Document:

exhibit4a.htm

Exhibit 4(a)

 

SEVENTH AMENDMENT TO CREDIT AGREEMENT

 

This Seventh Amendment to Credit Agreement (this “Seventh Amendment”) is entered into as of April 11, 2012, by and among Denbury Resources Inc., a Delaware corporation (“Borrower”), JPMorgan Chase Bank, N.A., as Administrative Agent (“Administrative Agent”), and the financial institutions parties hereto as Banks (collectively, “Banks”, and each individually, a “Bank”).

 

W I T N E S S E T H

 

 WHEREAS, Borrower, Administrative Agent, the other agents party thereto and Banks party thereto are parties to that certain Credit Agreement dated as of March 9, 2010 (as amended, the “Credit Agreement”) (unless otherwise defined herein, all terms used herein with their initial letter capitalized shall have the meaning given such terms in the Credit Agreement, including, to the extent applicable, after giving effect to the amendments set forth in Section 1 of this Seventh Amendment);

 

 WHEREAS, pursuant to the Credit Agreement, Banks have made a Revolving Loan to Borrower and provided certain other credit accommodations to Borrower; and

 

WHEREAS, Borrower has requested that (i) the Credit Agreement be amended to increase the permissible amount of Additional Permitted Subordinate Debt (other than Refinancing Debt) from $300,000,000 to $650,000,000 and (ii) the Borrowing Base be reaffirmed. 

 

 NOW THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, Borrower, Administrative Agent and Banks hereby agree as follows:

 

Section 1. Seventh Amendment Effective Date Amendments.  In reliance on the representations, warranties, covenants and agreements contained in this Seventh Amendment, and subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, the Credit Agreement shall be amended effective as of the Seventh Amendment Effective Date (defined below) in the manner provided in this Section 1.

 

1.1 Additional Definition.  Section 1.1 of the Credit Agreement shall be amended to add thereto in alphabetical order the following definition of “Seventh Amendment” which shall read in full as follows:

 

“Seventh Amendment” means that certain Seventh Amendment to Credit Agreement dated as of April 11, 2012 among Borrower, Administrative Agent and Banks party thereto.

 

1.2 Amendment to Definition.  The definition of “Loan Papers” contained in Section 1.1 of the Credit Agreement shall be amended and restated in its entirety to read in full as follows:

 

“Loan Papers” means this Agreement, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment, the Notes, each Facility Guarantee which may now or hereafter be executed, each Borrower Pledge Agreement which may now or hereafter be executed, each Subsidiary Pledge Agreement which may now or hereafter be executed, all Mortgages now or at any time hereafter delivered pursuant to Section 5.1, and all other certificates, documents, or instruments delivered in connection with this Agreement, as the foregoing may be amended from time to time.

 

1.3 Amendment to Section 2.13 of the Credit Agreement.  Section 2.13 of the Credit Agreement shall be amended and restated in its entirety to read in full as follows:

 

  

  

  

 

“Section 2.13   Automatic Reduction of Borrowing Base.  Simultaneously with the issuance or incurrence by any Credit Party of Additional Permitted Subordinate Debt (other than Refinancing Debt) on or after May 1, 2013 in accordance with Section 9.1(a)(ii)(A), the Borrowing Base shall be automatically reduced, without the need for any additional approval by Administrative Agent or Banks, by an amount equal to twenty-five percent (25%) of the principal amount of such Additional Permitted Subordinate Debt (other than Refinancing Debt) issued or incurred; provided, that Borrower shall notify Administrative Agent at least five (5) Domestic Business Days in advance of any such issuance or incurrence of Additional Permitted Subordinate Debt (other than Refinancing Debt).  Promptly following any such reduction in the Borrowing Base, Administrative Agent shall notify Borrower and Banks of the amount of the Borrowing Base as reduced, which Borrowing Base shall remain in effect for all purposes of this Agreement until the next Redetermination of the Borrowing Base in accordance with Article IV or any additional reduction of the Borrowing Base in accordance with this Section 2.13.”

 

1.4 Amendment to Section 9.1(a)(ii)(A) of the Credit Agreement.  Section 9.1(a)(ii)(A) of the Credit Agreement shall be amended and restated in its entirety to read in full as follows:

 

“(A)           Additional Permitted Subordinate Debt (other than Refinancing Debt) may not exceed an aggregate principal amount outstanding at any one time of $650,000,000, and contemporaneously with any issuance or incurrence thereof with respect to Additional Permitted Subordinated Debt (other than Refinancing Debt) issued or incurred by any Credit Party on or after May 1, 2013 (1) the Borrowing Base shall be automatically reduced pursuant to and in accordance with Section 2.13 and (2) Borrower shall make any mandatory prepayment required by with Section 2.6(b), if applicable;”

 

1.5 Amendment to Section 9.1(d)(ii)(B) of the Credit Agreement.  The reference to “$300,000,000” set forth in clause (d)(ii)(B) is deleted and replaced with a reference to “$650,000,000”.

