DENBURY RESOURCES INC. Underwriting Agreement
Exhibit 1.1
EXECUTION VERSION
$420,000,000
9.75% Senior Subordinated Notes due 2016
February 10, 2009
▇.▇. ▇▇▇▇▇▇ Securities Inc.
As Representative of the
several Underwriters listed
in Schedule 1 hereto
several Underwriters listed
in Schedule 1 hereto
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Denbury Resources Inc., a Delaware corporation (the “Company”), proposes to issue and sell to
the several Underwriters listed in Schedule 1 hereto (the “Underwriters”), for whom you are acting
as representative (the “Representative”), $420 million principal amount of its 9.75% Senior
Subordinated Notes due 2016 (the “Securities”). The Securities will be issued pursuant to an
Indenture, dated on or about February 13, 2009 (the “Indenture”) between the Company, the
guarantors listed in Schedule 2 hereto (the “Guarantors”) and The Bank of New York Mellon Trust
Company, N.A., as trustee (the “Trustee”), and will be guaranteed on an unsecured senior
subordinated basis by each of the Guarantors (the “Guarantees”).
The Company hereby confirms its agreement with the several Underwriters concerning the
purchase and sale of the Securities, as follows:
1. Registration Statement. The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the “Securities Act”), a registration
statement on Form S-3 (File No. 333-157205), including a prospectus, relating to the Securities.
Such registration statement, as amended at the time it becomes effective, including the
information, if any, deemed pursuant to Rule 430A or 430B under the Securities Act to be part of
the registration statement at the time of its effectiveness (“Rule 430 Information”), is referred
to herein as the “Registration Statement”; and as used herein, the term “Preliminary Prospectus”
means the prospectus included in such registration statement (and any amendments thereto) at the
time of its effectiveness that omits Rule 430 Information, and the term
“Prospectus” means the prospectus in the form first used (or made available upon request of
purchasers pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales
of the Securities. If the Company has filed an abbreviated registration statement 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. Any reference in this Agreement to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the effective
date of the Registration Statement or the date of such Preliminary Prospectus or the Prospectus, as
the case may be and any reference to “amend”, “amendment” or “supplement” with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after such date under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder (collectively, the “Exchange
Act”) that are deemed to be incorporated by reference therein. Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Registration Statement and the
Prospectus.
At or prior to the time when sales of the Securities were first made (the “Time of Sale”), the
Company had prepared the following information (collectively, the “Time of Sale Information”): a
Preliminary Prospectus dated February 10, 2009, and each “free-writing prospectus” (as defined
pursuant to Rule 405 under the Securities Act) listed on Annex B hereto as constituting part of the
Time of Sale Information.
2. Purchase of the Securities by the Underwriters. (a) The Company agrees to issue
and sell the Securities to the several Underwriters as provided in this Agreement, and each
Underwriter, on the basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the
Company the respective principal amount of Securities set forth opposite such Underwriter’s name in
Schedule 1 hereto at a price equal to 90.816% of the principal amount thereof plus accrued
interest, if any, from February 13, 2009 to the Closing Date (as defined below). The Company will
not be obligated to deliver any of the Securities except upon payment for all the Securities to be
purchased as provided herein.
(b) The Company understands that the Underwriters intend to make a public offering of the
Securities as soon after the effectiveness of this Agreement as in the judgment of the
Representative is advisable, and initially to offer the Securities on the terms set forth in the
Prospectus. The Company acknowledges and agrees that the Underwriters may offer and sell
Securities to or through any affiliate of an Underwriter and that any such affiliate may offer and
sell Securities purchased by it to or through any Underwriter.
(c) Payment for and delivery of the Securities will be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ LLP at 10:00 A.M., New York City time, on February 13,
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2009, or at such other time or place on the same or such other date, not later than the fifth
business day thereafter, as the Representative and the Company may agree upon in writing. The time
and date of such payment and delivery is referred to herein as the “Closing Date”.
(d) Payment for the Securities shall be made by wire transfer in immediately available funds
to the account(s) specified by the Company to the Representative against delivery to the nominee of
The Depository Trust Company, for the account of the Underwriters, of one or more global notes
representing the Securities (collectively, the “Global Note”), with any transfer taxes payable in
connection with the sale of the Securities duly paid by the Company. The Global Note will be made
available for inspection by the Representative not later than 1:00 P.M., New York City time, on the
business day prior to the Closing Date.
(e) The Company and the Guarantors acknowledge and agree that each Underwriter is acting
solely in the capacity of an arm’s length contractual counterparty to the Company and the
Guarantors with respect to the offering of Securities contemplated hereby (including in connection
with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an
agent of, the Company, the Guarantors or any other person. Additionally, neither the
Representative nor any other Underwriter is advising the Company, the Guarantors or any other
person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The
Company and the Guarantors shall consult with their own advisors concerning such matters and shall
be responsible for making their own independent investigation and appraisal of the transactions
contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company
or the Guarantors with respect thereto. Any review by the Underwriters of the Company, the
Guarantors, the transactions contemplated hereby or other matters relating to such transactions
will be performed solely for the benefit of the Underwriters and shall not be on behalf of the
Company or the Guarantors.
(f) The Company hereby confirms its engagement of Scotia Capital (USA) Inc. as, and Scotia
Capital (USA) Inc. hereby confirms its agreement with the Company to render services as, a
“qualified independent underwriter” within the meaning of Rule 2720(b)(15) of the National
Association of Securities Dealers, Inc. (the “NASD”) with respect to the offering and sale of the
Securities. Scotia Capital (USA) Inc., in its capacity as qualified independent underwriter and not
otherwise, is referred to herein as the “QIU”.
3. Representations and Warranties of the Company and the Guarantors. The Company and
the Guarantors jointly and severally represent and warrant to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of
filing thereof, complied in all material respects with the Securities Act and did not contain any
untrue statement of a material fact or omit to
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state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company and the Guarantors make no representation and warranty with
respect to any statements or omissions made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such Underwriter through the
Representative expressly for use in any Preliminary Prospectus.
(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale did not, and
at the Closing Date will not, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the Company and the Guarantors
make no representation and warranty with respect to any statements or omissions made in reliance
upon and in conformity with information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representative expressly for use in such Time of Sale
Information. No statement of material fact included in the Prospectus has been omitted from the
Time of Sale Information and no statement of material fact included in the Time of Sale Information
that is required to be included in the Prospectus has been omitted therefrom.
(c) Issuer Free Writing Prospectus. The Company (including its agents and representatives,
other than the Underwriters in their capacity as such) has not prepared, made, used, authorized,
approved or referred to and will not prepare, make, use, authorize, approve or refer to any
“written communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer
to sell or solicitation of an offer to buy the Securities (each such communication by the Company
or its agents and representatives, other than the Underwriters in their capacity as such, (other
than a communication referred to in clauses (i), (ii) and (iii) below) an “Issuer Free Writing
Prospectus”) other than (i) any document not constituting a prospectus pursuant to Section
2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act, (ii) the Preliminary
Prospectus, (iii) the Prospectus, (iv) the documents listed on Annex B as constituting part of the
Time of Sale Information and (v) any electronic road show or other written communications, in each
case approved in writing in advance by the Representative. Each such Issuer Free Writing
Prospectus complied in all material respects with the Securities Act, has been or will be (within
the time period specified in Rule 433) filed in accordance with the Securities Act (to the extent
required thereby) and, when taken together with the Preliminary Prospectus filed prior to the first
use of such Issuer Free Writing Prospectus, did not, and at the Closing Date will not, contain any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company and the Guarantors make no representation and warranty with
respect to any statements or omissions made in each such Issuer Free Writing Prospectus in reliance
upon and in conformity with information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representative expressly for use in any Issuer Free Writing
Prospectus.
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(d) Registration Statement and Prospectus. The Registration Statement is an “automatic shelf
registration statement” as defined under Rule 405 of the Securities Act that has been filed with
the Commission not earlier than three years prior to the date hereof; and no notice of objection of
the Commission to the use of such registration statement or any post-effective amendment thereto
pursuant to Rule 401(g)(2) under the Securities Act has been received by the Company. No order
suspending the effectiveness of the Registration Statement has been issued by the Commission and no
proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or
related to the offering has been initiated or threatened by the Commission; as of the applicable
effective date of the Registration Statement and any amendment thereto, the Registration Statement
complied and will comply in all material respects with the Securities Act and the Trust Indenture
Act of 1939, as amended, and the rules and regulations of the Commission thereunder (collectively,
the “Trust Indenture Act”), and did not and will not 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 not misleading; and as of the date of the Prospectus and any amendment or
supplement thereto and as of the Closing Date, the Prospectus will not 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 the light of the circumstances under which they were made,
not misleading; provided that the Company and the Guarantors make no representation and
warranty with respect to (i) that part of the Registration Statement that constitutes the Statement
of Eligibility and Qualification (Form T-1) of the Trustee under the Trust Indenture Act or (ii)
any statements or omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through the Representative
expressly for use in the Registration Statement and the Prospectus and any amendment or supplement
thereto.
