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EXHIBIT 1(a)
[ ] Shares
DENBURY RESOURCES INC.
COMMON SHARES
UNDERWRITING AGREEMENT
February , 1998
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February , 1998
Morgan Stanley & Co.
Incorporated
Gordon Capital, Inc.
Johnson Rice & Company L.L.C.
Loewen, Ondaatje, McCutcheon USA Limited
and Certain Canadian Affiliates of the
Foregoing Listed in Schedule II
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
DENBURY RESOURCES INC., a Canadian corporation (the "Company"),
proposes to issue and sell to the several Underwriters (as defined below) [ ]
shares of its Common Shares, no par value (the "Firm Shares"). Morgan Stanley &
Co. Incorporated, Gordon Capital, Inc., Johnson Rice & Company L.L.C. and
Loewen, Ondaatje, McCutcheon USA Limited shall act as representatives (the
"Representatives") of the several Underwriters.
The Company also proposes to sell to the several Underwriters not more
than an additional [ ] shares of the Company's Common Shares, no par value (the
"Additional Shares"), if and to the extent that the Representatives shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such Additional Shares granted to the Underwriters in Section 2 hereof. The Firm
Shares and the Additional Shares are hereinafter collectively referred to as the
"Shares". The Common Shares, no par value, of the Company to be outstanding
after giving effect to the sales contemplated hereby are hereinafter referred to
as the "Common Shares". It is understood that the Shares will be offered and
sold in the United States and in Alberta, British Columbia, Manitoba, Ontario,
Quebec and Saskatchewan (the "Qualifying Provinces") and, subject to applicable
law, may be offered and sold outside of the United States and the Qualifying
Provinces.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement relating to the Shares. The registration
statement as amended at the time it becomes effective,
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including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act"), and all documents
incorporated therein by reference, is hereinafter referred to as the
"Registration Statement"; the prospectus in the form first used to confirm sales
of Shares is hereinafter referred to as the "Prospectus". If the Company has
filed an abbreviated registration statement to register additional Common Shares
pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement. The Company has
also filed with the applicable securities regulatory authorities in each of the
Qualifying Provinces (each a "Canadian Commission") a preliminary prospectus and
will file with the Canadian Commissions, as soon as practicable following the
execution hereof, a final prospectus qualifying the Shares for distribution in
such Qualifying Province. The prospectus in the form first used to confirm sales
of Shares in the Qualifying Provinces and all documents incorporated therein by
reference is hereinafter referred to as the "Final Canadian Prospectus", the
preliminary version thereof is referred to as the "Preliminary Canadian
Prospectus" and the Final Canadian Prospectus and Preliminary Canadian
Prospectus are collectively referred to as the "Canadian Prospectus".
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters and their
respective Canadian affiliates set forth in Schedule II hereto (the "Canadian
Affiliates") that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each part of the Registration Statement, when such part became
effective, did not contain and each such part, as amended or supplemented,
if applicable, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) the Registration Statement
and the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and
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the applicable rules and regulations of the Commission thereunder and (iii)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
1(b) do not apply to statements or omissions in the Registration Statement
or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Preliminary Canadian Prospectus has been filed and the Final
Canadian Prospectus will be filed with each Canadian Commission in
conformity with the applicable securities legislation of the Qualifying
Provinces and their respective rules, regulations and written published
policies (collectively, "Canadian Securities Laws") and receipts for the
Preliminary Canadian Prospectus have been obtained from or on behalf of
each of the Canadian Commissions and the Company will use its reasonable
efforts to obtain as soon as practicable following filing, receipts from
the Canadian Commission for the Final Canadian Prospectus.
(d) The Preliminary Canadian Prospectus, as of the time of filing
thereof, and the Final Canadian Prospectus, as of the time of filing
thereof, (i) did not, or will not, as applicable, contain a
misrepresentation (as such term is defined in Canadian Securities Laws),
(ii) constituted, or will constitute, as applicable, full, true and plain
disclosure of all material facts relating to the Shares and the Company and
its subsidiaries taken as a whole and (iii) did not, or will not, as
applicable, contain and, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein in light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph 1(d) do not
apply to statements or omissions in the Canadian Prospectus based upon
information relating to any Underwriter or Canadian Affiliate furnished to
the Company in writing by such Underwriter or Canadian Affiliate through
you expressly for use therein.