 

Section 2. Reaffirmation of Borrowing Base.  In reliance on the representations, warranties, covenants and agreements contained in this Seventh Amendment, and subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, the Borrowing Base shall be reaffirmed at $1,600,000,000 as of the Seventh Amendment Effective Date, and shall remain at $1,600,000,000 until the next Redetermination Date.  Borrower and Banks agree that the Redetermination provided for in this Section 2 shall be the May 1, 2012 Scheduled Redetermination and shall not be construed or deemed to be a Special Redetermination for purposes of Section 4.3 of the Credit Agreement.

 

Section 3. Conditions Precedent to Seventh Amendment Effective Date Amendments.  The amendments contained in Section 1 and the reaffirmation of the Borrowing Base contained in Section 2 hereof shall be effective on the date that each of the following conditions precedent is satisfied (the “Seventh Amendment Effective Date”):

 

3.1 Counterparts.  Administrative Agent shall have received counterparts hereof duly executed by Borrower and the Required Banks and acknowledged by each Restricted Subsidiary (or, in the case of any party as to which an executed counterpart shall not have been received, telegraphic, telecopy, or other written confirmation from such party of execution of a counterpart hereof by such party).

 

3.2 No Default; No Borrowing Base Deficiency.  No Default or Event of Default shall have occurred which is continuing, and no Borrowing Base Deficiency then exists.

 

3.3 Other Documents.  Administrative Agent shall have been provided with such documents, instruments and agreements, and Borrower shall have taken such actions, in each case as Administrative Agent may reasonably require in connection with this Seventh Amendment and the transactions contemplated hereby.

 

Section 4. Representations and Warranties.  To induce Banks and Administrative Agent to enter into this Seventh Amendment, Borrower hereby represents and warrants to Banks and Administrative Agent as follows on the Seventh Amendment Effective Date:

 

  

  

  

 

4.1 Reaffirm Existing Representations and Warranties.  Each representation and warranty of Borrower contained in the Credit Agreement and the other Loan Papers is true and correct in all material respects on the date hereof and will be true and correct in all material respects after giving effect to the amendments set forth in Section 1 hereof, except that any representation or warranty that is qualified by “material” or “Material Adverse Effect” references therein shall be true and correct in all respects.

 

4.2 Due Authorization; No Conflict.  The execution, delivery and performance by Borrower of this Seventh Amendment are within Borrower’s corporate or organizational powers, have been duly authorized by all necessary action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not violate or constitute a default under any provision of applicable law or any Material Agreement binding upon Borrower or any other Credit Party or result in the creation or imposition of any Lien upon any of the assets of Borrower or any other Credit Party other than Liens securing the Obligations.

 

4.3 Validity and Enforceability.  This Seventh Amendment constitutes the valid and binding obligation of Borrower enforceable in accordance with its terms, except as (a) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditor’s rights generally, and (b) the availability of equitable remedies may be limited by equitable principles of general application.

 

4.4 No Defense.  Borrower acknowledges that Borrower has no defense to (a) Borrower’s obligation to pay the Obligations when due, or (b) the validity, enforceability or binding effect against Borrower of the Credit Agreement or any of the other Loan Papers or any Liens intended to be created thereby.

 

Section 5. Miscellaneous.

 

5.1 No Waivers.  No failure or delay on the part of Administrative Agent or Banks to exercise any right or remedy under the Credit Agreement, any other Loan Papers or applicable law shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of any right or remedy, all of which are cumulative and may be exercised without notice except to the extent notice is expressly required (and has not been waived) under the Credit Agreement, the other Loan Papers and applicable law.

 

5.2 Reaffirmation of Loan Papers.  Any and all of the terms and provisions of the Credit Agreement and the Loan Papers shall, except as amended and modified hereby, remain in full force and effect.  The amendments contemplated hereby shall not limit or impair any Liens securing the Obligations, each of which are hereby ratified, affirmed and extended to secure the Obligations as they may be increased pursuant hereto.

 

5.3 Legal Expenses.  Borrower hereby agrees to pay on demand all reasonable fees and expenses of counsel to Administrative Agent incurred by Administrative Agent in connection with the preparation, negotiation and execution of this Seventh Amendment and all related documents.

 

5.4 Parties in Interest.  All of the terms and provisions of this Seventh Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

 

5.5 Counterparts.  This Seventh Amendment may be executed in counterparts, and all parties need not execute the same counterpart; however, no party shall be bound by this Seventh Amendment until Borrower, the Required Banks and each Restricted Subsidiary have executed a counterpart.  Facsimiles shall be effective as originals.

