares or shares required by applicable law to be held by
a Person other than the Company or a Restricted Subsidiary.
Section 4.11. Limitation on Liens. The Company shall not,
and shall not permit any Restricted Subsidiary to, directly or indirectly,
enter into, create, Incur, assume or suffer to exist any Lien on or with
respect to any property of the Company or such Restricted Subsidiary, whether
owned on the Issue Date or acquired after the Issue Date, or any interest
therein or any income or profits therefrom, unless the Securities or any
Subsidiary Guaranty of such Restricted Subsidiary, as applicable, are secured
equally and ratably with (or prior to) any and all other obligations secured by
such Lien, except that the Company and its Restricted Subsidiaries may enter
into, create, Incur, assume or suffer to exist Permitted Liens and Liens
securing Senior Indebtedness.
Section 4.12. Compliance Certificate. The Company and DRI
shall deliver to the Trustee within 120 days after the end of each fiscal year
of the Company an Officers' Certificate stating that in the course of the
performance by the signers of their duties as Officers of
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the Company or DRI, as the case may be, they would normally have knowledge of
any Default and whether or not the signers know of any Default that occurred
during such fiscal year. If they do, the certificate shall describe the
Default, its status and what action the Company or DRI, as the case may be, is
taking or proposes to take with respect thereto. The Company and DRI also
shall comply with TIA Section 314(a)(4).
Section 4.13. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 4.14. Future Subsidiary Guarantors. The Company
shall cause each Restricted Subsidiary that represents at least 10% of the book
assets of, or 10% of the ACNTA of the Company and its Restricted Subsidiaries,
taken as a whole, and that has an aggregate of $15.0 million or more of
Indebtedness and Preferred Stock outstanding at any time to promptly Guarantee
the Securities pursuant to a Subsidiary Guaranty substantially in the form
attached hereto as Exhibit B.
ARTICLE 5
Successor Company
Section 5.01. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer
or lease, in one transaction or a series of related transactions, all or
substantially all the assets of the Company and its Restricted Subsidiaries,
taken as a whole, to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under
the laws of the United States of America, any State thereof or the
District of Columbia and the Successor Company (if not the Company)
shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Securities and this
Indenture;
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(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction
as having been Incurred by the Successor Company or any Subsidiary as
a result of such transaction as having been Incurred by such Successor
Company or such Subsidiary at the time of such transaction), no
Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Adjusted Consolidated Net Tangible Assets
that are not less than the Adjusted Consolidated Net Tangible Assets
prior to such transaction;
(v) in the case of a conveyance, transfer or lease of all or
substantially all the assets of the Company and its Restricted
Subsidiaries, taken as a whole, such assets shall have been so
conveyed, transferred or leased as an entirety or virtually as an
entirety to one Person; and
(vi) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture
(if any) comply with this Indenture;
provided, however, that clauses (iii) and (iv) shall not be applicable to any
such transaction solely between DRI, the Company and any Restricted Subsidiary;
provided further, however, that clause (i)(A) shall not be applicable to any
merger of the Company with and into DRI in connection with a transaction in
which DRI, substantially concurrently with such merger, becomes (or is merged
with and into) a Person organized and existing under the laws of the United
States of America, or any State thereof or the District of Columbia.
The Successor Company shall be the successor to the Company
and shall succeed to, and be substituted for,
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and may exercise every right and power of, the Company under this Indenture,
but the predecessor Company in the case of a lease shall not be released from
the obligation to pay the principal of and interest on the Securities.
Section 5.02. When Guarantors May Merge or Transfer Assets.
(a) DRI shall not consolidate with or merge with or into, or convey, transfer
or lease, in one transaction or series of related transactions, all or
substantially all its assets to any Person unless: (i) the resulting,
surviving or transferee Person (if not DRI) shall be a Person organized and
existing under the laws of Canada or any province thereof or under the laws of
the United States of America, or any State thereof or the District of Columbia,
and such Person shall expressly assume, by executing a Guaranty Agreement, in a
form acceptable to the Trustee, all the obligations of DRI, if any, under the
DRI Guaranty; (ii) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which becomes
an obligation of the resulting, surviving or transferee Person as a result of
such transaction as having been issued by such Person at the time of such
transaction), no Default shall have occurred and be continuing; (iii) in the
case of a conveyance, transfer or lease of all or substantially all the assets
of DRI, such assets shall have been so conveyed, transferred or leased as an
entirety or virtually as an entirety to one Person; and (iv) the Company
delivers to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such Guaranty
Agreement, if any, complies with this Indenture.
(b) The Company will not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to any Person unless: (i) the resulting, surviving or transferee Person (if not
such Subsidiary) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of the
United States of America, or any State thereof or the District of Columbia,
and, if such Person is not the Company, such Person shall expressly assume, by
executing a Guaranty Agreement, all the obligations of such Subsidiary, if any,
under its Subsidiary Guaranty; (ii) immediately after giving effect to such
transaction or transactions on a pro forma basis (and treating any Indebtedness
which becomes
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an obligation of the resulting, surviving or transferee Person as a result of
such transaction as having been issued by such Person at the time of such
transaction), no Default shall have occurred and be continuing; (iii) in the
case of a conveyance, transfer or lease of all or substantially all the assets
of a Subsidiary Guarantor, such assets shall have been so conveyed, transferred
or leased as an entirety or virtually as an entirety to one Person; and (iv)
the Company delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
Guaranty Agreement, if any, complies with this Indenture. The provisions of
clauses (i) and (ii) above shall not apply to any one or more transactions
which constitute an Asset Disposition if the Company has complied with the
applicable provisions of Section 4.07.
ARTICLE 6
Defaults and Remedies
Section 6.01. Events of Default. An "Event of Default"
occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article 10, and such default continues
for a period of 30 consecutive days;
(2) the Company (i) defaults in the payment of the principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required purchase, upon
declaration or otherwise, whether or not such payment shall be
prohibited by Article 10 or (ii) fails to redeem or purchase
Securities when required pursuant to this Indenture or the Securities,
whether or not such redemption or purchase shall be prohibited by
Article 10;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07 (other than a failure to purchase Securities when
required under Section 4.07),
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4.08, 4.09 (other than a failure to purchase Securities when required
under Section 4.09), 4.10, 4.11, 4.12 or 4.14 and such failure
continues for 30 consecutive days after the notice specified below;
(5) the Company fails to comply with any of its agreements
contained in the Securities or in this Indenture (other than those
referred to in (1), (2), (3) or (4) above) and such failure continues
for 60 consecutive days after the notice specified below;
(6) Indebtedness of the Company or DRI (other than Limited
Recourse Production Payments and Non-recourse Purchase Money
Indebtedness) is not paid within any applicable grace period after
final maturity or the maturity of such Indebtedness is accelerated by
the holders thereof because of a default (and such acceleration is not
rescinded or annulled) and the total amount of such Indebtedness
unpaid or accelerated exceeds $10.0 million;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating
to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
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(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and
the order or decree remains unstayed and in effect for 60
days;
(9) any judgment or decree for the payment of money in an
uninsured or unindemnified amount in excess of $10.0 million or its
foreign currency equivalent at the time is rendered against the
Company or a Significant Subsidiary and is not discharged and either
(A) an enforcement proceeding has been commenced by any creditor upon
such judgment or decree or (B) there is a period of 60 days following
the entry of such judgment or decree during which such judgment or
decree is not discharged, waived, bonded or the execution thereof
stayed, in either case 10 days after the notice specified below; or
(10) the DRI Guaranty ceases to be in full force and effect
(other than in accordance with the terms of such Guaranty) or DRI
denies or disaffirms its obligations under the DRI Guaranty if such
default continues for a period of 10 days after the notice specified
below.
The foregoing will constitute "Events of Default" whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5), (9) or (10) is not an Event
of Default until the Trustee or the Holders of at least 25% in principal amount
of the Securities notify
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the Company of the Default and the Company does not cure such Default within
the time specified after receipt of such notice. Such notice must specify the
Default, demand that it be remedied and state that such notice is a "Notice of
Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice, in the form of an Officers'
Certificate, of any Event of Default under clause (3) or (6) and any event
which with the giving of notice or the lapse of time would become an Event of
Default under clause (4), (5), (9) or (10), describing its status and what
action the Company is taking or proposes to take with respect thereto. The
Trustee shall not be deemed to have knowledge of any Default or Event of
Default unless one of its Trust Officers receives written notice thereof from
the Company or any of the Holders.
Section 6.02. Acceleration. If an Event of Default (other
than an Event of Default specified in Section 6.01(7) or (8) with respect to
the Company) occurs and is continuing, the Trustee by written notice to the
Company, or the Holders of at least 25% in principal amount of the outstanding
Securities by written notice to the Company and the Trustee, may declare the
principal of and accrued but unpaid interest on all the Securities to be due
and payable. Upon such a declaration, such principal and interest shall be due
and payable immediately. If an Event of Default specified in Section 6.01(7)
or (8) with respect to the Company occurs and is continuing, the principal of
and interest on all the Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in principal amount of the
outstanding Securities by written notice to the Trustee may rescind any such
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
Section 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or
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interest on the Securities or to enforce the performance of any provision of
the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
Section 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by written notice to the Trustee
may waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is
deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
Section 6.05. Control by Majority. The Holders of a majority
in principal amount of the outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to be furnished with indemnification satisfactory to it in its sole discretion
against all losses and expenses caused by taking or not taking such action.
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Section 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders furnish, if required by the
Trustee, to the Trustee reasonable security or indemnity against any
loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the furnishing of the required
security or indemnity; and
(5) the Holders of a majority in principal amount of the
outstanding Securities do not give the Trustee a direction
inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
Section 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of, premium (if any) or interest on the
Securities held by such Holder, on or after the respective due dates expressed
in the Securities, or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
Section 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
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Section 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, DRI or any
Subsidiary Guarantor their respective creditors or their respective property
and, unless prohibited by law or applicable regulations, may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
Section 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article 6, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent
required by Article 10;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
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Section 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than an aggregate of 10% in principal amount of the
Securities.
Section 6.12. Waiver of Stay or Extension Laws. Neither the
Company nor DRI (to the extent it may lawfully do so) shall at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and neither the Company nor DRI (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
shall not hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE 7
Trustee
Section 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations
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shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine such
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to advance, expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers. The Trustee, however, may so advance or
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expend its own funds if, in its own reasonable judgment, the Trustee believes
that repayment of such funds or adequate indemnity against such risk or
liability has been reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) Notwithstanding anything to the contrary herein, the
Trustee shall have no duty to review the reports and information documents
required to be provided by Section 4.02 for the purposes of determining
compliance with any provisions of this Indenture.
