As filed with the Securities and Exchange Commission on August 5, 2003
Registration Statement No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DENBURY RESOURCES INC.
(Exact name of Registrant)
DELAWARE 1311 75-2815171
(State of incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
PHIL RYKHOEK, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
DENBURY RESOURCES INC.
5100 TENNYSON PKWY., STE. 3000
PLANO, TEXAS 75024
(972) 673-2000
(Name, address and telephone number of Registrant's
executive offices and agent for service)
Copies to:
DONALD W. BRODSKY
LEE THOMPSON
JENKENS & GILCHRIST,
A PROFESSIONAL CORPORATION
1100 LOUISIANA STREET, SUITE 1800
HOUSTON, TEXAS 77002
(713) 951-3300
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ X ]
CALCULATION OF REGISTRATION FEE
====================================================================================================
PROPOSED
TITLE OF EACH MAXIMUM AMOUNT OF
CLASS OF SECURITIES AGGREGATE REGISTRATION
TO BE REGISTERED(1) OFFERING PRICE(1)(2) FEE
----------------------------------------------------------------------------------------------------
Debt Securities...................................(4)
Common Stock.........................................
Preferred Stock......................................
Depositary Shares.................................(5)
Warrants.............................................
Subtotal....................................... $ 150,000,000
Common Stock offerable by selling shareholders
named herein......................................... $ 200,000,000
-------------
TOTAL......................... $ 350,000,000 $3,909(3)
====================================================================================================
(1) This registration statement also covers such indeterminate amount of
securities as may be issued in exchange for, or upon conversion, redemption
or exercise of, as the case may be, debt securities, preferred stock,
depositary shares or warrants registered hereunder.
(2) The proposed maximum price per unit will be determined from time to time by
the Registrant in connection with the issuance by the Registrant of the
securities registered hereunder.
(3) Pursuant to Rule 429 and Rule 457(p) under the Securities Act of 1933, the
prospectus included as part of this Registration Statement also relates to
the remaining $97,625,000 of unsold securities from a maximum offering
price of $200 million of securities previously registered on Form S-3 under
Registration Statement No. 333-57382 declared effective April 6, 2001. Of
the $50,000 paid as a filing fee for Registration Statement No. 333-57382,
$24,406 has not been used, and all of that unused $24,406 filing fee
is being used to offset a portion of the filing fee for the
securities being registered hereunder.
(4) If any debt securities are issued at an original issue discount, then the
offering price of the debt securities shall be in such amount as shall
result in an aggregate initial offering price not to exceed $150 million,
less the offering price of any securities previously issued hereunder
by the Registrant.
(5) Such indeterminate number of depositary shares will be represented by
depositary receipts. In the event that the Registrant elects to offer to
the public fractional interests in shares of preferred stock registered
hereunder, depositary receipts will be distributed to those persons
purchasing the fractional interests and the shares of preferred stock will
be issued to the Depositary under the deposit agreement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
2
SUBJECT TO COMPLETION, DATED AUGUST 5, 2003
PROSPECTUS
$350,000,000
[GRAPHIC OMITTED]
DENBURY RESOURCES INC.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
Denbury Resources Inc. may offer and sell from time to time debt
securities, common stock, preferred stock, depositary shares or warrants. Our
common stock may also be offered by certain selling shareholders. We will
provide specific terms of these securities in supplements to this prospectus.
The terms of the securities will include the initial offering price, aggregate
amount of the offering, listing on any securities exchange or quotation system,
risk factors and the agents, dealers or underwriters, if any, to be used in
connection with the sale of these securities. You should read this prospectus
and any supplement carefully before you invest.
Our common stock is traded on the New York Stock Exchange under the
symbol "DNR."
This prospectus may not be used to sell securities unless accompanied
by a supplement to this prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is _______________, 2003
You should rely only on the information contained in or incorporated by
reference in this prospectus and in any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information contained in or incorporated by reference
in this prospectus is accurate as of any date other than the date on the front
of this prospectus or the applicable prospectus supplement.
TABLE OF CONTENTS PAGE
ABOUT THIS PROSPECTUS.......................................................................................... 3
WHERE YOU CAN FIND MORE INFORMATION............................................................................ 3
RISK FACTORS................................................................................................... 5
FORWARD-LOOKING STATEMENTS..................................................................................... 7
THE COMPANY.................................................................................................... 8
RATIO OF EARNINGS TO FIXED CHARGES............................................................................. 9
USE OF PROCEEDS................................................................................................ 9
DESCRIPTION OF DEBT SECURITIES................................................................................. 10
General............................................................................................... 10
Non U.S. Currency..................................................................................... 11
Original Issue Discount Securities.................................................................... 12
Covenants............................................................................................. 12
Registration, Transfer, Payment and Paying Agent...................................................... 12
Ranking of Debt Securities............................................................................ 14
Global Securities..................................................................................... 14
Outstanding Debt Securities........................................................................... 14
Redemption and Repurchase............................................................................. 15
Conversion and Exchange............................................................................... 15
Consolidation, Merger and Sale of Assets.............................................................. 15
Events of Default..................................................................................... 15
Modification and Waivers.............................................................................. 17
Discharge, Termination and Covenant Termination....................................................... 19
Governing Law......................................................................................... 19
Regarding the Trustees................................................................................ 20
DESCRIPTION OF CAPITAL STOCK................................................................................... 20
General............................................................................................... 20
Common Stock.......................................................................................... 20
Preferred Stock....................................................................................... 21
DESCRIPTION OF DEPOSITARY SHARES............................................................................... 22
DESCRIPTION OF WARRANTS........................................................................................ 23
SELLING SHAREHOLDERS........................................................................................... 23
PLAN OF DISTRIBUTION........................................................................................... 24
LEGAL OPINIONS................................................................................................. 26
EXPERTS........................................................................................................ 26
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission using a "shelf" registration process.
Under the shelf process, we may sell any combination of the securities described
in this prospectus in one or more offerings up to a total dollar amount of
$150 million. In addition, under this shelf process, one or more selling
shareholders may resell our common stock that they own in one or more offerings,
up to a total dollar amount of $200 million. This prospectus provides you with
a general description of the securities we or such selling shareholders may
offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement, together with additional information described under the heading
"WHERE YOU CAN FIND MORE INFORMATION."
As used in this prospectus, "Denbury," "we," "us," and "our" refer to
Denbury Resources Inc. and its subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, which requires us to file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any document that we file at the Public Reference Room of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of its public reference
room. You may view our reports electronically at the SEC's Internet site at
http://www.sec.gov, or at our own website at http://www.denbury.com.
This prospectus constitutes part of a Registration Statement on Form
S-3 filed with the SEC under the Securities Act of 1933. It omits some of the
information contained in the Registration Statement, and reference is made to
the Registration Statement for further information with respect to us and the
securities we are offering. Any statement contained in this prospectus
concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the SEC is not necessarily
complete, and in each instance reference is made to the copy of the filed
document.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information and the
information in the prospectus. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until we sell all the securities
covered by this prospectus:
1. Our Annual Report on Form 10-K for the year ended December 31, 2002;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2003;
3. The description of our common stock contained in Amendment No. 1 to
our registration statement on Form 8-A filed on April 21, 1999,
including any amendment or report filed before or after the date of
this prospectus for the purpose of updating the description;
3
4. Current Reports on Form 8-K dated March 11, 2003, March 17, 2003,
March 19, 2003, May 1, 2003 and July 31, 2003 (excluding any
information furnished pursuant to Item 9 or Item 12 of any such
Current Report on Form 8-K; and
5. Information under the caption "Security Ownership of Certain
Beneficial Owners and Management" on pages 13 and 14 of our Definitive
Proxy Statement dated April 11, 2003.
You may request a copy of these filings at no cost, by writing or
telephoning Phil Rykhoek, Senior Vice President and Chief Financial Officer,
Denbury Resources Inc., 5100 Tennyson Pkwy., Ste. 3000, Plano, Texas 75024,
phone: (972) 673-2000.