 

5.6 Complete Agreement.  THIS SEVENTH AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES.

 

5.7 Headings.  The headings, captions and arrangements used in this Seventh Amendment are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of this Seventh Amendment, nor affect the meaning thereof.

 

  

  

  

 

5.8 Governing Law.  THIS SEVENTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

 

[SIGNATURE PAGES FOLLOW]

 

  

  

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Seventh Amendment to be duly executed by their respective authorized officers on the date and year first above written.

 

	  	
BORROWER:

	  	
 

DENBURY RESOURCES INC.,

a Delaware corporation

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

Each of the undersigned (i) consent and agree to this Seventh Amendment, and (ii) agree that the Loan Papers to which it is a party shall remain in full force and effect and shall continue to be the legal, valid and binding obligation of such Person, enforceable against it in accordance with its terms.

 

	  	
DENBURY GATHERING & MARKETING INC.,

a Delaware corporation

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

	  	
DENBURY HOLDINGS INC.,

a Delaware corporation (f/k/a Denbury Encore Holdings Inc.)

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

	  	
DENBURY OPERATIONG COMPANY,

a Delaware corporation (f/k/a EAP Properties, Inc. and successor-by-merger to a previous “Denbury Operating Company”)

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

 

	  	
DENBURY ONSHORE, LLC,

a Delaware limited liability company

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

	  	
DENBURY PIPELINE HOLDINGS, LLC,

a Delaware limited liability company

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
DENBURY GREEN PIPELINE-TEXAS, LLC,

a Delaware limited liability company

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

	  	
DENBURY GULF COAST PIPELINES, LLC,

a Delaware limited liability company

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

	  	
GREENCORE PIPELINE COMPANY, LLC,

a Delaware limited liability company

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

	  	
DENBURY AIR, LLC,

a Delaware limited liability company (f/k/a EAP Operating, LLC)

	  	  	  
	  	
 

By:

	
 

/s/ James S. Matthews

	  	  	
James S. Matthews,

Vice President and General Counsel

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
ADMINISTRATIVE AGENT/BANK:

	  	
 

JPMORGAN CHASE BANK, N.A.,

As Administrative Agent and a Bank

	  	  	  
	  	
 

By:

	
 

/s/ Mark E. Olson

	  	  	
Mark E. Olson

Authorized Officer

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

BANK OF AMERICA, N.A.

	  	  	  
	  	
 

By:

	
 

/s/ Stephen J. Hoffman

	  	
 

Name:

	
Stephen J. Hofman

	  	
Title:

	
Managing Director

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

THE BANK OF NOVA SCOTIA

	  	  	  
	  	
 

By:

	
 

/s/ John Frazell

	  	
 

Name:

	
John Frazell

	  	
Title:

	
Director

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

	  	  	  
	  	
 

By:

	
 

/s/ Bill O’Daly

	  	
 

Name:

	
Bill O’Daly

	  	
Title:

	
Director

	  	
 

By:

	
 

/s/ Michael D. Spaight

	  	
 

Name:

	
Michael D. Spaight

	  	
Title:

	
Associate

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

	  	
BANKS:

	  	
 

ROYAL BANK OF CANADA

	  	  	  
	  	
 

By:

	
 

/s/ Jay T. Sartain

	  	
 

Name:

	
Jay T. Sartain

	  	
Title:

	
Authorized Signatory

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

	  	
BANKS:

	  	
 

WELLS FARGO BANK, N.A.

	  	  	  
	  	
 

By:

	
 

/s/ Thomas E. Stelmer, Jr.

	  	
 

Name:

	
Thomas E. Stelmer, Jr.

	  	
Title:

	
Vice President

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

UBS LOAN FINANCE, LLC

	  	  	  
	  	
 

By:

	
 

/s/ Mary E. Evans

	  	
 

Name:

	
Mary E. Evans

	  	
Title:

	
Associate Director

 

 

	  	
 

By:

	
 

/s/ Irja R. Otsa

	  	
 

Name:

	
Irja R. Otsa

	  	
Title:

	
Associate Director

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

	  	
BANKS:

	  	
 

UNION BANK, N.A.

	  	  	  
	  	
 

By:

	
 

/s/ David Carter

	  	
 

Name:

	
David Carter

	  	
Title:

	
Investment Banking Officer

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

	  	
BANKS:

	  	
 

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK (f/k/a CALYON NEW YORK BRANCH)

	  	  	  
	  	
 

By:

	
 

/s/ Tom Byargeon

	  	
 

Name:

	
Tom Byargeon

	  	
Title:

	
Managing Director

	  	
 

By:

	
 

/s/ Sharada Manne

	  	
 

Name:

	
Sharada Manne

	  	
Title:

	
Managing Director

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

BANK OF SCOTLAND plc

	  	  	  
	  	
 

By:

	
 

/s/ Julia R. Franklin

	  	
 

Name:

	
Julia R. Franklin

	  	
Title:

	
Vice President

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

	  	
BANKS:

	  	
 

COMPASS BANK

	  	  	  
	  	
 

By:

	
 

/s/ Dorothy Marchand

	  	
 

Name:

	
Dorothy Marchand

	  	
Title:

	
Senior Vice President

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

CAPITAL ONE NATIONAL ASSOCIATION, formerly known as Capital One, N.A.