Section 7.02. Rights of Trustee. (a) The Trustee may rely
on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
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(f) The Trustee shall not be charged with knowledge of any
Default or Event of Default unless either (1) a Trust Officer shall have actual
knowledge of such Default or Event of Default or (2) written notice of such
Default or Event of Default shall have been given to the Trustee by the Company
or any other obligor on such Securities or by any Holder of the Securities.
Section 7.03. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
Section 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Company or DRI in the Indenture or in any document issued
in connection with the sale of the Securities or in the Securities other than
the Trustee's certificate of authentication.
Section 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as the
Trust Officer responsible for administering this Indenture and the Securities
in good faith determines that withholding notice is not opposed to the
interests of Securityholders.
Section 7.06. Reports by Trustee to Holders. Within sixty
(60) days after [ ] of each year, beginning with [ ], 1998, the
Trustee shall mail to each Securityholder a brief report dated as of May 15 of
such year, that complies with TIA Section 313(a). The Trustee also shall
comply with TIA Section 313(b).
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A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
Section 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services,
including extraordinary services such as default administration. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The
Company shall indemnify the Trustee against any and all loss, liability or
expense (including attorneys' fees) arising out of its acceptance of this trust
or incurred by it in connection with the administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture against the Company (including under Section 7.07).
The Trustee shall notify the Company promptly of any claim (whether asserted by
any Securityholder or the Company) for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the resignation or removal of the Trustee and the discharge of
this Indenture. When the Trustee incurs expenses after the occurrence of a
Default
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specified in Section 6.01(7) or (8) with respect to the Company, the expenses
are intended to constitute expenses of administration under the Bankruptcy Law.
Section 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in
principal amount outstanding of the Securities may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount oustanding of the Securities and such
Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy
exists in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
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If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
Section 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The
Trustee shall have a combined capital and surplus of at least $50.0 million as
set forth in its most recent annual report of condition. The Trustee shall
comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA
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Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
Section 8.01. Discharge of Liability on
Securities; Defeasance. (a) When (i) the Company delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to Section
2.07) for cancelation or (ii) all outstanding Securities have become due and
payable, whether at maturity or as a result of the mailing of a notice of
redemption pursuant to Article 3 hereof and the Company irrevocably deposits
with the Trustee funds sufficient to pay at maturity or upon redemption all
outstanding Securities, including interest thereon to maturity or such
redemption date (other than Securities replaced pursuant to Section 2.07), and
if in either case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Section 8.01(c), cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of
this Indenture on demand of the Company accompanied by an Officers' Certificate
and an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.14 and the
operation of Sections 6.01(4), 6.01(6), 6.01(7) (but only with respect to
Significant Subsidiaries), 6.01(8) (but only with respect to Significant
Subsidiaries), 6.01(9) and 6.01(10) and its obligations under Sections
5.01(iii), (iv) and (v) and under Section 5.02 ("covenant defeasance option").
The Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If
the Company exercises its covenant defeasance option, payment of the Securities
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may not be accelerated because of an Event of Default specified in
Section 6.01(4), 6.01(6), 6.01(7) (but only with respect to Significant
Subsidiaries), 6.01(8) (but only with respect to Significant Subsidiaries),
6.01(9) or 6.01(10) or because of the failure of the Company to comply with
Section 5.01(iii), (iv) or (v) or with Section 5.02. If the Company exercises
its legal defeasance option or its covenant defeasance option, DRI will be
released from all its obligations with respect to the DRI Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.07, 7.07, 7.08 and this Article 8
shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
Section 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment of
principal and interest on the Securities to maturity or redemption, as
the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing its
opinion that the payments of principal of and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and
interest when due on all the Securities to maturity or redemption, as
the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
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(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such legal defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Securityholders will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Securities
as contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article 3.
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Section 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article 10.
Section 8.04. Repayment to Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any money or
securities held by them at any time which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof that would then be required for the Company to exercise its legal
defeasance option or its covenant defeasance option pursuant to this Article 8.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of principal or interest that remains unclaimed
for two years, and, thereafter, Securityholders entitled to the money must look
to the Company for payment as general creditors.
Section 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
Section 8.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any
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Securities because of the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE 9
Amendments
Section 9.01. Without Consent of Holders. The Company, DRI
and the Trustee may amend this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the
Code;
(4) to make any change in Article 10 that would limit or
terminate the benefits available to any holder of Senior Indebtedness
of the Company or DRI (or Representatives therefor) under Article 10;
(5) to add guarantees with respect to the Securities
(including any Subsidiary Guaranty) or to secure the Securities;
(6) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company or DRI;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA; or
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(8) to make any change that does not adversely affect the
rights of any Securityholder.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness
(or any group or representative thereof authorized to give a consent) consent
to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
Section 9.02. With Consent of Holders. The Company, DRI and
the Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities. Without the consent of each
Securityholder affected, however, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon a required purchase (to
the extent the Company has at the time become obligated by the terms
of the Indenture to effect a required purchase) or the redemption of
any Security or change the time at which any Security may be redeemed
in accordance with Article 3 and paragraph 5 of the Securities;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Article 10 or that adversely affects
the rights of any Securityholder under Article 10;
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(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section; or
(8) make any change in the DRI Guaranty that would adversely
affect the Securityholders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 or the fourth paragraph of
Section 11.01 of any holder of Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
Section 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents and Waivers.
A consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective. After
an amendment or waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any
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other action described above or required or permitted to be taken pursuant to
this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall
be entitled to give such consent or to revoke any consent previously given or
to take any such action, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 120 days after such record date.
Section 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
Section 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
Section 9.07. Payment for Consent. Neither the Company nor
any Affiliate of the Company shall, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to any
Holder for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of this Indenture or the Securities unless such
consideration is offered to be paid or agreed to be paid to all Holders that so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
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ARTICLE 10
Subordination of the Securities
Section 10.01. Agreement To Subordinate. The Company agrees,
and each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities are senior unsecured, general obligations of the
Company, subordinated in right of payment, to the extent and in the manner
provided in this Article 10, to the prior payment of all Senior Indebtedness of
the Company, whether outstanding on the Issue Date or thereafter incurred,
including the Company's obligations under the Credit Agreement, and that the
subordination is for the benefit of and enforceable by the holders of such
Senior Indebtedness. The Securities shall in all respects rank pari passu with
all other Senior Subordinated Indebtedness of the Company, and only
Indebtedness of the Company which is Senior Indebtedness shall rank senior to
the Securities in accordance with the provisions set forth herein. All
provisions of this Article 10 shall be subject to Section 10.12.
Section 10.02. Liquidation, Dissolution, Bankruptcy. Upon
any payment or distribution of the assets of the Company upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) subject to the provisions of Section 10.12, holders of
Senior Indebtedness of the Company shall be entitled to receive
payment in full of such Senior Indebtedness before Securityholders
shall be entitled to receive any payment of principal of or interest
on the Securities; and
(2) until the Senior Indebtedness of the Company is paid in
full, any payment or distribution to which Securityholders would be
entitled but for this Article 10 shall be made to holders of such
Senior Indebtedness as their interests may appear, except that
Securityholders may receive shares of stock and any debt securities
that are subordinated to such Senior Indebtedness to at least the same
extent as the Securities.
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Section 10.03. Default on Designated Senior Indebtedness.
The Company may not pay the principal of, premium (if any) or interest on the
Securities or make any deposit pursuant to Section 8.01 and may not repurchase,
redeem or otherwise retire any Securities (collectively, "pay the Securities")
if (i) any Designated Senior Indebtedness of the Company is not paid when due
or (ii) any other default on Designated Senior Indebtedness of the Company
occurs and the maturity of such Designated Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, (x) the default has been
cured or waived and any such acceleration has been rescinded or (y) such
Designated Senior Indebtedness has been paid in full; provided, however, that
the Company may pay the Securities without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from the
Representative of the Designated Senior Indebtedness with respect to which
either of the events set forth in clause (i) or (ii) of this sentence has
occurred and is continuing. During the continuance of any default (other than
a default described in clause (i) or (ii) of the preceding sentence) with
respect to any Designated Senior Indebtedness of the Company pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Company may not pay the
Securities for a period (a "Payment Blockage Period") commencing upon the
receipt by the Trustee (with a copy to the Company) of written notice (a
"Blockage Notice") of such default from the Representative of the holders of
such Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) because
the default giving rise to such Blockage Notice is no longer continuing or
(iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence,
unless the holders of such Designated Senior Indebtedness giving such Blockage
Notice or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company shall resume
payments on the Securities after the end of such Payment Blockage Period. The
Securities shall not be subject to more than one Payment Blockage Period in any
consecutive 360-day period,
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irrespective of the number of defaults with respect to Designated Senior
Indebtedness of the Company during such period. For purposes of this Section,
no default or event of default which existed or was continuing on the date of
the commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not
within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
Section 10.04. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company or the Trustee (upon receipt of the requisite information from the
Company) shall promptly notify the holders of Designated Senior Indebtedness
(or their Representatives) of the Company of the acceleration.
Section 10.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article 10 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness of the Company and
pay it over to them as their interests may appear.
Section 10.06. Subrogation. After all Senior Indebtedness of
the Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness.
A distribution made under this Article 10 to holders of Senior Indebtedness of
the Company which otherwise would have been made to Securityholders is not, as
between the Company and Securityholders, a payment by the Company on such
Senior Indebtedness.
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Section 10.07. Relative Rights. This Article 10 defines the
relative rights of Securityholders and holders of Senior Indebtedness of the
Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default, subject to the rights of
holders of Senior Indebtedness of the Company to receive distributions
otherwise payable to Securityholders.
Section 10.08. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
Section 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article 10. The Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness may give the
notice; provided, however, that, if an issue of Senior Indebtedness of the
Company has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it
were not Trustee. The Registrar and co-registrar and the Paying Agent may do
the same with like rights. The Trustee shall be entitled to all the rights set
forth in this Article 10 with respect to any such Senior Indebtedness which may
at any time be held by it, to the same extent as any other holder of such
Senior Indebtedness; and nothing in Article 7 shall deprive the
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Trustee of any of its rights as such holder. Nothing in this Article 10 shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
7.07.