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(e) The listing of the Shares on the New York Stock Exchange (the
"NYSE") and The Toronto Stock Exchange (the "TSE") has been approved by
each such exchange subject only to the filing of documents and evidence of
satisfactory distribution in accordance with the requirements of each such
exchange on or before [ ] in the case of the NYSE and May 5, 1998 in the
case of the TSE.
(f) No order preventing or suspending the use of the Canadian
Prospectus has been issued by any of the Canadian Commissions.
(g) The Company has been duly incorporated and is validly existing as
a corporation under the federal laws of Canada, has the corporate power and
authority to own its property and to conduct its business as described in
the Prospectus and the Canadian Prospectus (collectively, the "North
American Prospectuses") and is duly registered to carry on business in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such registration, except to the extent that
the failure to be so registered would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(h) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the North
American Prospectuses and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole; all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly by the Company or
a subsidiary of the Company, free and clear of all liens, encumbrances,
equities or claims.
(i) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the North American
Prospectuses.
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(j) The Common Shares of the Company outstanding prior to the issuance
of the Shares have been duly authorized and are validly issued, fully paid
and non-assessable.
(k) The Shares to be sold by the Company have been duly authorized by
the Company and, when issued and delivered in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable, and
the issuance of such Shares will not be subject to any preemptive or
similar rights, except for the right of the Texas Pacific Group to maintain
its pro rata ownership interest in the equity securities of the Company on
the terms described in the Registration Statement.
(l) This Agreement has been duly authorized, executed and delivered by
the Company.
(m) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the articles of amalgamation or by-laws
of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of the various
states or the Canadian Securities Laws and the rules and regulations of the
TSE in connection with the offer and sale of the Shares.
(n) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the North American Prospectuses (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement).
(o) The Company is presently eligible to participate in the POP System
(as such term is defined in National Policy 47 of the Canadian Securities
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Administrators), and at the date hereof the Company is in compliance in all
material respects with its timely disclosure obligations under Canadian
Securities Laws and its obligations as a listed Company on the TSE.
(p) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which the Company or any of its subsidiaries is subject that are required
to be described in the Registration Statement or the North American
Prospectuses and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the North American Prospectuses or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(q) Each preliminary prospectus filed as part of the registration
statement as originally filed with the Commission or as part of any
amendment thereto, or filed with the Commission pursuant to Rule 424 under
the Securities Act, complied when so filed in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder.
(r) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, provincial, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the North American Prospectuses, except
to the extent that the failure to obtain or file would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(s) The Company is not and, after giving effect to the offering and
sales of the Shares and the application of the proceeds thereof as
described in the North American Prospectuses, will not be an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(t) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state, provincial and local laws and
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regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(u) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
(other than those required in the ordinary course of the Company's
operations) required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities (other than those encountered in the
ordinary course of the Company's operations) and any potential liabilities
to third parties) which would, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(v) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and the Underwriters, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agree, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedule I hereto
opposite their names at $[ ] a share (the "purchase price"). In consideration
for your services hereunder, the Company shall pay to the Underwriters or to
their order, a commission in immediately available funds equal to $[ ] a Share
in respect of each Share which is sold pursuant to this Agreement (the
"Underwriters' Commission").