	  	  	  
	  	
 

By:

	
 

/s/ Peter Shen

	  	
 

Name:

	
Peter Shen

	  	
Title:

	
Vice President

	  	  	  

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

COMERICA BANK

	  	  	  
	  	
 

By:

	
 

/s/ James A. Morgan

	  	
 

Name:

	
James A. Morgan

	  	
Title:

	
Vice President

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

ING CAPITAL LLC

	  	  	  
	  	
 

By:

	
 

/s/ Juli Bieser

	  	
 

Name:

	
Juli Bieser

	  	
Title:

	
Director

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

	  	
BANKS:

	  	
 

SUNTRUST BANK

	  	  	  
	  	
 

By:

	
 

/s/ Gregory C. Magnuson

	  	
 

Name:

	
Gregory C. Magnuson

	  	
Title:

	
Vice President

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

	  	
BANKS:

	  	
 

CIBC, INC.

	  	  	  
	  	
 

By:

	
 

/s/ Trudy Nelson

	  	
 

Name:

	
Trudy Nelson

	  	
Title:

	
Authorized Signatory

	  	
 

By:

	
 

/s/ Richard Antl

	  	
 

Name:

	
Richard Antl

	  	
Title:

	
Authorized Signatory

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

KEYBANK NATIONAL ASSOCIATION

	  	  	  
	  	
 

By:

	
 

/s/ Craig Hanselman

	  	
 

Name:

	
Craig Hanselman

	  	
Title:

	
Vice President

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

	  	
BANKS:

	  	
 

U.S. BANK NATIONAL ASSOCIATION

	  	  	  
	  	
 

By:

	
 

/s/ Daria Mahoney

	  	
 

Name:

	
Daria Mahoney

	  	
Title:

	
Vice President

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

SUMITOMO MITSUI BANKING CORPORATION

	  	  	  
	  	
 

By:

	
 

/s/ Masakazu Hasegawa

	  	
 

Name:

	
Masakazu Hasegawa

	  	
Title:

	
Managing Director

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

	  	
 

FIFTH THIRD BANK

	  	  	  
	  	
 

By:

	
 

/s/ Matthew Lewis

	  	
 

Name:

	
Matthew Lewis

	  	
Title:

	
Vice President

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

	  	
BANKS:

	  	
 

GOLDMAN SACHS LENDING PARTNERS LLC

	  	  	  
	  	
 

By:

	
 

/s/ Michelle Latzoni

	  	
 

Name:

	
Michelle Latzoni

	  	
Title:

	
Authorized Signatory

 

 

 

	

[Signature Page]

Seventh Amendment to Credit Agreement

Denbury Resources Inc.exhibit10a.htm

Exhibit 10(a)

 

                   Maximum Performance Shares

Date of Grant: January 6, 2012

 

2012 PERFORMANCE STOCK AWARD

2004 OMNIBUS STOCK AND INCENTIVE PLAN

FOR DENBURY RESOURCES INC.

PERFORMANCE STOCK AWARD (“Award”) made effective January 6, 2012 (“Date of Grant”) between Denbury Resources Inc. (the “Company”) and «Officer_Name» (“Holder”).

WHEREAS, Section 17 of the 2004 Omnibus Stock and Incentive Plan For Denbury Resources Inc. (“Plan”) authorizes the Committee to grant performance-based Awards;

WHEREAS, the Committee desires to grant to Holder an Award under which Holder can earn a maximum of

                     Performance Shares based on the performance factors set forth in this Award, and subject to all of the provisions, including without limitation the Vesting provisions, of the Plan and this Award;

WHEREAS, no Performance Shares will be issued or outstanding until their respective Vesting Dates or they become Retained Earned Shares; and

WHEREAS, the Company and Holder understand and agree that this Award is in all respects subject to the terms, definitions and provisions of the Plan, and all of which are incorporated herein by reference, except to the extent otherwise expressly provided in this Award.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows:

1.      Performance Share Grant. The Company hereby grants Holder the right to earn, Vest in, and receive delivery of, on the Delivery Date up to                      Reserved Shares (“Performance Shares”) subject to the terms and conditions set forth in the Plan and in this Award.