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Company, the distribution may be made and the notice given
to their Representative (if any).
Section 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 10 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 10 shall
have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities.
Section 10.12. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payment from the
money or the proceeds of U.S. Government Obligations deposited in trust with
the Trustee in accordance with the provisions of Article 8 for the payment of
principal of and interest on the Securities shall not be subordinated to the
prior payment of any Senior Indebtedness of the Company or subject to the
restrictions set forth in this Article 10, and none of the Securityholders
shall be obligated to pay over any such amount to the Company or any holder of
such Senior Indebtedness of the Company or any other creditor of the Company.
Section 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Senior Indebtedness and other Indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent
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thereto or to this Article 10. In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness of the Company to participate in any payment
or distribution pursuant to this Article 10, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article 10, and, if
such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to
all actions or omissions of actions by the Trustee pursuant to this Article 10.
Section 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness of the Company as provided in this Article 10
and appoints the Trustee as attorney-in-fact for any and all such purposes.
Section 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Company. The
Trustee undertakes to perform or to observe only such of the covenants and
obligations as are specifically set forth in this Article 10, and no implied
covenants or obligations with respect to such holders of such Senior
Indebtedness shall be implied in this Indenture against the Trustee.
Section 10.16. Reliance by Holders of Senior Indebtedness of
the Company on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder
of any Senior Indebtedness of the Company, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of such Senior Indebtedness
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shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
ARTICLE 11
DRI Guaranty
Section 11.01. Guarantee. DRI, as primary obligor and not
merely as surety, hereby irrevocably, fully and unconditionally Guarantees on a
senior subordinated basis to each Holder and to the Trustee and its successors
and assigns (a) the full and punctual payment of principal of and interest on
the Securities when due, whether at Stated Maturity, by acceleration, by
redemption or otherwise, and all other monetary obligations of the Company
under this Indenture and the Securities and (b) the full and punctual
performance within applicable grace periods of all other obligations of the
Company under this Indenture and the Securities (the foregoing obligations
Guaranteed by DRI hereinafter collectively called the "Guaranteed
Obligations"). DRI further agrees that the Guaranteed Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
DRI, and that DRI shall remain bound under this Article 11 notwithstanding any
extension or renewal of any such Guaranteed Obligation.
DRI waives presentation to, demand of, payment from and
protest to the Company of any of the Guaranteed Obligations and also waives
notice of protest for nonpayment. DRI waives notice of any default under the
Securities or the Guaranteed Obligations. The obligations of DRI hereunder
shall not be affected by (a) the failure of any Holder or the Trustee to assert
any claim or demand or to enforce any right or remedy against the Company or
any other Person under this Indenture, the Securities or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Guaranteed Obligations or
any of them; (e) the failure of any Holder or Trustee to exercise any right or
remedy against any other Guarantor of the Guaranteed Obligations; or (f) any
change in the ownership of such Guarantor.
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DRI further agrees that the DRI Guaranty herein constitutes a
Guarantee of payment, performance and compliance when due (and not a Guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the Guaranteed
Obligations.
The DRI Guaranty, as it relates to the principal of and
interest on the Securities shall be, to the extent and manner set forth in
Article 12, subordinated in right of payment to the prior payment in full of
all Senior Indebtedness of DRI and the DRI Guaranty is hereby made subject to
such provisions of this Indenture.
The obligations of DRI hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of
the Guaranteed Obligations or otherwise. Without limiting the generality of
the foregoing, the obligations of DRI herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any
thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of DRI or would otherwise operate as a discharge of DRI as
a matter of law or equity.
DRI further agrees that the DRI Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Guaranteed Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against DRI
by virtue hereof, upon the failure of the Company to pay the principal
<PAGE> 103
94
of or interest on any Guaranteed Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Guaranteed Obligation, DRI shall, upon receipt
of written demand by the Trustee, forthwith pay, or cause to be paid, in cash,
to the Holders or the Trustee an amount equal to the sum of (i) the unpaid
principal amount of such Guaranteed Obligations, (ii) accrued and unpaid
interest on such Guaranteed Obligations (but only to the extent not prohibited
by law) and (iii) all other monetary Guaranteed Obligations of the Company to
the Holders and the Trustee.
DRI agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Guaranteed Obligations
guaranteed hereby until payment in full of all Guaranteed Obligations. DRI
further agrees that, as between it, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations
Guaranteed hereby may be accelerated as provided in Article 6 for the purposes
of the DRI Guaranty, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Guaranteed Obligations
Guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Guaranteed Obligations as provided in Article 6, such obligations (whether
or not due and payable) shall forthwith become due and payable by DRI for the
purposes of this Section.
DRI also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section.
Section 11.02. Successors and Assigns. This Article 11 shall
be binding upon DRI and its respective successors and assigns and shall enure
to the benefit of the successors and assigns of the Trustee and the Holders
and, in the event of any transfer or assignment of rights by any Holder or the
Trustee, the rights and privileges conferred upon that party in this Indenture
and in the Securities shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of this
Indenture.
Section 11.03. No Waiver. Neither a failure nor a delay on
the part of either the Trustee or the Holders in exercising any right, power or
privilege under this
<PAGE> 104
95
Article 11 shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise of any right, power or
privilege. The rights, remedies and benefits of the Trustee and the Holders
herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at
law, in equity, by statute or otherwise.
Section 11.04. Modification. No modification, amendment or
waiver of any provision of this Article 11, nor the consent to any departure by
DRI therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
No notice to or demand on DRI in any case shall entitle DRI to any other or
further notice or demand in the same, similar or other circumstances.
Section 11.05. Additional Amounts. (a) If DRI (or any
successor) is required by law or by the interpretation or administration
thereof by the relevant government authority or agency to withhold or deduct
any amount for or on account of any present or future tax, duty, levy, impost,
assessment or other governmental charge (including penalties, interest and
other liabilities related thereto) imposed or levied by or on behalf of the
Government of Canada or of any province or territory thereof or by any
authority or agency therein or thereof having power to tax (or the jurisdiction
of incorporation of any successor of DRI) (hereinafter "Taxes") from any
payment made under or with respect to the DRI Guaranty, DRI (or any successor)
shall pay such additional amounts ("Additional Amounts") as may be necessary so
that the net amount received by each Holder (including Additional Amounts)
after such withholding or deduction will not be less than the amount the Holder
would have received if such Taxes had not been withheld or deducted; provided,
however, that no Additional Amounts shall be payable with respect to payments
made to a Holder (an "Excluded Holder") in respect of a beneficial owner (i)
with which DRI does not deal at arm's length (within the meaning of the Income
Tax Act (Canada)) at the time of making of such payment, (ii) which is subject
to such Taxes by reason of its being connected with Canada or any province or
territory thereof otherwise than by the mere holding of Securities or the
receipt of payments thereunder, (iii) which presents any Security for payment
of principal
<PAGE> 105
96
more than 60 days after the later of (x) the date on which payment first became
due and (y) if the full amount payable has not been received by the Trustee on
or prior to such due date, the date on which, the full amount payable having
been so received, notice to that effect shall have been given to the Holders by
the Trustee, except to the extent that the Holder would have been entitled to
such Additional Amounts on presenting such Security for payment on the last day
of the applicable 60-day period, (iv) which failed to duly and timely comply
with a timely request of DRI, the Company or the Trustee to provide
information, documents or other evidence concerning the Holder's nationality,
residence, entitlement to treaty benefits, identity or connection with Canada
or any political subdivision or authority thereof, if and to the extent that
due and timely compliance with such request would have reduced or eliminated
any Taxes as to which Additional Amounts would have otherwise been payable to
such Holder but for this clause (iv), (v) on account of any estate,
inheritance, gift, sale, transfer, personal property or other similar Tax, (vi)
which is a fiduciary, a partnership or not the beneficial owner of any payment
on a Security, if and to the extent that any beneficiary or settlor of such
fiduciary, any partner in such partnership or the beneficial owner of such
payment (as the case may be) would not have been entitled to receive Additional
Amounts with respect to such payment if such beneficiary, settlor, partner or
beneficial owner had been the Holder of such Security or (vii) any combination
of the foregoing numbered clauses of this proviso. DRI (or any successor)
shall make such withholding or deduction and remit the full amount deducted or
withheld to the relevant authority as and when required in accordance with
applicable law.
(b) DRI (or any successor) shall furnish to the Trustee,
within 30 days after the date the payment of any Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such payment by DRI
in such form as provided in the normal course by the taxing authority imposing
such Taxes and as is reasonably available to DRI (or any successor). The
Trustee shall make such evidence available to the Holders upon request. DRI
(or any successor) shall upon written request of each Holder (other than an
Excluded Holder), reimburse each such Holder for the amount of any Taxes so
levied or imposed and paid by such Holder with respect to any such
reimbursement foregoing clause (i), but excluding any such Taxes on such
Holder's net income, so that the net amount received by such Holder
<PAGE> 106
97
after such reimbursement will not be less than the net amount the Holder would
have received if Taxes (other than such Taxes on such Holder's net income) on
such reimbursement had not been imposed.
(c) Whenever in this Indenture there is mentioned, in any
context, (a) the payment of principal, (b) purchase prices in connection with a
purchase of Securities, (c) interest or (d) any other amount payable on or with
respect to any of the Securities, such mention shall be deemed to include
mention of the payment of Additional Amounts provided for in this Section to
the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof.
ARTICLE 12
Subordination of DRI Guaranty
Section 12.01. Agreement To Subordinate. DRI agrees, and
each Securityholder by accepting a Security agrees, that the Obligations of DRI
are subordinated in right of payment, to the extent and in the manner provided
in this Article 12, to the prior payment of all Senior Indebtedness of DRI and
that the subordination is for the benefit of and enforceable by the holders of
such Senior Indebtedness. The Obligations of DRI shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of DRI and only
Senior Indebtedness of DRI shall rank senior to the DRI Guaranty in accordance
with the provisions set forth herein.