(e) Incorporated Documents. The documents incorporated by reference in the Registration
Statement, the Prospectus and the Time of Sale Information, when they were filed with the
Commission, conformed in all material respects to the requirements of the Exchange Act of 1934, as
amended, and the rules and regulation of the Commission thereunder (collectively, the “Exchange
Act”), and none of such documents 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, in
the light of the circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Registration Statement, the Prospectus or
the Time of Sale Information, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and 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, in the light of the circumstances under which they were made, not
misleading.
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(f) Financial Statements. The financial statements and the related notes thereto included or
incorporated by reference in the Registration Statement, the Time of Sale Information and the
Prospectus comply in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as applicable, and present fairly the financial position of the Company and
its subsidiaries as of the dates indicated and the results of their operations and the changes in
their cash flows for the periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent basis throughout
the periods covered thereby, and the supporting schedules included or incorporated by reference in
the Registration Statement present fairly the information required to be stated therein; the other
financial information included or incorporated by reference in the Registration Statement, the Time
of Sale Information and the Prospectus has been derived from the accounting records of the Company
and its subsidiaries and presents fairly the information shown thereby.
(g) No Material Adverse Change. Since the date of the most recent financial statements of the
Company included or incorporated by reference in the Registration Statement, the Time of Sale
Information and the Prospectus, (i) there has not been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries, or any dividend or distribution of any kind
declared, set aside for payment, paid or made by the Company on any class of capital stock, or any
material adverse change, or any development involving a prospective material adverse change, in or
affecting the business, properties, management, financial position, results of operations or
prospects of the Company and its subsidiaries taken as a whole; (ii) neither the Company nor any of
its subsidiaries has entered into any transaction or agreement that is material to the Company and
its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent,
that is material to the Company and its subsidiaries taken as a whole; and (iii) neither the
Company nor any of its subsidiaries has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered by insurance, or
from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or
governmental or regulatory authority, except with respect to each of clauses (i), (ii) and (iii),
as otherwise disclosed in the Registration Statement, the Time of Sale Information and the
Prospectus.
(h) Organization and Good Standing. The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified, in good standing or have such power or authority would
not, individually or in the aggregate, have a material adverse effect on the business, properties,
management, financial position, results of operations or prospects of the Company and its
subsidiaries taken as a whole or on the performance by the Company and the Guarantors of their
obligations under the Securities and the Guarantees (a “Material Adverse Effect”). The
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Company does not own or control, directly or indirectly, any corporation, association or other
entity other than the subsidiaries required to be listed and so listed in Exhibit 21 to the
Registration Statement.
(i) Capitalization. The Company has an authorized capitalization as set forth in the
Registration Statement, the Time of Sale Information and the Prospectus and all the outstanding
shares of capital stock or other equity interests of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable (except for general partner
interests) and are owned directly or indirectly by the Company, free and clear of any lien, charge,
encumbrance, security interest, restriction on voting or transfer or any other claim of any third
party, except as set forth in any partnership governing documents.
(j) Due Authorization. The Company and each of the Guarantors have full right, power and
authority to execute and deliver this Agreement, the Securities and the Indenture (including each
Guarantee set forth therein, the “Transaction Documents”) and to perform their respective
obligations hereunder and thereunder; and all action required to be taken for the due and proper
authorization, execution and delivery of each of the Transaction Documents and the consummation of
the transactions contemplated thereby has been duly and validly taken.
(k) The Indenture. The Indenture has been duly authorized by the Company and each of the
Guarantors and has been duly qualified under the Trust Indenture Act and, when the Indenture is
duly executed and delivered in accordance with its terms by each of the parties thereto,
constitutes a valid and legally binding agreement of the Company and each of the Guarantors
enforceable against each of them in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles relating to enforceability (collectively,
the “Enforceability Exceptions”).
(l) The Securities and the Guarantees. The Securities have been duly authorized by the
Company and, when duly executed, authenticated, issued and delivered as provided in the Indenture
and paid for as provided herein, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the
benefits of the Indenture; and the Guarantees have been duly authorized by each of the Guarantors
and, when the Securities have been duly executed, authenticated, issued and delivered as provided
in the Indenture and paid for as provided herein, will be valid and legally binding obligations of
each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms,
subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture.
(m) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors.
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(n) Descriptions of the Transaction Documents. Each Transaction Document conforms in all
material respects to the description thereof contained in the Registration Statement, the Time of
Sale Information and the Prospectus.
(o) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws or similar organizational documents; (ii) in default, and no
event has occurred that, with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(p) No Conflicts. The execution, delivery and performance by the Company and each of the
Guarantors of each of the Transaction Documents, the issuance and sale of the Securities, the
issuance of the Guarantees and compliance by the Company and each of the Guarantors with the terms
thereof and the consummation of the transactions contemplated by the Transaction Documents will not
(i) conflict with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or by-laws or similar
organizational documents of the Company or any of its subsidiaries or (iii) result in the violation
of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of clauses (i) and (iii) above, for any
such conflict, breach, violation or default that would not, individually or in the aggregate, have
a Material Adverse Effect.
(q) No Consents Required. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory authority is
required for the execution, delivery and performance by the Company or each of the Guarantors of
each of the Transaction Documents, the issuance and sale of the Securities and the issuance of the
Guarantees and compliance by the Company and each of the Guarantors with the terms thereof and the
consummation of the transactions contemplated by the Transaction Documents, except for the
registration of the Securities (including the Guarantees) under the Securities Act, the
qualification of the Indenture and the Trustee under the Trust Indenture Act and such consents,
approvals, authorizations, orders and registrations or qualifications as may be required under
applicable state securities laws in connection with the purchase and distribution of the Securities
(including the Guarantees) by the Underwriters.
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(r) Legal Proceedings. Except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of its subsidiaries is or may be
a party or to which any property of the Company or any of its subsidiaries is or may be the subject
that, individually or in the aggregate, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect; no such
investigations, actions, suits or proceedings are threatened or, to the best knowledge of the
Company and each of the Guarantors, contemplated by any governmental or regulatory authority or
threatened by others; and (i) there are no current or pending legal, governmental or regulatory
actions, suits or proceedings that are required under the Securities Act to be described in the
Registration Statement or the Prospectus that are not so described in the Registration Statement,
the Time of Sale Information and the Prospectus and (ii) there are no statutes, regulations or
contracts or other documents that are required under the Securities Act to be filed as exhibits to
the Registration Statement or described in the Registration Statement and the Prospectus that are
not so filed as exhibits to the Registration Statement or described in the Registration Statement,
the Time of Sale Information and the Prospectus.
(s) Independent Registered Public Accounting Firm. PricewaterhouseCoopers, who has audited
certain financial statements of the Company and its subsidiaries, is an independent registered
public accounting firm with respect to the Company and its subsidiaries within the applicable rules
and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United
States) and as required by the Securities Act.
(t) Title to Real and Personal Property. The Company and its subsidiaries have good and valid
title in fee simple to, or have valid rights to lease or otherwise use, all items of real and
personal property that are material to the respective businesses of the Company and its
subsidiaries. Any liens, encumbrances, claims and defects and imperfections of title with respect
to the items of real and personal property are disclosed in the Registration Statement, the Time of
Sale Information and the Prospectus or do not materially interfere with the use made and proposed
to be made of such property by the Company and its subsidiaries and could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
(u) Title to Intellectual Property. The Company and its subsidiaries own or possess adequate
rights or licenses to use all material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service ▇▇▇▇ registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their respective businesses; and
believe the conduct of their respective businesses will not conflict in any material respect with
any such rights of others, and the Company and its subsidiaries have not received any notice of any
claim of infringement or conflict with any such rights of others.
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(v) No Undisclosed Relationships. No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its subsidiaries, on the other, that
is required by the Securities Act to be described in the Registration Statement and the Prospectus
and that is not so described in such documents and in the Time of Sale Information.