2.      Definitions. All words capitalized herein that are defined in the Plan shall have the meaning assigned them in the Plan; other capitalized words shall have the following meaning, or shall be defined elsewhere in this Award:

(a) “BOE” means Barrels of Oil Equivalent, and for all purposes hereof, will be calculated using the ratio of one barrel of crude oil, condensate or natural gas liquids to 6 Mcf of natural gas.

(b) “Committee Percentage Point Reduction” means the number (if any) of Performance Percentage Points (not in excess of the Committee Percentage Point Reduction Limitation) by which the Committee reduces Holder’s Performance Percentage Points in accordance with Section 7 hereof.

(c) “Committee Percentage Point Reduction Limitation” means the lesser of (i) forty (40) Performance Percentage Points, and (ii) the product of (x) Holder’s Performance Percentage Points earned during the Performance Period as determined prior to the application of the Committee Percentage Point Reduction, multiplied by (y) twenty-five percent (25%).

(d) “Delivery Date” means the date on which Vested Earned Shares (other than Retained Earned Shares and Performance Shares delivered under 8(b)) are delivered to Holder, which shall be the Vesting Date, or as soon thereafter as practicable, but in no event later than 30 days after the Vesting Date.

(e) “Disability” means, without limitation, the same as it does in the Plan.

 

  

  

  

 

(f) “Earned Performance Shares” means the number of Performance Shares which are earned during the Performance Period as described and calculated in Section 8.

(g) “Fiscal Year” means the 12-month period adopted by the Company for financial reporting purposes.

(h) “Performance Measure” means, collectively, changes in amounts of oil and gas reserves, changes in production rates, and operating cost reductions, as determined based upon the (i) the Tertiary Oil Production Measure, (ii) the Corporate Production Measure, (iii) LOE per BOE Measure, and (iv) the Reserve Replacement Measure; provided, further, that when reference to a specific Performance Measure is intended, reference will be made to such specific Performance Measure.

(i) “Performance Period” means the period beginning on January 1, 2012, and ending on December 31, 2012.

(j) “Performance Percentage” means the excess of (i) Holder’s aggregate Performance Percentage Points, over (ii) the Committee Percentage Points Reduction, if any, determined as of the last day of the Performance Period.

(k) “Performance Percentage Points” means, collectively, the points, designated as Performance Percentage Points, earned with respect to each Performance Measure during Performance Period.

(l) “Performance Shares” means the number of Reserved Shares subject to this Award, as shown on the first page of this Award.

(m) “Post Separation Change in Control” means a Change in Control which follows Holder’s Separation, but results from the Commencement of a Change in Control that occurs prior to Holder’s Separation. For all purposes of this Award, the term “Commencement of a Change in Control” shall mean the date on which any material action, including without limitation through a written offer, open-market bid, corporate action, proxy solicitation or otherwise, is taken by a “person” (as defined in Section 13(d) or Section 14(d)(2) of the 1934 Act), or a “group” (as defined in Section 13(d)(3) of the 1934 Act), or their affiliates, to commence efforts that, within 12 months after the date of such material action, leads to a Change in Control as defined in Section 2(h)(2), (3) or (4) of the Plan involving such person, group, or their affiliates.

(n) “Target Performance Shares” means                      of the Performance Shares, which is the number of Performance Shares which will be Earned Performance Shares if Holder’s Performance Percentage is 100%.

(o)      “Vesting Date” means March 31, 2013.

3.      Performance Percentage Points Earned With Respect To The Tertiary Oil Production Measure.

(a) Tertiary Production Based Performance Percentage Points. The Performance Percentage Points which will be credited to Holder with respect to the Tertiary Oil Production Measure are set forth in the following Chart based on the Average Annual Tertiary Production Percentage. The “Average Annual Tertiary Production Percentage” means the quotient (rounded to 3 decimal places and then expressed as a percentage) of (x) the Adjusted Tertiary Oil Production for such Fiscal Year, divided by (y) the Tertiary Oil Production Forecast for such Fiscal Year.

	 	 	
Average Annual Tertiary

Production Percentage

	 	
Performance

Percentage Points

	 
	 	A.	 	
107.2% or more

	 	 70	 
	 	B.	 	
104.3% to 107.1%

	 	 56	 
	 	C.	 	
100% to 104.2%

	 	 42	 
	 	D.	 	
95.7% to 99.9%

	 	 28	 
	 	E.	 	
Less than 95.7%

	 	 0	 

 

  

  

  

 

(b) Adjusted Tertiary Oil Production. For purposes of this Award, the “Adjusted Tertiary Oil Production” shall be equal to (i) the actual tertiary oil production of the Company for such Fiscal Year as reported in the Company’s Form 10-K, or if not specifically reported, then as determined by the Committee from the underlying documents, minus (ii) the tertiary oil production related to an oil property acquired during such Fiscal Year, such amount to be the lesser of (a) the actual tertiary oil production for such Fiscal Year from the acquired property or incremental property interest (if a material partial interest) or (b) the forecasted oil production related thereto for such Fiscal Year for the property before any improvements made by the Company following the acquisition of the property, plus (iii) that portion of the Tertiary Oil Production Forecast, as defined below which is related to any oil property disposed or sold during such Fiscal Year for the period during which the Company did not own the oil property.