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On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares described in the last sentence of this
paragraph, and the Underwriters shall have a one-time right to purchase,
severally and not jointly, up to [ ] Additional Shares at the purchase price. If
you, on behalf of the Underwriters, elect to exercise such option, you shall so
notify the Company in writing not later than 30 days after the date of this
Agreement, which notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days after the
date of such notice. Additional Shares may be purchased as provided in Section 5
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Additional Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as the Representatives may determine) that bears the same proportion to
the total number of Additional Shares to be purchased as the total number of
Firm Shares set forth in both parts of Schedule I hereto opposite the name of
such Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 120 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
Common Shares or any securities convertible into or exchangeable for Common
Shares or (ii) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the Common Shares,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Shares or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold
hereunder, (B) the issuance by the Company of Common Shares upon the exercise of
any option or warrant or the conversion of a security outstanding on the date
hereof which are either disclosed in the Prospectus or of which the Underwriters
have been advised in writing, (C) the issuance by the Company of Common Shares
under its existing stock
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purchase plans or the grant of stock options to new employees hired by the
Company during such 120-day period or (D) transactions by any person other than
the Company relating to Common Shares or other securities acquired in open
market transactions after the completion of the offering of the Shares.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares: (a) in the United States, as soon after the Registration Statement
and this Agreement have become effective as in your judgment is advisable and
(b) in Canada, as soon after receipts are obtained for the Final Canadian
Prospectus from or on behalf of the Canadian Commissions in each of the
Qualifying Provinces as in your judgment is advisable, and in effecting the
distribution of the Shares in the Qualifying Provinces, you will offer and sell
the Shares through your respective Canadian Affiliates. The Company is further
advised by you that the Shares are to be offered to the public initially at $[ ]
a share (the public offering price) and to certain dealers selected by you at a
price that represents a concession not in excess of $[ ] a share under the
public offering price, and that any Underwriter may allow, and such dealers may
re-allow, a concession, not in excess of $[ ] a share, to any Underwriter or to
certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares, net of the
applicable Underwriters' Commission, shall be made in Federal or other funds
immediately available in New York City against delivery of such Firm Shares for
the respective accounts of the several Underwriters at 8:30 a.m., New York City
time, on [ ], 1998, or at such other time on the same or such other date, not
later than [ ], 1998, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "Closing Date".
Payment for any Additional Shares, net of the applicable Underwriters'
Commission, shall be made in Federal or other funds immediately available in New
York City against delivery of such Additional Shares for the respective accounts
of the several Underwriters at 8:30 a.m., New York City time, on the date
specified in the notice described in Section 2 or at such other time on the same
or on such other date, in any event not later than [ ], 1998 as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Option Closing Date".
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Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Conditions. The several obligations of the Company hereunder and
the several obligations of the Underwriters hereunder are subject to the
condition that the Registration Statement shall have become effective not later
than 5 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters hereunder are subject to
the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
North American Prospectuses (exclusive of any amendment or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus; and
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(iii) there shall not have developed, occurred, or come into
effect, any occurrence of national or international consequence or any
action, governmental regulation, inquiry or other occurrence of any
nature whatsoever which, in the opinion of the Underwriters, seriously
effects or may seriously effect the Canadian financial markets or the
business of the Company and its subsidiaries on a consolidated basis.
(b) The Canadian Prospectus shall have been filed with the Canadian
Commissions of each of the Qualifying Provinces in accordance with
applicable Canadian Securities Laws and receipts therefore shall have been
issued by such Canadian Commissions.
(c) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that the Company has
complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or before the Closing
Date.
The officer signing and delivering such certificate may rely upon the
best of his knowledge as to proceedings threatened.
(d) You and the Canadian Affiliates shall have received on the Closing
Date an opinion of Jenkens & Gilchrist, a Professional Corporation, U.S.
counsel for the Company, dated the Closing Date, to the effect that:
(i) each U.S. subsidiary of the Company is a corporation validly
existing in good standing under the laws of the jurisdiction of its
U.S. incorporation and has the corporate power and authority to own
its property and to conduct its business as described in the North
American Prospectuses and is duly qualified to transact business and
is in good standing in each U.S. jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the
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Company and its U.S. subsidiaries, taken as a whole;
(ii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of U.S. law applicable to the
Company or, to such counsel's knowledge, any agreement or other
instrument binding upon the Company or any of its subsidiaries filed
as an exhibit to the Registration Statement or the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, or, to such
counsel's knowledge, any judgment, or decree of any U.S. governmental
body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of or
qualification with any U.S. governmental body or agency is required
for the performance by the Company of its obligations under this
Agreement, except such as may be required by the securities or Blue
Sky laws of the various states of the U.S. in connection with the
offer and sale of the Shares;
(iii) the statements (1) in the Prospectus under the captions
"Business and Properties-- Regulations" and "Description of Capital
Stock" and in the first, second, fourth and sixth paragraphs under the
caption "Underwriters" and (2) in the Registration Statement under
Item 15, in each case only insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents and proceedings and fairly summarize the
matters referred to therein;
(iv) the Shares have been conditionally approved for listing by
the NYSE;
(v) after due inquiry, such counsel does not know of any legal
or governmental proceeding pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
North American Prospectuses and are not so
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described or of any U.S. statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;
(vi) the Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended; and
(vii) the Registration Statement and Prospectus (except for
financial statements and schedules and other financial and statistical
data and the reserve or related data and information included therein
as to which such counsel need not express any opinion) comply as to
form in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder.