4
RISK FACTORS
There are a number of risks associated with investing in Denbury and in
our industry. You should carefully review the more detailed description of risk
factors contained in the supplement to this prospectus.
STEEP OR PROLONGED DROPS IN PRICES CAN HARM US FINANCIALLY AND HURT OUR ABILITY
TO GROW.
Our revenue, profitability and cash flow depend upon the prices and
demand for oil and natural gas. The markets for oil and natural gas are very
volatile, as evidenced by the recent volatility in natural gas prices in
response to the war between the United States and Iraq. The changes in oil and
natural gas prices have a significant impact on the value of our reserves and a
decline in prices could cause a write-down of our oil and gas properties, which
would negatively affect our net income.
OUR CONTROLLING STOCKHOLDER STILL HOLDS A SIGNIFICANT PERCENTAGE OF OUR
OUTSTANDING COMMON STOCK.
Although over the last nine months affiliates of the Texas Pacific
Group have sold approximately 37% of the Denbury common stock that they owned,
they still beneficially own approximately 32% of our outstanding common stock.
TExas Pacific Group representatives currently hold four of nine seats on our
board of directors. As a result of this ownership and provisions of our
certificate of incorporation and bylaws, the Texas Pacific Group has
historically had the effective ability to elect all our directors and to
control our business andaffairs, including decisions with respect to the
acquisition or disposition of assets, the future issuance of our common stock
or other securities, dividendpolicy and decisions with respect to our drilling,
operating and acquisition expenditure plans.
OIL AND NATURAL GAS DRILLING AND PRODUCING OPERATIONS INVOLVE VARIOUS RISKS.
Our drilling activities are subject to many risks, including the risk
that we will not discover commercially productive reservoirs. Operating and
developing oil and natural gas properties involves a number of inherent risks,
including the risk of personal injury, environmental contamination or loss of
wells. In addition, our drilling operations may be curtailed, delayed or
canceled as a result of other factors, including title problems, adverse weather
conditions, and compliance with environmental and other governmental
requirements. We may not be able to insure against all of these risks.
A FAILURE TO ACQUIRE PRODUCING PROPERTIES ON A PROFITABLE BASIS IN THE FUTURE
MAY SIGNIFICANTLY AFFECT OUR PROFITABILITY AND GROWTH.
Our significant growth in recent years is attributable in significant
part to our acquiring producing properties. Our ability to continue to make
successful acquisitions is influenced by many factors beyond our control.
ESTIMATING OUR RESERVES, PRODUCTION AND FUTURE NET CASH FLOW IS DIFFICULT TO DO
WITH ANY CERTAINTY.
Estimates of our proved developed oil and natural gas reserves and the
resulting future net revenues contained in this prospectus and elsewhere are
based on a number of uncertainties. A drop in prices or estimated production
volumes could materially adversely affect our revenues, profitability and
financial health.
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OUR LEVEL OF INDEBTEDNESS MAY ADVERSELY AFFECT OPERATIONS AND LIMIT OUR GROWTH.
We make, and will continue to make, substantial capital expenditures to
acquire, develop, produce, explore and abandon our oil and natural gas reserves.
Our bank borrowing base is adjusted at the banks' discretion and is based in
part upon external factors over which we have no control. Further, our cash flow
from operations is highly dependent on the prices that we receive for oil and
natural gas. Any decrease in our revenues, as a result of lower oil or gas
prices or otherwise, could limit our ability to replace reserves or maintain
production at current levels. If our cash flow from operations drops
significantly, we may be unable to find additional debt or equity financing.
SHORTAGES OF OIL FIELD EQUIPMENT, SERVICES AND QUALIFIED PERSONNEL COULD REDUCE
OUR CASH FLOW AND ADVERSELY AFFECT RESULTS OF OPERATIONS.
Our ability to conduct operations in a timely and cost effective manner
depends on the availability of supplies, equipment and personnel. The oil and
gas industry is cyclical and experiences periodic shortages of drilling rigs and
other equipment, tubular goods, supplies and experienced personnel. Shortages
can delay operations and materially increase operating and capital costs.
OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO FIND, DEVELOP OR ACQUIRE ADDITIONAL
OIL AND NATURAL GAS RESERVES THAT ARE ECONOMICALLY RECOVERABLE.
Unless we successfully replace the reserves that we produce, our reserves will
decline, resulting eventually in a decrease in oil and natural gas production.
This would lead to lower production and cash flow.
OUR PRODUCTION WILL DECLINE IF OUR ACCESS TO SUFFICIENT AMOUNTS OF CARBON
DIOXIDE IS LIMITED.
The crude oil production from our tertiary recovery projects depends on
our having access to sufficient amounts of carbon dioxide (CO2). Our ability to
produce this oil would be hindered if our supply of CO2 were limited due to
problems with our current CO2 producing wells and facilities, including
compression equipment, or catastrophic pipeline failure. Our anticipated future
production growth is also dependent on our ability to increase the production
volumes of CO2. If our crude oil production were to decline, it could have a
material adverse effect on our financial condition and results of operations.
OUR USE OF HEDGING ARRANGEMENTS COULD RESULT IN FINANCIAL LOSSES OR REDUCE OUR
INCOME.
To reduce our exposure to fluctuations in the prices of oil and natural
gas, we currently and may in the future enter into hedging arrangements for a
portion of our oil and natural gas production. Hedging arrangements expose us to
risk of financial loss in some circumstances, including when:
o production is less than expected;
o the counter-party to the hedging contract defaults on its contract
obligations (as was the case with respect to our hedges placed in
2001 with an Enron subsidiary as counter-party, which resulted in
our suffering a loss); or
o there is a change in the expected differential between the
underlying price in the hedging agreement and actual prices
received.
In addition, these hedging arrangements may limit the benefit we would
receive from increases in the prices for oil and natural gas.
6
THE LOSS OF MORE THAN ONE OF OUR LARGE OIL AND NATURAL GAS PURCHASERS COULD HAVE
A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS.
For the year ended December 31, 2002, two purchasers each accounted for
more than 10% of our oil and natural gas revenues and in the aggregate for 25%
of these revenues. We would not expect the loss of any single purchaser to have
a material adverse effect upon our operations. However, the loss of a large
single purchaser could potentially reduce the competition for our oil and
naturalgas production, which in turn could negatively impact the prices
we receive.
FORWARD-LOOKING STATEMENTS
Some of the information included in this prospectus, any prospectus
supplement and the documents we have incorporated by reference contain
forward-looking statements. Forward-looking statements use forward-looking terms
such as "believe," "expect," "may," "intend," "will," "project," "budget,"
"should" or "anticipate" or other similar words. These statements discuss
"forward-looking" information such as:
o anticipated capital expenditures and budgets;
o future cash flows and borrowings;
o pursuit of potential future acquisition or drilling
opportunities; and
o sources of funding for exploration and development.
These forward-looking statements are based on assumptions that we
believe are reasonable, but they are open to a wide range of uncertainties and
business risks, including the following:
o fluctuations of the prices received or demand for oil
and natural gas;
o uncertainty of drilling results, reserve estimates and
reserve replacement;
o operating hazards;
o acquisition risks;
o availability and deliverability of CO2;
o unexpected substantial variances in capital requirements;
o environmental matters; and
o general economic conditions.
Other factors that could cause actual results to differ materially from
those anticipated are discussed in our periodic filings with the SEC, including
our Annual Report on Form 10-K for the year ended December 31, 2002.
When considering these forward-looking statements, you should keep in
mind the risk factors and other cautionary statements in this prospectus, any
prospectus supplement and the documents we have incorporated by reference. We
will not update these forward-looking statements unless the securities laws
require us to do so.