(w) Investment Company Act. Each of the Company and the Guarantors is not and, after giving
effect to the offering and sale of the Securities and the application of the proceeds thereof as
described in the Registration Statement, the Time of Sale Information and the Prospectus, will not
be an “investment company” or an entity “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, “Investment Company Act”).
(x) Taxes. The Company and its subsidiaries have paid all federal, state, local and foreign
taxes and filed all tax returns required to be paid or filed through the date hereof; and except as
would not have a Material Adverse Effect or as otherwise disclosed in the Registration Statement,
the Time of Sale Information and the Prospectus, there is no tax deficiency that has been, or could
reasonably be expected to be, asserted against the Company or any of its subsidiaries or any of
their respective properties or assets.
(y) Licenses and Permits. The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective properties or the
conduct of their respective businesses as described in the Registration Statement, the Time of Sale
Information and the Prospectus, except where the failure to possess or make the same would not,
individually or in the aggregate, have a Material Adverse Effect; and except as described in the
Registration Statement, the Time of Sale Information and the Prospectus, neither the Company nor
any of its subsidiaries has received notice of any revocation or modification of any such license,
certificate, permit or authorization or has any reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary course.
(z) No Labor Disputes. No labor disturbance by or dispute with employees of the Company or
any of its subsidiaries exists or, to the best knowledge of the Company and each of the Guarantors,
is contemplated or threatened and the Company and each of the Guarantors are not aware of any
existing or imminent labor disturbance by, or dispute with, the employees of any of their or their
subsidiaries’ principal suppliers, contractors or customers, except as would not have a Material
Adverse Effect.
(aa) Compliance With Environmental Laws. (i) The Company and its subsidiaries (x) are in
compliance with any and all applicable federal, state, local and
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foreign laws, rules, regulations, requirements, decisions and orders relating to the protection of
human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, “Environmental Laws”); (y) have received and are in compliance with all
permits, licenses, certificates or other authorizations or approvals required of them under
applicable Environmental Laws to conduct their respective businesses; and (z) have not received
notice of any actual or potential liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or contaminants, and (ii) there are
no costs or liabilities associated with Environmental Laws of or relating to the Company or its
subsidiaries, except in the case of each of clauses (i) and (ii) above, for any such failure to
comply, or failure to receive required permits, licenses or approvals, or cost or liability, as
would not, individually or in the aggregate, have a Material Adverse Effect.
(bb) Compliance With ERISA. Each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is maintained,
administered or contributed to by the Company or any of its affiliates for employees or former
employees of the Company and its affiliates has been maintained in compliance with its terms and
the requirements of any applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”), except for any
such failure to comply as would not, individually or in the aggregate, have a Material Adverse
Effect; no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of
the Code, has occurred with respect to any such plan excluding transactions effected pursuant to a
statutory or administrative exemption, except for any such prohibited transaction, as would not,
individually or in the aggregate, have a Material Adverse Effect; and no such plan is a
“multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA or is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA.
(cc) Disclosure Controls. The Company and its subsidiaries maintain “disclosure controls and
procedures” (as defined in Rule 13a-15(e) of the Exchange Act) designed to ensure that information
required under the Exchange Act to be disclosed in the Company’s filings is recorded, processed,
summarized and reported within the time periods specified in the Commission’s rules and forms. In
connection with assessing material information required to be disclosed in the Registration
Statement, the Time of Sale Information and the Prospectus, the chief executive officer and chief
financial officer have evaluated the effectiveness of the Company’s disclosure controls and
procedures as of the end of the Company’s 2008 fiscal year and have determined that such disclosure
controls and procedures are effective in all material respects in providing to them on a timely
basis such material information.
(dd) Accounting Controls. The Company and its subsidiaries maintain systems of “internal
control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply
with the requirements of the Exchange Act and have been designed by, or under the supervision of,
their respective principal executive and principal financial officers, or persons performing
similar functions, to provide reasonable assurance
11
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles, including, but not
limited to internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset accountability; and (iii)
access to assets is permitted only in accordance with management’s general or specific
authorization. Except as disclosed in the Registration Statement, the Time of Sale Information and
the Prospectus, there were no material weaknesses in the Company’s internal controls for the period
covered by the 2007 10-K, and, for the periods subsequent to the period covered by the 2007 10-K,
there are no material weaknesses in the Company’s internal controls that have come to the attention
of the Company’s management.
(ee) Insurance. The Company and its subsidiaries have insurance covering such risks as are
customarily carried by businesses similarly situated, including insurance against (other than
losses or damage to property owned by the Company or any of its subsidiaries which is self insured)
losses customarily insured against as a result of damage by fire, lightning, hail, tornado,
explosion and other similar risk covering their respective properties, operations, personnel and
businesses, including business interruption insurance; and neither the Company nor any of its
subsidiaries has (i) received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made in order to continue such
insurance or (ii) any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from
similar insurers as may be necessary to continue its business.
(ff) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the best
knowledge of the Company and each of the Guarantors, any director, officer, agent, employee or
other person associated with or acting on behalf of the Company or any of its subsidiaries has (i)
used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(gg) Compliance with Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit
or proceeding by or before any court or governmental agency, authority or body or any
12
arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering
Laws is pending or, to the best knowledge of the Company, threatened.
(hh) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the knowledge
of the Company, any director, officer, agent, employee or Affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (“OFAC”); the Company is not currently under
investigation by OFAC; the Company has not discovered any facts that would lead it to believe it
has violated any laws or regulations administered by OFAC; and the Company will not directly or
indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(ii) Solvency. On the Closing Date, and after giving effect to the issuance of the Securities
and the consummation of the other transactions related thereto as described in the Registration
Statement, the Time of Sale Information and the Prospectus, as of the Closing Date, the Company
will be Solvent. As used in this paragraph, the term “Solvent” means, with respect to a particular
date, that on such date (i) the present fair market value (or present fair saleable value) of the
assets of the Company is not less than the total amount required to pay the debts of the Company
(including an amount of contingent liabilities, computed at the amount which, in light of all of
the facts and circumstances existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability) as they become absolute and matured; (ii) the
Company is able to realize upon its assets and pay its debts as they mature and become due in the
normal course of business; (iii) assuming consummation of the issuance of the Securities as
contemplated by this Agreement, the Registration Statement, the Time of Sale Information and the
Prospectus, the Company has not incurred debts and does not propose to incur debts that would be
beyond its ability to pay as such debts and liabilities mature; and (iv) the Company is not engaged
in any business or transaction, and does not propose to engage in any business or transaction, for
which its property would constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which the Company is engaged.
(jj) No Restrictions on Subsidiaries. Except as provided in the Company’s Sixth Amended and
Restated Credit Agreement, as amended, among Denbury Onshore, LLC, as Borrower, the Company as
Parent Guarantor, JPMorgan Chase Bank, National Association, successor by merger to BankOne, NA, as
Administrative Agent, and certain other financial institutions dated September 14, 2006, the
Indenture, the Company’s Indenture dated as of April 3, 2007 relating to the Company’s 71/2% Senior
Subordinated Notes Due 2015 and the Company’s Indenture dated as of March 25, 2003 relating to the
Company’s 71/2% Senior Subordinated Notes Due 2013, no subsidiary of the Company is currently
prohibited, directly or indirectly, under any agreement or other instrument to which it is a party
or is subject, from paying any dividends to the Company, from making any other distribution on such
subsidiary’s
13
capital stock, from repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary’s properties or assets to the Company or any
other subsidiary of the Company except that there are limitations on dividends, asset
contributions, or distributions that may be paid to Genesis Energy Inc.
(kk) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would give
rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a
brokerage commission, finder’s fee or like payment in connection with the offering and sale of the
Securities.
(ll) No Registration Rights. No person has the right to require the Company or any of its
subsidiaries to register any securities for sale under the Securities Act by reason of the filing
of the Registration Statement with the Commission or the issuance and sale of the Securities.
(mm) No Stabilization. Neither the Company nor any of the Guarantors have taken, directly or
indirectly, any action designed to or that could reasonably be expected to cause or result in any
stabilization or manipulation of the price of the Securities.
(nn) [Intentionally Omitted.]
(oo) Margin Rules. Neither the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Company as described in the Registration Statement, the
Time of Sale Information and the Prospectus will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of Governors.