In such opinion such counsel will state that (i) it has no reason to
believe that (except for financial statements and schedules and other
financial and statistical data and the reserve or related data and
information included therein as to which such counsel need not express any
belief) the Registration Statement and the prospectus included therein at
the time the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and (ii) has no reason to believe(except for financial
statements and schedules and other financial and statistical data included
therein as to which such counsel need not express any belief) the
Prospectus contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(e) You and the Canadian Affiliates shall have received on the Closing
Date an opinion of Burnet, Duckworth & Palmer, Canadian counsel for the
Company, dated the Closing Date, to the effect that:
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(i) the Company is a corporation duly incorporated 10 and
validly existing under the federal laws of Canada and has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly registered to
carry on business in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
registered would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(ii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained under the heading
"Description of Capital Stock" in the Prospectus and the heading
"Description of Share Capital" in the Canadian Prospectus;
(iii) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of
such Shares will not, as at the date of issuance, be subject to any
statutory preemptive or similar rights, except for the preemptive
rights held by the Texas Pacific Group (or affiliates thereof) on the
terms described in the Registration Statement;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable Canadian law or any
charter documents or by-laws of the Company or, to such counsel's
knowledge, any agreement or other instrument binding upon the Company
filed as an exhibit to the Registration Statement or the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, or,
to such counsel's knowledge, any judgment, or decree of any Canadian
governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or
order of or qualification with any Canadian governmental body or
agency is required for the performance by the Company of its
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obligations under this Agreement, except such as may be required by
The Toronto Stock Exchange and the securities laws of the various
Canadian provinces in connection with the offer and sale of the
Shares;
(vi) the statements (1) in the Prospectus under the captions
"Canadian Taxation and the Investment Canada Act" and "Service and
Enforcement of Legal Process" and (2) in the Canadian Prospectus under
the captions "Plan of Distribution" and "Description of Share
Capital", in each case only insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents and proceedings and fairly summarize the
matters referred to therein;
(vii) subject to general investment provisions, the Shares are
eligible investments under the statutes listed in the Canadian
Prospectus under the heading "Eligibility for Investment" without the
investor having recourse to the so-called "basket" provisions of such
statutes;
(viii) the Shares have been conditionally approved for listing by
the TSE, subject to the Company fulfilling all of the requirements of
the TSE in the manner and within the time limites set forth in the
Letter of the TSE dated February 5, 1998;
(ix) after due inquiry, such counsel does not know of any legal
or governmental proceeding pending or threatened to which the Company
is a party or to which any of the properties of the Company is subject
that are required to be described in the Canadian Prospectuses and are
not so described; and
(x) the Canadian Prospectus (except for financial statements
and schedules and other financial and statistical data and the reserve
or related data and information included therein to which counsel need
not express any opinion) complies as to form in all material respects
with Appendix B of National Policy Statement No. 47 of the Canadian
Securities Laws.
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In such opinion such counsel will state that (i) it has no reason to
believe that (except for financial statements and schedules and other
financial and statistical data and the reserve or related data and
information included therein as to which such counsel need not express any
belief) the Canadian Prospectus at the time the Canadian Prospectus was
filed contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) has no reason to believe(except
for financial statements and schedules and other financial and statistical
data included therein as to which such counsel need not express any belief)
the Canadian Prospectus contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(f) You shall have received on the Closing Date an opinion of Cravath,
Swaine & Moore, special counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (iii) (but only as
to the statements in the Prospectus under "Description of Capital Stock"
and "Underwriters"), (vii) and the last paragraph of Section 5(d) above.