7
THE COMPANY
We are an independent oil and natural gas company engaged in
acquisition, development and exploration activities in the U.S. Gulf Coast
region. We are the largest producer of oil and natural gas in Mississippi and
have significant operations onshore Louisiana and in the offshore Gulf of
Mexico. Our strategy is to increase the value of our properties in our core
areas through a combination of acquisitions, exploitation, drilling and proven
engineering extraction processes, including secondary (waterflood) and tertiary
(carbon dioxide or CO2 injection) recovery techniques.
We believe that CO2 flooding is the most efficient tertiary recovery
mechanism for crude oil. Our ownership of critical CO2 assets, our dominant
position as the largest producer in Mississippi and our inventory of prospects
have positioned us to increase our reserves there at attractive finding costs.
In our CO2 operations in Mississippi, we believe that there are significant
additional reserves in fields controlled by us along our CO2 pipeline in
addition to our proved reserves in this area.
We have a well-balanced portfolio of development, exploitation and
exploration projects, including long-lived oil and shorter-lived natural gas
properties. We operate our largest fields, which gives us a significant
advantage through being able to control our cost structure and the timing of
major operational decisions. A key to our growth has been our strategy of
exploitation and development of acquired properties, with a goal of doubling the
reserves in place at the time of acquisition.
As of December 31, 2002, we had estimated proved reserves of 130.7
MMBOE, with a PV-10 Value of $1.426 billion. Of these proved reserves, 66% are
proved developed and 25.6% are natural gas. Our first quarter 2003 average
production was 36,093 BOE/d, which was 54% oil and 46% natural gas. From 2000 to
2002, we had a 20% compounded annual growth rate in net asset value per share,
based on the year-end PV-10 Value of our proved reserves using constant prices
of $25.00 per barrel of oil and $4.00 per mcf of natural gas in each period. We
are continuing to focus upon growth in our net asset value per share,
principally through debt reduction and increases in our reserve value using
constant prices.
We manage our operations and financial resources conservatively to
enable us to execute our business plan over the entire commodity price cycle.
Our goal is to maintain a ratio of debt to operating cash flow of not more than
approximately 2.0 to 1.0. We hedge a portion of our commodity price risk to help
protect a base level of cash flow for budgeted capital expenditures and
projected economics of properties we acquire.
Our principal executive office is located at 5100 Tennyson Parkway,
Suite 3000, Plano, Texas 75024 and our telephone number is 972-673-2000.
8
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges:
THREE MONTHS
ENDED
MARCH 31, 2003 YEAR ENDED DECEMBER 31,
------------------ -----------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Ratio of earnings to fixed charges
5.2X 3.6X 4.6X 5.8X 1.3X (a)
(a) Earnings were insufficient to cover fixed charges by $285 million. The
deficiency was primarily due to a $280 million writedown of the full
cost pool as a result of low oil prices during 1998.
For the purpose of computing the ratio of earnings to fixed charges,
earnings are defined as:
o income from continuing operations before income taxes
and equity method earnings of affiliates;
o plus fixed charges.
Fixed charges are defined as the sum of the following:
o interest expense;
o amortization of debt discount and issuance cost; and
o that portion of rental expense which we believe to be
representative of an interest factor.
USE OF PROCEEDS
Unless we specify otherwise in an accompanying prospectus supplement,
we intend to use the net proceeds we receive from the sale of any securities
that we offer by this prospectus and the accompanying prospectus supplement
for the repayment of debt under our credit lines and for general corporate
purposes. General corporate purposes may include additions to working capital,
development and exploration expenditures or the financing of possible
acquisitions. The net proceeds may be invested temporarily until they are
used for their stated purpose.
We will not receive any of the proceeds from the sale of common stock
by the selling shareholders.
9
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities which may be offered by us from time to time. The applicable
prospectus supplement will describe the specific terms of the debt securities
offered by that prospectus supplement.
We may issue debt securities either separately or together with, or
upon the conversion of, or in exchange for, other securities. The debt
securities are to be either senior obligations of ours issued in one or more
series and referred to herein as the "Senior Debt Securities," or subordinated
obligations of ours issued in one or more series and referred to herein as the
"Subordinated Debt Securities." The Senior Debt Securities and the Subordinated
Debt Securities are collectively referred to as the "Debt Securities." The Debt
Securities will be general obligations of the Company. Each series of Debt
Securities will be issued under an agreement, or "Indenture," between Denbury
and an independent third party, usually a bank or trust company, known as a
"Trustee," who will be legally obligated to carry out the terms of the
Indenture. The name(s) of the Trustee(s) will be set forth in the applicable
prospectus supplement. We may issue all the Debt Securities under the same
Indenture, as one or as separate series, as specified in the applicable
prospectus supplement(s).
This summary of certain terms and provisions of the Debt Securities and
Indentures is not complete. If we refer to particular provisions of an
Indenture, the provisions, including definitions of certain terms, are
incorporated by reference as a part of this summary. The Indentures are or will
be filed as an exhibit to the registration statement of which this prospectus is
a part, or as exhibits to documents filed under the Securities Exchange Act of
1934 which are incorporated by reference into this prospectus. The Indentures
are subject to and governed by the Trust Indenture Act of 1939, as amended. You
should refer to the applicable Indenture for the provisions which may be
important to you.
GENERAL
The Indentures will not limit the amount of Debt Securities which we
may issue. We may issue Debt Securities up to an aggregate principal amount as
we may authorize from time to time. The applicable prospectus supplement will
describe the terms of any Debt Securities being offered, including:
o the title and aggregate principal amount;
o the date(s) when principal is payable;
o the interest rate, if any, and the method for calculating
the interest rate;
o the interest payment dates and the record dates for the interest
payments;
o the places where the principal and interest will be payable;
o any mandatory or optional redemption or repurchase terms or
prepayment, conversion, sinking fund or exchangeability or
convertibility provisions;
o whether such Debt Securities will be Senior Debt Securities or
Subordinated Debt Securities and, if Subordinated Debt
Securities, the subordination provisions and the applicable
definition of "Senior Indebtedness";
10
o additional provisions, if any, relating to the defeasance and
covenant defeasance of the Debt Securities;
o if other than denominations of $1,000 or multiples of $1,000,
the denominations the Debt Securities will be issued in;
o whether the Debt Securities will be issued in the form of
Global Securities, as defined below, or certificates;
o whether the Debt Securities will be issuable in registered
form, referred to as "Registered Securities," or in bearer
form, referred to as "Bearer Securities" or both and, if
Bearer Securities are issuable, any restrictions applicable to
the exchange of one form for another and the offer, sale and
delivery of Bearer Securities;
o any applicable material federal tax consequences;
o the dates on which premiums, if any, will be payable;
o our right, if any, to defer payment of interest and the
maximum length of such deferral period;
o any paying agents, transfer agents, registrars or trustees;
o any listing on a securities exchange;
o if convertible into common stock or preferred stock, the terms
on which such Debt Securities are convertible;
o the terms, if any, of the transfer, mortgage, pledge, or
assignment as security for any series of Debt Securities of
any properties, assets, proceeds, securities or other
collateral, including whether certain provisions of the Trust
Indenture Act are applicable, and any corresponding changes to
provisions of the Indenture as currently in effect;
o the initial offering price; and
o other specific terms, including covenants and any additions or
changes to the events of default provided for with respect to
the Debt Securities.
The terms of the Debt Securities of any series may differ and, without
the consent of the holders of the Debt Securities of any series, we may reopen a
previous series of Debt Securities and issue additional Debt Securities of such
series or establish additional terms of such series, unless otherwise indicated
in the applicable prospectus supplement.
NON U.S. CURRENCY
If the purchase price of any Debt Securities is payable in a currency
other than U.S. dollars or if principal of, or premium, if any, or interest, if
any, on any of the Debt Securities is payable in any currency other than U.S.
dollars, the specific terms with respect to such Debt Securities and such
foreign currency will be specified in the applicable prospectus supplement.
