SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (or Date of Earliest Event Reported): December 17, 1998
DENBURY RESOURCES INC.
(Exact name of Registrant as specified in its charter)
Canada 1-12935 Not Applicable
(State of incorporation or (Commission File Number) (IRS Employer
organization) Identification No.)
17304 Preston Road
Suite 200
Dallas, Texas 77252
(Address of principal executive offices)
(972) 673-2000
(Registrant's telephone number)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On December 16, 1998, Denbury Resources Inc. (the "Company"), and TPG
Partners II, L.P. (the "Purchaser"), entered into a Stock Purchase Agreement
(the "Agreement") pursuant to which the Purchaser agreed to purchase from the
Company 18,552,876 of the Company's common shares, no par value, (the "Common
Shares"), for $100 million. The Purchaser is an affiliate of the Texas Pacific
Group ("TPG"), a 32% shareholder of the Company. Among other things, closing of
the transaction is conditioned upon shareholder, regulatory and other customary
approvals and a mutually acceptable amendment of the Company's bank credit
facility. As part of this agreement, the Company will extend registration rights
to apply to the Common Shares to be acquired in this transaction. This
registration rights agreement will also extend and modify the registration
rights of the Common Shares previously owned by TPG.
This transaction will increase TPG's ownership from approximately 32% to
60% of the Company. TPG is currently represented by three designees on the
Company's board of directors, Messrs. Bonderman, Price and Stanton. The Company
does not anticipate that this transaction will result in any changes to the
current board of directors, management or operations of the Company.
The foregoing discussion is qualified in its entirety by reference to the
agreement, copies of which are attached hereto as Exhibit 99.1 and are
incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: December 17, 1998
Denbury Resources, Inc.
By: /s/ Phil Rykhoek
---------------------------------
Name: Phil Rykhoek
Title: Chief Financial Officer
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EXHIBIT INDEX
Exhibit
No. Exhibit Description
99.1 Stock Purchase Agreement dated December 16, 1998 between Denbury
Resources Inc. and TPG Partners II, L.P.
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EXHIBIT 99.1
STOCK PURCHASE AGREEMENT DATED
DECEMBER 16, 1998
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of the
16th day of December, 1998 by and between Denbury Resources Inc. (the "Company")
and TPG Partners II, L.P. ("Buyer").
W I T N E S S E T H
WHEREAS, the Company desires to sell to Buyer, and Buyer desires to
purchase from Company, 18,552,876 shares (the "Shares") of the Company's common
shares, no par value (the "Common Shares"), for U.S.$100,000,000 pursuant to the
terms and conditions set forth herein;
WHEREAS, the Common Shares are traded on the New York Stock Exchange (the
"NYSE") and the rules of the NYSE require approval of the sale of the Shares to
Buyer by holders of a majority of shares voting on the proposal that are held by
disinterested shareholders;
WHEREAS, the Common Shares are traded on the Toronto Stock Exchange (the
"TSE") and the rules of the TSE require the approval by holders of a majority of
shares voting on the proposal that are held by disinterested shareholders of the
sale of the Shares to Buyer; and
WHEREAS, the Company is proposing to move its corporate domicile from
Canada to the United States as a Delaware corporation (the "Continuance," the
continued Delaware corporation being the "Continued Company"), and such
Continuance requires shareholder approval by two-thirds (2/3) of all votes cast
at a duly constituted meeting of shareholders and registration with the U.S.
Securities and Exchange Commission (the "Commission") of the deemed issuance of
new securities of the Company;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 ISSUANCE AND PURCHASE AND SALE OF SHARES; PURCHASE PRICE. Subject to
the terms and conditions set forth in this Agreement, and in reliance upon the
representations and warranties hereinafter set forth, the Company agrees to sell
and deliver to Buyer, and Buyer agrees to subscribe for and purchase from the
Company, the Shares free and clear of all Liens for U.S.$5.39 per Common Share,
for an aggregate purchase price of U.S.$100,000,000 (the "Buyer Purchase
Price"). The parties agree that the Shares will be issued upon the closing of
the transactions contemplated hereby (the "Closing") by the Company if the
Continuance is not consummated, and by the Continued Company if the Continuance
is consummated.
1.2 MUTUAL CONDITIONS PRECEDENT. The Company's obligation to sell the
Shares and Buyer's obligation to buy the Shares is subject to and conditioned
upon:
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(a) approval of the sale of the Shares by the Company to the Buyer by
that proportion of shareholders voting at a duly constituted meeting of
shareholders required by applicable Law or the rules of the NYSE or the TSE
(subject to Buyer and its Affiliates voting their Common Shares in the same
proportions as those shareholders other than Buyer and such Affiliates
voting thereon, or as otherwise required by the applicable Law or the rules
of the NYSE or TSE);
(b) the receipt of any approval required to be obtained from the TSE
and compliance with Ontario Securities Commission Policy Statement 9.1 and
similar policies from other Canadian securities regulators; and
(c) an amendment of the NationsBank Credit Facility mutually
acceptable to the Company and the Buyer, such acceptance not to be
unreasonably withheld.
1.3 CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The Company's
obligation to issue and sell the Shares hereunder shall also be subject to and
conditioned upon the satisfaction or waiver of each of the following additional
conditions:
(a) Representations and Warranties; Covenants. The representations and
warranties of Buyer set forth in Article 2 hereof shall have been true and
correct in all material respects on and as of the date hereof and shall be
true and correct in all material respects as of the Closing as if made on
the Closing Date (except where such representation and warranty speaks by
its terms as of a different date, in which case it shall be true and
correct as of such date). Buyer shall have performed in all material
respects all obligations and complied with all agreements, undertakings and
covenants required by it to be performed at or prior to the Closing, and
Buyer shall have delivered to the Company at the Closing a certificate in
form and substance satisfactory to the Company dated the Closing Date and
signed by an executive officer of TPG Advisors II, Inc. to the effect that
the conditions set forth in this Section 1.3(a) have been satisfied.
(b) Opinion of Counsel. The Company shall have received at the Closing
from Richard A. Ekleberry, general counsel to TPG Advisors II, Inc., a
written opinion dated the Closing Date, in form reasonably satisfactory to
the Company, with respect to the matters set forth in Sections 2.3, 2.4 and
2.5.
(c) Compliance with Laws; No Adverse Action or Decision. Since the
date hereof,
(i) no Law shall have been promulgated, enacted or entered that
restrains, enjoins, prevents, materially delays, prohibits or
otherwise makes illegal the performance of this Agreement or the
Registration Rights Agreement or the consummation of the transactions
contemplated hereby or thereby;
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(ii) no preliminary or permanent injunction or other order by any
Governmental Entity that restrains, enjoins, prevents, materially
delays, prohibits or otherwise makes illegal the performance of this
Agreement or the Registration Rights Agreement or the consummation of
the transactions contemplated hereby or thereby shall have been issued
and remain in effect; and
(iii) no Governmental Entity shall have instituted any action,
claim, suit, investigation or other proceeding that seeks to restrain,
enjoin, prevent, materially delay, prohibit or otherwise make illegal
the performance of this Agreement or the Registration Rights Agreement
or the consummation of the transactions contemplated hereby or
thereby.
(d) Consents. All Regulatory Approvals from any Governmental Entity
and all consents, waivers or approvals from any other Person required for
or in connection with the execution and delivery of this Agreement and the
Registration Rights Agreement and the consummation at the Closing by the
parties hereto and thereto of the transactions contemplated hereby and
thereby shall have been obtained or made on terms reasonably satisfactory
to the Company, including proof of Buyer's timely filing of an early
warning disclosure report and private placement questionnaire and
undertaking required by the TSE, and all waiting periods specified under
applicable Law, the expiration of which is necessary for such consummation,
shall have expired or been terminated.
(e) Registration Rights Agreement. The Company shall have received
counterpart originals or certified or other copies of the Registration
Rights Agreement and such other documents as it may reasonably request.
1.4 CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS. The obligation of
Buyer to purchase the Shares hereunder shall also be subject to and conditioned
upon the satisfaction or waiver of each of the following additional conditions:
(a) Representations and Warranties; Covenants. The representations and
warranties of the Company set forth in Article 3 hereof shall have been
true and correct in all material respects on and as of the date hereof and
shall be true and correct in all material respects as of the Closing as if
made on the Closing Date (except where such representation and warranty
speaks by its terms as of a different date, in which case it shall be true
and correct in all material respects as of such date), it being understood
that for the purposes of Section 4.6, the representations and warranties
made in the Agreement are being made as of the date hereof and are not
being made as of the Closing Date. The Company shall have performed in all
material respects all obligations and complied with all agreements,
undertakings and covenants required hereunder to be performed by it at or
prior to the Closing. The Company shall have delivered to Buyer at the
Closing a certificate in form and substance satisfactory to Buyer dated the
Closing Date and signed by the chief executive officer and the chief
financial officer of the Company to the effect
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that the conditions set forth in this Section 1.4(a) have been satisfied;
provided that any certificate delivered under this Section 1.4(a), insofar
as it relates to whether or not there has been a Material Adverse Effect
that results primarily and directly from prevailing oil prices, prevailing
natural gas prices or levels of production, will be prepared and based
upon, respectively, the best knowledge of such officers with respect to
such prices and production levels using information available to them at
the time of preparation of such certificate (including the use of estimates
where actual prices and production information are not available) and
prepared in a manner consistent with the Company's past practices.
(b) Opinions of Counsel. Buyer shall have received at the Closing from
Jenkens & Gilchrist, a Professional Corporation, and Burnet, Duckworth &
Palmer, written opinions dated the Closing Date, in form reasonably
satisfactory to Buyer, with respect to matters set forth in Sections 3.1,
3.2, 3.3, 3.4, 3.5(a) and 3.9.
(c) Continuance and Merger. If the Continuance shall have occurred and
immediately thereafter the Significant Subsidiary shall have been merged
into the Continued Company, the terms of such Continuance and merger shall
have been approved by a majority of not less than two-thirds of all of the
members of the Board of Directors of the Company and shall provide that (A)
the exchange ratio of shares of common stock of the Continued Company for
Common Shares shall be one-to-one and (B) the certificate of incorporation
of the Continued Company shall expressly exempt the Continued Company from
the applicability of Section 203 of the DGCL.
(d) Compliance with Laws; No Adverse Action or Decision. Since the
date hereof, (A) no Law shall have been promulgated, enacted or entered
that restrains, enjoins, prevents, materially delays, prohibits or
otherwise makes illegal the performance of this Agreement or the
Registration Rights Agreement or the consummation of the transactions
contemplated hereby or thereby, (B) no preliminary or permanent injunction
or other order by any Governmental Entity that restrains, enjoins,
prevents, materially delays, prohibits or otherwise makes illegal the
performance of this Agreement or the Registration Rights Agreement or the
consummation of the transactions contemplated hereby or thereby shall have
been issued and remain in effect, and (C) no Governmental Entity shall have
instituted any Proceeding that seeks to restrain, enjoin, prevent,
materially delay, prohibit or otherwise make illegal the performance of
this Agreement or the Registration Rights Agreement or the consummation of
the transactions contemplated hereby or thereby.
(e) Consents. All Regulatory Approvals from any Governmental Entity
and all consents, waivers or approvals from any other Person required for
or in connection with the execution and delivery of this Agreement and the
Registration Rights Agreement and the consummation at the Closing by the
parties hereto and thereto of the transactions contemplated hereby and
thereby shall have been obtained or made on terms reasonably satisfactory
to the Buyer, and all waiting periods specified under applicable Law, the
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expiration of which is necessary for such consummation, shall have expired
or been terminated.
(f) Registration Rights Agreement. Buyer shall have received
counterpart originals or certified or other copies of the Registration
Rights Agreement and such other documents as it may reasonably request.
(g) No Material Adverse Effect, No Alternative Transaction. Since the
date of this Agreement, no event shall have occurred which has had, or is
reasonably likely to have, a Material Adverse Effect, and no Alternative
Transaction shall have been consummated or agreement, understanding, or
arrangement with respect thereto entered into.
1.5 NO REGISTRATION. Buyer acknowledges and understands that the Shares
have not been registered under the Securities Act and are being acquired by
Buyer for its own account (subject to the provisions of Section 1.7 hereof).