(c) Tertiary Oil Production Forecast. For purposes of this Award, “Tertiary Oil Production Forecast” means for 2012, 34,500 barrels of oil per day.

4.      Performance Percentage Points Earned With Respect To The Corporate Production Measure.

(a) Corporate Production Based Performance Percentage Points. The Performance Percentage Points which will be credited to Holder with respect to the Corporate Production Measure are set forth in the following Chart based on the Average Annual Corporate Production Percentage. The “Average Annual Corporate Production Percentage” means for such Fiscal Year, the quotient (rounded to 3 decimal places and then expressed as a percentage) of (x) the Adjusted Corporate Production of the Company for such Fiscal Year, divided by (y) the Corporate Production Forecast for such Fiscal Year.

	 	 	
Average Annual Corporate

Production Percentage

	 	
Performance

Percentage Points

	 
	 	A.	 	
106.2% or more

	 	 40	 
	 	B.	 	
103.4% to 106.1%

	 	 32	 
	 	C.	 	
100% to 103.3%

	 	 24	 
	 	D.	 	
96.6% to 99.9%

	 	 16	 
	 	E.	 	
Less than 96.6%

	 	 0	 

(b) Adjusted Corporate Production. For purposes of this Award, “Adjusted Corporate Production” means (i) the actual production of oil and natural gas (in BOEs) for the Fiscal Year as reported in the Company’s Form 10-K (“Corporate Production”), minus (ii) the oil and natural gas production (in BOEs) related to properties acquired during such Fiscal Year, such amount to be the lesser of (a) the actual oil and natural gas production (in BOEs) for such Fiscal Year from the acquired property or incremental property interest (if a partial interest) or (b) the forecasted oil and natural gas production (in BOEs) related thereto for such Fiscal Year for the property before any improvements made by the Company following the acquisition of the property, plus (iii) that portion of the Corporate Production Forecast, as defined below, which is related to any oil or natural gas property disposed or sold during such Fiscal Year for the period during which the Company did not own the property.

(c) Corporate Production Forecast. For purposes of this Award, “Corporate Production Forecast” means for 2012, 72,750 BOE per day.

5.      Performance Percentage Points Earned With Respect To Lease Operating Expense (“LOE”) Per BOE Measure.

(a) “Actual-to-Budget” LOE Per BOE Measure Performance Percentage Points. The Performance Percentage Points which will be credited to Holder with respect to “Actual-to-Budget” LOE Per BOE Measure are set forth in the following Chart as compared to the various budgeted levels of LOE per BOE set forth in such Chart.

 

  

  

  

 

(b) “Actual LOE Per BOE” for such Fiscal Year means (x) the actual LOE for the Fiscal Year as reported in the Company’s Form 10-K for 2012 (less the cost for CO2 as per the Company’s detailed LOE analysis) minus total LOE (including cost for CO2) related to properties acquired during such Fiscal Year, plus for properties sold during such Fiscal Year, the originally budgeted LOE for that portion of such Fiscal Year during which the results of operations of such properties are not included in the Company’s financial results, divided by (y) the actual oil and natural gas production (in BOEs) for such Fiscal Year as reported in the Company’s Form 10-K for 2012, minus the actual oil and natural gas production (in BOEs) for such Fiscal Year from properties or incremental property interests (if a partial interest) acquired during such Fiscal Year, plus for properties sold during such Fiscal Year, the originally budgeted production for that portion of such Fiscal Year during which the results of operations of such properties are not included in the Company’s financial results.

(c) Performance Percentage Points. The Performance Percentage Points which will be awarded Holder for the Performance Period with respect to the LOE per BOE Measure will be calculated as of the last day of the Performance Period, and will be based on the levels of Actual LOE per BOE during the Fiscal Year as compared to the levels shown in the following Chart:

	 	 	
Actual

LOE Per BOE

	 	
Performance

Percentage Points

	 
	 	A.	 	
Less than $17.68

	 	50	 
	 	B.	 	$17.68 to $18.15	 	40	 
	 	C.	 	$18.16 to $18.78	 	30	 
	 	D.	 	$18.79 to $19.45	 	20	 
	 	E.	 	
Greater than $19.45

	 	 0	 

6.      Performance Percentage Points Earned With Respect To The Reserve Replacement Measure.

The Performance Percentage Points Holder will earn with respect to the Reserve Replacement Measure will be based on the Company’s Reserve Replacement Percentage for the entire Performance Period. “Reserve Replacement Percentage” means the quotient (rounded up to 3 decimal places and then expressed as a percentage) of (i) the Final Reserves less the Initial Reserves, divided by (ii) Total Production for the Company.