11
ORIGINAL ISSUE DISCOUNT SECURITIES
Debt Securities may be issued as "Original Issue Discount Securities"
to be sold at a substantial discount below their principal amount. Original
Issue Discount Securities may include "zero coupon" securities that do not pay
any cash interest for the entire term of the securities. In the event of an
acceleration of the maturity of any Original Issue Discount Security, the amount
payable to the holder thereof upon such acceleration will be determined in the
manner described in the applicable prospectus supplement. Conditions pursuant to
which payment of the principal of the Subordinated Debt Securities may be
accelerated will be set forth in the applicable prospectus supplement. Material
federal income tax and other considerations applicable to Original Issue
Discount Securities will be described in the applicable prospectus supplement.
COVENANTS
Under the Indentures, we will be required to:
o pay the principal, interest and any premium on the Debt
Securities when due;
o maintain a place of payment;
o deliver a report to the Trustee at the end of each fiscal year
reviewing our obligations under the Indentures; and
o deposit sufficient funds with any paying agent on or before
the due date for any principal, interest or any premium.
Any additional covenants will be described in the applicable prospectus
supplement.
REGISTRATION, TRANSFER, PAYMENT AND PAYING AGENT
Unless otherwise indicated in a prospectus supplement, each series of
Debt Securities will be issued in registered form only, without coupons. The
Indentures, however, provide that we may also issue Debt Securities in bearer
form only, or in both registered and bearer form. Bearer Securities shall not be
offered, sold, resold or delivered in connection with their original issuance in
the United States or to any United States person other than offices located
outside the United States of certain United States financial institutions.
"United States person" means any citizen or resident of the United States, any
corporation, partnership or other entity created or organized in or under the
laws of the United States, any estate the income of which is subject to United
States federal income taxation regardless of its source, or any trust whose
administration is subject to the primary supervision of a United States court
and which has one or more United States fiduciaries who have the authority to
control all substantial decisions of the trust. "United States" means the United
States of America (including the states thereof and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction.
Purchasers of Bearer Securities will be subject to certification procedures and
may be affected by certain limitations under United States tax laws. Such
procedures and limitations will be described in the prospectus supplement
relating to the offering of the Bearer Securities.
Unless otherwise indicated in a prospectus supplement, Registered
Securities will be issued in denominations of $1,000 or any integral multiple
thereof, and Bearer Securities will be issued in denominations of $5,000.
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Unless otherwise indicated in a prospectus supplement, the principal,
premium, if any, and interest, if any, of or on the Debt Securities will be
payable, and Debt Securities may be surrendered for registration of transfer or
exchange, at an office or agency to be maintained by us in the Borough of
Manhattan, The City of New York, provided that payments of interest with respect
to any Registered Security may be made at our option by check mailed to the
address of the person entitled to payment or by transfer to an account
maintained by the payee with a bank located in the United States. No service
charge shall be made for any registration of transfer or exchange of Debt
Securities, but we may require payment of a sum sufficient to cover any tax or
other governmental charge and any other expenses that may be imposed in
connection with the exchange or transfer.
Unless otherwise indicated in a prospectus supplement, payment of
principal of, premium, if any, and interest, if any, on Bearer Securities will
be made, subject to any applicable laws and regulations, at such office or
agency outside the United States as specified in the prospectus supplement and
as we may designate from time to time. Unless otherwise indicated in a
prospectus supplement, payment of interest due on Bearer Securities on any
interest payment date will be made only against surrender of the coupon relating
to such interest payment date. Unless otherwise indicated in a prospectus
supplement, no payment of principal, premium or interest with respect to any
Bearer Security will be made at any office or agency in the United States or by
check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; except that if amounts
owing with respect to any Bearer Securities shall be payable in U.S. dollars,
payment may be made at the Corporate Trust Office of the applicable Trustee or
at any office or agency designated by us in the Borough of Manhattan, The City
of New York, if (but only if) payment of the full amount of such principal,
premium or interest at all offices outside of the United States maintained for
such purpose by us is illegal or effectively precluded by exchange controls or
similar restrictions.
Unless otherwise indicated in the applicable prospectus supplement, we
will not be required to:
o issue, register the transfer of or exchange Debt Securities of
any series during a period beginning at the opening of
business 15 days before any selection of Debt Securities of
that series of like tenor to be redeemed and ending at the
close of business on the day of that selection;
o register the transfer of or exchange any Registered Security,
or portion thereof, called for redemption, except the
unredeemed portion of any Registered Security being redeemed
in part;
o exchange any Bearer Security called for redemption, except to
exchange such Bearer Security for a Registered Security of
that series and like tenor that is simultaneously surrendered
for redemption; or
o issue, register the transfer of or exchange any Debt Security
which has been surrendered for repayment at the option of the
holder, except the portion, if any, of the Debt Security not
to be so repaid.
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RANKING OF DEBT SECURITIES
The Senior Debt Securities will be unsubordinated obligations of ours
and will rank equally in right of payment with all other unsubordinated
indebtedness of ours. The Subordinated Debt Securities will be obligations of
ours and will be subordinated in right of payment to all existing and future
Senior Indebtedness. The prospectus supplement will describe the subordination
provisions and set forth the definition of "Senior Indebtedness" applicable to
the Subordinated Debt Securities, and will set forth the approximate amount of
such Senior Indebtedness outstanding as of a recent date.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities that will be deposited with, or on
behalf of, a "Depository" identified in the prospectus supplement relating to
such series. Global Debt Securities may be issued in either registered or bearer
form and in either temporary or permanent form. Unless and until it is exchanged
in whole or in part for individual certificates evidencing Debt Securities, a
Global Debt Security may not be transferred except as a whole:
o by the Depository to a nominee of such Depository;
o by a nominee of such Depository to such Depository or another
nominee of such Depository; or
o by such Depository or any such nominee to a successor of such
Depository or a nominee of such successor.
The specific terms of the depository arrangement with respect to a
series of Global Debt Securities and certain limitations and restrictions
relating to a series of Global Bearer Securities will be described in the
applicable prospectus supplement.
OUTSTANDING DEBT SECURITIES
In determining whether the holders of the requisite principal amount of
outstanding Debt Securities have given any authorization, demand, direction,
notice, consent or waiver under the relevant Indenture, the amount of
outstanding Debt Securities will be calculated based on the following:
o the portion of the principal amount of an Original Issue
Discount Security that shall be deemed to be outstanding for
such purposes shall be that portion of the principal amount
thereof that could be declared to be due and payable upon a
declaration of acceleration pursuant to the terms of such
Original Issue Discount Security as of the date of such
determination;
o the principal amount of a Debt Security denominated in a
currency other than U.S. dollars shall be the U.S. dollar
equivalent, determined on the date of original issue of such
Debt Security, of the principal amount of such Debt Security;
and
o any Debt Security owned by us or any obligor on such Debt
Security or any affiliate of us or such other obligor shall be
deemed not to be outstanding.
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REDEMPTION AND REPURCHASE
The Debt Securities may be redeemable at our option, may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, or may be subject
to repurchase by Denbury at the option of the holders, in each case upon the
terms, at the times and at the prices set forth in the applicable prospectus
supplement.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are
convertible into or exchangeable for common stock, preferred stock, or other
Debt Securities will be set forth in the applicable prospectus supplement. Such
terms of conversion or exchange may be either mandatory, at the option of the
holders, or at our option.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each Indenture generally will permit a consolidation or merger between
us and another corporation, if the surviving corporation meets certain
limitations and conditions. Subject to those conditions, each Indenture may also
permit the sale by us of all or substantially all of our property and assets. If
this happens, the remaining or acquiring corporation shall assume all of our
responsibilities and liabilities under the Indentures including the payment of
all amounts due on the Debt Securities and performance of the covenants in the
Indentures.