Buyer will not sell, assign, transfer, pledge, hypothecate or otherwise dispose
of or encumber the Shares, or any interest therein, except in compliance with
the registration requirements of the Securities Act or an applicable exemption
from registration thereunder, and in compliance with applicable state securities
laws. Buyer understands that the certificates representing the Shares will bear
the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. Neither
this certificate nor any interest therein may be offered, sold,
transferred, encumbered or otherwise disposed of, unless either (i)
there is an effective registration statement under said Act relating
thereto, or (ii) the Company has received an opinion of counsel,
satisfactory in form and substance to the Company, that such
registration is not required."
1.6 CLOSING. Subject to the satisfaction or, if permissible, waiver of the
conditions set forth in Sections 1.2, 1.3 and 1.4, the Closing shall take place
at the offices of Jenkens & Gilchrist, a Professional Corporation, no later than
the first Business Day following such satisfaction or, if permissible, waiver,
or at such other time and place as the parties may agree (the date on which the
Closing occurs, the "Closing Date"). At the Closing, the following documents
shall be exchanged:
(a) In full payment for the Shares, Buyer shall deliver the Buyer
Purchase Price in immediately available funds to the Company by wire
transfer to the bank account designated by the Company at least two
Business Days prior to the Closing Date, or by such other means as may be
agreed upon by the parties hereto, together with the other documents,
certificates and opinions to be delivered pursuant to Section 1.4 hereof.
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(b) The Company shall deliver the certificate(s) representing the
Shares to Buyer (registered in the names of Buyer and/or its Affiliates and
in the denominations designated by Buyer at least two Business Days prior
to the Closing Date), together with the other documents, certificates and
opinions to be delivered pursuant to Section 1.3 hereof.
(c) Buyer and the Company shall execute and deliver each to the other
at the closing a cross receipt for the certificate(s) representing the
Shares and the funds representing the Buyer Purchase Price, respectively.
1.7 ASSIGNMENT TO AFFILIATES. Buyer may assign all or any portion of its
rights under this Agreement and the Registration Rights Agreement to any of its
Affiliates having TPG GenPar II, L.P., as its general partner, provided that
such Affiliate meets the definition of "Permitted Holder" under the terms of the
Indenture dated as of February 26, 1998 (the "Indenture"), between Denbury
Management Inc., the Company and ChaseBank of Texas, National Association, as
Trustee, covering the Company's 9% Senior Subordinated Notes due 2008.
1.8 COSTS OF TRANSACTION. Except as set forth in Sections 4.6 and 5.12, the
parties agree that they shall bear their respective costs of the transaction,
including costs of their respective counsel, provided that costs associated with
registration, if any, of the Shares under the Securities Act and any applicable
Canadian securities laws will be borne by the Company.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to, and agrees with, the Company as follows:
2.1 INFORMED SOPHISTICATED INVESTOR. By virtue of Buyer's position as an
Affiliate of the Company both directly and indirectly through three members of
the Company's Board of Directors being Affiliates of Buyer, Buyer has access to
information regarding the Company's finances, properties, assets and
liabilities, and business prospects to a degree sufficient to permit Buyer to
make an informed investment decision as to the purchase of the Shares. By reason
of Buyer's business and financial experience (and the business and financial
experience of any persons retained by Buyer to advise it with respect to its
investment in the Shares), Buyer (together with such advisers, if any) has such
knowledge, sophistication and experience in business and financial matters as to
be capable of evaluating the merits and risks of the investment in the Shares.
Nothing contained in this Section 2.1 shall mitigate or diminish the
representations, warranties or covenants contained in this Agreement.
2.2 NO DISTRIBUTION INTENT. Buyer represents to the Company that it is not
acquiring the Shares with a view to, nor does it have any current intent to
engage in, a distribution or resale of the Shares, and that the individual share
of each participant in the Buyer had an aggregate
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acquisition cost to such participant of not less than Cnd.$97,000. Buyer
acknowledges that it may only resell the Shares in compliance with the
registration requirements of the Securities Act or an applicable exemption from
registration thereunder.
2.3. ORGANIZATION. Buyer is a limited partnership duly organized, validly
existing and in good standing under the Laws of the State of Delaware and has
all requisite power and authority to own or lease and operate its properties and
to conduct its business as it is now being conducted and is proposed to be
conducted.
2.4 AUTHORITY; NO CONSENT. Buyer represents to the Company that it is duly
authorized to execute and deliver this Agreement and the Registration Rights
Agreement and that upon execution and delivery by Buyer, this Agreement and the
Registration Rights Agreement will constitute legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their terms.
Buyer has the absolute and unrestricted right, power and authority to execute
and deliver this Agreement and the Registration Rights Agreement and to perform
its obligations hereunder and thereunder. Buyer is not and will not be required
to obtain any consent from any Person in connection with the execution and
delivery of this Agreement or the Registration Rights Agreement or the
consummation or performance of any of the transactions contemplated hereby or
thereby.
2.5 NO VIOLATION. Buyer represents and warrants that neither the execution
and performance of this Agreement and the Registration Rights Agreement nor the
consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a breach of the terms, conditions and provisions of,
or constitute a default (with or without the passage of time) under, its
organizational documents, any agreement, indenture or other instrument under
which it is bound, or (ii) violate or conflict with any applicable Law.
2.6 THE TORONTO STOCK EXCHANGE. Buyer (i) undertakes not to sell or
otherwise dispose of the Shares, or any securities derived therefrom, for a
period of six (6) months from the Closing Date without the prior consent of the
TSE and any other regulatory body having jurisdiction and (ii) agrees to execute
any undertaking to this effect that may be required by the TSE.
2.7 PERMITTED HOLDER. Buyer meets the definition of "Permitted Holder"
under the terms of the Indenture.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to, and agrees with, Buyer as
follows:
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3.1. CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Company and its
Significant Subsidiary is a corporation, limited liability company or
partnership duly incorporated, organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all requisite
power and authority to own or lease and operate its properties and to conduct
its business in all material respects as it is currently being conducted and is
proposed to be conducted. Each of the Company and its Significant Subsidiary is
duly licensed, authorized or qualified as a foreign corporation or partnership
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which its ownership, lease or operation of property or
conduct of business requires such qualification, except where the failure to be
so licensed, authorized or qualified and in good standing would not, taken as a
whole, have a Material Adverse Effect. The Company has made available upon
request by Buyer a complete and correct copy of the Articles of Continuance in
force on the date hereof and the Bylaws of the Company and its Significant
Subsidiary, each as amended to date and each of which as so made available is in
full force and effect. The Company will make available upon request by Buyer a
complete and correct copy of the minute books of the Company and its Significant
Subsidiary, each such minute book to include minutes of the meetings of, and
resolutions adopted by, the Board of Directors and the boards of directors of
the Significant Subsidiary and the committees thereof to date.
3.2 SHARES. The Shares will be duly authorized and when issued in
accordance with this Agreement and upon the payment of the Buyer Purchase Price
set forth in Section 1.1 hereof, will be duly and validly issued, fully paid and
nonassessable, and the Company will deliver an opinion of Burnet, Duckworth &
Palmer or, if the Continuance shall have occurred at or prior to Closing,
Jenkens & Gilchrist, a Professional Corporation, to that effect at the Closing.
3.3 AUTHORITY; NO CONSENT. Upon the execution and delivery by the Company
thereof, this Agreement and the Registration Rights Agreement will constitute
legal, valid and binding obligations of the Company, enforceable against it in
accordance with their respective terms. The Company has the absolute and
unrestricted right, power and authority to execute and deliver this Agreement
and the Registration Rights Agreement and to perform its obligations hereunder
and thereunder. Except as set forth in Schedule 3.3 hereof, the Company is not
and will not be required to obtain any consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the transactions contemplated hereby or thereby.
3.4. NO VIOLATION. Other than the Continuance and merger immediately
thereafter of the Significant Subsidiary into the Continued Company for which a
waiver and amendment under the NationsBank Credit Facility is being sought, the
Company represents and warrants that neither the execution and performance of
this Agreement and the Registration Rights Agreement nor the consummation of the
transactions contemplated hereby or thereby will (i) conflict with, or result in
the breach of the terms, conditions and provision of, or constitute a default
(with or without notice or the passage of time) under, or result in or give rise
to a right of termination, cancellation, acceleration or modification of any
right or obligation under, or give rise to a right
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to put or to compel a tender offer for outstanding securities of the Company or
any of its Subsidiaries under, or require any consent, waiver or approval under,
any note, bond, debt instrument, indenture, mortgage, deed of trust, lease, loan
agreement, joint venture agreement, contract or any other agreement, instrument
or obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any property of the Company or
any of its Subsidiaries is bound, (ii) violate or conflict with any applicable
Law, (iii) violate or give rise to any preemptive rights, rights of first
refusal or other similar rights on behalf of any Person (other than an Affiliate
of Buyer) under any applicable Law or any provision of the charter or bylaws of
the Company or the Continued Company or any agreement or instrument applicable
to the Company or (iv) result in the creation or imposition of any Lien upon any
assets or properties of the Company or any of its Subsidiaries.
3.5. CAPITALIZATION; SECURITIES.
(a) As of the date hereof, the authorized capital stock of the Company
consists of:
(i) an unlimited number of Common Shares, of which 26,801,680 are
outstanding, 2,519,244 are reserved for issuance under the Option
Plan, 75,000 are reserved for issuance under warrants and 64,858 are
reserved for issuance under the Purchase Plan;
(ii) an unlimited number of first and second preferred shares,
issuable in series, of which no shares are outstanding and no shares
are reserved for issuance; and
(iii) all of such outstanding Common Shares were duly authorized
and validly issued and are fully paid and non-assessable.
(b) Except for options to purchase in the aggregate 1,890,531 Common
Shares with an average exercise price of approximately U.S.$13.00 per share
pursuant to the Option Plan and the natural gas hedging agreements
described in Note 6 to the Consolidated Financial Statements of the Company
contained in its Form 10-Q filed with the Commission on November 6, 1998,
natural gas hedging agreements entered into in the normal course of
business and options to purchase not more than 100,000 Common Shares that
may be granted in accordance with the policy of the Board of Directors in
connection with the hiring of new employees since the disclosure in such
Note 6 through the Closing Date, and those certain options approved by the
Board of Directors of the Company on December 1, 1998 to be granted as of
January 1, 1999, there are no authorized or outstanding (or any obligations
to authorize or issue) Derivative Securities.
(c) As of December 1, 1998, the Company and its Subsidiaries have no
outstanding Indebtedness other than U.S.$100,000,000 of Indebtedness
outstanding pursuant to the NationsBank Credit Facility, U.S.$125,000,000
of the Company's 9%
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Senior Subordinated Notes and no more than U.S.$5,000,000 pursuant to all
other credit arrangements, notes and ordinary course of business credit
facilities. True, complete and correct copies of the NationsBank Credit
Facility and Indenture, including the exhibits and schedules thereto and
any other documents executed in connection therewith, will be made
available to Buyer upon request.
(d) Other than pursuant to the registration rights agreement dated as
of December 21, 1995 among the Company and certain of Buyer's Affiliates,
or under the Registration Rights Agreement, no Person has any right to
require the Company to register securities of the Company under the
Securities Act, and there are no shareholder or similar agreements to which
the Company is a party, except as disclosed on Schedule 3.5(d) hereto. To
the Company's knowledge, there are no securities that the Company is
required to register pursuant to any agreement listed on Schedule 3.5(d)
hereto.