(a) Performance Percentage Points. The Performance Percentage Points which will be awarded Holder for the Performance Period with respect to the Reserve Replacement Measure are set forth in the following Chart:

	 	 	
 

Reserve Replacement

Percentage

	 	
Performance

Percentage Points

	 
	 	A.	 	
300% or more

	 	40	 
	 	B.	 	
200% to 299%

	 	32	 
	 	C.	 	
150% to 199%

	 	24	 
	 	D.	 	
100% to 149%

	 	16	 
	 	E.	 	
Less than 100%

	 	0	 

(b) Initial Reserves. For purpose of this Award, “Initial Reserves” means the total Company proved reserve quantities as of December 31, 2011 expressed in BOEs as estimated by DeGolyer and MacNaughton, independent petroleum engineers and disclosed in the Company’s Form 10-K Report for 2011.

 

  

  

  

 

(c) Final Reserves. For purposes of this Award, “Final Reserves” means the sum of (i) the total Company proved reserve quantities on the last day of the Performance Period expressed in BOEs as estimated by DeGolyer and MacNaughton or the Company’s then current independent petroleum engineer, determined using the same price deck as was used by the Company in calculating the Initial Reserves, plus (ii) the Uneconomic Reserves, plus (iii) the Disposed Reserves, plus (iv) Total Production. The “Uneconomic Reserves” are those proved undeveloped reserves expressed in BOEs which were included in the Initial Reserves, but are not considered proved undeveloped reserves on the last day of the Performance Period solely because the price deck used to price oil and natural gas products and/or the prices used to estimate the capital costs required to develop the proved undeveloped reserves as of the last day of the Performance Period have changed from those used in the Initial Reserve report such that the extraction of such otherwise proved reserves is uneconomic (i.e. Uneconomic Reserves cannot be reserves excluded from the Final Reserves because drilling activity during the period changed the status or evaluation of the undeveloped reserves, or because the Company no longer holds the acreage or interest, or because factors other than commodity prices or changes in the estimated capital costs have made the project uneconomic). The “Disposed Reserves” are those proved reserves quantities expressed in BOEs which were sold during the Performance Period as reported as such in the Company’s Form 10-K SFAS 69 disclosures.

7.      Committee’s Reduction of Performance Percentage Points.

Notwithstanding any provision hereof to the contrary, the Committee, in its sole discretion, by written notice to Holder prior to the Vesting Date, may reduce Holder’s otherwise earned Performance Percentage Points by applying a Committee Percentage Point Reduction.

(a) Performance Percentage Points Reduction. The Committee will make its determination of the Committee Percentage Point Reduction amount (if any) based on the Committee’s subjective evaluation of Company performance with respect to each of the four Additional Committee Evaluation Factors listed in (b) below, which evaluation will determine the amount of the Performance Percentage Points reduction for each such Additional Committee Evaluation Factor based on the Chart below, and the sum of those reductions, but not in excess of the Committee Percentage Point Reduction Limitation, will be Committee Percentage Point Reduction for the Performance Period:

	 	 	
Committee’s Determination of

the Level of Performance With

Respect to each Committee

Evaluation Factor

	 	
Reduction in

Performance

Percentage Points

	 
	 	A.	 	
Above Average

	 	0	 
	 	B.	 	
Average

	 	5	 
	 	C.	 	
Below Average

	 	10	 

(b) For purposes of this Award, the “Additional Committee Evaluation Factors” (each of which may cause a reduction of up to 10 Performance Percentage Points) are:

(i)       the Company’s compliance with such corporate governance factors as the ability to obtain an unqualified auditors’ opinion on the Company’s financial statements contained in its Form 10-K for 2012, and avoid any financial restatements,

(ii)       the Company’s maintenance of a reasonable debt-to-capital and/or debt-to-cash flow ratio,

(iii)       the Company’s record as to health, safety and environmental compliance and results, and

(iv)       the increase in the net asset value per share of Company stock, determined after excluding the effects, to the extent reasonably practical, caused by fluctuations in commodity prices and capital and operating costs or other factors which are generally not controllable by the Company.

 

  

  

  

 

8.      Earning Performance Shares.

(a) Earned Performance Shares. The number of Earned Performance Shares shall be equal to the product of (i) the Target Performance Shares, multiplied by (ii) the Performance Percentage. Only whole shares will be issued to the Holder. The Committee will determine, and the Administrator will advise Holder, of Holder’s Performance Percentage as soon as reasonably possible after the last day of the Performance Period.