We are only permitted to consolidate or merge with or into any other
corporation or sell all or substantially all of our assets according to the
terms and conditions of the Indentures, as indicated in the applicable
prospectus supplement. The remaining or acquiring corporation will be
substituted for us in the Indentures with the same effect as if it had been an
original party to the Indenture. Thereafter, the successor corporation may
exercise our rights and powers under any Indenture, in our name or in its own
name. Any act or proceeding required or permitted to be done by our board of
directors or any of our officers may be done by the board or officers of the
successor corporation.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable prospectus supplement, an
Event of Default, as defined in the Indentures and applicable to Debt Securities
issued under such Indentures, typically will occur with respect to the Debt
Securities of any series under the Indenture upon:
o default for a period to be specified in the applicable
prospectus supplement in payment of any interest with respect
to any Debt Security of such series;
o default in payment of principal or any premium with respect to
any Debt Security of such series when due upon maturity,
redemption, repurchase at the option of the holder or
otherwise;
o default in deposit of any sinking fund payment when due with
respect to any Debt Security of such series;
o default by us in the performance, or breach, of any other
covenant or warranty in such Indenture, which shall not have
been remedied for a period to be specified in the applicable
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prospectus supplement after notice to us by the applicable
Trustee or the holders of not less than a fixed percentage in
aggregate principal amount of the Debt Securities of all
series issued under the applicable Indenture;
o certain events of bankruptcy, insolvency or reorganization
of Denbury; or
o any other Event of Default that may be set forth in the
applicable prospectus supplement, including an Event of
Default based on other debt being accelerated, known as a
"cross-acceleration."
No Event of Default with respect to any particular series of Debt
Securities necessarily constitutes an Event of Default with respect to any other
series of Debt Securities. If the Trustee considers it in the interest of the
holders to do so, the Trustee under an Indenture may withhold notice of the
occurrence of a default with respect to the Debt Securities to the holders of
any series outstanding, except a default in payment of principal, premium, if
any, interest, if any.
Each Indenture will provide that if an Event of Default with respect to
any series of Debt Securities issued thereunder shall have occurred and be
continuing, either the relevant Trustee or the holders of at least a fixed
percentage in principal amount of the Debt Securities of such series then
outstanding may declare the principal amount of all the Debt Securities of such
series to be due and payable immediately. In the case of Original Issue Discount
Securities, the Trustee may declare as due and payable such lesser amount as may
be specified in the applicable prospectus supplement. However, upon certain
conditions, such declaration and its consequences may be rescinded and annulled
by the holders of at least a fixed percentage in principal amount of the Debt
Securities of all series issued under the applicable Indenture.
The applicable prospectus supplement will provide the terms pursuant to
which an Event of Default shall result in acceleration of the payment of
principal of Subordinated Debt Securities.
In the case of a default in the payment of principal of, or premium, if
any, or interest, if any, on any Subordinated Debt Securities of any series, the
applicable Trustee, subject to certain limitations and conditions, may institute
a judicial proceeding for the collection thereof.
No holder of any of the Debt Securities of any series will have any
right to institute any proceeding with respect to the Indenture or any remedy
thereunder, unless the holders of at least a fixed percentage in principal
amount of the outstanding Debt Securities of such series:
o have made written request to the Trustee to institute such
proceeding as Trustee, and offered reasonable indemnity to the
Trustee,
o the Trustee has failed to institute such proceeding within the
time period specified in the applicable prospectus supplement
after receipt of such notice, and
o the Trustee has not within such period received directions
inconsistent with such written request by holders of a
majority in principal amount of the outstanding Debt
Securities of such series. Such limitations do not apply,
however, to a suit instituted by a holder of a Debt Security
for the enforcement of the payment of the principal of,
premium, if any, or any accrued and unpaid interest on, the
Debt Security on or after the respective due dates expressed
in the Debt Security.
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During the existence of an Event of Default under an Indenture, the
Trustee is required to exercise such rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise thereof as a
prudent person would exercise under the circumstances in the conduct of such
person's own affairs. Subject to the provisions of the Indenture relating to the
duties of the Trustee, if an Event of Default shall occur and be continuing, the
Trustee is under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders, unless such holders
shall have offered to the Trustee reasonable security or indemnity. Subject to
certain provisions concerning the rights of the Trustee, the holders of at least
a fixed percentage in principal amount of the outstanding Debt Securities of any
series have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any power
conferred on the Trustee with respect to such series.
The Indentures provide that the Trustee will, within the time period
specified in the applicable prospectus supplement after the occurrence of any
default, give to the holders of the Debt Securities of such series notice of
such default known to it, unless such default shall have been cured or waived;
provided that the Trustee shall be protected in withholding such notice if it
determines in good faith that the withholding of such notice is in the interest
of such holders, except in the case of a default in payment of principal of or
premium, if any, on any Debt Security of such series when due or in the case of
any default in the payment of any interest on the Debt Securities of such
series.
Denbury is required to furnish to the Trustee annually a statement as
to compliance with all conditions and covenants under the Indentures.
MODIFICATION AND WAIVERS
From time to time, when authorized by resolutions of our board of
directors and by the Trustee, without the consent of the holders of Debt
Securities of any series, we may amend, waive or supplement the Indentures and
the Debt Securities of such series for certain specified purposes, including,
among other things:
o to cure ambiguities, defects or inconsistencies;
o to provide for the assumption of our obligations to holders of
the Debt Securities of such series in the case of a
merger or consolidation;
o to add to our Events of Default or our covenants or to make
any change that would provide any additional rights or
benefits to the holders of the Debt Securities of such series;
o to add or change any provisions of such Indenture to
facilitate the issuance of Bearer Securities;
o to establish the form or terms of Debt Securities of any
series and any related coupons;
o to add guarantors with respect to the Debt Securities of
such series;
o to secure the Debt Securities of such series;
o to maintain the qualification of the Indenture under the
Trust Indenture Act; or
o to make any change that does not adversely affect the rights
of any holder.
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Other amendments and modifications of the Indentures or the Debt
Securities issued thereunder may be made by Denbury and the Trustee with the
consent of the holders of not less than a fixed percentage of the aggregate
principal amount of the outstanding Debt Securities of each series affected,
with each series voting as a separate class; provided that, without the consent
of the holder of each outstanding Debt Security affected, no such modification
or amendment may:
o reduce the principal amount of, or extend the fixed maturity
of the Debt Securities, or alter or waive any redemption,
repurchase or sinking fund provisions of the Debt Securities;
o reduce the amount of principal of any Original Issue Discount
Securities that would be due and payable upon an acceleration
of the maturity thereof;
o change the currency in which any Debt Securities or any
premium or the accrued interest thereon is payable;
o reduce the percentage in principal amount outstanding of Debt
Securities of any series which must consent to an amendment,
supplement or waiver or consent to take any action under the
Indenture or the Debt Securities of such series;
o impair the right to institute suit for the enforcement of any
payment on or with respect to the Debt Securities;
o waive a default in payment with respect to the Debt Securities
or any guarantee;
o reduce the rate or extend the time for payment of interest on
the Debt Securities;
o adversely affect the ranking of the Debt Securities of
any series;
o release any guarantor from any of its obligations under its
guarantee or the Indenture, except in compliance with the
terms of the Indenture; or
o solely in the case of a series of Subordinated Debt
Securities, modify any of the applicable subordination
provisions or the applicable definition of Senior Indebtedness
in a manner adverse to any holders.
The holders of a fixed percentage in aggregate principal amount of the
outstanding Debt Securities of any series may waive compliance by us with
certain restrictive provisions of the relevant Indenture, including any set
forth in the applicable prospectus supplement. The holders of a fixed percentage
in aggregate principal amount of the outstanding Debt Securities of any series
may, on behalf of the holders of that series, waive any past default under the
applicable Indenture with respect to that series and its consequences, except a
default in the payment of the principal of, or premium, if any, or interest, if
any, on any Debt Securities of such series, or in respect of a covenant or
provision which cannot be modified or amended without the consent of a larger
fixed percentage of holders or by the holder of each outstanding Debt Securities
of the series affected.