(g) You shall have received on the Closing Date an opinion of Osler,
Hoskin & Harcourt, special counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (iii), (iv) and the
last paragraph of Section 5(e) above.
With respect to the last paragraph of Section 5(d) and Section 5(e)
above, Jenkens & Gilchrist, a Professional Corporation, Burnet, Duckworth &
Palmer, Cravath, Swaine & Moore and Osler, Hoskin & Harcourt may state that
their opinion and belief are based upon their participation in the
preparation of the Registration Statement, the Prospectus and, as
applicable, the Canadian Prospectus, and any amendments or supplements
thereto and review and discussion of the contents thereof with officers of
the Company, but are without independent check or verification except as
specified.
(h) You shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form
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17
and substance satisfactory to you, from Deloitte & Touche, Chartered
Accountants, Calgary, Alberta, independent public accountants for the
Company, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in the
Registration Statement and the North American Prospectuses; provided that
the letter delivered on the Closing Date shall use a "cut-off" date not
earlier than the date hereof.
(i) The Underwriters and the Canadian Affiliates shall have received
on the Closing Date a legal opinion dated the Closing Date, in form and
substance satisfactory to counsel to the Underwriters, addressed to the
Underwriters and the Canadian Affiliates and counsel to the Underwriters
from Byers Casgrain, Montreal, Quebec:
(i) regarding compliance with the laws of Quebec relating to the use
of the French language in connection with the documents
(including the Canadian Prospectus and any amendments or
supplements thereto and certificates representing the Shares) to
be delivered to purchasers in Quebec in connection with the
offering of the Shares; and
(ii) to the effect that the French language version of the Canadian
Prospectus (including any supplement or amendment thereto), other
than with respect to the financial information contained in the
Canadian Prospectus under the headings o, o and o (collectively,
the "Financial Information"), is in all material respects a
complete and accurate translation of the English language version
thereof and that such versions are not susceptible to any
materially different interpretation with respect to material
matter contained therein.
(j) The Underwriters and the Canadian Affiliates shall have received
on the Closing Date an opinion of Deloitte Touche, Chartered Accountants,
and Price Waterhouse, Chartered Accountants, dated the Closing Date, in
form and substance satisfactory to counsel to the Underwriters, addressed
to the Underwriters and the Canadian Affiliates and counsel to the
Underwriters to
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the effect that the French language version of the Financial Information
(in respect of which such firm has responsibility for translating)
contained in the Canadian Prospectus (including any supplement or amendment
thereto) is in all material respects a complete and accurate translation of
the English language version thereof and that such versions are not
susceptible of any materially different interpretation with respect to a
material matter contained therein.
(k) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales of Common Shares of the Company
or any securities convertible into or exercisable or exchangeable for such
Common Shares, delivered to you on or before the date hereof, shall be in
full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to the Representatives on the
Option Closing Date of such documents as they may reasonably request with
respect to the good standing of the Company, the valid and unencumbered title of
the Additional Shares and other matters related to the issuance of the
Additional Shares.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters and Canadian Affiliates herein contained, the
Company covenants with each Underwriter and Canadian Affiliate as follows:
(a) As soon as practicable, and in any event not later than one
business day after the date of this Agreement, the Company will prepare the
Final Canadian Prospectus and file such Canadian Prospectus with the
Canadian Commissions in each of the Qualifying Provinces and use its
reasonable efforts to obtain from or on behalf of such Canadian Commissions
receipts for such Canadian Prospectus dated as of such date.