(pp) Forward-Looking Statements. No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) included or incorporated by
reference in the Registration Statement, the Time of Sale Information and the Prospectus has been
made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(qq) Statistical and Market Data. Nothing has come to the attention of the Company that has
caused the Company to believe that the statistical and market-related data included or incorporated
by reference in the Registration Statement, the Time of Sale Information and the Prospectus is not
based on or derived from sources that are reliable and accurate in all material respects.
(rr) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. There is and has been no failure on the part of the Company or any
of the Company’s directors or officers, in their capacities as such, to comply, in all material
respects, with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations
promulgated in connection therewith (the “Sarbanes-
14
Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to
certifications.
(ss) Status under the Securities Act. The Company is not an ineligible issuer and is a
well-known seasoned issuer, in each case as defined in Rule 405 under the Securities Act, in each
case at the times specified in the Securities Act in connection with the offering of the
Securities. The Company has paid the registration fee for this offering.
(tt) Reserve Report Data. The oil and gas reserve estimates of the Company and its
subsidiaries for the fiscal years ended December 31, 2006, 2007 and 2008 contained in the
Preliminary Prospectus and the Prospectus are derived from reports that have been prepared by the
independent petroleum consulting firm as set forth therein, such reserve estimates fairly reflect
the oil and gas reserves of the Company and its subsidiaries at the dates indicated therein and are
in accordance, in all material respects, with the Commission guidelines applied on a consistent
basis throughout the periods involved.
(uu) Independent Reserve Engineering Firms. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ have represented to the
Company that they are, and the Company believes them to be, independent reserve engineers with
respect to the Company and its subsidiaries and for the periods set forth in the Preliminary
Prospectus and the Prospectus.
4. Further Agreements of the Company and the Guarantors. The Company and each of the
Guarantors jointly and severally covenant and agree with each Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) and Rule 430A or 430B under the Securities Act, will
file, any Issuer Free Writing Prospectus (including the Term Sheet in the form of Annex C hereto)
to the extent required by Rule 433 under the Securities Act; and will file, within the time periods
required under the Exchange Act, all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery
of a prospectus is required in connection with the offering or sale of the Securities; and the
Company will furnish copies of the Prospectus and each Issuer Free Writing Prospectus (to the
extent not previously delivered) to the Underwriters in New York City prior to 10:00 A.M., New York
City time, on the business day next succeeding the date of this Agreement in such quantities as the
Representative may reasonably request. The Company has paid or will pay the registration fees for
this offering within the time period required by Rule 456(b)(1)(i) under the Securities Act
(without giving effect to the proviso therein) and in any event prior to the Closing Date.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to the Representative,
two copies of the Registration Statement with fax signatures as
15
originally filed and each amendment thereto, in each case including all exhibits and consents filed
therewith; and (ii) to each Underwriter (A) a conformed copy of the Registration Statement as
originally filed and each amendment thereto, in each case including all exhibits and consents filed
therewith and (B) during the Prospectus Delivery Period (as defined below), as many copies of the
Prospectus (including all amendments and supplements thereto and documents incorporated by
reference therein) and each Issuer Free Writing Prospectus as the Representative may reasonably
request. As used herein, the term “Prospectus Delivery Period” means such period of time after the
first date of the public offering of the Securities as in the opinion of counsel for the
Underwriters a prospectus relating to the Securities is required by law to be delivered (or
required to be delivered but for Rule 172 under the Securities Act) in connection with sales of the
Securities by any Underwriter or dealer.
(c) Amendments or Supplements; Issuer Free Writing Prospectuses. Before making, preparing,
using, authorizing, approving, referring to or filing any Issuer Free Writing Prospectus, and
before filing any amendment or supplement to the Registration Statement or the Prospectus, whether
before or after the time that the Registration Statement becomes effective the Company will furnish
to the Representative and counsel for the Underwriters a copy of the proposed Issuer Free Writing
Prospectus, amendment or supplement for review and will not make, prepare, use, authorize, approve,
refer to or file any such Issuer Free Writing Prospectus or file any such proposed amendment or
supplement to which the Representative reasonably objects.
(d) Notice to the Representative. The Company will advise the Representative promptly, and
confirm such advice in writing, (i) when the Registration Statement has been filed; (ii) when any
amendment to the Registration Statement has been filed or becomes effective; (iii) when any
supplement to the Prospectus or any amendment to the Prospectus or any Issuer Free Writing
Prospectus has been filed; (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or the receipt of any
comments from the Commission relating to the Registration Statement or any other request by the
Commission for any additional information; (v) of the issuance by the Commission of any order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or the initiation or threatening of any proceeding for
that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event
within the Prospectus Delivery Period as a result of which the Prospectus, the Time of Sale
Information or any Issuer Free Writing Prospectus as then amended or supplemented would include 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 the light of the circumstances existing
when the Prospectus, the Time of Sale Information or any such Issuer Free Writing Prospectus is
delivered to a purchaser, not misleading; (vii) of the receipt by the Company of any notice of
objection of the Commission to the use of the Registration Statement or any post-effective
amendment thereto pursuant to Rule 401(g)(2) under the Securities Act; and (viii) of the
receipt by the Company of any notice with respect to any suspension of the qualification of the
Securities for offer and sale in any jurisdiction
16
or the initiation or threatening of any proceeding for such purpose; and the Company will use its
reasonable best efforts to prevent the issuance of any such order suspending the effectiveness of
the Registration Statement, preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification of the Securities and, if any such order is issued,
will obtain as soon as possible the withdrawal thereof.
(e) Time of Sale Information. If at any time prior to the Closing Date (i) any event shall
occur or condition shall exist as a result of which the Time of Sale Information as then amended or
supplemented would include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the circumstances, not
misleading or (ii) it is necessary to amend or supplement the Time of Sale Information to comply
with law, the Company will immediately notify the Underwriters thereof and forthwith prepare and,
subject to paragraph (c) above, file with the Commission (to the extent required) and furnish to
the Underwriters and to such dealers as the Representative may designate, such amendments or
supplements to the Time of Sale Information as may be necessary so that the statements in the Time
of Sale Information as so amended or supplemented will not, in the light of the circumstances, be
misleading or so that the Time of Sale Information will comply with law.
(f) Ongoing Compliance. If during the Prospectus Delivery Period (i) any event shall occur or
condition shall exist as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it
is necessary to amend or supplement the Prospectus to comply with law, the Company will immediately
notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file
with the Commission and furnish to the Underwriters and to such dealers as the Representative may
designate, such amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that
the Prospectus will comply with law.
(g) Blue Sky Compliance. The Company will qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representative shall reasonably request
and will continue such qualifications in effect so long as required for distribution of the
Securities; provided that neither the Company nor any of the Guarantors shall be required
to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such
jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent
to service of process in any such jurisdiction or (iii) subject itself to taxation in any such
jurisdiction if it is not otherwise so subject.
17
(h) Earning Statement. The Company will make generally available to its security holders and
the Representative as soon as practicable an earning statement that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering
a period of at least twelve months beginning with the first fiscal quarter of the Company occurring
after the “effective date” (as defined in Rule 158) of the Registration Statement.
(i) Clear Market. During the period from the date hereof through and including the date that
is 90 days after the date hereof, the Company and each of the Guarantors will not, without the
prior written consent of the Representative, offer, sell, contract to sell or otherwise dispose of
any debt securities issued or guaranteed by the Company or any of the Guarantors and having a tenor
of more than one year.
(j) Use of Proceeds. The Company will apply the net proceeds from the sale of the Securities
as described in the Registration Statement, the Time of Sale Information and the Prospectus under
the heading “Use of Proceeds”.
(k) No Stabilization. Neither the Company nor any of the Guarantors will take, directly or
indirectly, any action designed to or that could reasonably be expected to cause or result in any
stabilization or manipulation of the price of the Securities.
(l) Legending and Record Retention. The Company will, pursuant to reasonable procedures
developed in good faith, comply with legending requirements applicable to Issuer Free Writing
Prospectuses and retain copies of each Issuer Free Writing Prospectus that is not filed with the
Commission in accordance with the Securities Act.