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DISCHARGE, TERMINATION AND COVENANT TERMINATION
When we establish a series of Debt Securities, we may provide that such
series is subject to the termination and discharge provisions of the applicable
Indenture. If those provisions are made applicable, we may elect either:
o to terminate and be discharged from all of our obligations
with respect to those Debt Securities subject to some
limitations; or
o to be released from our obligations to comply with specified
covenants relating to those Debt Securities, as described in
the applicable prospectus supplement.
To effect that termination or covenant termination, we must irrevocably
deposit in trust with the relevant Trustee an amount which, through the payment
of principal and interest in accordance with their terms, will provide money
sufficient to make payments on those Debt Securities and any mandatory sinking
fund or similar payments on those Debt Securities. This deposit may be made in
any combination of funds or government obligations. On such a termination, we
will not be released from certain of our obligations that will be specified in
the applicable prospectus supplement.
To establish such a trust we must deliver to the relevant Trustee an
opinion of counsel to the effect that the holders of those Debt Securities:
o will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of the termination or
covenant termination; and
o will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would
have been the case if the termination or covenant termination
had not occurred.
If we effect covenant termination with respect to any Debt Securities,
the amount of deposit with the relevant Trustee must be sufficient to pay
amounts due on the Debt Securities at the time of their stated maturity.
However, those Debt Securities may become due and payable prior to their stated
maturity if there is an Event of Default with respect to a covenant from which
we have not been released. In that event, the amount on deposit may not be
sufficient to pay all amounts due on the Debt Securities at the time of the
acceleration.
The applicable prospectus supplement may further describe the
provisions, if any, permitting termination or covenant termination, including
any modifications to the provisions described above.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
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REGARDING THE TRUSTEES
The Trust Indenture Act contains limitations on the rights of a
trustee, should it become a creditor of ours, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claims, as security or otherwise. Each Trustee is permitted to engage in
other transactions with us from time to time, provided that if such Trustee
acquires any conflicting interest, it must eliminate such conflict upon the
occurrence of an Event of Default under the relevant Indenture, or else resign.
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of June 30, 2003, we are authorized to issue up to 125,000,000
shares of stock, including up to 100,000,000 shares of common stock, par value
$.001 per share, and up to 25,000,000 shares of preferred stock, par value $.001
per share. As of June 30, 2003, we had 53,973,381 shares of common stock and no
shares of preferred stock outstanding. As of that date, we also had
approximately 7,209,178 shares of common stock reserved for issuance to cover
the granting or exercising of options under our option plan or in connection
with other awards under various employee or director incentive and compensation
plans. As of June 30, 2003, a total of 5,556,262 stock options were
outstanding under our option plan.
The following is a summary of the key terms and provisions of our
equity securities. You should refer to the applicable provisions of our
certificate of incorporation, bylaws, the Delaware General Corporation Law and
the documents we have incorporated by reference for a complete statement of the
terms and rights of our capital stock.
COMMON STOCK
Voting Rights. Each holder of common stock is entitled to one vote per
share. Subject to the rights, if any, of the holders of any series of preferred
stock pursuant to applicable law or the provision of the certificate of
designation creating that series, all voting rights are vested in the holders of
shares of common stock. Holders of shares of common stock have noncumulative
voting rights, which means that the holders of more than 50% of the shares
voting for the election of directors can elect 100% of the directors, and the
holders of the remaining shares voting for the election of directors will not be
able to elect any directors. As of June 30, 2003, the Texas Pacific Group holds
approximately 32% of our outstanding common stock.
Dividends. Dividends may be paid to the holders of common stock when,
as and if declared by the board of directors out of funds legally available for
their payment, subject to the rights of holders of any preferred stock. Denbury
has never declared a cash dividend and intends to continue its policy of using
retained earnings for expansion of its business.
Rights upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share equally, in proportion to the number of shares of common stock
held by them, in any of our assets available for distribution after the payment
in full of all debts and distributions and after the holders of all series of
outstanding preferred stock, if any, have received their liquidation preferences
in full.
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Non-Assessable. All outstanding shares of common stock are fully paid
and non-assessable. Any additional common stock we offer and issue under this
Prospectus will also be fully paid and non-assessable.
No Preemptive Rights. Holders of common stock are not entitled to
preemptive purchase rights in future offerings of our common stock.
Listing. Our outstanding shares of common stock are listed on the New
York Stock Exchange under the symbol "DNR." Any additional common stock we issue
will also be listed on the NYSE and any other exchange on which our common stock
is then traded.
PREFERRED STOCK
Our board of directors can, without approval of our shareholders, issue
one or more series of preferred stock and determine the number of shares of each
series and the rights, preferences and limitations of each series. Our
Certificate of Incorporation requires that the decision to create a series of
preferred stock must be made by no fewer than 2/3 of the members of the board of
directors. The following description of the terms of the preferred stock sets
forth certain general terms and provisions of our authorized preferred stock. If
we offer preferred stock, a description will be filed with the SEC and the
specific designations and rights will be described in a prospectus supplement,
including the following terms:
o the series, the number of shares offered and the liquidation
value of the preferred stock;
o the price at which the preferred stock will be issued;
o the dividend rate, the dates on which the dividends will be
payable and other terms relating to the payment of dividends
on the preferred stock;
o the liquidation preference of the preferred stock;
o the voting rights of the preferred stock;
o whether the preferred stock is redeemable or subject to a
sinking fund, and the terms of any such redemption or
sinking fund;
o whether the preferred stock is convertible or exchangeable
for any other securities, and the terms of any such
conversion; and
o any additional rights, preferences, qualifications,
limitations and restrictions of the preferred stock.
The description of the terms of the preferred stock to be set forth in
an applicable prospectus supplement will not be complete and will be subject to
and qualified in its entirety by reference to the certificate of designation
relating to the applicable series of preferred stock. The registration statement
of which this prospectus forms a part will include the certificate of
designation as an exhibit or incorporate it by reference.
Undesignated preferred stock may enable our board of directors to
render more difficult or to discourage an attempt to obtain control of us by
means of a tender offer, proxy contest, merger or otherwise, and to thereby
protect the continuity of our management. The issuance of shares of preferred
stock may
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adversely affect the rights of the holders of our common stock. For
example, any preferred stock issued may rank prior to our common stock as to
dividend rights, liquidation preference or both, may have full or limited voting
rights and may be convertible into shares of common stock. As a result, the
issuance of shares of preferred stock may discourage bids for our common stock
or may otherwise adversely affect the market price of our common stock or any
existing preferred stock.
Any preferred stock will, when issued, be fully paid and
non-assessable.
DESCRIPTION OF DEPOSITARY SHARES
We may offer preferred stock represented by depositary shares and issue
depositary receipts evidencing the depositary shares. Each depositary share will
represent a fraction of a share of preferred stock. Shares of preferred stock of
each class or series represented by depositary shares will be deposited under a
separate deposit agreement among us, a bank or trust company acting as the
"Depository" and the holders of the depositary receipts. Subject to the terms of
the deposit agreement, each owner of a depositary receipt will be entitled, in
proportion to the fraction of a share of preferred stock represented by the
depositary shares evidenced by the depositary receipt, to all the rights and
preferences of the preferred stock represented by such depositary shares. Those
rights include any dividend, voting, conversion, redemption and liquidation
rights. Immediately following the issuance and delivery of the preferred stock
to the Depository, we will cause the Depository to issue the depositary receipts
on our behalf.