Section 12.02. Liquidation, Dissolution, Bankruptcy. Upon
any payment or distribution of the assets of DRI to creditors upon a total or
partial liquidation or a total or partial dissolution of DRI or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to DRI or its property:
(1) holders of Senior Indebtedness of DRI shall be entitled to
receive payment in full of such Senior Indebtedness in cash or cash
equivalents before Securityholders shall be entitled to receive any
payment pursuant to any Obligations of DRI; and
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98
(2) until the Senior Indebtedness of DRI is paid in full in
cash or cash equivalents, any distribution to which Securityholders
would be entitled but for this Article 12 shall be made to holders of
such Senior Indebtedness as their interests may appear, except that
Securityholders may receive shares of stock and any debt securities of
DRI that are subordinated to Senior Indebtedness, and to any debt
securities received by holders of Senior Indebtedness, of DRI to at
least the same extent as the Obligations of DRI are subordinated to
Senior Indebtedness of DRI.
Section 12.03. Default on Designated Senior Indebtedness of
DRI. DRI may not make any payment pursuant to any of its Obligations or
repurchase, redeem or otherwise retire or defease any Securities or other
Obligations (collectively, "pay its Guaranty") if (i) any Designated Senior
Indebtedness of DRI is not paid when due or (ii) any other default on
Designated Senior Indebtedness of DRI occurs and the maturity of such
Designated Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Designated Senior Indebtedness has
been paid in full; provided, however, that DRI may pay its Guaranty without
regard to the foregoing if DRI and the Trustee receive written notice approving
such payment from the Representative of the Designated Senior Indebtedness with
respect to which either of the events set forth in clause (i) or (ii) of this
sentence has occurred and is continuing. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding
sentence) with respect to any Designated Senior Indebtedness of DRI pursuant to
which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, DRI may not pay its Guaranty
for a period (a " DRI Payment Blockage Period") commencing upon the receipt by
the Trustee (with a copy to DRI) of written notice (a "DRI Blockage Notice") of
such default from the Representative of the holders of such Designated Senior
Indebtedness specifying an election to effect a DRI Payment Blockage Period and
ending 179 days thereafter (or earlier if such DRI Payment Blockage Period is
terminated (i) by written notice to the Trustee and DRI from the Person or
Persons who gave such DRI Blockage Notice, (ii) because the default giving rise
to such DRI
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99
Blockage Notice is no longer continuing or (iii) because such Designated Senior
Indebtedness has been repaid in full). Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this Section), unless the holders of
Designated Senior Indebtedness giving such DRI Blockage Notice or the
Representative of such holders shall have accelerated the maturity of such
Designated Senior Indebtedness, DRI shall resume payments pursuant to its
Obligations after the end of such DRI Payment Blockage Period. The DRI
Guaranty shall not be subject to more than one DRI Payment Blockage Period in
any consecutive 360-day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness of DRI during such period. For
purposes of this Section, no default or event of default which existed or was
continuing on the date of the commencement of any DRI Payment Blockage Period
with respect to the Designated Senior Indebtedness initiating such DRI Payment
Blockage Period shall be, or be made, the basis of the commencement of a
subsequent DRI Payment Blockage Period by the Representative of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such default or event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
Section 12.04. Demand for Payment. If a demand for payment
(upon receipt of the requisite information from DRI) is made on DRI pursuant to
Article 11, DRI or the Trustee shall promptly notify the holders of Designated
Senior Indebtedness(or their Representatives) of DRI of such demand.
Section 12.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article 12 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of the relevant Senior Indebtedness and pay
it over to them or their Representative as their interests may appear.
Section 12.06. Subrogation. After all Senior Indebtedness of
DRI is paid in full and until the Securities are paid in full, Securityholders
shall be subrogated to the rights of holders of such Senior Indebtedness to
receive distributions applicable to Senior Indebtedness. A distribution made
under this Article 12 to holders of such Senior Indebtedness which otherwise
would have been made to
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100
Securityholders is not, as between DRI and Securityholders, a payment by DRI on
such Senior Indebtedness.
Section 12.07. Relative Rights. This Article 12 defines the
relative rights of Securityholders and holders of Senior Indebtedness of DRI.
Nothing in this Indenture shall:
(1) impair, as between DRI and Securityholders, the obligation
of DRI, which is absolute and unconditional, to pay its Obligations to
the extent set forth in Article 11; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a default by DRI under its Obligations,
subject to the rights of holders of Senior Indebtedness of DRI to
receive distributions otherwise payable to Securityholders.
Section 12.08. Subordination May Not Be Impaired by DRI. No
right of any holder of Senior Indebtedness of DRI to enforce the subordination
of the Obligations of DRI shall be impaired by any act or failure to act by DRI
or by its failure to comply with this Indenture.
Section 12.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 12.03, the Trustee or Paying Agent may continue to make
payments pursuant to the DRI Guaranty and shall not be charged with knowledge
of the existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of such payment, a
Trust Officer of the Trustee receives written notice satisfactory to it that
payments may not be made under this Article 12. The Company, DRI, the Trustee,
the Registrar or co-registrar, the Paying Agent, a Representative or a holder
of Senior Indebtedness of DRI may give the notice; provided, however, that, if
an issue of Senior Indebtedness of DRI has a Representative, only the
Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of DRI with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 12 with respect to any Senior Indebtedness of DRI which may at any
time be held by it, to the same extent as any other holder of such Senior
Indebtedness of DRI; and nothing in Article 7 shall deprive the Trustee of any
of its rights as such holder. Nothing in
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101
this Article 12 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
Section 12.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of DRI, the distribution may be made and the notice given to their
Representative (if any).
Section 12.11. Article 12 Not To Prevent Defaults Under the
DRI Guaranty or Limit Right To Demand Payment. The failure to make a payment
pursuant to the DRI Guaranty by reason of any provision in this Article 12
shall not be construed as preventing the occurrence of a default under the DRI
Guaranty. Nothing in this Article 12 shall have any effect on the right of the
Securityholders or the Trustee to make a demand for payment on DRI pursuant to
Article 11.
Section 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
12.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representative for the holders of Senior
Indebtedness of DRI for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of such Senior
Indebtedness and other indebtedness of DRI, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 12. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of DRI to participate in any
payment or distribution pursuant to this Article 12, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Indebtedness of DRI held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and other facts pertinent to the rights of such Person under this Article 12,
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment. The provisions of Sections 7.01 and 7.02 shall be
applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 12.
<PAGE> 111
102
Section 12.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness of DRI as provided in this Article 12 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
Section 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of DRI. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness of DRI and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Securityholders
or the Company or any other Person, money or assets to which any holders of
such Senior Indebtedness shall be entitled by virtue of this Article 12 or
otherwise.
Section 12.15. Reliance by Holders of Senior Indebtedness of
DRI on Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and
are intended to be, an inducement and a consideration to each holder of any
Senior Indebtedness of DRI, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Security, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE 13
Miscellaneous
Section 13.01. Trust Indenture Act Controls. If any
provision of this Indenture limits, qualifies or conflicts with another
provision which is required to be included in this Indenture by the TIA, the
required provision shall control.
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103
Section 13.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company or DRI:
Denbury Management, Inc.
17304 Preston Road, Suite 200
Dallas, Texas 75252
Attention of Corporate Secretary
if to the Trustee:
Chase Bank of Texas, National Association
2200 Ross Avenue, 5th Floor
Dallas, Texas 75201
Attention of Global Trust Services
The Company, DRI or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if
so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 13.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by
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104
the Company to the Trustee to take or refrain from taking any action under this
Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
Any Officers' Certificate may be based, insofar as it relates to legal matters,
upon an Opinion of Counsel, unless any such Officer knows or in the exercise of
reasonable care should have known that such Opinion of Counsel is erroneous.
Any Opinion of Counsel may be based, insofar as it relates to factual matters,
information with respect to which is in possession of the Company, upon an
Officers' Certificate, unless such counsel knows or in the exercise of
reasonable
<PAGE> 114
105
care should have known that such Officers' Certificate is erroneous.
Section 13.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee actually knows are so owned shall
be so disregarded. Also, subject to the foregoing, only Securities outstanding
at the time shall be considered in any such determination.
Section 13.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
Section 13.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York or in the State of Texas. If a payment date
is a Legal Holiday, payment shall be made on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue with respect to such payment
for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
Section 13.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
Section 13.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such
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106
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.
Section 13.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
Section 13.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Indenture.
Section 13.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE> 116
107
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
DENBURY MANAGEMENT, INC.,
by
------------------------------
Name: Phil Rykhoek
Title: Chief Financial
Officer and Secretary
GUARANTOR:
DENBURY RESOURCES INC.,
by
---------------------------
Name: Phil Rykhoek
Title: Chief Financial
Officer and Secretary
TRUSTEE:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as
Trustee
by
-------------------
Name:
Title:
<PAGE> 117
EXHIBIT A
[FORM OF FACE OF SECURITY]
[GLOBAL SECURITY LEGEND]
No. $ CUSIP:
% Senior Subordinated Note Due 2008
DENBURY MANAGEMENT, INC., a Texas corporation, promises to pay
to , or registered assigns, the principal sum of
Dollars on [ ], 2008.
Interest Payment Dates: [ ] and [ ].
Record Dates: [ ] and [ ].
Additional provisions of this Security are set forth on the other side of this
Security.
Dated: DENBURY MANAGEMENT, INC.,
by
-----------------------
Authorized Officer
-----------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Chase Bank of Texas, National Association,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE> 118
2
[FORM OF REVERSE SIDE OF SECURITY]
[ ]% Senior Subordinated Note Due 2008
1. Interest
Denbury Management, Inc., a Texas corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on
the principal amount of this Security at the rate per annum shown above. The
Company will pay interest semiannually on [ ] and [ ] of each year.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from [ ], 1998.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne
by the Securities plus [ ]% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the [ ] or [ ] next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of
Securities (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by the
holders thereof or, if no U.S. dollar account maintained by the payee with a
bank in the United States is designated by any holder to the Trustee or the
Paying Agent at least 30 days prior to the relevant due date for payment (or
such other date as the Trustee may accept in its discretion), by mailing a
check to the registered address of such holder.
<PAGE> 119
3
3. Paying Agent and Registrar
Initially, Chase Bank of Texas, National Association (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of February [ ], 1998 ("Indenture"), among the Company, DRI and the Trustee.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture
and the Act for a statement of those terms.
The Securities are general unsecured, senior subordinated
obligations of the Company. The Company may, subject to Article 4 of the
Indenture, issue additional Securities under the Indenture. The Indenture
imposes certain limitations on the Incurrence of Indebtedness by the Company
and certain of its Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and certain of its
Subsidiaries, the purchase or redemption of Capital Stock of the Company and of
certain Capital Stock of such Subsidiaries, the sale or transfer of assets and
Subsidiary stock, the creation of Liens and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and certain of its
Subsidiaries to restrict distributions and dividends from Subsidiaries. The
Indenture also restricts the ability of the Company and DRI to consolidate or
merge with or into, or to transfer all or substantially all their assets to,
another Person.