5. Certain Agreements of the Underwriters. Each Underwriter hereby represents and
agrees that
(a) It has not and will not use, authorize use of, refer to, create, or participate in the
planning for use of, any “free writing prospectus”, as defined in Rule 405 under the Securities Act
(which term includes use of any written information furnished to the Commission by the Company and
not incorporated by reference into the Registration Statement and any press release issued by the
Company); provided however, that it may create, use, authorize use of, refer to, or participate in
the planning for use of (i) a free writing prospectus that, solely as a result of use by such
Underwriter, would not trigger an obligation to file such free writing prospectus with the
Commission pursuant to Rule 433, (ii) any Issuer Free Writing Prospectus listed on Annex B or
prepared pursuant to Section 3(c) or Section 4(c) above (including any electronic road show, if the
contents therein have been prepared by, or approved in advance by, the Company), or (iii) any free
writing prospectus prepared by such Underwriter and approved by the Company in advance in writing
(each such free writing prospectus referred to in clauses (i) or (iii), an “Underwriter Free
Writing Prospectus”). Notwithstanding the foregoing, the
Underwriters may use a term sheet substantially in the form of Annex C hereto without the
consent of the Company.
18
(b) It will, pursuant to reasonable procedures developed in good faith, comply with any
legending requirements applicable to, each free writing prospectus used or referred to by it, in
accordance with the Securities Act.
(c) It is not subject to any pending proceeding under Section 8A of the Securities Act with
respect to the offering (and will promptly notify the Company if any such proceeding against it is
initiated during the Prospectus Delivery Period).
6. Conditions of the Underwriters’ Obligations. The obligation of each Underwriter to
purchase Securities on the Closing Date as provided herein is subject to the performance by the
Company and each of the Guarantors of their respective covenants and other obligations hereunder
and to the following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceeding for such purpose, pursuant to Rule
401(g)(2) or pursuant to Section 8A under the Securities Act shall be pending before or threatened
by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely
filed with the Commission under the Securities Act (in the case of an Issuer Free Writing
Prospectus, to the extent required by Rule 433 under the Securities Act) and in accordance with
Section 4(a) hereof; and all requests by the Commission for additional information shall have been
complied with to the reasonable satisfaction of the Representative.
(b) Representations and Warranties. The representations and warranties of the Company and the
Guarantors contained herein shall be true and correct on the date hereof and on and as of the
Closing Date; and the statements of the Company, the Guarantors and their respective officers made
in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date.
(c) No Downgrade. Subsequent to the earlier of (A) the Time of Sale and (B) the execution and
delivery of this Agreement, (i) no downgrading shall have occurred in the rating accorded the
Securities or any other debt securities or preferred stock of or guaranteed by the Company, any of
the Guarantors or any of their respective subsidiaries by any “nationally recognized statistical
rating organization”, as such term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act and (ii) no such organization shall have publicly announced that it has
under surveillance or review, or has changed its outlook with respect to, its rating of the
Securities or of any other debt securities or preferred stock of or guaranteed by the Company, any
of the Guarantors or any of their respective subsidiaries (other than an announcement with positive
implications of a possible upgrading).
(d) No Material Adverse Change. No event or condition of a type described in Section 3(g)
hereof shall have occurred or shall exist, which event or condition is not described in the Time of
Sale Information (excluding any amendment or supplement
19
thereto) and the Prospectus (excluding any
amendment or supplement thereto) and the effect of which in the reasonable judgment of the
Representative makes it impracticable or inadvisable to proceed with the offering, sale or delivery
of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale
Information and the Prospectus.
(e) Officer’s Certificate. The Representative shall have received on and as of the Closing
Date a certificate of an executive officer of the Company and of each Guarantor who has specific
knowledge of the Company’s or such Guarantor’s financial matters and is satisfactory to the
Representative (i) confirming that such officer has carefully reviewed the Registration Statement,
the Time of Sale Information and the Prospectus and, to the best knowledge of such officer, the
representations set forth in Sections 3(b) and 3(d) hereof are true and correct, (ii) confirming
that the other representations and warranties of the Company and the Guarantors in this Agreement
are true and correct and that the Company and the Guarantors have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied hereunder at or prior to the
Closing Date and (iii) to the effect set forth in paragraphs (a), (c) and (d) above.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date,
PricewaterhouseCoopers shall have furnished to the Representative, at the request of the Company,
letters, dated the respective dates of delivery thereof and addressed to the Underwriters, in form
and substance reasonably satisfactory to the Representative, containing statements and information
with respect to the financial statements and certain financial information contained or
incorporated by reference in the Registration Statement, the Time of Sale Information and the
Prospectus; provided that the letter delivered on the Closing Date shall use a “cut-off”
date no more than three business days prior to the Closing Date.
(g) Opinion and 10b-5 Statement of Counsel for the Company. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel for
the Company, shall have furnished to the Representative, at the request of the Company, their
written opinion and 10b-5 Statement, dated the Closing Date and addressed to the Underwriters, in
form and substance reasonably satisfactory to the Representative, to the effect set forth in Annex
A hereto.
(h) Opinion and 10b-5 Statement of Counsel for the Underwriters. The Representative shall
have received on and as of the Closing Date an opinion and 10b-5 Statement of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, with respect to such matters as the Representative may
reasonably request, and such counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.
(i) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or
sale of the Securities or the issuance of the Guarantees;
20
and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent
the issuance or sale of the Securities or the issuance of the Guarantees.
(j) Good Standing. The Representative shall have received on and as of the Closing Date
satisfactory evidence of the good standing of the Company and its subsidiaries in their respective
jurisdictions of organization and their good standing in such other jurisdictions as the
Representative may reasonably request, in each case in writing or any standard form of
telecommunication from the appropriate governmental authorities of such jurisdictions.
(k) Additional Documents. On or prior to the Closing Date, the Company and the Guarantors
shall have furnished to the Representative such further certificates and documents as the
Representative may reasonably request.
(l) Reserve Report Confirmation Letters. On the date of this Agreement and on the Closing
Date, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ shall have furnished to the Representative, at the request of the
Company, letters, dated the respective dates of delivery thereof and addressed to the Underwriters,
in form and substance reasonably satisfactory to the Representative, containing statements and
information with respect to the oil and gas reserves of the Company and its subsidiaries as
reported in letters to the Company.
All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company and each of the Guarantors jointly and
severally agree to indemnify and hold harmless each Underwriter, its affiliates, directors and
officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are
incurred), joint or several, that arise out of, or are based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration Statement or caused by
any omission or alleged omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or any amendment or
supplement thereto), any Issuer Free Writing
Prospectus or any Time of Sale Information, or caused by any omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each of clauses (i) and (ii) except
insofar as such losses, claims, damages or liabilities
21
arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representative for use therein.
(b) Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of the Guarantors, each of their respective
directors, each of their respective officers who signed the Registration Statement and each person,
if any, who controls the Company or any of the Guarantors within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise
out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such Underwriter furnished
to the Company in writing by such Underwriter through the Representative expressly for use in the
Registration Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free
Writing Prospectus or any Time of Sale Information, it being understood and agreed that the only
such information consists of the following: the fourth and sixth paragraphs under the table of
Underwriters in the section entitled “Underwriting” in the Prospectus, the last sentence in the
seventh paragraph under the table of Underwriters in the section entitled “Underwriting”, the
second, third and last sentences of the last paragraph in the section entitled “Underwriting,” and
the following information in the Issuer Free Writing Prospectus dated February 10, 2009: the final
sentence of the first paragraph of the legend in the final pricing term sheet.
(c) Notice and Procedures. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against any person in
respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such
person (the “Indemnified Person”) shall promptly notify the person against whom such
indemnification may be sought (the “Indemnifying Person”) in writing; provided that the
failure to notify the Indemnifying Person shall not relieve it from any liability that it may have
under paragraph (a) or (b) above except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b)
above. If any such proceeding shall be brought or asserted against an Indemnified Person and it
shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the
Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and
any others entitled to indemnification pursuant to paragraphs (a) and (b) above that the
Indemnifying Party may designate in such proceeding and shall pay the fees and expenses of such
counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person
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
22
Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a
reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal defenses available to it
that are different from or in addition to those available to the Indemnifying Person; or (iv) the
named parties in any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interest between them. It is
understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or
related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such
fees and expenses shall be reimbursed as they are incurred. Any such separate firm for any
Underwriter, its affiliates, directors and officers and any control persons of such Underwriter
shall be designated in writing by ▇.▇. ▇▇▇▇▇▇ Securities Inc. and any such separate firm for the
Company, each of the Guarantors, each of their respective directors, each of their respective
officers who signed the Registration Statement and any control persons of the Company and the
Guarantors shall be designated in writing by the Company. The Indemnifying Person 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 Person agrees
to indemnify each Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees
and expenses of counsel as contemplated by this paragraph, the Indemnifying Person 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 the Indemnifying Person of such request and (ii)
the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall, without the written
consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and indemnification could
have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an
unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject matter of such
proceeding and (y) does not include any statement as to or any admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under
such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantors on the one hand and the
23
Underwriters on the other from the offering
of the Securities or (ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the
Underwriters on the other 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 and the Guarantors on the one hand and the
Underwriters on the other shall be deemed to be in the same respective proportions as the net
proceeds (before deducting expenses) received by the Company from the sale of the Securities and
the total underwriting discounts and commissions received by the Underwriters in connection
therewith, in each case as set forth in the table on the cover of the Prospectus, bear to the
aggregate offering price of the Securities. The relative fault of the Company and the Guarantors
on the one hand and the Underwriters on the other 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 any
Guarantor or by the Underwriters and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Company, the Guarantors and the Underwriters agree that it
would not be just and equitable if contribution pursuant to paragraph (d) above 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 paragraph (d) above. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with any such action or claim.