If depositary shares are offered, the applicable prospectus supplement
will describe the terms of such depositary shares, the deposit agreement and, if
applicable, the depositary receipts, including the following, where applicable:
o the payment of dividends or other cash distributions to the
holders of depositary receipts when such dividends or other
cash distributions are made with respect to the preferred
stock;
o the voting by a holder of depositary shares of the preferred
stock underlying such depositary shares at any meeting called
for such purpose;
o if applicable, the redemption of depositary shares upon a
redemption by us of shares of preferred stock held by
the Depository;
o if applicable, the exchange of depositary shares upon an
exchange by us of shares of preferred stock held by the
Depository for debt securities or common stock;
o if applicable, the conversion of the shares of preferred stock
underlying the depositary shares into shares of our common
stock, other shares of our preferred stock or our debt
securities;
o the terms upon which the deposit agreement may be amended
and terminated;
o a summary of the fees to be paid by us to the Depository;
o the terms upon which a Depository may resign or be removed
by us; and
o any other terms of the depositary shares, the deposit
agreement and the depositary receipts.
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If a holder of depositary receipts surrenders the depositary receipts
at the corporate trust office of the Depository, unless the related depositary
shares have previously been called for redemption, converted or exchanged into
other securities of Denbury, the holder will be entitled to receive at this
office the number of shares of preferred stock and any money or other property
represented by such depositary shares. Holders of depositary receipts will be
entitled to receive whole and, to the extent provided by the applicable
prospectus supplement, fractional shares of the preferred stock on the basis of
the proportion of preferred stock represented by each depositary share as
specified in the applicable prospectus supplement. Holders of shares of
preferred stock received in exchange for depositary shares will no longer be
entitled to receive depositary shares in exchange for shares of preferred stock.
If the holder delivers depositary receipts evidencing a number of depositary
shares that is more than the number of depositary shares representing the number
of shares of preferred stock to be withdrawn, the Depository will issue the
holder a new depositary receipt evidencing such excess number of depositary
shares at the same time.
Prospective purchasers of depositary shares should be aware that
special tax, accounting and other considerations may be applicable to
instruments such as depositary shares.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of preferred or common stock,
either independently or together with other securities. Each series of warrants
will be issued under a warrant agreement to be entered into between Denbury and
a bank or trust company. You should refer to the warrant agreement relating to
the specific warrants being offered for the complete terms of such warrant
agreement and the warrants.
Each warrant will entitle the holder to purchase the number of shares
of preferred or common stock at the exercise price set forth in, or calculable
as set forth in any applicable prospectus supplement. The exercise price may be
subject to adjustment upon the occurrence of certain events, as set forth in any
applicable prospectus supplement. After the close of business on the expiration
date of the warrant, unexercised warrants will become void. The place or places
where, and the manner in which, warrants may be exercised shall be specified in
any applicable prospectus supplement.
SELLING SHAREHOLDERS
The selling shareholders may be affiliates of the Texas Pacific Group,
as the holders of 17,274,314 shares of our common stock, or approximately 32%
of our outstanding common stock as of June 30, 2003, or our directors or
executive officers. The prospectus supplement for any offering of the common
stock by selling shareholders will include the following information:
o the names of the selling shareholders;
o the number of shares of common stock held by each of the
selling shareholders;
o the percentage of the outstanding common stock held by each of
the selling shareholders; and
o the number of shares of common stock offered by each of the
selling shareholders.
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PLAN OF DISTRIBUTION
We and any selling shareholders may sell the securities offered by this
prospectus and applicable prospectus supplements:
o through underwriters or dealers;
o through agents;
o directly to purchasers; or
o through a combination of any such methods of sale.
Any such underwriter, dealer or agent may be deemed to be an underwriter within
the meaning of the Securities Act of 1933.
The applicable prospectus supplement relating to the securities will
set forth:
o their offering terms, including the name or names of any
underwriters, dealers or agents;
o the purchase price of the securities and the proceeds to us
from such sale;
o any underwriting discounts, commissions and other items
constituting compensation to underwriters, dealers or agents;
o any initial public offering price;
o any discounts or concessions allowed or reallowed or paid by
underwriters or dealers to other dealers;
o in the case of debt securities, the interest rate, maturity
and redemption provisions; and
o any securities exchanges on which the securities may
be listed.
If underwriters or dealers are used in the sale, the securities will be
acquired by the underwriters or dealers for their own account and may be resold
from time to time in one or more transactions in accordance with the rules of
the New York Stock Exchange:
o at a fixed price or prices which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to such prevailing market prices; or
o at negotiated prices.
The securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more of such firms. Unless otherwise set forth in an applicable prospectus
supplement, the obligations of underwriters or dealers to purchase the
securities will be subject to
24
certain conditions precedent and the underwriters or dealers will be obligated
to purchase all the securities if any are purchased. Any public offering price
and any discounts or concessions allowed or reallowed or paid by underwriters
or dealers to other dealers may be changed from time to time.
Securities may be sold directly by us or through agents designated by
us from time to time. Any agent involved in the offer or sale of the securities
in respect of which this prospectus and a prospectus supplement is delivered
will be named, and any commissions payable by us to such agent will be set
forth, in the prospectus supplement. Unless otherwise indicated in the
prospectus supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
If so indicated in the prospectus supplement, we will authorize
underwriters, dealers or agents to solicit offers from certain specified
institutions to purchase securities from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject to any conditions set forth in the prospectus
supplement and the prospectus supplement will set forth the commission payable
for solicitation of such contracts. The underwriters and other persons
soliciting such contracts will have no responsibility for the validity or
performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements
entered into with us to be indemnified by us against certain civil liabilities,
including liabilities under the Securities Act of 1933, or to contribution by
Denbury to payments which they may be required to make. The terms and conditions
of such indemnification will be described in an applicable prospectus
supplement. Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for, us in the ordinary course of
business.
Each class or series of securities will be a new issue of securities
with no established trading market, other than the common stock, which is listed
on the New York Stock Exchange. We may elect to list any other class or series
of securities on any exchange, other than the common stock, but we are not
obligated to do so. Any underwriters to whom securities are sold by us for
public offering and sale may make a market in such securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any securities.
Certain persons participating in any offering of securities may engage
in transactions that stabilize, maintain or otherwise affect the price of the
securities offered. In connection with any such offering, the underwriters or
agents, as the case may be, may purchase and sell securities in the open market.
These transactions may include overallotment and stabilizing transactions and
purchases to cover syndicate short positions created in connection with the
offering. Stabilizing transactions consist of certain bids or purchases for the
purpose of preventing or retarding a decline in the market price of the
securities; and syndicate short positions involve the sale by the underwriters
or agents, as the case may be, of a greater number of securities than they are
required to purchase from us, as the case may be, in the offering. The
underwriters may also impose a penalty bid, whereby selling concessions allowed
to syndicate members or other broker-dealers for the securities sold for their
account may be reclaimed by the syndicate if such securities are repurchased by
the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the securities,
which may be higher than the price that might otherwise prevail in the open
market, and if commenced, may be discontinued at any time. These transactions
may be effected on the New York Stock Exchange in the over-the-counter market or
otherwise. These activities will be described in more detail in the sections
entitled "Plan of Distribution" or "Underwriting" in the applicable prospectus
supplement.
25
LEGAL OPINIONS
Jenkens & Gilchrist, A Professional Corporation, will issue an opinion
for Denbury regarding the legality of the securities offered by this prospectus
and applicable prospectus supplement. If the securities are being distributed in
an underwritten offering, certain legal matters will be passed upon for the
underwriters by counsel identified in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference from Denbury's Annual Report on Form 10-K for the year ended
December 31, 2002, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the
periods ended March 31, 2003 and 2002 which is incorporated herein by reference,
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their report included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003 and incorporated by reference herein (which report
includes an emphasis paragraph regarding the adoption of Statement of Financial
Accounting Standards No. 143, "Accounting for Retirement Obligations"), they did
not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the review
procedures applied. Deloitte & Touche LLP are not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their reports on the
unaudited interim financial information because those reports are not "reports"
or a "part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Act.