(b) To furnish to the Representatives, without charge, five copies of
the conformed EDGAR submission copy of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a
conformed EDGAR submission copy of the Registration Statement (without
exhibits thereto) and (i) to furnish to the Representatives in New York
City, without charge, prior to 10:00 a.m. New York City time on the second
business day next succeeding the date of this
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Agreement and during the period mentioned in paragraph (d) below, as many
copies of the Prospectus and any supplements and amendments thereto or to
the Registration Statement as you may reasonably request and (ii) to
furnish to the Canadian Affiliates in [ ], without charge, prior to 12:00
noon New York City time on the third business day next succeeding the date
of this Agreement, as many copies of the Final Canadian Prospectus and any
supplements or amendments thereto as the Final Canadian Affiliates may
reasonably request.
(c) Before amending or supplementing the Registration Statement, the
Prospectus or the Canadian Prospectus, to furnish you a copy of each such
proposed amendment or supplement and to file no such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
or each Canadian Commission within the applicable period specified in Rule
424(b) under the Securities Act or under the applicable provisions of
Canadian Securities Laws any prospectus, amended prospectus, amendment or
supplement required to be filed pursuant to such Rule or laws.
(d) If, during such period after the first date of the public offering
of the Shares as in the opinion of your counsel the Prospectus is required
by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if, in the opinion of your
counsel, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers (whose
names and addresses you will furnish to the Company) to which Shares may
have been sold by you on behalf of the Underwriters and to any other
dealers upon request, either amendments or supplements to the Prospectus so
that the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances when the Prospectus is delivered to
a purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(e) If at any time after the date of the Canadian Prospectus: (i) any
material change (actual,
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anticipated, contemplated or threatened, financial or otherwise, in the
business, affairs, operations, assets, liabilities (contingent or
otherwise) or capital of the Company and its subsidiaries, taken as a
whole, shall have occurred; (ii) any material fact has arisen or is
discovered which would have been required to have been stated in the Final
Canadian Prospectus had it arisen or been discovered on or prior to the
date of the Final Canadian Prospectus; or (iii) any change in any material
fact contained in the Final Canadian Prospectus or any amendments or
supplements thereto arises or is discovered, which change is, or could
reasonably be expected to be, of such a nature as to render any statement
in the Canadian Prospectus or any amendments or supplements thereto
misleading or untrue or which would result in a misrepresentation in the
Canadian Prospectus or any amendments or supplements thereto or which would
result in the Canadian Prospectus or any amendments or supplements thereto
not complying (to the extent that such compliance is required) with
Canadian Securities Laws, then the Company shall promptly, and in any event
within any applicable time limitation, comply, to the satisfaction of the
Underwriters and the Canadian Affiliates, acting reasonably, with all
applicable filings and other requirements under Canadian Securities Laws as
a result of such fact or change. Notwithstanding the foregoing, the Company
shall not file any amendments or supplements to the Canadian Prospectus to
which the Underwriters and the Canadian Affiliates, acting reasonably,
object. The Company shall, in good faith, discuss with the Underwriters and
the Canadian Affiliates any fact or change in circumstances (actual,
anticipated, contemplated or threatened, financial or otherwise) which is
of such a nature that there is reasonable doubt as to whether any action
need be taken pursuant to the operation of this paragraph.
(f) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(g) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the
twelve-month period ending March 31, 1999 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
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7. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration, qualification and delivery of the Shares under the
Securities Act and Canadian Securities Laws and all other fees or expenses in
connection with the preparation and filing of the Registration Statement, any
preliminary prospectus, the North American Prospectuses and amendments and
supplements to any of the foregoing (collectively, the "Offering Documents"),
including all printing costs associated therewith, and the mailing and
delivering of copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or other
taxes payable thereon, (iii) all expenses in connection with the qualification
of the Shares for offer and sale under the securities laws of other
jurisdictions as provided in Section 6(f) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification, (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters incurred in connection with the
review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all costs and expenses incident to
listing the Shares on the NYSE and TSE, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer agent,
registrar or depositary, (viii) the costs and expenses of the Company relating
to investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, and (ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise made
in this Section. It is understood, however, that except as provided in this
Section, Section 9 entitled "Indemnity and Contribution", and the last paragraph
of Section 11 below, the Underwriters will pay all of their costs and expenses,
including fees and
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disbursements of their counsel, stock transfer taxes payable on resale of any of
the Shares by them and any advertising expenses connected with any offers they
may make.