3.6. COMPANY REPORTS; FINANCIAL STATEMENTS.
(a) The Company has made available to Buyer a true and complete copy
of
(i) the Company's Annual Report on Form 10-K for the years ended
December 31, 1997 and 1996;
(ii) the Company's Quarterly Report on Form 10-Q for the periods
ended March 31, June 30 and September 30, 1998;
(iii) each registration statement, report on Form 8-K, proxy
statement, information statement or other report or statement filed by
the Company with the Commission since December 31, 1995 and prior to
the date hereof, in each case in the form (including exhibits and any
amendments thereto) filed with the Commission (items (i) through (iii)
collectively, the "SEC Reports"); and
(iv) all documents forming part of its public file with the
Canadian provincial securities commissions. As of their respective
dates, the SEC Reports and any registration statement, report, proxy
statement, information statement or other statement filed by the
Company with the Commission before the Closing Date ("Subsequent
Reports") (i) were, or will be, as the case may be, timely filed with
the Commission; (ii) complied, or will comply, as the case may be, in
all material respects, with the applicable requirements of the
Exchange Act and the Securities Act, and (iii) did not, or will not,
as the case may be, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
has filed all reports and statements with the Commission required to
have been filed
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as of the date hereof for the Company to register securities for sale
on Form S-3 under the Securities Act or any successor form thereto.
(b) Each of the consolidated balance sheets (including, where
applicable, the related notes and schedules) included in or
incorporated by reference into the SEC Reports and any Subsequent
Reports fairly presents, or will fairly present, as the case may be,
in all material respects, the consolidated financial position of the
Company and its Subsidiaries as of the date thereof, and each of the
consolidated statements of income (or statements of results of
operations), stockholders' equity and cash flows (including the
related notes and schedules) included in or incorporated by reference
into the SEC Reports or any Subsequent Reports fairly presents or will
fairly present as the case may be, in all material respects, the
results of operations, retained earnings and cash flows, as the case
may be, of the Company and its Subsidiaries (on a consolidated basis)
for the periods or as of the dates, as the case may be, set forth
therein, in each case in accordance with Canadian GAAP (or U.S. GAAP
after the change to U.S. GAAP anticipated if the Continuance is
consummated) applied on a consistent basis throughout the periods
covered (except as stated therein or, where applicable, in the notes
thereto, except in each of the foregoing instances in the case of
interim statements for the lack of footnote disclosure.
3.7. ABSENCE OF CERTAIN CHANGES. Except for transactions approved by
two-thirds of all of the members of the Board of Directors, transactions
contemplated by this Agreement and the Registration Rights Agreement, or as
disclosed in the SEC Reports or on Schedule 3.7 hereto, since September 30,
1998, the Company and its Subsidiaries have conducted their consolidated
business in the ordinary and usual course, and there has not been any of the
following:
(a) any change or amendment to the charter, bylaws or other
organizational documents of the Company or any of its Subsidiaries;
(b) any issuance or sale or purchase or redemption of any shares of
their respective Equity Securities or of any Derivative Securities, other
than pursuant to this Agreement and the Option Plan or Purchase Plan;
(c) any dividend or other distribution declared, set aside, paid or
made with respect to their respective Equity Securities or any direct or
indirect redemption, purchase or other acquisition of such Equity
Securities by the Company or any of its Subsidiaries, except dividends or
other distributions made to the Company or to any Wholly Owned Subsidiary
of the Company;
(d) any acquisition or disposition of assets by the Company and its
Subsidiaries having a fair value or for a purchase price in excess of
U.S.$10,000,000, in the aggregate, other than acquisitions or dispositions
made in the ordinary course of business,
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acquisitions or dispositions among the Company and its Wholly Owned
Subsidiaries or among such Wholly Owned Subsidiaries;
(e) except for borrowings under the NationsBank Credit Facility up to
U.S.$130,000,000, any increase in excess of U.S.$5,000,000 in the
Indebtedness of the Company and its Subsidiaries, taken as a whole, other
than repayments at stated maturity and any change in intra-Company
Indebtedness among the Company and its Wholly Owned Subsidiaries or among
such Wholly Owned Subsidiaries;
(f) except with respect to the NationsBank Credit Facility as
contemplated by Sections 1.2(c) and 3.4 and related instruments, or
agreements in the ordinary course of business, any material amendment of
any mortgage, Lien, lease, agreement, loan agreement, indenture or other
instrument or document;
(g) any default, event of default or breach (or any event which, with
notice or the passage of time or both, would constitute a default, event of
default or breach) by the Company or any of its Subsidiaries of any credit,
financing or other agreement or instrument relating to any material
Indebtedness which has not been cured by the Closing Date;
(h) any damage, destruction, theft or other casualty, loss (whether or
not covered by insurance) which causes a Material Adverse Effect;
(i) except with respect to the NationsBank Credit Facility as
contemplated by Sections 1.2(c) and 3.4, any material commitment, agreement
or transaction entered into, amended, or terminated (or any waiver of any
rights or remedies under any of the foregoing) by the Company or any of its
Subsidiaries (including any agreement with respect to any ongoing or
threatened litigation), other than in the ordinary course of business;
(j) any entry into or amendment of any material employment or
severance compensation agreement or consulting or similar agreement with,
or any material increase in the compensation or benefits payable or to
become payable by the Company or any of its Subsidiaries to any employee of
the Company or any of its Subsidiaries (other than agreements terminable
without penalty or similar payment by the Company or such Subsidiary, as
the case may be, on not more than 30 days' notice and any other increases
in compensation payable or to become payable to employees (other than
directors or officers) in the ordinary course of business;
(k) any change in the financial accounting methods, principles or
practices of the Company and its Subsidiaries for financial accounting
purposes, taken as a whole, except as required by Canadian GAAP or
applicable Law, other than the contemplated change to U.S. GAAP if the
Continuance is consummated;
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(l) any adoption of a plan of or any agreement or arrangement with
respect to or resolutions providing for the liquidation, dissolution,
merger, consolidation or other reorganization of the Company or any of its
Significant Subsidiaries other than the merger of Denbury Management Inc.
into the Continued Company as contemplated in Section 1.4(c) hereof;
(m) any change, condition, occurrence, circumstance or other event
that, individually or in the aggregate, has had or is reasonably likely to
have a Material Adverse Effect; or
(n) any commitment or agreement to do any of the foregoing, except as
otherwise required or expressly permitted by this Agreement;
3.8. FINANCIAL ADVISORS AND BROKERS.
(a) No Person has acted, directly or indirectly, as a broker, finder
or financial advisor of the Company in connection with this Agreement or
the Registration Rights Agreement or the transactions contemplated hereby
or thereby, and no Person is entitled to receive any broker's, finder's or
similar fee or commission in respect thereof based in any way on any
agreement, arrangement or understanding made by or on behalf of the
Company, any of its Subsidiaries or any of their respective directors,
officers or employees.
(b) The Board of Directors has received an opinion from Credit Suisse
First Boston Corporation to the effect that the consideration to be
received by the Company for the Shares pursuant to the terms hereof is
fair, from a financial point of view, to the Company.
3.9. EXEMPTION FROM REGISTRATION. Assuming the representations and
warranties of Buyer set forth in Article 3 hereof are true and correct in all
material respects, the Company believes that the offer and sale of the Shares
made pursuant to this Agreement will be in compliance with the Securities Act
and any applicable Canadian provincial and U.S. state securities laws and rules
of the NYSE and the TSE and will be, subject to the Company's filing of a report
of trade on Form 20 within ten days of the Closing Date with the Alberta
Securities Commission and the Company's payment of any applicable fees relating
to such filing, and subject to compliance with the provisions of Section 18.2[2]
of Ontario Securities Commission Policy 9.1, exempt from the registration
requirements of the Securities Act and any applicable Canadian provincial and
U.S. state securities laws and rules of the NYSE and the TSE.
3.10. DISCLOSURE. The representations and warranties made by the Company in
this Agreement, and the exhibits, documents, statements, certificates or
schedules furnished or to be furnished to Buyer pursuant to the terms hereof or
expressly referenced herein or therein, taken as a whole, do not and will not
contain any untrue statement of a material fact, or omit to state a
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material fact necessary to make the statements or facts contained herein or
therein not misleading.
3.11. PRICE PROTECTION. The Company has given notice and requested
conditional listing approval from the TSE to the effect that the Company can
issue the Shares at a price of U.S.$5.39 to Buyer pursuant to the terms hereof.
ARTICLE 4
COVENANTS
4.1. TAKING OF NECESSARY ACTION. Each of the parties hereto agrees to use
its reasonable best efforts promptly to take or cause to be taken all actions
and promptly to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the foregoing,
Buyer and the Company will make all required filings as promptly as possible
after the date hereof, and shall obtain all other Regulatory Approvals necessary
or, in the opinion of Buyer or the Company, advisable in order to permit the
consummation of the transactions contemplated hereby.
4.2. CONDUCT OF BUSINESS. From the date hereof until the Closing, the
Company shall conduct its business and shall cause its Subsidiaries to conduct
their respective businesses in, and only in, the ordinary course and shall use,
and shall cause its Subsidiaries to use, their best efforts to preserve intact
their respective present business organizations, operations, goodwill and
relationships with third parties and to keep available the services of the
present directors, officers and key employees. Without limiting the generality
of the foregoing, except as required pursuant to outstanding agreements or
obligations of the Company or any of its Subsidiaries that have been disclosed
to Buyer and set forth in the Schedules hereto or the SEC Reports, from the date
hereof until the Closing, without the prior written consent of Buyer (except as
expressly permitted or required by this Agreement), (i) the Company shall not,
and shall cause each of its Subsidiaries not to, take any action that would
cause a representation or warranty of the Company set forth herein to be untrue
if made at such time, or a covenant of the Company set forth herein to fail to
be satisfied; (ii) the Company shall not adopt any shareholder rights plan or
supermajority voting requirement, issue any security or take any similar action
that would have an adverse effect upon the legal rights of Buyer as a majority
shareholder of the Company under applicable corporate Law following the
consummation of the transactions contemplated in this Agreement; and (iii) the
Company shall not, and shall cause each of its Subsidiaries not to, commit or
agree to do any of the foregoing.
4.3. NOTIFICATIONS. At all times prior to the Closing Date, Buyer shall
promptly notify the Company and the Company shall promptly notify Buyer in
writing of any fact, change, condition, circumstance or occurrence or
nonoccurrence of any event which will or is reasonably likely to result in the
failure to satisfy the conditions to be complied with or satisfied by it
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hereunder, provided however, that the delivery of any notice pursuant to this
Section 4.3 shall not limit or otherwise affect the remedies available hereunder
to any party receiving such notice.
4.4. ALTERNATIVE TRANSACTIONS.
(a) From the date hereof until the earlier of the Closing and the
termination of this Agreement (the "Exclusivity Period"), the Company shall
not permit any of its Subsidiaries or Affiliates to, and shall not
authorize or permit any of their Representatives to, directly or
indirectly,
(i) solicit or initiate, or encourage the submission of, any
Proposal,
(ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any
Proposal or Alternative Transaction, other than a transaction with
Buyer, or
(iii) authorize, engage in, or enter into any agreement or
understanding with respect to, any Alternative Transaction; provided
however, to the extent required by the fiduciary obligations of the
Board of Directors, as determined in good faith by the Board of
Directors based on the advice of outside counsel, the Company may
participate in such discussions or negotiations or furnish such
information in response to an unsolicited Proposal with respect to, or
authorize, engage in or enter into any agreement or understanding with
respect to, a Business Combination; and provided further, that if the
Company's Board of Directors, as determined in good faith by the Board
of Directors based on the advice of outside counsel, deems it to be in
the best interests of its Shareholders, the Company, its officers and
its Directors may notify any party that initiates discussions
regarding a potential Alternative Transaction, that it is engaged in
the transactions contemplated by this Agreement and will not engage in
any further communications while pursuing such transactions.
(b) The Company will promptly advise Buyer of, and inform Buyer of the
terms of, any Proposal that the Company, any of its Subsidiaries or
Affiliates or any of their Representatives may receive during the
Exclusivity Period.
4.5. SHAREHOLDERS' MEETING.
(a) The Company will take, in accordance with applicable Law and its
organizational documents, all action necessary to present a proposal for
the approval by shareholders of the transactions contemplated by this
Agreement (the "Shareholder Approval Proposal") for a vote at a meeting of
the Company's shareholders, which
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meeting shall be held as promptly as possible but in any event within such
time periods as required by applicable regulatory authorities (the
"Shareholders' Meeting").