The Indenture also provides that the Company shall cause DRI
to Guarantee the Securities pursuant to the DRI
<PAGE> 120
4
Guaranty. The DRI Guaranty will secure the due and punctual payment of the
principal of and interest, if any, on the Securities and all other amounts
payable by the Company under the Indenture and the Securities when and as the
same shall be due and payable, whether at maturity, by acceleration or
otherwise. The DRI Guaranty will unconditionally guarantee the Obligations on
a senior subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in this paragraph, the Securities will not
be redeemable at the option of the Company prior to [ ], 2003. At any
time and from time to time prior to [ ], 2001, the Company may redeem in
the aggregate up to 35% of the original principal amount of Securities with the
proceeds of one or more Stock Offerings to the extent the net cash proceeds
thereof, in the case of a Stock Offering by DRI, are contributed to the equity
capital of the Company, at a redemption price (expressed as a percentage of
principal amount) of [ ]% plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that (i) either at least $81.0 million aggregate principal amount of Securities
must remain outstanding after each such redemption or such redemption must
retire the Securities in their entirety and (ii) such redemption occurs within
60 days following the closing of such Stock Offering.
On and after [ ], 2003, the Securities shall be
redeemable, at the Company's option, in whole or in part, at any time or from
time to time at the following redemption prices (expressed in percentages of
principal amount), plus accrued interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing on [ ] of the years set forth below:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
2003 . . . . . . . . . . . %
2004 . . . . . . . . . . .
2005 and thereafter . . . . 100.000
</TABLE>
<PAGE> 121
5
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to
accrue on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions, to cause the Company to repurchase
all or any part of the Securities of such Holder at a repurchase price equal to
101% of the principal amount of the Securities to be repurchased plus accrued
interest to the date of repurchase (subject to the right of Holders of record
on the relevant record date to receive interest due on the related interest
payment date) as provided in, and subject to the terms of, the Indenture.
8. Subordination
The Securities and the DRI Guaranty are subordinated to Senior
Indebtedness, as defined in the Indenture, of the Company or DRI, as the case
may be. To the extent provided in the Indenture, such Senior Indebtedness must
be paid before the Securities or the DRI Guaranty may be paid. The Company and
DRI agree, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such
purpose.
<PAGE> 122
6
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may register
the transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Securities selected for redemption (except, in the
case of a Security to be redeemed in part, the portion of the Security not to
be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security shall be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the
Indenture, including the DRI Guaranty, if the Company deposits with the Trustee
money or U.S. Government Obligations for the payment of principal and interest
on the Securities to redemption or maturity, as the case may be.
<PAGE> 123
7
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the Securities then
outstanding and (ii) any default or noncompliance with any provisions may be
waived with the written consent of the Holders of at least a majority in
principal amount of the Securities then outstanding. Subject to certain
exceptions set forth in the Indenture, without notice to or the consent of any
Securityholder, the Company, DRI and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities (provided that
the uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code), or to make any
change to the subordination provisions of the Indenture that would limit or
terminate the benefits available to any holder of Senior Indebtedness (or its
Representative) of the Company or DRI, or to add guarantees (including
Subsidiary Guaranties) with respect to the Securities, or to secure the
Securities, or to add to the covenants of the Company or DRI for the benefit of
the Holders, or to surrender any right or power conferred on the Company or
DRI, or to make any change that does not adversely affect the rights of any
Securityholder, or to comply with any requirement of the SEC in connection with
qualifying the Indenture under the Act. No amendment may be made to the
subordination provisions of the Indenture that adversely affects the rights of
any holder of Senior Indebtedness of the Company or of DRI then outstanding
unless the holders of such Senior Indebtedness (or their Representative)
consent to such change.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities when due; (ii) default in
payment of principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 of the Securities, upon declaration or otherwise, or failure by the
Company to redeem or purchase
<PAGE> 124
8
Securities when required; (iii) failure by the Company to comply with its
obligations under certain covenants; (iv) failure by the Company to comply with
other agreements in the Indenture or the Securities, in certain cases subject
to notice and lapse of time; (v) certain accelerations (including failure to
pay within any grace period after final maturity) of other Indebtedness of the
Company or any Significant Subsidiary (other than Limited Recourse
Indebtedness) if the amount accelerated (or so unpaid) exceeds $10.0 million;
(vi) certain events of bankruptcy, insolvency or reorganization with respect to
the Company or a Significant Subsidiary; (vii) any judgment or decree for the
payment of money in excess of $10.0 million is rendered against the Company or
a Significant Subsidiary, remains outstanding for a period of 60 days following
such judgment or decree and is not discharged, waived or stayed within 10 days
after notice; or (viii) the DRI Guaranty ceases to be in full force and effect
(other than in accordance with the terms of such Guaranty) or DRI denies or
disaffirms its obligations under the DRI Guaranty if such default continues for
a period of 10 days after notice thereof to the Company. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the principal of and
accrued but unpaid interest on all the Securities to be due and payable
immediately. Certain events of bankruptcy, insolvency or reorganization are
Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default. A default under
clauses (iv), (v), (vii) or (viii) will not constitute an Event of Default
until the Trustee or the Holders of 25% in principal amount of the outstanding
Securities notifies the Company of the default and the Company does not cure
such default within the time specified after receipt of such notice.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of
any continuing Default (except a Default in payment of principal or interest)
if it determines that withholding notice is in the interest of the Holders.
<PAGE> 125
9
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the
<PAGE> 126
10
Securities and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Securityholders. No representation is made as
to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
Denbury Management, Inc.
17304 Preston Road, Suite 200
Dallas, Texas 75252
Attention of Chief Financial Officer
<PAGE> 127
11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
____________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature Guarantee: ___________________________________
(Signature must be guaranteed by an "eligible
guarantor institution", that is, a bank, stockbroker,
saving and loan association or credit union meeting
the requirements of the Registrar, which requirements
include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
<PAGE> 128
12
OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Security purchased by the Company
pursuant to Section 4.07 or 4.09 of the Indenture, check the box:
[ ]
If you elect to have only part of this Security purchased by
the Company pursuant to Section 4.07 or 4.09 of the Indenture, check the box
and state the amount:
[ ]
$ ________________
Date: _______________ Your Signature:
_____________________________________
(Sign exactly as your name appears
on the other side of this Security.)
Signature Guarantee: _____________________________________
(Signature must be guaranteed by an "eligible
guarantor institution", that is, a bank, stockbroker,
saving and loan association or credit union meeting
the requirements of the Registrar, which requirements
include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
<PAGE> 129
13
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global authorized officer
in Principal in Principal Security following of Trustee or
Amount of this Amount of this such decrease or Securities
Date of Exchange Global Security Global Security increase Custodian
- ---------------- ----------------- ------------------ ---------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 130
EXHIBIT B
GUARANTY AGREEMENT, dated as of ,
made by [SUBSIDIARY GUARANTOR] (the "Guarantor"), the
undersigned subsidiary of Denbury Management, Inc. ("the
Company"), in favor of the Holders and the Trustee (as defined
in the Indenture referred to below).
Reference is made to the Indenture dated as of ,
1998 (as amended, restated, supplemented or modified from time to time, the
"Indenture"), among the Company, DRI and Chase Bank of Texas, National
Association, as trustee (the "Trustee").
WHEREAS the Company is a party to the Indenture;
WHEREAS the Company owns directly or indirectly all of or a
majority interest in the Guarantor;
WHEREAS, the Guarantor is a Subsidiary of the Company and is
becoming a guarantor of Indebtedness pursuant to Section 4.14 of the Indenture;
WHEREAS, the Company has agreed pursuant to Section 4.14 of
the Indenture to cause the Guarantor to Guarantee the Securities pursuant to
the terms of the Indenture and this Guaranty Agreement;
NOW, THEREFORE, in consideration of the promises thereby, the
Guarantor hereby agrees with and for the benefit of the Holders as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Guaranty
Agreement, terms defined in the Indenture (to the extent not otherwise defined
herein) or in the preamble or recitals hereto are used herein as therein
defined.
<PAGE> 131
2
ARTICLE II
Guaranty
SECTION 2.01. Guaranty. The Guarantor, as primary obligor
and not merely as surety, hereby irrevocably, fully an unconditionally
Guarantees on a senior subordinated basis to each Holder and to the Trustee and
its successors and assigns: (a) the full and punctual payment of principal and
interest on the Securities when due, whether at Stated Maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations of
the Company under the Indenture and the Securities and (b) the full and
punctual performance within applicable grace periods of all other obligations
of the Company under the Indenture and the Securities (the foregoing
obligations Guaranteed by the Guarantor being hereinafter collectively called
the "Obligations"). The Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
the Guarantor and that the Guarantor will remain bound under this Article II
notwithstanding any extension or renewal of any such Obligation.
The Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. The Guarantor waives notice of any default under the
Securities or the Obligations. The obligations of the Guarantor hereunder
shall not be affected by (a) the failure of any Holder or the Trustee to assert
any claim or demand or to enforce any right or remedy against the Company or
any other Person under the Indenture, the Securities or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of the
Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder or Trustee to exercise any right or remedy
against any other guarantor of the Obligations; or (f) except as provided in
Section 2.06 of this Guaranty Agreement, any change in the ownership of the
Guarantor.
The Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and
not a guarantee of collection) and waives any right to require that any resort
be had by any Holder or the Trustee to any security held for payment of the
Obligations.
<PAGE> 132
3
The Subsidiary Guaranty is, to the extent and in the manner
set forth in Article III, subordinated and subject in right of payment to the
prior payment in full in cash or cash equivalents of all Senior Indebtedness of
the Guarantor and is made subject to such provisions of the Indenture.
Except as expressly set forth in Section 8.01(b) of the
Indenture and Sections 2.02 and 2.06 of this Guaranty Agreement, the
obligations of the Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense of setoff, counterclaim, recoupment or termination whatsoever or
by reason of the invalidity, illegality or unenforceability of the Obligations
or otherwise. Without limiting the generality of the foregoing, the
obligations of the Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under the Indenture, the Securities or
any other agreement, by any waiver or modification of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
the Guarantor or would otherwise operate as a discharge of the Guarantor as a
matter of law or equity.
The Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal or interest on any Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against the
Guarantor by virtue hereof, upon the failure of the Company to pay the
principal or interest on any Obligation when and as the same shall become due,
whether at maturity, by acceleration, by redemption or otherwise, or to perform
or comply with any other Obligation, the Guarantor hereby promises to and will,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i)
the unpaid amount of such Obligations, (ii) accrued and unpaid interest on
<PAGE> 133
4
such Obligations (but only to the extent not prohibited by law) and (iii) all
other monetary Obligations of the Company to the Holders or the Trustee.
The Guarantor agrees that it shall not be entitled to any
right of subrogation in respect of any Obligations guaranteed hereby until
payment in full of all Obligations and all obligations to which the Obligations
are subordinated as provided in Article III. The Guarantor further agrees
that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article 6 of the Indenture for the purposes of the
Guarantor's Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 of the Indenture, such Obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantor for the purposes of this Section.
The Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
SECTION 2.02. Limitation on Liability. Any term or provision
of this Guaranty Agreement or the Indenture to the contrary notwithstanding,
the maximum, aggregate amount of the Obligations guaranteed hereunder by the
Guarantor shall not exceed the maximum amount that can be hereby guaranteed
without rendering this Subsidiary Guaranty or the Indenture, as it relates to
the Guarantor, voidable under applicable law relating to fraudulent conveyance
or fraudulent transfer or similar laws affecting the rights of creditors
generally (taking into account, for purposes of such determination, the full
amount, without any reduction, of the Guarantor's liability under its guarantee
of Senior Indebtedness).
SECTION 2.03. Successors and Assigns. This Article II shall
be binding upon the Guarantor and its successors and assigns and shall enure to
the benefit of the successors and assigns of the Trustee and the Holders and,
in the event of any transfer or assignment of rights by any Holder or the
Trustee, the rights and privileges conferred upon that party in this Guaranty
Agreement or the Indenture and in the Securities shall automatically extend to
and be
<PAGE> 134
5
vested in such transferee or assignee, all subject to the terms and conditions
of the Indenture.
SECTION 2.04. No Waiver. Neither a failure nor a delay on
the part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article II shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege. The rights, remedies and benefits of the
Trustee and the Holders herein expressly specified are cumulative and not
exclusive of any other rights, remedies or benefits which either may have under
this Article II at law, in equity, by statute or otherwise.
SECTION 2.05. Modification. No modification, amendment or
waiver of any provision of this Article II, nor the consent to any departure by
the Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Trustee, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice to or demand on the Guarantor in any case shall entitle the Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
SECTION 2.06. Release of Guarantor. Upon (i) the sale
(including any sale pursuant to any exercise of remedies by a holder of Senior
Indebtedness of the Guarantor) or other disposition (including by way of
consolidation or merger) of the Guarantor, or the sale or disposition of all or
substantially all the assets of the Guarantor (in each case other than to the
Company or an Affiliate of the Company) or (ii) the release or termination of
the Guarantor's guarantee of Indebtedness incurred pursuant to Section 4.05(a)
of the Indenture, the Guarantor shall be deemed released from all obligations
under this Article II without any further action required on the part of the
Trustee or any Holder. At the request of the Company, the Trustee shall
execute and deliver an appropriate instrument evidencing such release.
ARTICLE III
Subordination of the Guaranty
SECTION 3.01. Agreement To Subordinate. The Guarantor
agrees, and each Securityholder by accepting a Security agrees, that the
obligations of the Guarantor
<PAGE> 135
6
hereunder are subordinated in right of payment to the extent and in the manner
provided in this Article III, to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness of the Guarantor and that the
subordination is for the benefit of and enforceable by the holders of such
Senior Indebtedness. The obligations of the Guarantor hereunder shall in all
respects rank pari passu with all other Senior Subordinated Indebtedness of the
Guarantor and only Senior Indebtedness of the Guarantor shall rank senior to
the Subsidiary Guaranty in accordance with the provisions set forth herein.
SECTION 3.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Guarantor to creditors upon total
or partial liquidation or total or partial dissolution of the Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Guarantor or its property:
(1) holders of Senior Indebtedness of the Guarantor shall be
entitled to receive payment in full of such Senior Indebtedness in
cash or cash equivalents before Securityholders shall be entitled to
receive any payment pursuant to any Obligations of the Guarantor; and
(2) until the Senior Indebtedness of the Guarantor is paid in
full in cash or cash equivalents, any distribution to which
Securityholders would be entitled but for this Article III shall be
made to holders of such Senior Indebtedness as their interests may
appear, except that Securityholders may receive shares of stock and
any debt securities of the Guarantor that are subordinated to Senior
Indebtedness, and to any debt securities received by holders of Senior
Indebtedness, of the Guarantor to at least the same extent as the
Obligations of the Guarantor are subordinated to Senior Indebtedness
of the Guarantor.
SECTION 3.03. Default on Designated Senior Indebtedness of
the Guarantor. The Guarantor may not make any payment pursuant to this
Subsidiary Guaranty or repurchase, redeem or otherwise retire or defease any
Securities or other Obligations (collectively, "pay its Subsidiary Guaranty")
if (i) any Designated Senior Indebtedness (as defined in the Indenture) of the
Guarantor is not paid when due or (ii) any other default on Designated Senior
Indebtedness of the Guarantor occurs and the maturity of such Designated Senior
Indebtedness is accelerated in
<PAGE> 136
7
accordance with its terms unless, in either case, (x) the default has been
cured or waived and any such acceleration has been rescinded or (y) such Senior
Indebtedness has been paid in full in cash or cash equivalents; provided,
however, that the Guarantor may pay its Subsidiary Guaranty without regard to
the foregoing if the Guarantor and the Trustee receive written notice approving
such payment from the Representative of the Senior Indebtedness with respect to
which either of the events set forth in clause (i) or (ii) of this sentence has
occurred and is continuing. The Guarantor may not pay its Subsidiary Guaranty
for a period (a "Guarantor Payment Blockage Period") commencing upon the
receipt by the Trustee (with a copy to the Guarantor) of written notice (a
"Guarantor Payment Notice") of such default from the Representative of the
holders of such Designated Senior Indebtedness specifying an election to effect
a Guarantor Payment Blockage Period and ending 179 days thereafter (or earlier
if such Guarantor Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Guarantor from the Person or Persons who gave such
Guarantor Blockage Notice, (ii) because the default giving rise to such
Guarantor Blockage Notice is no longer continuing or (iii) because such
Designated Senior Indebtedness has been repaid in full). Notwithstanding the
provisions described in the immediately preceding sentence (but subject to the
provisions contained in the first sentence of this Section), unless the holders
of Senior Indebtedness giving such Guarantor Blockage Notice or the
Representative of such holders shall have accelerated the maturity of such
Senior Indebtedness, the Guarantor shall resume payments pursuant to its
obligations hereunder after such Guarantor Payment Blockage Period. The
Subsidiary Guaranty shall not be subject to more than one Guarantor Payment
Blockage Period in any consecutive 360-day period, irrespective of the number
of defaults with respect to Designated Senior Indebtedness of the Guarantor
during such period. For purposes of this Section, no default or event of
default which existed or was continuing on the date of the commencement of any
Guarantor Payment Blockage Period with respect to the Designated Senior
Indebtedness initiating such Guarantor Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Guarantor Payment Blockage
Period by the Representative of such Designated Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
<PAGE> 137
8
SECTION 3.04. Demand for Payment. If a written demand for
payment is made on the Guarantor pursuant to Article II, the Guarantor or the
Trustee (upon receipt of the requisite information from the Guarantor) shall
promptly notify the holders of Designated Senior Indebtedness (or their
Representatives) of such Guarantor of such demand.
SECTION 3.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article III should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of the relevant Senior Indebtedness and pay
it over to them or their Representative as their interests may appear.
SECTION 3.06. Subrogation. After all Senior Indebtedness of
the Guarantor is paid in full and until the Securities are paid in full, the
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness.
A distribution made under this Article III to holders of such Senior
Indebtedness which otherwise would have been made to Securityholders is not, as
between the Guarantor and Securityholders, a payment by the Guarantor on such
Senior Indebtedness.
SECTION 3.07. Relative Rights. This Article III defines the
relative rights of Securityholders and holders of Senior Indebtedness of the
Guarantor. Nothing in this Indenture shall:
(1) impair, as between the Guarantor and Securityholders, the
obligation of the Guarantor, which is absolute and unconditional, to
pay the Obligations to the extent set forth in Article II; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a default by the Guarantor under this
Subsidiary Guaranty, subject to the rights of holders of Senior
Indebtedness of the Guarantor to receive distributions otherwise
payable to Securityholders.
SECTION 3.08. Subordination May Not Be Impaired by Guarantor.
No right of any holder of Senior Indebtedness of the Guarantor to enforce the
subordination of the obligations of the Guarantor hereunder shall be impaired
by any act or failure to act by the Guarantor or by its failure to comply with
this Guaranty Agreement or the Indenture.
<PAGE> 138
9
SECTION 3.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 3.03 of this Guaranty Agreement, the Trustee or Paying
Agent may continue to make payments with respect to the Subsidiary Guaranty and
shall not be charged with knowledge of the existence of facts that would
prohibit the making of any such payments unless, not less than two Business
Days prior to the date of such payment, a Trust Officer of the Trustee receives
written notice satisfactory to it that payments may not be made under this
Article III. The Company, the Guarantor, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness of the
Guarantor may give the notice; provided, however, that, if an issue of Senior
Indebtedness of the Guarantor has a Representative, only the Representative may
give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Guarantor with the same rights it would have if it
were not Trustee. The Registrar and co-registrar and the Paying Agent may do
the same with like rights. The Trustee shall be entitled to all the rights set
forth in this Article III with respect to any Senior Indebtedness of the
Guarantor which may at any time be held by it, to the same extent as any other
holder of Senior Indebtedness; and nothing in Article 7 of the Indenture shall
deprive the Trustee of any of its rights as such holder. Nothing in this
Article III shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07 of the Indenture.
SECTION 3.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Guarantor, the distribution may be made and the notice
given to their Representative (if any).