The provisions of this Section 7 shall not affect any agreement that
the Sellers may otherwise have for the allocation of such expenses among
themselves.
8. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter (including its respective Canadian Affiliate) and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred by any Underwriter or any such controlling
person in connection with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Offering Document, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in any Offering Document.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party,
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upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and (b) the fees and expenses
of more than one separate firm (in addition to any local counsel) for the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section. In the case of any such separate firm for the Underwriters and such
control persons of Underwriters, such firm shall be designated in writing by
Morgan Stanley & Co. Incorporated. In the case of any such separate firm for the
Company, and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify each indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such
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indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such subsection, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other hand in connection with the
offering of the Shares shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate public offering price of the
Shares. The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The
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Underwriters' respective obligations to contribute pursuant to this Section 8
are several in proportion to the respective number of shares they have purchased
hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may
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26
be, any of the NYSE, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange, the Chicago Board of Trade or the TSE, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York or Toronto shall have been declared by the applicable
authorities or (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis that,
in your judgment, is material and adverse, and (b) in the case of any of the
events specified in clauses (a)(i) through (iv), such event singly or together
with any other such event makes it, in your judgment, impracticable to market
the Shares on the terms and in the manner contemplated in the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the later of (x) execution and delivery hereof by the
parties hereto and (y) release of notification of the effectiveness of the
Registration Statement by the Commission.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date or the Option Closing Date, as the case may be, any Underwriter
or Underwriters shall fail or refuse to purchase Shares and the aggregate number
of Shares with respect to which such default occurs is more than one-tenth of
the aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to you and the Company
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for the purchase of such Shares are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date or the Option Closing
Date, as the case may be, but in no event for longer than seven days, in order
that the required changes, if any, in the Offering Documents or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
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14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of references only and shall not be deemed a part of
this Agreement.
Very truly yours,
DENBURY RESOURCES INC.,
By
-----------------------------------
Name:
Title:
Accepted, February , 1998
MORGAN STANLEY & CO.
INCORPORATED
GORDON CAPITAL, INC.
JOHNSON RICE & COMPANY L.L.C.
LOEWEN, ONDAATJE,
MCCUTCHEON USA LIMITED
Acting severally on behalf of themselves and the several
Underwriters
Morgan Stanley & Co.
Incorporated
By
-----------------------------------
Name:
Title:
30
Schedule I
Firm Shares
Number of
Firm Shares
to be
Underwriter Purchased
----------- ---------------
Morgan Stanley & Co. Incorporated
Gordon Capital, Inc.
Johnson, Rice & Company L.L.C.
Loewen, Ondaatje, McCutcheon USA Limited
---------------
Total Shares................................................
===============
31
Schedule II
Canadian Affiliates
Respective
Underwriter Canadian Affiliate
- ----------- ------------------
32
Exhibit A
[FORM OF LOCK-UP LETTER]
, 1998
Denbury Resources Inc.
17304 Preston Road, Suite 200
Dallas, TX 75252
Morgan Stanley & Co. Incorporated
Gordon Capital, Inc.
Johnson Rice & Company L.L.P.
Loewen, Ondaatje, McCutcheon USA Limited
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Denbury Resources Inc., a Canadian corporation
(the "COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by
the several Underwriters, including Morgan Stanley (the "UNDERWRITERS"), of up
to [ ] shares (the "SHARES") of the Common Stock of the Company (the "COMMON
STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, it will not during the period commencing
on the date hereof and ending 120 days after the date of the final prospectus
relating to the Public offering (the "PROSPECTUS"), (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exchangeable for Common Stock, or
(ii) enter into any swap or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the Common Stock, whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) the sale of any Shares to the
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Underwriters pursuant to the Underwriting Agreement or (b) transactions relating
to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. In addition, the
undersigned agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 120 days after the date of the Prospectus, make any
demand for or exercise any right with respect to, the registration of any shares
of Common Stock or any security convertible into or exchangeable for Common
Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
----------------------------------------
(Name)
----------------------------------------
(Address)