(b) The Company shall prepare and file with the Commission as promptly
as possible after the date hereof a proxy statement for use in soliciting
proxies in connection with the Shareholders' Meeting (as amended or
supplemented, the "Proxy Statement"). The Proxy Statement shall contain the
recommendation of the Board of Directors of the Company that the Company's
shareholders approve the Shareholder Approval Proposal. The Company shall
notify Buyer promptly of the receipt by it of any comments from the
Commission or its staff and of any request by the Commission for amendments
or supplements to the Proxy Statement or for additional information and
will supply Buyer with copies of all correspondence between the Company and
its representatives, on the one hand, and the Commission or the members of
its staff or of any other Governmental Entities, on the other hand, with
respect to the Proxy Statement. The Company shall give Buyer and its
counsel the reasonable opportunity to review and comment on those portions
of the Proxy Statement which pertain to Buyer, the purchase of Shares
hereunder or the Shareholder Approval Proposal prior to its being filed
with the Commission and shall give Buyer and its counsel the reasonable
opportunity to review and comment on all amendments and supplements to the
Proxy Statement and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the
Commission, provided that Buyer and its counsel shall provide such comments
as soon as possible. The Company shall give reasonable consideration to any
comments Buyer or its counsel may provide with respect to the Proxy
Statement or any amendment or supplement thereto.
(c) Other than with respect to any information with respect to Buyer
supplied to the Company by Buyer in writing specifically for inclusion in
the Proxy Statement as to which information the Company makes no
representation or warranty, the Company hereby represents and warrants that
the Proxy Statement, as of the date thereof and as of the date of the
Shareholders' Meeting, will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they will be made, not misleading.
(d) Buyer hereby represents and warrants that the Proxy Statement, as
of the date thereof and as of the date of the Shareholders' Meeting, will
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they will be
made, not misleading, to the extent, and only to the extent that such
statement or omission was made in reliance upon and in conformity with
information with respect to Buyer and its Affiliates supplied to the
Company by Buyer specifically for inclusion in the Proxy Statement.
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(e) Buyer and its Affiliates hereby agree that they will vote the
Common Shares of the Company which they own on the Shareholder Approval
Proposal in the same proportions as those shareholders other than Buyer and
its Affiliates voting thereon.
4.6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless Buyer, each
member of Buyer, each limited or general partner of each such member, each
limited or general partner of each such limited or general partner, each of
their Affiliates and each of their Representatives (collectively, the
"Indemnified Parties") from and against any and all losses, penalties,
judgments, suits, costs, claims, liabilities, damages and expenses
(including, without limitation, reasonable attorneys' fees and
disbursements but excluding Taxes imposed as a result of being a direct or
indirect owner of the Shares or realizing income or gain with respect
thereto) (collectively, "Losses"), incurred by, imposed upon or asserted
against any of the Indemnified Parties as a result of, relating to or
arising out of (i) the breach of any representation, warranty, agreement or
covenant made by the Company in this Agreement or the Registration Rights
Agreement or in any certificate delivered by the Company pursuant hereto or
thereto or (ii) any litigation, claims, suits or proceedings by a third
party to which such Indemnified Party is made a party (other than as a
plaintiff) arising out of the transactions contemplated by this Agreement,
except, in the case of this clause (ii), for such Losses which are finally
judicially determined (including, without limitation, in a separate
proceeding seeking declaratory relief specifically for this purpose) to
have resulted primarily from the conduct of the Buyer or its Affiliates
(other than the Company); provided that unless and until a final and
non-appealable judicial determination shall be made that such Indemnified
Party is not entitled to indemnification under clause (ii) above, each such
Indemnified Party shall be reimbursed for all indemnified Losses under
clause (ii) above as they are incurred; provided further that if a final
and non-appealable judicial determination shall be made that such
Indemnified Party is not entitled to be indemnified for Losses under clause
(ii) above, such Indemnified Party shall repay to the Company the amount of
such Losses for which the Company shall have reimbursed such Indemnified
Party.
(b) Buyer agrees to indemnify and hold harmless the Company and each
of its Representatives (collectively, the "Indemnified Company Parties")
from and against any and all Losses incurred by any of the Indemnified
Company Parties as a result of, or arising out of, the breach of any
representation, warranty, agreement or covenant made by Buyer in this
Agreement or the Registration Rights Agreement or in any certificate
delivered by Buyer pursuant hereto or thereto.
(c) If any claim, suit or proceeding covered by Section 4.6(a) above
is brought against an indemnified party and it gives notice to the
indemnifying party of the commencement of such proceeding, the indemnifying
party will be entitled to participate
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in such proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such proceeding and the Indemnified
Party determines in good faith that joint representation would be
inappropriate or (ii) the actual or potential defendants in, or targets of,
any such action include both the Indemnified Party and the indemnifying
party, and the Indemnified Party shall have reasonably concluded, upon
advice of counsel, that there may be legal defenses available to it which
are different from or additional to those available to the indemnifying
party), to assume the defense of such proceeding and provide
indemnification with counsel satisfactory to the Indemnified Party and,
after notice from the indemnifying party will not be liable to the
Indemnified Party for any fees of other counsel or any other expenses with
respect to the defense of such proceeding. If the indemnifying party
assumes the defense of a proceeding, no compromise or settlement of such
claims may be effected by the indemnifying party or Indemnified Party
without the other's consent. If, upon receiving notice, the indemnifying
party does not timely undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails to
diligently pursue such defense, the Indemnified Party may undertake such
defense through counsel of its choice, at the cost and expense of the
indemnifying party.
4.7. ANTITAKEOVER STATUTES. The Company shall take all reasonable action
within its power to exempt the Company, the Continued Company or Buyer from the
provisions of any antitakeover, business combination or similar provision of
applicable Law in connection with or following the transactions contemplated
hereby. Without limiting the generality of the foregoing, the certificate of
incorporation of the Continued Company shall exempt the Continued Company from
the applicability of Section 203 of the DGCL.
ARTICLE 5
MISCELLANEOUS
5.1 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereby, and supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof.
5.2 SURVIVAL OF REPRESENTATIONS. All representations, warranties and
agreements made by the Company and Buyer in this Agreement or pursuant hereto
shall survive the execution and delivery of this Agreement.
5.3 NOTICES. All notices, payments and other required communications
("Notices") to the parties shall be in writing, and shall be addressed,
respectively, as follows:
If to Company: Denbury Resources Inc.
17304 Preston Road, Suite 200
Dallas, Texas 75252
Attn: Phil Rykhoek
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If to Buyer: TPG Partners II, L.P.
201 Main Street
Suite 2420
Fort Worth, Texas 76102
Attn: James J. O'Brien
All Notices shall be given (i) by personal delivery, (ii) by electronic
communication, with a confirmation sent by registered or certified mail, return
receipt requested, or (iii) by overnight courier. All Notices shall be deemed
delivered (i) if by personal delivery on the date of delivery if delivered
during normal business hours, and, if not delivered during normal business
hours, on the next business day following delivery, (ii) if by electronic
communication, on the date of receipt of the electronic communication, and (iii)
if by overnight courier on the date for which delivery was contracted. A party
may change its address by Notice to the other party.
5.4 APPLICABLE LAW AND VENUE. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by the internal
laws, and not the law of conflicts, of the State of Texas, except that (i)
matters of corporate law shall, until the consummation of the Continuance, be
governed by the Canada Business Corporations Act and, thereafter, by the Law of
the State of Delaware and (ii) matters of securities laws shall be governed by
the federal securities laws of the United States and the securities laws of the
several provinces of Canada, as applicable. Any legal action relating to this
Agreement shall be brought only in the United States District Court for the
Northern District of Texas, Dallas Division.
5.5 WAIVER. The failure of a party to insist on the strict performance of
any provision of this Agreement or to exercise any right, power or remedy upon a
breach hereof shall not constitute a waiver of any provision of this Agreement
or limit the party's right thereafter to enforce any provision or exercise any
right.
5.6 SEVERABILITY. If any term, provision, covenant, or restriction of this
Agreement is held by the final, nonappealable order of a court of competent
jurisdiction to be invalid, void, or unenforceable, the remainder of the terms,
provisions, covenants and restrictions hereof shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
5.7 AMENDMENTS. This Agreement may be amended, modified, or superseded only
by written instrument executed by all parties hereto.
5.8 HEADINGS. The Article and Section headings appearing in this Agreement
are for convenience of reference only and are not intended, to any extent or for
any purpose, to limit or define the text of any Article or Section.
5.9 Gender and Number. Whenever required by the context, as used in this
Agreement, the singular number shall include the plural and the neuter shall
include the masculine or feminine gender, and vice versa.
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5.10 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be an original and all of which together shall constitute
one agreement binding on all parties hereto, notwithstanding that all the
parties have not signed the same counterpart.
5.11 SPECIFIC PERFORMANCE. The parties hereto specifically acknowledge that
monetary damages are not an adequate remedy for violations of this Agreement,
and that any party hereto may, in its sole discretion, apply to a court of
competent jurisdiction for specific performance or injunctive or such other
relief as such court may deem just and proper in order to enforce this Agreement
or prevent any violation hereof and, to the extent permitted by applicable Law
and to the extent the party seeking such relief would be entitled on the merits
to obtain such relief, each party waives any objection to the imposition of such
relief.
5.12 TERMINATION.
(a) Subject to Section 5.12(b), this Agreement may be terminated by
notice in writing at any time prior to the Closing by Buyer or the Company
if:
(i) the Shareholder Meeting shall have been held and the
Shareholder Approval Proposal shall not have been approved thereat;
(ii) the Closing shall not have occurred on or before the earlier
of the last day of the Pricing Period and the 180th day following the
date hereof;
(iii) any Governmental Entity of competent jurisdiction shall
have issued any judgment, injunction, order, ruling or decree or taken
any other action restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement or the
Registration Rights Agreement and such judgment, injunction, order,
ruling, decree or other action becomes final and nonappealable;
provided that the party seeking to terminate this Agreement pursuant
to this Section 5.12(a)(iii) shall have used its best efforts to have
such judgment, injunction, order, ruling or decree lifted, vacated or
denied;
(iv) the Company and Buyer so mutually agree in writing;
provided however, that the right to terminate this Agreement under Section
5.12(a)(i) or (ii) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the primary cause of,
or primarily resulted in, the failure of the Closing to occur on or before
such date.
(b) If this Agreement is terminated in accordance with Section 5.12(a)
hereof and the transactions contemplated hereby are not consummated, this
Agreement shall become null and void and of no further force and effect
except that (i) the terms and provisions of Section 4.6 and this Article 5
shall remain in full force and effect and (ii) any termination
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of this Agreement shall not relieve any party hereto from any liability for
any breach of its obligations hereunder.
(c) If this Agreement is terminated in accordance with Section
5.12(a)(i) or a(ii) hereof, the Company shall pay to Buyer, within one
Business Day following such termination, a fee in the amount of
U.S.$1,000,000 in immediately available funds.
(d) Within one Business Day of the later to occur of (i) termination
of this Agreement and (ii) the earlier of (A) the entering into of a
written agreement, letter of intent, agreement in principle, memorandum of
understanding or similar writing with respect to an Alternative Transaction
and (B) the consummation of an Alternative Transaction, the Company shall
pay Buyer (or its assignees) the Alternative Transaction Fee; provided that
an Alternative Transaction Fee shall be payable only in the event that (i)
a bona fide Alternative Transaction (whether or not the same Alternative
Transaction as is ultimately consummated or as to which a written
agreement, letter of intent, agreement in principle, memorandum of
understanding or similar writing is ultimately entered into) is proposed
to, or an inquiry or contact with respect thereto is made to, the Company
or its Designated Representatives prior to the Cut-Off Date (as defined
below) or a Proposal with respect to a bona fide Alternative Transaction is
publicly announced by the Person contemplating such transaction or an agent
of such Person prior to the CutOff Date and (ii) an agreement with respect
to an Alternative Transaction is entered into or an Alternative Transaction
is consummated within one year after the Cut-Off Date. The term "Cut-Off
Date" shall mean the earlier of (i) the last day of the Pricing Period, or
(ii) the termination of this Agreement. The term "Designated
Representatives" means (i) any officers, directors or employees of the
Company or its Subsidiaries (the "Affiliated Representatives") or (ii) any
other Representative of the Company to the extent that such Representative
conveys the relevant information to the Company or an Affiliated
Representative.