Notwithstanding the provisions of paragraph (e), in no event shall an Underwriter be required to
contribute any amount in excess of the amount by which the total underwriting discounts and
commissions received by such Underwriter with respect to the offering of the Securities 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
Underwriters’ obligations to contribute pursuant to paragraph (d) above are several in proportion
to their respective purchase obligations hereunder and not joint.
(f) Indemnification of the QIU. The Company and each of the Guarantors jointly and severally
agree to indemnify and hold harmless Scotia Capital (USA) Inc. in
its capacity as QIU, its affiliates, directors and officers and each person, if any, who controls
the QIU within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including, without
limitation, legal fees and other expenses incurred in connection with
24
any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that
arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to make the statements
therein, not misleading, or (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing
Prospectus or any Time of Sale Information, or caused by any omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (iii) any act or omission to act or
any alleged act or omission to act by Scotia Capital (USA) Inc. as QIU in connection with any
transaction contemplated by this Agreement or undertaken in preparing for the purchase, sale and
delivery of the Securities, except as to this clause (iii) to the extent that any such loss, claim,
damage or liability results from the gross negligence or bad faith of Scotia Capital (USA) Inc. in
performing the services as QIU.
(g) Notice and Procedures for Indemnification of the QIU. If any suit, action, proceeding
(including any governmental or regulatory investigation), claim or demand shall be brought or
asserted against the QIU in respect of which indemnification may be sought pursuant to paragraph
(f) above, the QIU shall promptly notify the Company in writing; provided that the failure
to notify the Company shall not relieve it from any liability that it may have under paragraph (f)
above except to the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that the
failure to notify the Company shall not relieve it from any liability that it may have to the QIU
otherwise than under paragraph (f) above. If any such proceeding shall be brought or asserted
against the QIU and it shall have notified the Company thereof, the Company shall retain counsel
reasonably satisfactory to the QIU (who shall not, without the consent of the QIU, be counsel to
the Company) to represent the QIU and shall pay the fees and expenses of such counsel related to
such proceeding, as incurred. In any such proceeding, the QIU shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense of the QIU unless
(i) the Company and the QIU shall have mutually agreed to the contrary; (ii) the Company has failed
within a reasonable time to retain counsel reasonably satisfactory to the QIU; (iii) the QIU shall
have reasonably concluded that there may be legal defenses available to it that are different from
or in addition to those available to the Company; or (iv) the named parties in any such proceeding
(including any impleaded parties) include both the Company and the QIU and representation of both
parties by the same counsel would be inappropriate due to actual or potential differing interest
between them. The Company 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 Company agrees to indemnify the QIU
from and against any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time the QIU shall have requested that the Company reimburse the
QIU for fees and expenses of counsel as contemplated by this paragraph, the Company shall be liable
for any settlement of any proceeding
25
effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Company of such request and (ii) the Company
shall not have reimbursed the QIU in accordance with such request prior to the date of such
settlement. The Company shall not, without the written consent of the QIU, effect any settlement
of any pending or threatened proceeding in respect of which the QIU is or could have been a party
and indemnification could have been sought hereunder by the QIU, unless such settlement (x)
includes an unconditional release of the QIU, in form and substance reasonably satisfactory to the
QIU, from all liability on claims that are the subject matter of such proceeding and (y) does not
include any statement as to or any admission of fault, culpability or a failure to act by or on
behalf of the QIU.
(h) Contribution With Respect to Indemnification of the QIU. If the indemnification provided
for in paragraph (f) above is unavailable to the QIU or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the Company under such paragraph, in lieu
of indemnifying the QIU thereunder, shall contribute to the amount paid or payable by the QIU as a
result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Guarantors on the one hand and the
QIU on the other from the offering of the Securities or (ii) if the allocation provided by clause
(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) but also the relative fault of the Company and the
Guarantors on the one hand and the QIU on the other 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 and the Guarantors on the
one hand and the QIU on the other shall be deemed to be in the same respective proportions as the
net proceeds (before deducting expenses) received by the Company from the sale of the Securities,
as set forth in the table on the cover of the Prospectus, bear to the total underwriting discounts
and commissions received by the QIU. The relative fault of the Company and the Guarantors on the
one hand and the QIU on the other 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 any Guarantor or by the QIU
and the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(i) Limitation on Liability With Respect to Indemnification of the QIU. The Company, the
Guarantors and the QIU agree that it would not be just and equitable if contribution pursuant to
paragraph (h) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred to in paragraph (h)
above. The amount paid or payable by the QIU as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or other expenses incurred
by QIU in connection with any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
26
Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation.
(j) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any Indemnified Person
or Scotia Capital (USA) Inc. in its capacity as QIU at law or in equity.
8. Effectiveness of Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
9. Termination. This Agreement may be terminated in the absolute discretion of the
Representative, by notice to the Company, if 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
the New York Stock Exchange or the over-the-counter market; (ii) trading of any securities issued
or guaranteed by the Company or any of the Guarantors shall have been suspended on any exchange or
in any over-the-counter market; (iii) a general moratorium on commercial banking activities shall
have been declared by federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis,
either within or outside the United States, that, in the judgment of the Representative, is
material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale
or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the
Time of Sale Information and the Prospectus.
10. Defaulting Underwriter. (a) If, on the Closing Date, any Underwriter defaults on
its obligation to purchase the Securities that it has agreed to purchase hereunder, the
non-defaulting Underwriters may in their discretion arrange for the purchase of such Securities by
other persons satisfactory to the Company on the terms contained in this Agreement. If, within 36
hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for
the purchase of such Securities, then the Company shall be entitled to a further period of 36 hours
within which to procure other persons satisfactory to the non-defaulting Underwriters to purchase
such Securities on such terms. If other persons become obligated or agree to purchase the
Securities of a defaulting Underwriter, either the non-defaulting Underwriters or the Company may
postpone the Closing Date for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or arrangement, and the Company
agrees to promptly prepare any amendment or supplement to the Registration Statement and the
Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter”
includes, for all purposes of this Agreement unless the context otherwise requires, any person not
listed in Schedule 1 hereto that, pursuant to this Section 10, purchases Securities that a defaulting Underwriter agreed
but failed to purchase.
27
(b) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in paragraph (a) above, the aggregate principal amount of such Securities that remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities,
then the Company shall have the right to require each non-defaulting Underwriter to purchase the
principal amount of Securities that such Underwriter agreed to purchase hereunder plus such
Underwriter’s pro rata share (based on the principal amount of Securities that such
Underwriter agreed to purchase hereunder) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in paragraph (a) above, the aggregate principal amount of such Securities that remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the
Company shall not exercise the right described in paragraph (b) above, then this Agreement shall
terminate without liability on the part of the non-defaulting Underwriters. Any termination of
this Agreement pursuant to this Section 10 shall be without liability on the part of the Company,
except that the Company will continue to be liable for the payment of expenses as set forth in
Section 11 hereof and except that the provisions of Section 7 hereof shall not terminate and shall
remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company or any non-defaulting Underwriter for damages caused by its default.