SECTION 3.11. Article III Not To Prevent Defaults Under the
Indenture or Limit Right To Demand Payment. The failure to make a payment
pursuant to the Subsidiary Guaranty by reason of any provision in this Article
III shall not be construed as preventing the occurrence of a default under the
Indenture. Nothing in this Article III shall have any effect on the right of
the Securityholders or the Trustee to make a demand for payment on the
Guarantor pursuant to Article II.
SECTION 3.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article III, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction
<PAGE> 139
10
in which any proceedings of the nature referred to in Section 3.02 of this
Guaranty Agreement are pending, (ii) upon a certificate of the liquidating
trustee or agent or other Person making such payment or distribution to the
Trustee or to the Securityholders or (iii) upon the Representative for the
holders of Senior Indebtedness of the Guarantor for the purpose of ascertaining
the Persons entitled to participate in such payment or distribution, the
holders of such Senior Indebtedness and other indebtedness of the Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
III. In the event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness of the Guarantor to participate in any payment or distribution
pursuant to this Article III, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness of the Guarantor held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and
other facts pertinent to the rights of such Person under this Article III and,
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment. The provisions of Sections 7.01 and 7.02 of the Indenture shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article III.
SECTION 3.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness of the Guarantor as provided in this Article III
and appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 3.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Guarantor. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Guarantor and shall
not be liable to any such holders if it shall mistakenly pay over or distribute
to Securityholders or the Company or any other Person, money or assets to which
any holders of such Senior Indebtedness shall be entitled by virtue of this
Article III or otherwise.
SECTION 3.15. Reliance by Holders of Senior Indebtedness of
the Guarantor on Subordination Provisions.
<PAGE> 140
11
Each Securityholder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness of the Guarantor,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Security, to acquire and continue to hold, or to continue to
hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
ARTICLE IV
Miscellaneous
SECTION 4.01. Notices. All notices and other communications
pertaining to this Subsidiary Guaranty shall be in writing and shall be deemed
to have been duly given upon the receipt thereof. Such notices shall be
delivered by hand, or mailed, certified or registered mail with postage prepaid
(a) if to the Guarantor, at the Company's address set forth in the Indenture,
and (b) if to the Holders or the Trustee, as provided in the Indenture.
SECTION 4.02. Parties. Nothing expressed or mentioned in
this Guaranty Agreement is intended or shall be construed to give any Person,
firm or corporation, other than the Holders and the Trustee, any legal or
equitable right, remedy or claim under or in respect of this Subsidiary
Guaranty or any provision herein contained.
SECTION 4.03. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 4.04. Severability Clause. In case any provision in
this Guaranty Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby and such provision shall be ineffective
only to the extent of such invalidity, illegality or unenforceability.
SECTION 4.05. Waivers, Amendments and Remedies. The failure
to insist in any one or more instances upon
<PAGE> 141
12
strict performance of any of the provisions of this Guaranty Agreement or to
take advantage of any of its rights hereunder shall not be construed as a
waiver of any such provisions or the relinquishment of any such rights, but the
same shall continue and remain in full force and effect. Except as otherwise
expressly limited in this Guaranty Agreement, all remedies under this
Subsidiary Guaranty shall be cumulative and in addition to every other remedy
provided for herein or by law.
SECTION 4.06. Headings. The headings of the Articles and the
sections in this Guaranty Agreement are for convenience of reference only and
shall not be deemed to alter or affect the meaning or interpretation of any
provisions hereof.
IN WITNESS WHEREOF, the Guarantor has duly executed this
Guaranty Agreement as of the date first above written.
[SUBSIDIARY GUARANTOR],
By
---------------------------------------------------------
Name:
Title:
Acknowledged:
DENBURY MANAGEMENT, INC.,
By
-----------------------------------------------
Name:
Title:
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Trustee,
By
-----------------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 5(a)
[LETTERHEAD OF BURNET, DUCKWORTH & PALMER]
DRAFT
February 19, 1998
Denbury Resources Inc.
17304 Preston Road, Suite 510
Dallas, Texas
U.S.A. 75252
Dear Sirs:
RE: OFFERING OF COMMON SHARES OF DENBURY RESOURCES INC.
We have acted as Canadian counsel to Denbury Resources Inc., a Canadian
corporation (the "Corporation"), in connection with the registration under the
United States Securities Act of 1933, as amended (the "Act"), of an aggregate
5,530,780 Common Shares of the Corporation, without nominal or par value (the
"Common Shares"), 4,557,200 of such Common Shares being offered in an
underwritten public offering (the "Equity Offering"), 290,000 of such Common
Shares to be purchased directly from the Corporation by entities affiliated
with the Texas Pacific Group, the Corporation's largest shareholder (the "TPG
Purchase") and 683,580 of such Common Shares being subject to an over-allotment
option granted to the Underwriters (the "Over-Allotment Option") (the Equity
Offering, the TPG Purchase and the Over-Allotment Option being herein
collectively referred to as the "Offering"), all pursuant to a Registration
Statement on Form S-3 (Registration No. 333-43207) as amended, filed with the
Securities and Exchange Commission (the "Registration Statement"). We have also
acted as Canadian counsel to the Corporation in connection with:
i. the related Underwriting Agreement in connection with the offering of
a maximum aggregate of 5,240,780 Common Shares in connection with the
Equity Offering (the "Underwriting Agreement") among the Corporation
and Morgan Stanley & Co. Incorporated, acting separately on behalf of
itself and the other underwriters and their Canadian affiliates named
in the Underwriting Agreement and Schedules I and II thereto; and
ii. the Stock Purchase Agreement between the Corporation and TPG Partners,
L.P. in connection with the TPG Purchase (the "Stock Purchase
Agreement").
In connection therewith, we have examined:
i. the Articles of Amalgamation and the by-laws of the Corporation, in
each case, as amended to date;
ii. copies of resolutions of the Board of Directors of the Corporation
authorizing the issuance of the Common Shares and related matters;
iii. the Registration Statement, and all exhibits thereto;
iv. the Stock Purchase Agreement; and
v. such other documents and instruments as we have deemed necessary for
the expression of the opinions herein contained.
In conducting the foregoing examinations, we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to us as
originals, and the conformity to original documents of all documents submitted
to us as certified, notarial or true copies or reproductions or facsimiles
thereof. As to various questions of fact material to this opinion, we have
relied upon documents, records and instruments furnished to us by the
Corporation, without independent verification of their accuracy.
<PAGE> 2
2
We are qualified to practice law in the Province of Alberta and our opinion
herein is restricted to the laws of the Province of Alberta and the federal
laws of Canada applicable therein.
Based, in reliance upon, and subject to the foregoing, we are of the opinion
that the Common Shares, when issued and delivered by the Corporation in
accordance with the terms and conditions of the Underwriting Agreement and the
Stock Purchase Agreement, respectively, and the Corporation has received
payment in full of the purchase price therefor as specified in the Prospectus
of the Corporation attached to and forming part of the Registration Statement
as being the consideration for the Common Shares, will be validly issued as
fully paid and non-assessable Common Shares of the Corporation.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the captions "Service
and Enforcement of Legal Process" and "Legal Matters" in the Prospectus forming
a part of the Registration Statement.
This opinion is being furnished for the sole benefit of the addressee hereof in
connection with the Offering and may not be relied upon or distributed to any
other person or entity or for any other purpose without our express prior
written consent. This opinion is given as at the date hereof and we disclaim
any obligation or undertaking to advise any person of any change in law or fact
which may come to our attention after the date hereof.
Yours very truly,
/s/ Chris Von Vegesack
Encl.
<PAGE> 1
[JENKENS & GILCHRIST LETTERHEAD]
February 19, 1998
Denbury Management
17304 Preston Road, Suite 200
Dallas, Texas 75252
Re: Opinion as to Legality of Organization and
Certain Securities of Denbury Management, Inc.
Ladies and Gentlemen:
We have acted as U.S. securities counsel to Denbury Management, Inc., a
Texas corporation (the "Company") in connection with the registration under the
Securities Act of 1933, as amended ("Securities Act"), of Senior Subordinated
Notes Due 2008 (the "Notes) in the principal amount of up to $125,000,000. The
terms and conditions of such offering are described in a prospectus (the
"Prospectus"), contained in a registration statement (File number 333-43207), as
amended (the "Registration Statement"), on Form S-3 filed with the Securities
and Exchange Commission (the "Commission").
We have examined (i) the Prospectus and the Registration Statement, (ii) a
form of Indenture proposed to be entered into between the Company and Chase Bank
of Texas, National Association, as Trustee, pertaining to the Notes, (iii) the
Articles of Incorporation of the Company, as amended, and the bylaws and
corporate proceedings of the Company, and (iv) such other records, documents,
opinions, and instruments as in our judgment are necessary or appropriate to
enable us to render this opinion. We have made such legal and factual
determination as we have deemed relevant.
Based upon the foregoing, and having regard for such legal considerations
as we deem relevant, we are of the opinion that:
1. the Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas;
2. when the Indenture has been duly executed and delivered by the
officers authorized by the Board of Directors of the Company or a duly
authorized committee thereof
<PAGE> 2
Denbury Management
February 19, 1998
Page 2
to execute and deliver the same, it will constitute a legal, valid and
binding instrument of the Company, enforceable against the Company in
accordance with its terms; and
3. the Notes are duly authorized, and when executed and authenticated in
the manner set forth in the Indenture and when sold, issued to, and
paid for by the Underwriters, will be legal, valid and binding
obligations of the Company, entitled to the benefits provided by the
Indenture, and enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, general equitable principles and other
laws relating to or affecting the enforcement of the creditors'
rights.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to reference being made to our firm under the caption
"Legal Matters" in the Prospectus. In giving this consent, this firm does not
thereby admit that it comes into the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission promulgated thereunder.
Sincerely yours,
JENKENS & GILCHRIST,
A Professional Corporation
By: /s/ DONALD W. BRODSKY
----------------------------------
Donald W. Brodsky
Authorized Signatory on
Behalf of the Corporation
<PAGE> 1
EXHIBIT 10(b)
FIRST AMENDMENT TO FIRST RESTATED CREDIT AGREEMENT
This First Amendment to First Restated Credit Agreement (this "First
Amendment") is entered into as of the 2th day of January, 1998, by and among
Denbury Management, Inc. ("Borrower"), Denbury Resources Inc. ("Parent"),
NationsBank of Texas, N.A., as Administrative Agent ("Administrative Agent"),
and NationsBank of Texas, N.A. as Bank ("Bank").