5.13 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole benefit
of the parties hereto and their respective successors and permitted assigns and
nothing herein, express or implied, is intended or shall confer upon any other
Person any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement, except that the provisions of Section 4.6
shall inure to the benefit of and be enforceable by each of the Indemnified
Parties.
5.14 DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings set forth below:
"Affiliate" has the meaning set forth in Rule 12b-2 under the Exchange Act.
The term "Affiliated" has a correlative meaning.
"Affiliated Representatives" has the meaning set forth in Section 5.12(d).
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"Agreement" has the meaning set forth in the preamble hereto.
"Alternative Transaction" means any (A) direct or indirect acquisition or
purchase of any Equity Securities of the Company or any of its Subsidiaries or
any tender offer or exchange offer, that if consummated would result in any
Person (other than Buyer or any of its Affiliates) Beneficially Owning 25% or
more of any class of Equity Securities of the Company or Equity Securities of
any of its Subsidiaries, (B) Business Combination, liquidation, dissolution or
similar transaction involving the Company or any of its Subsidiaries, or (C)
other transaction the consummation of which would prevent or materially delay
the transaction contemplated hereby.
"Alternative Transaction Fee" means (i) U.S.$3,000,000 less (ii) any amount
paid to Buyer pursuant to Section 5.12(c).
"Articles of Continuance" means the Articles of Continuance of the Company,
as such may be amended from time to time.
"Beneficially Own" with respect to any securities means having "beneficial
ownership" of such securities (as determined pursuant to Rule 13d-3 under the
Exchange Act as in effect on the date hereof, except that a Person shall be
deemed to Beneficially Own all such securities that such Person has the right to
acquire whether such right is exercisable immediately or after the passage of
time). The terms "Beneficial Ownership" and "Beneficial Owner" have correlative
meanings.
"Board of Directors" means the board of directors of the Company.
"BOE" means one barrel of oil equivalent using the ratio of one barrel of
crude oil, condensate or natural gas liquids to six Mcf of natural gas.
"Business Combination" means a merger or consolidation in which the Company
is a constituent corporation and pursuant to which Voting Securities of the
Company are exchanged for cash, securities or other property, a recapitalization
of the Company or a sale of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole; provided that a transaction or
series of transactions as a result of which the Beneficial Ownership of the
Equity Securities of the Company or of the surviving entity of the transaction
(or of the ultimate parent of the Company or of such surviving entity)
immediately after the consummation of such transaction is the same (other than
in respect of fractional shares or odd lots) as the Beneficial Ownership of the
Company's Equity Securities immediately prior to the consummation thereof shall
not be deemed a "Business Combination."
"Business Day" means any day, other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by Law or executive order to close.
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"Buyer" has the meaning set forth in the preamble hereto.
"Buyer Purchase Price" has the meaning set forth in Section 1.1 hereof.
"Bylaws" means the Bylaws of the Company, as amended from time to time.
"Canadian GAAP" means Canadian generally accepted accounting principles as
in effect at the relevant time or for the relevant period.
"Closing" has the meaning set forth in Section 1.1 hereof.
"Closing Date" has the meaning set forth in Section 1.4 hereof.
"Commission" has the meaning set forth in the recitals hereto.
"Common Shares" has the meaning set forth in the recitals hereto.
"Company" has the meaning set forth in the preamble hereto.
"Continued Company" has the meaning set forth in the recitals hereto.
"Continuance" has the meaning set forth in the recitals hereto.
"Cut-Off Date" has the meaning set forth in Section 5.12(d).
"Derivative Securities" means any subscriptions, options, conversion
rights, warrants, or other agreements, securities or commitments of any kind
obligating the Company or any of its Subsidiaries to issue, grant, deliver or
sell, or cause to be issued, granted, delivered or sold, any Equity Securities
of the Company or any of its Subsidiaries.
"Designated Representatives" has the meaning set forth in Section 5.12(d).
"DGCL" means the Delaware General Corporation Law.
"Equity Securities" of any Person means any and all common stock, preferred
stock and any other class of capital stock of, and any partnership or limited
liability company interests of such Person or any other similar interests of any
Person that is not a corporation, partnership or limited liability company.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exclusivity Period" has the meaning set forth in Section 4.4(a) hereof.
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"Governmental Entity" means any government or political subdivision or
department thereof, any governmental or regulatory body, commission, board,
bureau, agency or instrumentality, or any court or arbitrator or alternative
dispute resolution body, in each case whether U.S. or Canadian federal, state,
provincial, local or foreign.
"Group" has the meaning set forth in Rule 13d-5 under the Exchange Act.
"Guarantee" means any direct or indirect obligation, contingent or
otherwise, to guarantee (or having the economic effect of guaranteeing)
Indebtedness in any manner, including, without limitation, any monetary
obligation to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of another Person (whether
arising by agreement to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise).
"Indebtedness" means, with respect to any Person, whether recourse is to
all or a portion of the assets of such Person and whether or not contingent, (i)
any obligation of such Person for money borrowed, (ii) any obligation of such
Person evidenced by bonds, debentures, notes, Guarantees or other similar
instruments, (iii) any reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person, (iv) any obligation of such Person issued or assumed as
the deferred purchase price of property, assets or services (but excluding trade
accounts payable and other accrued liabilities arising in the ordinary course of
business), (v) any interest rate or currency swap or similar hedging agreement,
and (vi) any capital lease obligation of such Person.
"Indemnified Parties" has the meaning set forth in Section 4.6(a) hereof.
"Indemnified Company Parties" has the meaning set forth in Section 4.6(b)
hereof.
"Law" means any law, treaty, statute, ordinance, code, rule or regulation
of a Governmental Entity or judgment, decree, order, writ, award, injunction or
determination of an arbitrator or court or other Governmental Entity.
"Lien" means any mortgage, pledge, lien, security interest, claim, voting
agreement, conditional sale agreement, title retention agreement, restriction,
option or encumbrance of any kind, character or description whatsoever.
"Losses" has the meaning set forth in Section 4.6(a) hereof.
"Material Adverse Effect" means a material adverse effect on the financial
condition, results of operations, business or assets of the Company and its
Subsidiaries taken as a whole, provided however, that any such adverse effect
(including, without limitation, (i) an adverse effect on the Company's financial
statements, (ii) non-cash writedowns in the book value of the Company's oil and
gas properties, (iii) a decline in the Company's reserve quantities or value,
24
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(iv) a decline in the Company's production volumes, or (v) a decrease in the
borrowing base under the NationsBank Credit Facility) shall not be considered to
be a Material Adverse Effect if it results primarily and directly from (x)
prevailing oil prices, provided that the weighted average oil price realized by
the Company over any 28 consecutive day period between the date hereof and the
Closing Date does not fall below 80% of the per barrel price realized by the
Company for the week commencing December 6, 1998, or (y) prevailing natural gas
prices, provided that the weighted average gas price realized by the Company
(after giving effect to any benefit received by the Company from natural gas
hedging contracts covering the Company's gas production) over any 28 consecutive
day period between the date hereof and the Closing Date does not fall below 80%
of the per Mcf price realized by the Company for the week commencing December 6,
1998, or (z) a decrease in the Company's production, provided that the average
daily production (on a BOE basis) during any 28 consecutive day period between
the date hereof and the Closing Date does not fall to a level below 13,000 BOE
per day.
"Mcf" means one thousand cubic feet of natural gas.
"NationsBank Credit Facility" means the credit facility established
pursuant to the First Restated Credit Agreement, by and among Denbury
Management, Inc., as borrower, the Company, as guarantor, NationsBank of Texas,
N.A., as administrative agent, NationsBank Montgomery Securities LLC, as
syndication agent and arranger and the financial institutions listed on Schedule
I thereto, as banks, dated December 29, 1997, as amended.
"NYSE" has the meaning set forth in the recitals hereto.
"Option Plan" means the Company's employee stock option plan made effective
August 9, 1995.
"Person" means any individual, corporation, company, association,
partnership, joint venture, trust or unincorporated organization, or
Governmental Entity.
"Pricing Period" means the period from the date hereof to the 90th day
following the date of filing of the Proxy Statement; provided however, that, if
(i) the Closing has not occurred prior to the 90th day following the date hereof
due solely to delays by the Commission or its staff in reviewing the Proxy
Statement or any amendment thereto, (ii) the Company has received written
confirmation from the TSE to the effect that the Company can issue the Shares at
a price of U.S.$5.39 to Buyer at any time prior to a date subsequent to the 90th
day following the date hereof and (iii) the Company provides a written copy of
such confirmation to Buyer, then "Pricing Period" shall mean the period from the
date hereof to such subsequent date.
"Proceeding" means any claim, suit, action, proceeding, arbitration or
investigation.
"Proposal" means any inquiry, proposal or offer from any person relating to
an Alternative Transaction.
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"Proxy Statement" has the meaning set forth in Section 4.4(b) hereof.
"Purchase Plan" means the Company's employee stock purchase plan made
effective February 1, 1996.
"Registration Rights Agreement" means the Registration Rights Agreement to
entered into on the Closing Date among the Company, TPG Partners, L.P., TPG
Parallel I, L.P., Buyer and any assignees of Buyer, in the form attached hereto
as Exhibit A.
"Regulatory Approvals" means (i) any and all certificates, permits,
licenses, franchises, concessions, grants, consents, approvals, orders,
registrations, authorizations, waivers, variances or clearances from, or filings
or registrations with, Governmental Entities and (ii) any and all waiting
periods imposed by applicable Laws.
"Representatives" means, with respect to any Person, any of such Person's
officers, directors, employees, agents, attorneys, accountants, actuaries,
consultants, equity financing partners or financial advisors or other Person
associated with, or acting on behalf of, such Person.
"SEC Reports" has the meaning set forth in Section 3.6(a) hereof.
"Securities Act" means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Shareholder Approval Proposal" has the meaning set forth in Section 4.5(a)
hereof.
"Shareholder' Meeting" has the meaning set forth in Section 4.5(a) hereof.
"Shares" has the meaning set forth in the recitals hereto.
"Significant Subsidiary" means Denbury Management Inc. and any successor
thereto.
"Subsequent Reports" has the meaning set forth in Section 3.6(a) hereof.
"Subsidiary" means, as to any Person, any other Person of which more than
50% of the Voting Securities are owned or controlled, or the ability to select
or elect 50% or more of the directors or similar managers is held, directly or
indirectly, by such first Person or one or more of its Subsidiaries or by such
first Person and one or more of its Subsidiaries.
"TSE" has the meaning set forth in the recitals hereto.
"Voting Power" means, with respect to any Voting Securities, the aggregate
number of votes attributable to such Voting Securities that could generally be
cast by the holders thereof for
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the election of directors at the time of determination (assuming such election
were then being held).
"Voting Securities" means, (i) with respect to the Company, the Equity
Securities of the Company entitled to vote generally for the election of
directors of the Company and (ii) with respect to any other Person, any
securities of or interests in such Person entitled to vote generally for the
election of directors or any similar managing person of such Person.
"Wholly Owned Subsidiary" means, as to any Person, a Subsidiary of such
Person of which 100% of the Equity Securities (other than directors' qualifying
shares or similar shares) is owned, directly or indirectly, by such Person.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.
Company: DENBURY RESOURCES INC.
By: /s/ Phil Rykhoek
------------------------------------
Name: Phil Rykhoek
Title:Chief Financial Officer & Secretary
Buyer: TPG PARTNERS II, L.P.
By: TPG GenPar II, L.P., General Partner
By: TPG Advisors II, Inc., General
Partner
By: /s/ William S. Price, III
------------------------------------
Name: William S. Price, III
Title: Vice President
27
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SCHEDULES
There are no schedules to this Agreement.
28
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
Dated as of [________________, ____]
by and among
DENBURY RESOURCES INC.,
TPG PARTNERS II, L.P.,
TPG PARTNERS, L.P.
and
TPG PARALLEL I, L.P.