11. Payment of Expenses. (a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company and each of the Guarantors
jointly and severally agree to pay or cause to be paid all costs and expenses incident to the
performance of its obligations hereunder, including without limitation, (i) the costs incident to
the authorization, issuance, sale, preparation and delivery of the Securities and any taxes payable
in that connection; (ii) the costs incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Preliminary Prospectus, any Issuer Free Writing
Prospectus, any Time of Sale Information and the Prospectus (including all exhibits, amendments and
supplements thereto) and the distribution thereof; (iii) the costs of reproducing and distributing
each of the Transaction Documents; (iv) the fees and expenses of the Company’s and the Guarantor’s
counsel and independent accountants and independent reserve engineers; (v) the fees and expenses
incurred in connection with the registration or qualification and determination of eligibility for
investment of the Securities under the laws of such jurisdictions as the Representative may
designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the
related fees and expenses of counsel for the Underwriters); (vi) any fees charged by rating
agencies for rating the Securities; (vii) the fees and expenses of the Trustee and any paying agent (including
related fees and expenses of any counsel to such parties); (viii) all expenses and application fees
incurred in connection with any filing with, and clearance of the
28
offering by, the Financial
Industry Regulatory Authority, Inc.; and (ix) all expenses incurred by the Company in connection
with any “road show” presentation to potential investors.
(b) If (i) this Agreement is terminated pursuant to Section 9, (ii) the Company for any reason
fails to tender the Securities for delivery to the Underwriters or (iii) the Underwriters decline
to purchase the Securities for any reason permitted under this Agreement, the Company and each of
the Guarantors jointly and severally agrees to reimburse the Underwriters for all out-of-pocket
costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the
Underwriters in connection with this Agreement and the offering contemplated hereby.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and the officers
and directors and any controlling persons referred to herein, and the affiliates of each
Underwriter referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein. No purchaser of Securities from any
Underwriter shall be deemed to be a successor merely by reason of such purchase.
13. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company, the Guarantors and the Underwriters contained in this
Agreement or made by or on behalf of the Company, the Guarantors or the Underwriters pursuant to
this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and
payment for the Securities and shall remain in full force and effect, regardless of any termination
of this Agreement or any investigation made by or on behalf of the Company, the Guarantors or the
Underwriters.
14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities
Act; (b) the term “business day” means any day other than a day on which banks are permitted or
required to be closed in New York City; and (c) the term “subsidiary” has the meaning set forth in
Rule 405 under the Securities Act.
15. Miscellaneous. (a) Authority of the Representative. Any action by the
Underwriters hereunder may be taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc. on behalf of the Underwriters,
and any such action taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc. shall be binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Underwriters shall be given to
the Representative c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (fax:
▇▇▇-▇▇▇-▇▇▇▇); Attention: ▇▇▇▇▇ ▇▇▇▇▇▇. Notices to the Company and the Guarantors shall be given
to them at Denbury Resources Inc., 5100 Tennyson
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (fax: ▇▇▇-▇▇▇-▇▇▇▇); Attention: ▇▇▇▇ ▇▇▇▇▇▇▇.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.
(f) Headings. The headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
30
If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.
Very truly yours,
| DENBURY RESOURCES INC. |
||||
| By | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
| SUBSIDIARY GUARANTORS: DENBURY ONSHORE, LLC, |
||||
| By | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
| DENBURY GATHERING & MARKETING, INC., |
||||
| By | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
| DENBURY OPERATING COMPANY, |
||||
| By | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
| DENBURY MARINE, L.L.C., |
||||
| By | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
31
| TUSCALOOSA ROYALTY FUND LLC, |
||||
| By | Denbury Operating Company, its | |||
| Sole Member | ||||
| By | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
| DENBURY GREEN PIPELINE-TEXAS, LLC, |
||||
| By | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
32
| Accepted: February 10, 2009 ▇.▇. ▇▇▇▇▇▇ SECURITIES INC. |
||||
| By | /s/ ▇.▇. ▇▇▇▇▇▇ Securities Inc. | |||
| Authorized Signatory | ||||
For itself and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
several Underwriters listed
in Schedule 1 hereto.
33
Schedule 1
| Underwriter | Principal Amount | |||
▇.▇. ▇▇▇▇▇▇ Securities Inc. |
$ | 136,500,000 | ||
Banc of America Securities LLC |
73,500,000 | |||
Fortis Securities LLC |
52,500,000 | |||
Wachovia Capital Markets, LLC |
52,500,000 | |||
Wedbush ▇▇▇▇▇▇ Securities Inc. |
23,100,000 | |||
Comerica Securities, Inc. |
23,100,000 | |||
KeyBanc Capital Markets Inc. |
23,100,000 | |||
U.S. Bancorp Investments, Inc. |
12,600,000 | |||
Scotia Capital (USA) Inc. |
10,500,000 | |||
BBVA Securities, Inc. |
6,300,000 | |||
Calyon Securities (USA) Inc. |
6,300,000 | |||
Total |
$ | 420,000,000 | ||
34
Schedule 2
| State of | ||
| Incorporation | ||
| Guarantors | or Organization | |
DENBURY ONSHORE, LLC
|
Delaware | |
| DENBURY GATHERING & MARKETING, INC. | Delaware | |
| DENBURY OPERATING COMPANY | Delaware | |
| DENBURY MARINE, L.L.C. | Louisiana | |
| TUSCALOOSA ROYALTY FUND LLC | Mississippi | |
| DENBURY GREEN PIPELINE-TEXAS, LLC | Delaware |
35
Annex A
[Form of Opinion of Counsel for the Company]
(a) The Registration Statement is an “automatic shelf registration statement” as defined under
Rule 405 of the Securities Act that has been filed with the Commission not earlier than three years
prior to the date of the Underwriting Agreement and the Indenture was qualified under the Trust
Indenture Act of 1939 as of the date and time specified in such opinion; each of the Preliminary
Prospectus and the Prospectus was filed with the Commission pursuant to the subparagraph of Rule
424(b) under the Securities Act specified in such opinion on the date specified therein; and no
order suspending the effectiveness of the Registration Statement has been issued, no notice of
objection of the Commission to the use of such registration statement or any post-effective
amendment thereto pursuant to Rule 401(g)(2) under the Securities Act has been received by the
Company and no proceeding for that purpose or pursuant to Section 8A of the Securities Act against
the Company or in connection with the offering is pending or, to the best knowledge of such
counsel, threatened by the Commission.
(b) The Registration Statement and the Preliminary Prospectus included in the Time of Sale
Information and the Prospectus (other than the financial statements or notes thereto, pro forma
financial data, or other financial, statistical, accounting or reserve data, schedules or matters
contained in the Registration Statement, the Preliminary Prospectus included in the Time of Sale
Information and the Prospectus, as to which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Securities Act; and the Indenture complies as
to form in all material respects with the requirements of the Trust Indenture Act.
(c) The Company and each of its subsidiaries have been duly incorporated or formed, as
applicable, and are validly existing and in good standing under the laws of their respective
jurisdictions of incorporation or formation, are duly qualified to do business and are in good
standing in each jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification, and have the corporate or
limited liability company (as applicable) power and authority to own or hold their respective
properties and to conduct the businesses in which they are engaged, except where the failure to be
so qualified or have such power or authority would not, individually or in the aggregate, have a
Material Adverse Effect.
(d) The Company has an authorized capitalization as set forth in the Registration Statement,
the Time of Sale Information and the Prospectus and all the outstanding shares of capital stock or
other equity interests of each subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable (except for general partner interests).
(e) The Company and each of the Guarantors have the corporate or limited liability company (as
applicable) power and authority to execute and deliver each of the Transaction Documents to which
any of them is a party and to perform their respective
36
obligations thereunder; and all action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken.
(f) The Indenture has been duly authorized, executed and delivered by the Company and each of
the Guarantors and, assuming due authorization, execution and delivery thereof by the Trustee,
constitutes a valid and legally binding agreement of the Company and each of the Guarantors
enforceable against the Company and each of the Guarantors in accordance with its terms, subject to
the Enforceability Exceptions.
(g) The Securities have been duly authorized, executed and delivered by the Company and, when
duly authenticated as provided in the Indenture and paid for as provided in this Agreement, will be
duly and validly issued and outstanding and will constitute valid and legally binding obligations
of the Company enforceable against the Company in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the Indenture; and the
Guarantees have been duly authorized by each of the Guarantors and, when the Securities have been
duly executed, authenticated, issued and delivered as provided in the Indenture and paid for as
provided herein, will be valid and legally binding obligations of each of the Guarantors,
enforceable against each of the Guarantors in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the Indenture.
(h) This Agreement has been duly authorized, executed and delivered by the Company and each of
the Guarantors.
(i) Each Transaction Document conforms in all material respects to the description thereof
contained in the Registration Statement, the Time of Sale Information and the Prospectus.