Certain estimates of our oil and natural gas reserves and related
information incorporated by reference in this prospectus have been derived from
engineering reports prepared by DeGoyler and MacNaughton as of December 31,
2002, 2001 and 2000, and all such information has been so included on the
authority of such firm as an expert regarding the matters contained in its
reports.
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by
Denbury in connection with the sale of securities being registered hereby,
assuming Denbury sells $100 million of Debt Securities and $50 million of
common stock hereunder, and that the selling shareholders sell $200 million of
common stock hereunder. None of the following expenses will be paid by selling
shareholders, if any. All amounts are estimates, except the registration fee.
SEC Registration Fee.................................................................. $ 3,909
NYSE Filing Fee....................................................................... $ 13,500
Accounting Fees....................................................................... $ 75,000
Legal Fees and Expenses............................................................... $ 175,000
Printing and Engraving Fees and Expenses.............................................. $ 225,000
Trustee Fees.......................................................................... $ 15,000
Rating Agency Fee..................................................................... $ 65,000
Miscellaneous......................................................................... $ 52,591
---------
Total........................................................................ $ 625,000
=========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the Delaware General Corporation Law (the "DGCL"),
empowers us under specified circumstances, to indemnify our directors, officers,
employees and agents in connection with actions, suits or proceedings brought
against them or threatened by reason of the fact that they were our directors,
officers, employees or agents, so long as they acted in good faith and in a
manner that they reasonably believed to be in, or not opposed to, the best
interests of our Company, and with respect to any criminal action, that they had
no reasonable cause to believe their conduct was unlawful. With respect to suits
by or in the right of our Company, however, indemnification is generally limited
to attorneys' fees and other expenses and is not available if such person is
adjudged to be liable to us, unless a court determines that indemnification is
appropriate.
Article IX of our Certificate of Incorporation requires indemnification
of directors, officers and other employees to the fullest extent permitted by
Section 145 of the DGCL. Furthermore, Article IX explicitly provides that:
o we may advance expenses, including reasonable attorneys' fees, to
individuals entitled to indemnification;
o we may not take any action to diminish or reduce the rights of
individual entitled to indemnification after the occurrence of the
events to which the indemnification relates; and
o any person entitled to indemnification by us may bring suit against us
if we do not pay them within 30 days after receiving a written demand
for indemnification and, if successful, such person may recover their
II-1
expenses for such suit, including attorneys' fees, from us. In the
suit, we will have the burden of proving any defense that the person is
not eligible for indemnification under the DGCL.
Additionally, Denbury maintains directors and officers insurance which
includes coverage for liability under the federal securities laws.
Article X of our Certificate of Incorporation limits the personal
liability of a director to us or our stockholders for monetary damages for
breach of fiduciary duty as a director provided that a director's liability may
not be limited (i) for any breach of the director's duty of loyalty to Denbury
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 (relating to liability for unauthorized acquisitions or redemptions
of, or dividends on, capital stock) of the DGCL or (iv) for any transaction from
which the director derived an improper personal benefit.
ITEM 16. EXHIBITS
EXHIBIT NO. DOCUMENT DESCRIPTION
----------- --------------------
**1.1 Form of Underwriting Agreement (Debt Securities)
**1.2 Form of Underwriting Agreement (Common Stock)
**1.3 Form of Underwriting Agreement (Preferred Stock)
**1.4 Form of Underwriting Agreement (Depositary Shares)
**1.5 Form of Underwriting Agreement (Warrants)
*4.1 Form of Indenture between Denbury Resources Inc. and Trustee to be designated therein
covering Debt Securities to be offered hereunder, including Form of Note or Debenture
attached thereto
**4.2 Form of Certificate of Designation for Preferred Stock, including Specimen Certificate
**4.3 Form of Depositary Agreement between Denbury Resources Inc. and Depository to be designated
therein covering Depositary Shares to be offered hereunder, including Form of Depositary
Receipt attached hereto
**4.4 Form of Warrant Agreement and Trustee to be designated therein covering Common Stock Warrants to be
offered hereunder, including Form of Common Stock Warrant attached thereto
**4.5 Form of Warrant Agreement and Trustee to be designated therein covering Preferred Stock Warrants to be
offered hereunder, including Form of Preferred Stock Warrant attached thereto
II-2
EXHIBIT NO. DOCUMENT DESCRIPTION
----------- --------------------
4.6 Certificate of Incorporation of Denbury Resources Inc. filed with the Delaware Secretary
of State on April 20, 1999 (incorporated by reference as Exhibit 3(a) of the Registrant's
Form 10-Q for the quarter ended March 31, 1999).
4.7 Bylaws of Denbury Resources Inc., a Delaware corporation, adopted April 20, 1999
(incorporated by reference as Exhibit 3(b) of the Registrant's Form 10-Q for the quarter
ended March 31, 1999).
*5 Opinion of Jenkens & Gilchrist, A Professional Corporation, as to the validity of the Securities
being registered hereunder
*12 Denbury Resources Inc. Computation of Ratio of Earnings to Fixed Charges
*15 Letter from Deloitte & Touche LLP, independent accountants, as to unaudited interim financial information
*23.1 Consent of DeGolyer and MacNaughton
*23.2 Consent of Deloitte & Touche, LLP
*23.3 Consent of Jenkens & Gilchrist, A Professional Corporation (included in Exhibit 5)
*24 Power of Attorney (included on signature page)
**25 Statement(s) on Form T-1 of Eligibility of Trustee for the Debt Securities
---------------------
* Filed herewith
** To be filed by amendment or Form 8-K
17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of securities registered hereby, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Securities and Exchange Commission pursuant to Rule 424(b) under
the Securities Act of 1933 if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement; provided,
however, that the undertakings set forth in paragraph (i) and (ii) above do not
II-3
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby understands that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(d) For the purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(e) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(f) The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of that Act.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Plano, State of Texas, on August 4, 2003.
DENBURY RESOURCES INC.
By: /s/ Phil Rykhoek
---------------------------------------------------
Phil Rykhoek
Senior Vice President and Chief Financial Officer
Each person whose signature appears below as a signatory to this
Registration Statement constitutes and appoints Gareth Roberts and Phil Rykhoek,
or either one of them, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLE DATE
---------- ----- ----
President,
/s/ Gareth Roberts Chief Executive Officer August 4, 2003
------------------------------------ and Director (Principal
Gareth Roberts Executive Officer)
Senior Vice-President and
/s/ Phil Rykhoek Chief Financial Officer August 4, 2003
------------------------------------ (Principal Financial Officer)
Phil Rykhoek
Vice President and
/s/ Mark C. Allen Chief Accounting Officer August 4, 2003
------------------------------------ (Principal Accounting Officer)
Mark C. Allen
/s/ Ronald G. Greene Chairman of the Board and July 18, 2003
------------------------------------ Director
Ronald G. Greene
/s/ David I. Heather Director July 16, 2003
------------------------------------
David I. Heather
/s/ Wieland F. Wettstein Director July 17, 2003
------------------------------------
Wieland F. Wettstein
/s/ David B. Miller Director July 18, 2003
------------------------------------
David B. Miller
INDEX TO EXHIBITS
Exhibit No. Document Description
---------- --------------------
4.1 Form of Indenture between Denbury Resources Inc. and Trustee to be designated therein
covering Debt Securities to be offered hereunder, including Form of Note or Debenture
attached thereto
5 Opinion of Jenkens & Gilchrist, A Professional Corporation, as to the validity of the
Securities being registered hereunder
12 Denbury Resources Inc. Computation of Ratio of Earnings to Fixed Charges
15 Letter from Deloitte & Touche LLP, independent accountants, as to unaudited interim
financial information
23.1 Consent of DeGolyer and MacNaughton
23.2 Consent of Deloitte & Touche, LLP
23.3 Consent of Jenkens & Gilchrist, A Professional Corporation (included in Exhibit 5)
24 Power of Attorney (included on signature page)