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Table of Contents
Page
1. Definitions...............................................................1
2. Incidental Registration...................................................2
(a) Incidental Registration...............................................2
(b) Priority on Registrations.............................................3
3. Shelf Registration........................................................3
(a) Filing................................................................3
(b) Continued Effectiveness...............................................4
(c) Delay in Filing; Suspension of Registration...........................4
(d) Underwritten Offering.................................................4
4. Demand Registration Right.................................................5
(a) Right to Demand; Notice to Holders....................................5
(b) Number of Demand Registrations........................................5
(c) Limitation on Demand Registration.....................................6
(d) Delay in Filing; Suspension of Registration...........................6
(e) Underwritten Offering.................................................6
5. Black-Out Periods.........................................................7
(a) Restrictions on Public Sale by Holders................................7
(b) Restrictions on Public Sale by Company................................7
6. Registration Procedures...................................................7
7. Registration Expenses....................................................10
(a)Registration in the United States or Any Political Subdivision Thereof10
(b)Qualification in Canada or Any Political Subdivision Thereof..........10
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8. Indemnification; Contribution............................................11
(a) Indemnification by the Company.......................................11
(b) Indemnification by Holders...........................................12
(c) Conduct of Indemnification Proceedings...............................12
(d) Contribution.........................................................13
9. Miscellaneous............................................................13
(a) Limitations on Subsequent Registration Rights........................13
(b) Amendments and Waivers...............................................14
(c) Notices..............................................................14
(d) Successors and Assigns...............................................13
(e) Counterparts.........................................................14
(f) Headings.............................................................14
(g) Governing Law........................................................15
(h) Severability.........................................................15
(i) Entire Agreement.....................................................15
(j) Attorneys' Fees......................................................14
(k) No Inconsistent Agreements...........................................14
(l) Enforcement..........................................................14
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into effective as of [______________, ____] (the "Effective Date"), by and among
Denbury Resources Inc., a [Delaware/Canadian] corporation (the "Company"), TPG
Partners II, L.P., a Delaware limited partnership ("Partners II"), TPG Partners,
L.P., a Delaware limited partnership ("Partners I") and TPG Parallel I, L.P., a
Delaware limited partnership ("Parallel I").
This Agreement is made pursuant to the Stock Purchase Agreement dated as of
December 16, 1998 by and between the Company and Partners II (the "Stock
Purchase Agreement").
The parties hereby agree as follows:
1. DEFINITIONS.
Except as set forth below, or as otherwise defined in this Agreement, all
capitalized terms shall have the meanings ascribed to them in the Stock Purchase
Agreement. For purposes of this Agreement, the following terms shall have the
meanings so provided:
(a) "Adverse Disclosure" means (x) filing with the Commission of
financial statements (or modifications to previously filed financial statements
required by Applicable Securities Laws that pertain to the completeness of
financial statements or updating of financial statements) of the Company or an
acquired business as defined under Rule 3-05 of Regulation S-X under or (y)
public disclosure of material non-public information, which disclosure in the
good faith judgment of the board of directors of the Company, after consultation
with counsel to the Company, (i) would be required to be made in any
Registration Statement so that such Registration Statement would not be
materially misleading; (ii) would not be required to be made at such time but
for the filing of such Registration Statement; and (iii) the Company has a bona
fide business purpose for not disclosing publicly.
(b) "Applicable Securities Laws" means the securities laws, rules and
regulations of the United States of America or of Canada, or any political
subdivision of either and the by-laws, rules and regulations of the TSE, the
NYSE and any other exchange upon which Common Shares are listed applicable to
the subject offering or placement.
(c) "Holder" or "Holders" means any holder or holders of Registrable
Common Shares.
(d) "Participating Holder" means any Holder requesting the
registration of Registrable Common Shares pursuant to Sections 2 or 4.
(e) "Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of all or any portion of the securities covered by
the Registration
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Statement and all other amendments and supplements to the prospectus, including
post-effective amendments and all other material incorporated by reference in
such prospectus.
(f) "Registrable Common Shares" means the Subject Common Shares,
provided, that Subject Common Shares shall cease to be Registrable Common Shares
when (i) such Subject Common Shares are sold (A) pursuant to a Registration
Statement or other qualified document filed, when declared effective, under
Applicable Securities Laws or (B) without registration pursuant to Rule 144
under the Securities Act or as otherwise permitted under Applicable Securities
Laws, or (ii) the Company delivers to the Holders an opinion of counsel
satisfactory to the Holders of a majority of the Subject Common Shares then
outstanding to the effect that such Subject Common Shares may be publicly
offered without registration under Rule 144 under the Securities Act or as
otherwise permitted under Applicable Securities Laws.
(g) "Registration Statement" means any Registration Statement of the
Company filed with, or to be filed with, the Commission under the rules and
regulations promulgated under the Securities Act, including the Prospectus,
amendments and supplements to such Registration Statement, including
post-effective amendments, and all exhibits and all material incorporated by
reference in such Registration Statement.
(h) "Shelf Registration Statement" means a Registration Statement of
the Company filed with the Commission on Form S-3 (or any successor form or
other appropriate form under the Securities Act) for an offering to be made on a
continuous basis pursuant to Rule 415 under the Securities Act (or any similar
rule that may be adopted by the Commission).
(i) "Subject Common Shares" means the 27,274,314 Common Shares
Beneficially Owned as of the Closing Date by any limited partnership, limited
liability company or other investment fund managed directly or indirectly by the
principals of TPG Advisors, Inc., a Delaware corporation, or TPG Advisors II,
Inc., a Delaware corporation.
(j) "Underwritten Offering" means an offering in which securities of
the Company are sold to an underwriter on a firm commitment basis for reoffering
to the public.
2. INCIDENTAL REGISTRATION.
(a) Incidental Registration. If the Company proposes to register or
qualify any of its Common Shares under any Applicable Securities Laws for sale
(other than a registration on Form S-4, S-8 or any similar form), it will serve
written notice of such proposed registration or qualification to all Holders at
least 21 days before the anticipated filing date of a Registration Statement or
other document required for qualification, as applicable, relating thereto.
Written notices served by the Company pursuant to the preceding sentence of this
Section 2(a) shall be referred to hereinafter as "Notices." Subject to the
restrictions and in accordance with the procedures set forth below, the Company
will use its best efforts to include in any registration or qualification to
which a Notice relates all
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<PAGE>
Registrable Common Shares with respect to which the Company has received from
any Holder written requests for inclusion therein within 7 days prior to such
filing.
(b) Priority on Registrations.
(i) Notwithstanding the provisions of Section 2(a) hereof, in the case
of an Underwritten Offering by the Company of Common Shares or securities
convertible into or exchangeable or exercisable for Common Shares, the managing
underwriter or underwriters of the Underwritten Offering may limit the number of
Registrable Common Shares included in the Underwritten Offering pursuant to any
Registration Statement or qualification if, in its or their reasonable opinion,
the number of Registrable Common Shares proposed to be sold in such Underwritten
Offering exceeds the number that can be sold without materially adversely
interfering with the orderly sale and distribution of the securities being
offered pursuant to such Registration Statement or qualification. In the event
the number is to be so limited in the Underwritten Offering, qualification or
registration, a sufficient number of securities shall be eliminated to reduce
the total amount of securities to be included in such Underwritten Offering,
qualification or registration to the amount recommended by such underwriter. In
reducing the amount of securities to be included in such Underwritten Offering,
qualification or registration, the Company will include in such Underwritten
Offering, qualification or registration (A) first, all securities the Company
proposes to sell, and (B) second, to the extent not inconsistent with the Stock
Purchase Agreement or the Securities Purchase Agreement dated as of November 13,
1995 by and among the Company, Partners I and Parallel I, as amended, and all
documents related thereto, all Registrable Common Shares Beneficially Owned by
Holders requested to be included in the Underwritten Offering, qualification or
registration and Common Shares requested to be included by other holders of
Common Shares who have registration rights in respect thereof pari passu with
the registration rights granted hereby, reduced pro rata according to the number
of Registrable Common Shares or Common Shares which are Beneficially Owned by
Holders and each such other holder, as the case may be, and requested to be
included in such registration or qualification in good faith with the bona fide
intention of selling the same.
(ii) The Company shall use its best efforts to enable the Registrable
Common Shares of Holders, if inclusion in a registration or qualification and
related Underwritten Offering is properly requested, to be included in such
registration or qualification and Underwritten Offering.
3. SHELF REGISTRATION.
(a) Filing. As promptly as practicable following a demand by Holders
of not less than 25% of the Registrable Common Shares at any time up until the
sixth (6th) anniversary of the Closing Date, the Company shall file with the
Commission a Shelf Registration Statement relating to the offer and sale of the
Registrable Common Shares by Holders from time to time in accordance with the
methods of distribution elected by such Holders and set forth in such Shelf
Registration Statement and, thereafter, shall use its reasonable best efforts to
cause such Shelf Registration Statement to be declared effective under the
Securities Act. If, on the date of any such demand, the Company does not qualify
to
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<PAGE>
file a Shelf Registration Statement, then the provisions of this Section 3 shall
not apply, but, if at any time thereafter, the Company does so qualify, it
shall, as promptly as practicable following a subsequent demand by Holders of
not less than 25% of the Registrable Common Shares, file a Shelf Registration
Statement and use its reasonable best efforts to cause the Shelf Registration
Statement to be declared effective. Any such requested registration that results
in the declaration of effectiveness of a Shelf Registration Statement shall
hereinafter be referred to as a "Shelf Registration."
(b) Continued Effectiveness. The Company shall use its reasonable best
efforts to keep any Shelf Registration Statement filed and declared effective
pursuant to Section 3(a) continuously effective in order to permit the
Prospectus forming a part thereof to be usable by Holders until the earlier of
the date as of which (i) all the Registrable Common Shares have been sold
pursuant to such Shelf Registration Statement (but in no event prior to the
applicable period referred to in Section 4(3) of the Securities Act and Rule 174
thereunder) or (ii) each of the Holders is permitted to sell its Registrable
Common Shares without registration pursuant to Rule 144 under the Securities Act
or as otherwise permitted under Applicable Securities Laws (such period of
effectiveness being the "Shelf Period"). Subject to Section 3(c), below, the
Company shall not be deemed to have used its reasonable best efforts to keep the
Shelf Registration Statement effective during the Shelf Period if the Company
voluntarily takes any action or omits to take any action that would result in
Holders not being able to offer and sell any such Registrable Common Shares
during the Shelf Period, unless such action or omission is required by
applicable Law.
(c) Delay in Filing; Suspension of Registration. If the continued
effectiveness of the Shelf Registration Statement at any time would require the
Company to make an Adverse Disclosure, the Company may, upon giving prompt
written notice of such action to the Holders, suspend use of the Shelf
Registration Statement (a "Shelf Suspension"); provided, however, that the
Company shall not be permitted to exercise a Shelf Suspension (i) more than one
time during any twelve-month period or (ii) for a period exceeding fifty (50)
days on any such occasion (or seventy-five (75) days if such Adverse Disclosure
relates to the filing of audited financial statements, or audited statements of
revenues and expenses, of an acquired business). In the case of a Shelf
Suspension, the Holders agree to suspend use of the Prospectus in the Shelf
Registration Statement in connection with any such sale or purchase of or offer
to sell or purchase Registrable Common Shares upon receipt of the notice
referred to above. The Company shall immediately notify the Holders upon the
termination of any Shelf Suspension, amend or supplement the Prospectus, if
necessary, so it does not contain any untrue statement or omission therein and
furnish to the Holders such numbers of copies of the Prospectus as so amended or
supplemented as the Holders may reasonably request. The Company agrees, if
necessary, to supplement or make amendments to the Shelf Registration Statement,
if required by the registration form used by the Company for the Shelf
Registration or by the instructions applicable to such registration form or by
the Securities Act or the rules or regulations promulgated thereunder or as may
reasonably be requested by the Holders of a majority of the Registrable Common
Shares then outstanding.
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<PAGE>
(d) Underwritten Offering. If the Holders of a majority of the
Registrable Common Shares included in any offering pursuant to the Shelf
Registration Statement so elect prior to the filing of any supplement to the
Prospectus contained therein relating to such offering, such offering shall be
in the form of an Underwritten Offering and the Company shall amend or
supplement the Shelf Registration Statement, if appropriate. If any offering
pursuant to a Shelf Registration Statement involves an Underwritten Offering,
the Holders of a majority of the Registrable Common Shares included in such
Underwritten Offering shall, after consulting with the Company, have the right
to select the managing underwriter or underwriters to administer such
Underwritten Offering, subject to the right of the Company to select one
co-managing underwriter reasonably acceptable to such Holders for such
Underwritten Offering.