W I T N E S S E T H:
WHEREAS, Borrower, Parent, Administrative Agent and Bank are parties
to that certain First Restated Credit Agreement dated as of December 29, 1997
(the "Credit Agreement") (unless otherwise defined herein, all terms used
herein with their initial letter capitalized shall have the meaning given such
terms in the Credit Agreement); and
WHEREAS, pursuant to the Credit Agreement, Bank has made certain Loans
to Borrower; and
WHEREAS, Borrower, Parent, Administrative Agent and Bank desire to
amend the Credit Agreement in certain respects.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrower, Parent, Administrative Agent and Bank hereby agree as follows:
Section 1. Amendments. In reliance on the representations,
warranties, covenants and agreements contained in this First Amendment, the
Credit Agreement is hereby amended effective the date set forth in the preamble
hereto in the manner provided in this Section 1.
1.1. Additional Definitions. Section 1.1 of the Credit Agreement
is hereby amended to add the definitions "First Amendment" and "Initial
Conforming Borrowing Base" as follows:
"First Amendment" means that certain First Amendment to First
Restated Credit Agreement dated as of January 27, 1998 among Borrower,
Parent, Administrative Agent and Banks.
"Initial Conforming Borrowing Base" means the Conforming
Borrowing Base in effect from the Closing Date until the first
Redetermination after the Closing Date. The Initial Conforming
Borrowing Base shall be $175,000,000; provided, that, if the aggregate
amount of the Permitted Subordinate Debt when issued equals or exceeds
$100,000,000, the Initial Conforming Borrowing Base shall reduce
simultaneously with such issue by an amount equal to forty percent
(40%) of the excess of the amount of the Permitted Subordinate Debt as
issued over $100,000,000.
<PAGE> 2
1.2. Amendments to Definitions. The definitions of "Loan Papers"
and "Permitted Subordinate Debt" in Section 1.1 of the Credit Agreement are
hereby amended to read in full as follows:
"Loan Papers" means this Agreement, the First Amendment, the
Notes, the Facility Guaranty, the Parent Pledge Agreement, the
Existing Mortgages (as amended by the Amendment to Mortgages), all
Mortgages now or at any time hereafter delivered pursuant to Section
5.1, and all other certificates, documents or instruments delivered in
connection with this Agreement, as the foregoing may be amended from
time to time.
"Permitted Subordinate Debt" means Debt of Borrower resulting
from a single issue of senior subordinate notes and in an aggregate
outstanding principal balance of not greater than $150,000,000, and
which (a) is unsecured, (b) has a stated maturity of at least ten
years from the date of issue and does not provide for the
establishment of any sinking fund or otherwise require any mandatory
redemption, repayment, defeasance, repurchase or other amortization
prior to the scheduled maturity, (c) does not provide for a
non-default rate of interest greater than ten percent (10%) per annum
or original issue discount greater than three percent (3%), in each
case unless approved by Required Banks, (d) is fully subordinated to
the Obligations pursuant to subordination provisions which have been
approved by Required Banks, such approval to not be unreasonably
withheld, and (e) is not subject to negative covenants or events of
default (or other provisions which have the same effect as negative
covenants or events of default) which have not been approved by
Required Banks.
1.3. Amendment to Borrowing Base Provisions. Sections 4.4(a) and
4.6 of the Credit Agreement are hereby amended to read in full as follows:
(a) The Borrowing Base and the Conforming Borrowing Base shall
be redetermined on July 1, 1998 and on each October 1 and April 1
thereafter commencing October 1, 1998 or, in each such case, on a date
as promptly thereafter as reasonably possible based on engineering and
other information available to the Banks; provided, that, the Banks'
right to redetermine the Borrowing Base on or around July 1, 1998
under this clause (a) will be automatically waived if, subsequent to
the Closing Date and on or before such date, Parent issues newly
issued shares of common stock which results in Net Cash Proceeds to
Parent of at least $78,100,000.
SECTION 4.6 Initial Borrowing Base. The Borrowing Base
shall be $260,000,000 and the Conforming Borrowing Base shall be the
Initial Conforming Borrowing Base, in each case for the period
commencing on the date hereof and ending on the first Redetermination
after the Closing Date. The Borrowing Base in effect under this
Section 4.6 shall reduce (but not below the Conforming Borrowing
2
<PAGE> 3
Base) immediately upon the consummation of any Securities Offering by
any Credit Party in an amount equal to the Net Cash Proceeds resulting
from such Securities Offering. Simultaneously with any such
reduction, Borrower shall make a mandatory prepayment of the Revolving
Loan in an amount sufficient to eliminate any Borrowing Base
Deficiency resulting from such reduction in the Borrowing Base.
1.4. Amendment to Debt Covenant. Section 9.1 of the Credit
Agreement is hereby amended to read in full as follows:
SECTION 9.1 Incurrence of Debt. The Credit Parties will
not, nor will the Credit Parties permit any of their Subsidiaries to,
incur, become or remain liable for any Debt; provided that (a) the
Credit Parties may incur, become and remain liable for (i) the
Obligations, and (ii) other unsecured Debt in an aggregate amount
outstanding at any time not to exceed $10,000,000, (b) Borrower may
incur, become and remain liable for Permitted Subordinate Debt, and
(c) Parent and any Subsidiary of Borrower may incur, become and remain
liable for Permitted Subordinate Debt as a guarantor; provided, that
(i) such Guarantees of Permitted Subordinate Debt shall be
subordinated to the Obligations pursuant to subordination provisions
approved by Required Banks, such approval to not be unreasonably
withheld, and (ii) prior to the execution and delivery by any
Subsidiary of Borrower of any Guaranty of Permitted Subordinate Debt,
such Subsidiary shall (A) execute and deliver to Administrative Agent
for the ratable benefit of the Banks (A) an unconditional, joint and
several Guaranty of the Obligations in form and substance acceptable
to Administrative Agent, and (B) such certificates of officers of
such Subsidiary, certificates of Governmental Authorities, resolutions
of the Board of Directors (or comparable body) of such Subsidiary,
opinions of counsel and such other documents, instruments and
agreements as Administrative Agent shall reasonably require to
evidence the existence of such Subsidiary, the proper authorization,
execution and delivery of such Guaranty by such Subsidiary, the
enforceability of such Guaranty against such Subsidiary and such other
matters related thereto as Administrative Agent shall reasonably
require.
Section 2. Restatement of Articles of Incorporation. Borrower
has advised Administrative Agent and Bank that Borrower intends to amend and
restate its Articles of Incorporation in the form of Exhibit A hereto. Agent
and Bank hereby consent to such amendment and restatement and waive compliance
by Borrower with Section 9.6 of the Credit Agreement to the extent it prohibits
such amendment and restatement.
Section 3. Representations and Warranties of Borrower. To
induce Bank and Administrative Agent to enter into this First Amendment,
Borrower and Parent hereby represent and warrant to Administrative Agent and
Bank as follows:
3
<PAGE> 4
(a) Each representation and warranty of Borrower and Parent
contained in the Credit Agreement and the other Loan Papers is true and correct
on the date hereof and will be true and correct after giving effect to the
amendments set forth in Section 1 hereof.
(b) The execution, delivery and performance by Borrower and Parent
of this First Amendment are within the Borrower's and Parent's corporate
powers, have been duly authorized by necessary action, require no action by or
in respect of, or filing with, any governmental body, agency or official and do
not violate or constitute a default under any provision of applicable law or
any Material Agreement binding upon any Credit Party or any Subsidiary of any
Credit Party or result in the creation or imposition of any Lien upon any of
the assets of any Credit Party or any Subsidiary of any Credit Party except
Permitted Encumbrances.
(c) The First Amendment constitutes the valid and binding
obligations of Borrower and Parent enforceable in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor's rights generally, and (ii) the
availability of equitable remedies may be limited by equitable principles of
general application.
(d) Borrower and Parent have no defenses to payment, counterclaim
or rights of set-off with respect to the Obligations existing on the date
hereof.
Section 4. Miscellaneous.
4.1. Reaffirmation of Loan Papers; Extension of Liens. Any and all
of the terms and provisions of the Credit Agreement and the Loan Papers shall,
except as amended and modified hereby, remain in full force and effect.
Borrower and Parent hereby extend the Liens securing the Obligations until the
Obligations have been paid in full and agree that the amendments and
modifications herein contained shall in no manner affect or impair the
Obligations or the Liens securing payment and performance thereof.
4.2. Parties in Interest. All of the terms and provisions of this
First Amendment shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns.
4.3. Legal Expenses. Borrower hereby agrees to pay on demand all
reasonable fees and expenses of counsel to Administrative Agent incurred by
Administrative Agent, in connection with the preparation, negotiation and
execution of this Second Amendment and all related documents.
4.4. Counterparts. This First Amendment may be executed in
counterparts, and all parties need not execute the same counterpart; however,
no party shall be bound by this First Amendment until the parties have executed
a counterpart. Facsimiles shall be effective as originals.
4.5. Complete Agreement. THIS FIRST AMENDMENT, THE CREDIT
AGREEMENT AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
4
<PAGE> 5
CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
4.6. Headings. The headings, captions and arrangements used in
this First Amendment are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify or modify the terms of this First
Amendment, nor affect the meaning thereof.
(signature pages to follow)
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereby have caused this First
Amendment to be duly executed by their respective authorized officers on the
date and year first above written.
BORROWER:
--------
DENBURY MANAGEMENT, INC.
By: /s/ GARETH ROBERTS
-----------------------------------------
Name: Gareth Roberts
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
By: /s/ PHIL RYKHOEK
-----------------------------------------
Name: Phil Rykhoek
---------------------------------------
Title: Chief Financial Officer
--------------------------------------
PARENT:
------
DENBURY RESOURCES, INC.,
a corporation incorporated under the
Canada Business Corporations Act
By: /s/ GARETH ROBERTS
-----------------------------------------
Name: Gareth Roberts
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
By: /s/ PHIL RYKHOEK
-----------------------------------------
Name: Phil Rykhoek
---------------------------------------
Title: Chief Financial Officer
--------------------------------------
ADMINISTRATIVE AGENT:
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NATIONSBANK OF TEXAS, N.A.
By: /s/ J. SCOTT FOWLER
-----------------------------------------
J. Scott Fowler
Vice President
6
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BANK:
----
NATIONSBANK OF TEXAS, N.A.
By: /s/ J. SCOTT FOWLER
-----------------------------------------
J. Scott Fowler
Vice President
7