(j) The execution, delivery and performance by the Company and each of the Guarantors of each
of the Transaction Documents, the issuance and sale of the Securities, the issuance of the
Guarantees and compliance by the Company and each of the Guarantors with the terms thereof and the
consummation of the transactions contemplated by the Transaction Documents will not conflict with
or result in a breach or violation of any of the terms or provisions of, or constitute a default
under (i) any provision of law applicable to the Company or any of the Guarantors, (ii) the
articles or certificate of incorporation or articles of organization, bylaws or operating
agreement, or other charter documents of the Company or any of the Guarantors, or (iii) any
agreement or other instrument listed and filed as an exhibit to an Exchange Act report or, to our
knowledge, any judgment, order or decree to which the Company or any of the Guarantors are subject
of any governmental body, agency or court having jurisdiction over the Company or any of the
Guarantors, except, in the case of clauses (i) and (iii) above, for any such conflict, breach,
violation or default that would not, individually or in the aggregate, have a Material Adverse
Effect.
37
(k) No consent, approval, authorization, order, registration or qualification of or with any
court or arbitrator or governmental or regulatory authority is required for the execution, delivery
and performance by the Company and each of the Guarantors of each of the Transaction Documents, the
issuance and sale of the Securities, the issuance of the Guarantees and compliance by the Company
and each of the Guarantors with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents, except for the registration of the Securities and the
Guarantees under the Securities Act, the qualification of the Indenture and the Trustee under the
Trust Indenture Act and such consents, approvals, authorizations, orders and registrations or
qualifications as may be required under applicable state securities laws in connection with the
purchase and distribution of the Securities by the Underwriters.
(l) To the best knowledge of such counsel, except as described in the Registration Statement,
the Time of Sale Information and the Prospectus, there are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending to which the Company or any of its
subsidiaries is or may be a party or to which any property of the Company or any of its
subsidiaries is or may be the subject which, individually or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect; and no such investigations, actions, suits or proceedings are threatened
or, to the best knowledge of such counsel, contemplated by any governmental or regulatory authority
or threatened by others.
(m) The statements or descriptions included or incorporated by reference in the Preliminary
Prospectus and the Prospectus under the headings “The company—The offering,” “Risk factors— We
are subject to complex federal, state and local laws and regulations, including environmental laws,
that could adversely affect our business,” “Risk factors— A subsidiary guarantee could be voided
if it constitutes a fraudulent transfer under U.S. bankruptcy or similar state law, which would
prevent the holders of the notes from relying on that subsidiary to satisfy claims,” “Description
of the notes, “ and “Material U.S. federal income tax considerations,” and in the Company’s 2007
Annual Report on Form 10-K under the captions “Item 1. Business — Federal and State Regulations”
and “Item 3. Legal Proceedings,” only insofar as such statements constitute summaries of the legal
matters, documents and proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings and fairly summarize the legal
matters, documents or proceedings referred to therein. To the best knowledge of such counsel, (A)
there are no current or pending legal, governmental or regulatory actions, suits or proceedings
that are required under the Securities Act to be described in the Registration Statement or the
Prospectus and that are not so described in the Registration Statement, the Time of Sale
Information and the Prospectus and (B) there are no statutes, regulations or contracts and other
documents that are required under the Securities Act to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the Prospectus and that have not been so
filed as exhibits to the Registration Statement or described in the Registration Statement, the
Time of Sale Information and the Prospectus.
38
(n) The Company and each of the Guarantors is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as described in the Registration
Statement, the Time of Sale Information and the Prospectus, will not be an “investment company” or
an entity “controlled” by an “investment company” within the meaning of the Investment Company Act.
(o) The documents incorporated by reference in the Time of Sale Information and the Prospectus
or any further amendment or supplement thereto made by the Company prior to the Closing Date (other
than the financial statements or notes thereto, pro forma financial data, or other financial,
statistical, accounting or reserve data, schedules or matters contained in the Registration
Statement, the Time of Sale Information and the Prospectus, as to which such counsel need express
no opinion), when they were filed with the Commission, complied as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations of the Commission
thereunder; and such counsel has no reason to believe that any of such documents, when such
documents were so filed, contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statement therein, in the light of the circumstances
under which they were made when such documents were so filed, not misleading.
(p) Neither the issuance, sale and delivery of the Securities nor the application of the
proceeds thereof by the Company as described in the Prospectus will violate Regulation T, U or X of
the Board of Governors of the Federal Reserve System or any other regulation of such Board of
Governors.
Such counsel shall also state that they have participated in conferences with representatives
of the Company and with representatives of its independent accountants and counsel at which
conferences the contents of the Registration Statement, the Time of Sale Information and the
Prospectus and any amendment and supplement thereto and related matters were discussed and,
although such counsel assume no responsibility for the accuracy, completeness or fairness of the
Registration Statement, the Time of Sale Information, the Prospectus and any amendment or
supplement thereto (except as expressly provided above), nothing has come to the attention of such
counsel to cause such counsel to believe that the Registration Statement, at the time of its
effective date (including the information, if any, deemed pursuant to Rule 430A or 430B to be part
of the Registration Statement at the time of effectiveness), 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, that the Time of Sale Information, at the Time of Sale
(which such counsel may assume to be the date of the Underwriting Agreement) contained any untrue
statement of a material fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading or that the
Prospectus or any amendment or supplement thereto as of its date and the Closing Date contains any
untrue statement of a material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading
(other than financial statements or notes thereto, pro forma financial data, or other financial,
statistical,
39
accounting or reserve data, schedules or matters contained in the Registration Statement, the Time
of Sale Information and the Prospectus, as to which such counsel need express no belief).
In rendering such opinion, such counsel may rely as to matters of fact on certificates of
responsible officers of the Company and the Guarantors and public officials that are furnished to
the Underwriters.
The opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP described above shall be rendered to the Underwriters at
the request of the Company and shall so state therein.
40
Annex B
Time of Sale Information
Final pricing term sheet substantially in the form of Annex C attached hereto.
41
Annex C
Filed Pursuant to Rule 433
Registration Statement No. 333-157205
February 10, 2009
Registration Statement No. 333-157205
February 10, 2009
Pricing Term Sheet
Issuer:
|
Denbury Resources Inc. | |
Security Description:
|
Senior Subordinated Notes | |
Distribution:
|
SEC Registered | |
Aggregate Principal Amount:
|
$420,000,000 | |
Gross Proceeds:
|
$389,827,200 | |
Net Proceeds (Before Expenses):
|
$381,427,200 | |
Coupon:
|
9.75% | |
Maturity:
|
March 1, 2016 | |
Offering Price:
|
92.816% of face amount, plus accrued interest from February 13, 2009 | |
Yield to Maturity:
|
11.250% | |
Spread to Benchmark Treasury:
|
+890 basis points | |
Benchmark Treasury:
|
UST 4.5% due February 15, 2016 | |
Interest Payment Dates:
|
March 1 and September 1, commencing September 1, 2009 | |
Optional Redemption:
|
On or after March 1, 2013: 104.875% On or after March 1, 2014: 102.438% On or after March 1, 2015 and thereafter: 100% |
|
Equity Clawback:
|
Prior to March 1, 2012, up to 35% may be redeemed at 109.75% | |
Change of Control:
|
Put @ 101% of principal plus accrued interest | |
Trade Date:
|
February 10, 2009 | |
Settlement:
|
T+3; February 13, 2009 | |
CUSIP/ISIN:
|
▇▇▇▇▇▇▇▇▇/ US247916AB56 | |
Ranking:
|
Senior subordinated unsecured obligations of Issuer. | |
Ratings:
|
B1/BB | |
Denominations:
|
2,000x1,000 | |
Joint Book-Running Managers:
|
▇.▇. ▇▇▇▇▇▇ Securities Inc. Banc of America Securities LLC |
|
Co-Managers:
|
Fortis Securities LLC Wachovia Capital Markets, LLC Wedbush ▇▇▇▇▇▇ Securities Inc. Comerica Securities, Inc. KeyBanc Capital Markets Inc. U.S. Bancorp Investments, Inc. Scotia Capital (USA) Inc. BBVA Securities, Inc. Calyon Securities (USA) Inc. |
42
Note: A securities rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time.
The issuer has filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should read the prospectus in
that registration statement and other documents the issuer has filed with the SEC for more complete
information about the issuer and this offering. You may get these documents for free by visiting
▇▇▇▇▇ on the SEC Web site at ▇▇▇.▇▇▇.▇▇▇. Alternatively, the issuer, any underwriter or any dealer
participating in the offering will arrange to send you the prospectus if you request it by calling
collect ▇-▇▇▇-▇▇▇-▇▇▇▇.
43