4. DEMAND REGISTRATION RIGHT.
(a) Right to Demand; Notice to Holders. If, on or at any time after
the Closing Date there is no currently effective Shelf Registration Statement on
file with the Commission pursuant to which Holders may, from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement, offer and sell Registrable Common
Shares, then, at any time up until the sixth (6th) anniversary of the Closing
Date, the Holders of not less than 25% of the Registrable Common Shares may make
a written request to the Company for registration of an offering under the
Securities Act or other Applicable Securities Laws of all or part of the
Registrable Common Shares held by such Holders, provided that the estimated
market value of the Registrable Common Shares to be so registered is at least
U.S.$20 million in the aggregate. Any such requested registration shall
hereinafter be referred to as a "Demand Registration." Each request for a Demand
Registration shall specify the aggregate amount of Registrable Common Shares to
be registered and the intended methods of disposition thereof. Upon such request
for a Demand Registration, the Company shall file a Registration Statement
relating to such Demand Registration (the "Demand Registration Statement"), and
shall use its reasonable best efforts promptly to cause to become effective the
Demand Registration of such Registrable Common Shares under (i) the Securities
Act and (ii) the "Blue Sky" laws of such jurisdictions as any Holder of
Registrable Common Shares being registered under such Demand Registration or any
underwriter, if any, reasonably requests. Promptly upon receipt of a request for
a Demand Registration, the Company shall give notice of the request to all other
Holders not a signatory to such request, notifying each such Holder of its right
to participate in the Demand Registration.
(b) Number of Demand Registrations. Subject to and in accordance with
the provisions of Section 4(c), the Company shall be obligated to carry out up
to four (4) Demand Registrations; provided, however, that, if a Shelf
Registration is requested pursuant to Section 3(a) and a Shelf Registration
Statement in connection therewith is declared effective by the Commission, such
Shelf Registration shall count as a Demand Registration for purposes of the
foregoing obligation of the Company to carry out up to four (4) Demand
Registrations. The Company shall not be deemed to have effected a Demand
Registration unless and until the Demand Registration Statement is declared
effective and remains in effect until the earlier of
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(i) the completion of the distribution pursuant thereto and (ii) such period of
time, not exceeding two years, as requested by a majority of the Participating
Holders. In the event that a Demand Registration is requested under this Section
and Holders of the Registrable Common Shares requesting such Demand Registration
later determine not to sell any of their Registrable Common Shares in connection
with the Demand Registration requested, then prompt notice shall be given by
such Holders to the Company that the registration requested is no longer
required and that the request is thereby withdrawn. Upon receipt of such notice,
the Company shall cease all efforts to secure registration and shall take all
action necessary and reasonably practicable to prevent the commencement of
effectiveness for any Demand Registration Statement that it is preparing or has
prepared in connection with the withdrawn request; provided, however, that such
registration shall be deemed a Demand Registration for purposes of Section
2.2(b), above, unless the (i) withdrawing Holders shall have paid or reimbursed
the Company for all of the reasonable out-of-pocket fees and expenses incurred
by the Company in connection with the registration of such withdrawn Registrable
Common Shares or (ii) two previous such withdrawals have occurred. No Demand
Registration shall be deemed to have been effected if (i) during the Demand
Period such registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court or (ii) the conditions to closing specified in the underwriting agreement,
if any, entered into in connection with such registration are not satisfied by
reason of a wrongful act, misrepresentation or breach of an applicable
underwriting agreement by the Company.
(c) Limitation on Demand Registration. The Company shall be entitled
to postpone for a reasonable period of time (not to exceed 90 days) the filing
of any Registration Statement or other qualified document otherwise required to
be prepared and filed by it pursuant to Section 4(a) hereof if, at the time it
receives a request for such registration, (i) the Company is conducting or about
to conduct an offering of its securities and the Company is advised by its
investment banking firm that inclusion of such Registrable Common Shares will,
in the opinion of such investment banking firm, materially interfere with the
orderly sale and distribution of the securities being offered under such
Registration Statement or other qualified document or (ii) compliance with such
filing requirement would materially adversely affect (including, without
limitation, through premature disclosure thereof) a proposed financing,
reorganization, recapitalization, merger, acquisition, consolidation or similar
transaction involving the Company.
(d) Delay in Filing; Suspension of Registration. If the continued
effectiveness of the Demand Registration Statement at any time would require the
Company to make an Adverse Disclosure, the Company may, upon giving prompt
written notice of such action to the Participating Holders, suspend use of the
Demand Registration Statement (a "Demand Suspension"); provided, however, that
the Company shall not be permitted to exercise a Demand Suspension (i) more than
one time with respect to any one Demand Registration or (ii) for a period
exceeding fifty (50) days on any such occasion (or seventy-five (75) days if
such Adverse Disclosure relates to the filing of audited financial statements,
or audited statements of revenues and expenses, of an acquired business). In the
case of a Demand Suspension, the Participating Holders agree to suspend use of
the Prospectus related to the Demand Registration in connection with any such
sale or purchase or offer to sell or
6
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purchase of Registrable Common Shares upon receipt of the notice referred to
above. The Company shall immediately notify the Participating Holders upon the
termination of any Demand Suspension, amend or supplement the Prospectus, if
necessary, so it does not contain any untrue statement or omission therein and
furnish to the Participating Holders such numbers of copies of the Prospectus as
so amended or supplemented as the Participating Holders may reasonably request.
The Company agrees, if necessary, to supplement or make amendments to the Demand
Registration Statement, if required by the registration form used by the Company
for the Demand Registration or by the instructions applicable to such
registration form or by the Securities Act or the rules or regulations
promulgated thereunder or as may reasonably be requested by the Holders of a
majority of the Registrable Common Shares included in the offering pursuant to
such Demand Registration Statement.
(e) Underwritten Offering. If the Holders of a majority of the
Registrable Common Shares included in any offering pursuant to a Demand
Registration Statement so elect prior to the filing thereof, such offering shall
be in the form of an Underwritten Offering. If any offering pursuant to a Demand
Registration involves an Underwritten Offering, the Holders of a majority of the
Registrable Common Shares included in such Underwritten Offering shall, after
consulting with the Company, have the right to select the managing underwriter
or underwriters to administer such Underwritten Offering, subject to the right
of the Company to select one co-managing underwriter reasonably acceptable to
such Holders for such Underwritten Offering.
5. BLACK-OUT PERIODS.
(a) Restrictions on Public Sale by Holders. To the extent not
inconsistent with applicable Law, each Holder agrees not to effect any public
sale or distribution of Subject Common Shares, other Common Shares or a security
of the Company or any securities convertible into or exchangeable or exercisable
for Common Shares, during the seven days prior to, and during the 90-day period
beginning on, the effective date of any Registration Statement or other
qualified document, or, in the case of an Underwritten Offering pursuant to a
Shelf Registration Statement, the date of the closing under the underwriting
agreement entered into in connection therewith (except for a sale or
distribution that is part of the registration to which such Registration
Statement relates), if and to the extent requested in writing (with reasonable
prior notice), by (i) the Company in the case of a public offering by the
Company other than an Underwritten Offering, or (ii) the managing underwriter or
underwriters in the case of an Underwritten Offering.
(b) Restrictions on Public Sale by Company. To the extent not
inconsistent with applicable Law, the Company agrees not to effect any public
sale or distribution of Subject Common Shares, other Common Shares or a security
of the Company or any securities convertible into or exchangeable or exercisable
for Common Shares, during the seven days prior to, and during the 90-day period
beginning on, the effective date of any Registration Statement or other
qualified document, or, in the case of an Underwritten Offering pursuant to a
Shelf Registration Statement, the date of the closing under the underwriting
agreement entered into in connection therewith (except for a sale or
distribution that is part of the registration to which such Registration
Statement relates), if and to the extent requested in
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writing (with reasonable prior notice), by (i) Holders of a majority of the
Registrable Common Shares in the case of a public offering by the Company other
than an Underwritten Offering or (ii) the managing underwriter or underwriters
in the case of an Underwritten Offering. The Company agrees to use all
reasonable efforts to obtain from each holder of restricted Common Shares or
restricted securities convertible into or exchangeable or exercisable for Common
Shares of the Company, which restricted Common Shares or securities are acquired
on or after the date hereof and with respect to which the Company has granted
registration rights in accordance with Section 9(a), an agreement not to effect
any public sale or distribution of such securities (other than securities
purchased in a public offering) during any such period referred to in this
paragraph, except as part of any such registration if permitted. Without
limiting the foregoing, if after the date hereof the Company grants any Person
(other than a Holder) any rights to demand or participate in, a registration,
the Company agrees that the agreement with respect thereto shall include such
Person's agreement as contemplated by the previous sentence.
6. REGISTRATION PROCEDURES.
In connection with the Company's registration obligations under
Sections 2, 3, or 4 hereof, the Company will use its best efforts to effect the
registration and the sale of such Registrable Common Shares in accordance with
the intended method of disposition, as quickly as practicable, and in connection
with any such request and with any Demand Registration, the Company will as
expeditiously as possible:
(a) prepare and file a Registration Statement or other qualified
document under the Applicable Securities Laws which includes the Registrable
Common Shares and use its best efforts to cause such Registration Statement or
other qualified document to become effective;
(b) prepare and file such amendments and post-effective amendments to
the Registration Statement and Prospectus used in connection therewith as may be
necessary to keep the Registration Statement or other qualified document
effective for a period of not less than 120 days (in the case of a registration
referred to in Section 2) or, in the case of a Demand Registration, such period
of time, not exceeding two years, as requested by the Holders requesting such
Demand Registration (or such shorter period as shall be necessary to permit
Participating Holders to complete the distribution of the Registrable Common
Shares to which such Registration Statement or other qualified document relates
in accordance with its intended methods of distribution) and to comply with the
provisions of Applicable Securities Laws with respect to the disposition of all
Registrable Common Shares covered by the Registration Statement or other
qualified document for the period required to effect the distribution thereof,
but in no event shall the Company be required to do so for a period of more than
120 days (in the case of a registration referred to in Section 2) or two years
(in the case of a Demand Registration) following the effective date of such
Registration Statement or other qualified document;
(c) furnish to Participating Holders and the underwriter or
underwriters, if any, and to counsel to Participating Holders and underwriters
such number of conformed
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<PAGE>
copies of the Registration Statement and post-effective amendment thereto, upon
request, and such number or copies of the Prospectus (including each preliminary
Prospectus) and any amendments or supplements thereto, and any documents
incorporated by reference therein, as Participating Holders or such
underwriter(s) may reasonably request in order to facilitate the disposition of
the Registrable Common Shares being sold by Participating Holders (it being
understood that the Company consents to the use of the Prospectus and any
amendment or supplement thereto by Participating Holders and the underwriter or
underwriters, if any, in connection with the offering and sale of the
Registrable Common Shares covered by the Prospectus or any amendment or
supplement thereto);
(d) notify all Participating Holders and the underwriters, if any, at
any time when a Prospectus relating thereto is required to be delivered under
Applicable Securities Laws, when the Company becomes aware of the happening of
any event as a result of which any Prospectus included in such Registration
Statement or other qualified document (as then in effect) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading and, as promptly as possible thereafter, prepare and file
pursuant to Applicable Securities Laws and furnish a supplement or amendment to
such Prospectus so that, as thereafter delivered to the purchasers of such
Registrable Common Shares, such Prospectus 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.
(e) on or prior to the date on which the Registration Statement or
other qualified document is declared effective, use its best efforts to register
or qualify the Registrable Common Shares covered by the Registration Statement
or other qualified documents for offer and sale under the Applicable Securities
Laws of each jurisdiction as any Participating Holder or underwriter requests in
writing, and to cooperate with each Participating Holder, the underwriter or
underwriters, if any, and their counsel, in connection therewith; to use its
best efforts to keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the period such
Registration Statement or other qualified document is required to be kept
effective and to do any and all other acts or things necessary or advisable to
enable the disposition in all such jurisdictions of the Registrable Common
Shares covered by the applicable Registration Statement or other qualified
document;
(f) cooperate with Participating Holders and the managing underwriter
or underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Common Shares to
be sold under the Registration Statement or other qualified document, and enable
such Common Shares to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or any Participating Holder
may request;
(g) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions (including, without
limitation, delivery of customary legal opinions and officers' certificates) as
any Participating Holder
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<PAGE>
reasonably requests in order to expedite or facilitate the disposition of such
Registrable Common Shares;
(h) make available for inspection by any underwriter participating in
any disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such underwriter, all financial and
other records, pertinent corporate documents and properties of the Company, as
shall be reasonably necessary to enable it to exercise its due diligence
responsibility provided such parties, if requested, have entered into a
confidentiality agreement with the Company; and
(i) use its best effort to obtain a "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by "cold comfort" letters as any
Participating Holder or the underwriter reasonably requests.
Each Participating Holder, upon receipt of any notice from the Company
of the happening of any event of the kind described in subsection (d) of this
Section 6, will immediately discontinue disposition of the Registrable Common
Shares until receipt by such Participating Holder of the copies of the
supplemented or amended Prospectus contemplated by subsection (d) of this
Section 6 and copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus, or until it is advised in writing
(the "Advice") by the Company that the use of the Prospectus may be resumed,
and, if so directed by the Company, each Participating Holder will, or will
request the managing underwriter or underwriters, if any, to deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in each such Participating Holder's possession, of the Prospectus covering
such Registrable Common Shares current at the time of receipt of such notice. In
the event the Company shall give any such notice, the time periods mentioned in
subsection (b) of this Section 6 shall be extended by the number of days during
the period from and including the date of the giving of such notice to and
including the date when each Participating Holder shall have received (y) the
copies of the supplemented or amended Prospectus contemplated by subsection (d)
of this Section 6 and copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus or (z) the Advice.
7. REGISTRATION EXPENSES.
(a) Registration in the United States or Any Political Subdivision
Thereof. In the event of distribution of Registrable Common Shares in the United
States or any political subdivision thereof pursuant to this Agreement, the
Company will bear all expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all Commission,
National Association of Securities Dealers, Inc., NYSE and TSE registration and
filing fees, fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with
determination of eligibility for investment and blue sky qualifications of the
Registrable Common Shares), printing expenses, messenger and delivery expenses,
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), fees and
disbursements of counsel for the Company and its independent
10
<PAGE>
certified public accountants (including the expenses of any special audit or
"cold comfort" letters (if requested by the underwriter) required by or incident
to such performance), reasonable fees and disbursements of counsel selected by
Participating Holders, securities acts liability insurance (if the Company
elects to obtain such insurance), the reasonable fees and expenses of any
special experts retained by the Company in connection with such registration,
the reasonable fees and disbursements of underwriters customarily paid by
issuers or sellers of securities and fees and expenses of other Persons retained
by the Company (all such expenses being referred to herein as "Registration
Expenses") and excluding any fees and disbursements of underwriters not
customarily paid by the issuers or sellers of securities, including underwriting
discounts and commissions and transfer taxes, if any, attributable to the sale
of Registrable Common Shares and the fees and expenses of counsel to the
underwriters other than as provided above; provided, however, that, the Holders
shall be responsible for Registration Expenses in connection with any one (1) of
the four (4) permitted Demand Registrations (including any Shelf Registration)
so elected by the Holders of a majority of the Registrable Common Shares
included in such Demand Registration (or by Holders of a majority of the
Registrable Common Shares outstanding at the time a Shelf Registration is
requested).
(b) Qualification in Canada or Any Political Subdivision Thereof. In
the event that any Participating Holder exercises its rights pursuant to Section
2 of this Agreement in connection with a qualification or registration of
Registrable Common Shares under Applicable Securities Laws of Canada or any
political subdivision thereof, each Participating Holder shall pay its allocable
share of the expenses incurred by the Company in connection with the
registration or other qualification based upon the offering price of the
Registrable Common Shares it has sold divided by the total offering price of the
securities covered by the registration or other qualification.
8. INDEMNIFICATION; CONTRIBUTION.
(a) Indemnification by the Company. The Company agrees to indemnify,
protect and hold harmless, to the full extent permitted by applicable Law, each
Holder, its partners, officers, directors, employees and agents, the general
partner of any general partner, the partners, officers, directors, employees and
agents of any general partner's general partner, any investment partnership of
which a Holder is the general partner, and each partner of such investment
partnership, and any agent or investment adviser of any thereof, and each person
who controls any such person (within the meaning of the Securities Act), against
all losses, claims, damages, liabilities and expenses arising out of or based on
any untrue or allegedly untrue statement of material fact contained in any
Registration Statement, other qualified document or any amendment thereof or
supplement thereto or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading, except to the extent, and only to the extent, that the same are
caused by or contained in any information which any such Holder furnished in
writing to the Company expressly for use therein or by any such Holder's failure
to deliver to a purchaser of securities a copy of the Prospectus, other
qualified document or any amendments thereof or supplements thereto at a
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<PAGE>
time when such Holder is required by Applicable Securities Laws to do so after
the Company has furnished it with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify, protect
and hold harmless the underwriters thereof, selling brokers, dealer managers,
and similar securities industries professionals, their officers, directors,
employees, agent and each person who controls any such person (within the
meaning of the Securities Act) to the same extent as provided above with respect
to the indemnification of Holders.
(b) Indemnification by Holders. In connection with any Registration
Statement or other qualified document in which a Holder is participating, such
Holder will furnish to the Company in writing such customary information with
respect to such Holder as the Company reasonably requests for use in connection
with any such Registration Statement, other qualified document or any amendment
thereof or supplement thereto and agrees to indemnify, to the extent permitted
by applicable Law, the Company, its directors, employees, agents, officers, and
each person who controls the Company (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses arising out of or
based on any untrue or allegedly untrue statement of a material fact contained
in any Registration Statement, other qualified document or any amendment thereof
or supplement thereto or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is caused by or contained in any information which such Holder
furnished in writing to the Company expressly for use therein or by such
Holder's failure to deliver to a purchaser of securities a copy of the
Prospectus, or other qualified document or any amendments thereof or supplements
thereto at a time when such Holder is required by the Securities Act to do so
after the Company has furnished it with a sufficient number of copies of the
same. In no event shall the liability of any Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Common Shares giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such person will claim indemnification or contribution
pursuant to this Agreement and, unless in the reasonable judgment of such
indemnified party a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to such indemnified party. Whether or not such defense is assumed
by the indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent will not
be unreasonably withheld or delayed). No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. If the indemnifying party is not entitled to, or elects not to,
assume the defense of a claim, it will not be obligated to pay the fees and
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<PAGE>
expenses with respect to such claim of more than one counsel (and one local
counsel) for the indemnified party with respect to which a claim has been
asserted (which fees and expenses will be paid as they are billed to the
indemnified party) unless in the reasonable judgment of such indemnified party
(based on a written opinion of counsel) a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect to
such claim, in which event the indemnifying party shall be obligated to pay the
fees and expenses of such additional counsel or counsels as shall be necessary
to eliminate such conflicts in connection with the representation of indemnified
parties, such fees and expenses to be paid as they are billed to the indemnified
party.
(d) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Section 8 is for any reason held to be unenforceable although applicable in
accordance with its terms, the Company and each Holder shall contribute to the
losses, claims, damages, liabilities and expenses described herein, in such
proportions so that the portion thereof for which each Holder shall be
responsible shall be limited to the portion determined by a court or the parties
to any settlement to arise out of or to be based on any untrue statement of
material fact contained in a Registration Statement, or other qualified
document, or any amendment thereof or supplement thereto or any omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they are
made, not misleading, caused by or contained in any information which each such
Holder furnished in writing to the Company expressly for use therein or by such
Holder's failure to deliver to a purchaser of securities a copy of the
Prospectus, or other qualified document or any amendments to supplements thereto
at a time when such Holder is required by Applicable Securities Laws to do so
after the Company has furnished it with a sufficient number of copies of the
same, and the Company shall be responsible for the balance (subject to any other
rights the Company may have against any other selling holder the securities of
which were included in such Registration Statement, or other qualified document,
amendment or supplement); provided, that the liability of each Holder shall in
no event exceed the net proceeds from the Registrable Common Shares sold by it
thereunder. The Company and Holders agree that it would not be just and
equitable if their respective obligations to contribute were to be determined by
pro rata allocation, by reference to the proceeds realized by them or in any
manner which does not take into account the equitable considerations set forth
in this Section 8(d).
9. MISCELLANEOUS.
(a) Limitations on Subsequent Registration Rights. The Company agrees
and covenants that it will not grant or allow, or amend or waive any provision
of any agreement providing registration rights to provide, any persons or
entities any registration rights with respect to any securities of the Company
held by such persons or entities that are better than the rights granted to
Holders hereunder, nor shall the Company grant any persons or entities any
registration rights which would result in such persons or entities being able to
register their shares prior to Registrable Common Shares held by all Holders or
on demand without the full, pro rata participation of all Holders in any such
Demand Registration.
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<PAGE>
(b) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders of a majority of
Registrable Common Shares.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by telex or telecopier, registered or
certified mail (return receipt requested), postage prepaid to (i) the Company
and Partners II as provided in the Stock Purchase Agreement and to (ii) Partners
I and Parallel I as set forth below. Notices sent by mail shall be effective two
days after mailing; notices sent by telex shall be effective when answered back;
notices sent by telecopier shall be effective when receipt is acknowledged; and
notices sent by courier guaranteeing next day delivery shall be effective on the
next business day after timely delivery to the courier.
If to Partners I: TPG Partners, L.P.
201 Main Street
Suite 2420
Fort Worth, Texas 76102
Attention: James J. O'Brien
If to Parallel I: TPG Parallel I, L.P.
201 Main Street
Suite 2420
Fort Worth, Texas 76102
Attention: James J. O'Brien
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties, it
being understood that no assignment shall increase the number of Demand
Registrations (including Shelf Registrations) available under this Agreement.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any
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<PAGE>
such provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the Holders shall be enforceable to the fullest
extent permitted by law.
(i) Entire Agreement. This Agreement, together with the Stock Purchase
Agreement and the documents contemplated thereby, is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement and the Stock Purchase
Agreement (including the exhibits thereto) and the documents contemplated
thereby supersede all prior agreements and understandings between the parties
with respect to such subject matter, including the Registration Rights Agreement
dated as of December 21, 1995 by and among the Company, Partners I and Parallel
I, as amended.
(j) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement or the Stock Purchase Agreement, or where any
provision hereof or thereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to any
other available remedy.
(k) No Inconsistent Agreements. None of the Company, Partners I,
Partners II or Parallel I will on or after the date of this Agreement enter into
any agreement with respect to the Subject Common Shares which is inconsistent
with the rights granted in this Agreement or otherwise conflicts with the
provisions hereof. Nothing herein shall limit the rights of Partners I, Partners
II and Parallel I pursuant to securities rules, regulations and laws of Canada.
(l) Enforcement. It is specifically agreed and understood that
monetary damages would not adequately compensate the non-breach parties for the
breaching of this Agreement and this Agreement shall therefore be specifically
enforceable, and any breach or threatened breach of this Agreement shall be the
proper subject of a temporary or permanent injunction or restraining order,
without necessity of bond or other security.
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<PAGE>
IN WITNESS WHEREOF, the parties shave executed this Agreement as of
the Effective Date.
DENBURY RESOURCES INC.
By:_____________________________________
TPG PARTNERS, L.P.
By: TPG GenPar, L.P., its general
partner
By: TPG Advisors, Inc., its general
partner
By:_____________________________________
TPG PARALLEL I, L.P.
By: TPG GenPar, L.P., its general
partner
By: TPG Advisors, Inc., its general
partner
By:_____________________________________
TPG PARTNERS II, L.P.
By: TPG GenPar II, L.P., its general
partner
By: TPG Advisors II, Inc., its
general partner
By:_____________________________________
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