(b) Change in Control. Notwithstanding the foregoing and any other provision hereof to the contrary, if a Change in Control occurs during the Performance Period then, regardless of the Performance Percentage at the date of the Change in Control, Holder will be entitled to receive delivery of all of the Target Performance Shares (notwithstanding any provision hereof to the contrary, none of which Target Performance Shares will be retained by the Company other than as payment for withholding) as soon as reasonably possible following such Change in Control, but in no event later than the 15th day of the third month after the end of the calendar year in which such Change in Control occurs, and Holder permanently shall forfeit the right to receive any other Performance Shares.

9.      Vesting (and Forfeiture) of Earned Performance Shares.

(a) No Separation Prior to the Vesting Date. If Holder does not Separate prior to the Vesting Date, Holder will be 100% Vested in the Earned Shares.

(b) Forfeiture. Except to the extent expressly provided in (i), (ii), (iii), or (iv) below, Holder permanently will forfeit all rights with respect to all Performance Shares upon the date of his Separation, if such Separation occurs prior to the Vesting Date.

(i)       Death. If Holder Separates by reason of death prior to the Vesting Date, Holder’s Beneficiary will be entitled to receive Performance Shares in an amount equal to the number of Target Performance Shares (and does not have any right to receive any other Performance Shares) as soon as reasonably possible, but in no event more than 90 days after Holder’s death.

(ii)       Disability. If Holder Separates by reason of a Disability prior to the Vesting Date, Holder will be entitled to receive Performance Shares in an amount equal to the number of Target Performance Shares (and does not have any right to receive any additional Performance Shares) as soon as reasonably possible, but in no event later than the 15th day of the third month after the end of the calendar year following the Date on which the Committee determines that Holder is Disabled.

(iii)       Post Separation Change in Control. If there is a Post Separation Change in Control, Holder will be entitled to receive Performance Shares in an amount equal to the number of Target Performance Shares (and does not have any right to receive any additional Performance Shares) as soon as reasonably possible after the date of the Change in Control, but in no event later than the 15th day of the third month after the end of the calendar year in which such Change in Control occurs.

(iv)       Retirement. If Holder Separates after reaching Holder’s Retirement Vesting Date and prior to the Vesting Date, Holder will be entitled to receive only that percentage (if any) of the Performance Shares as shall be determined by the Committee in writing (and does not have any right to receive any additional Performance Shares). In making its determination, the Committee will take into account the percentage of the Performance Period completed by the date of Holder’s Separation, and its best estimate of the Performance Percentage Points Holder has earned by the date of Holder’s Separation and is expected to earn during the portion of the Performance Period occurring after the date of Holder’s Separation. The Committee will make its determination, and Holder will receive the Performance Shares (if any) as determined by the Committee, within a reasonable time, but in no event later than the 15th day of the third month after the end of the calendar year following Holder’s Separation.  Notwithstanding the foregoing, in the event Holder Separates after Holder’s Retirement Vesting Date, but within 12 months of the Date of Grant, all rights to receive Performance Shares under this Award will be forfeited.

 

  

  

  

 

10.      Withholding. On the Vesting Date, the minimum federal income tax withholding required to be made by the Company shall be paid by Holder (or Holder’s Beneficiary) to the Administrator in cash, by delivery of Shares, or by authorizing the Company to retain Earned Shares, or a combination thereof; provided, further, that where Shares or Earned Shares are delivered or retained, the satisfaction of Holder’s obligation hereunder will be based on the Fair Market Value on the Vesting Date of such delivered or retained Shares.

 

11.      Issuance of Shares. Without limitation, Holder shall not have any of the rights and privileges of an owner of any of the Performance Shares (including voting rights) until the Vesting Date. The Administrator shall deliver the Vested Shares (reduced by the number of Vested Shares delivered to the Administrator to pay required withholding under section 10 above) to the Holder as soon as reasonably possible following vesting. The Holder agrees to hold and retain the required number of Vested Shares as specified in the Company’s stock ownership guidelines, as potentially modified from time to time.

12.      Administration. Without limiting the generality of the Committee’s rights, duties and obligations under the Plan, the Committee shall have the following specific rights, duties and obligations with respect to this Award. Without limitation, the Committee shall interpret conclusively the provisions of the Award, adopt such rules and regulations for carrying out the Award as it may deem advisable, decide conclusively all questions of fact arising in the application of the Award, certify the extent to which Performance Measures have been satisfied and the number of Performance Percentage Points earned, exercise its right to reduce Performance Percentage Points, and make all other determinations and take all other actions necessary or desirable for the administration of the Award. The Committee is authorized to change any of the terms or conditions of the Award in order to take into account any material unanticipated change in the Company’s operations, corporate structure, assets, or similar change, but only to the extent such action carries out the original purpose, intent and objectives of the Award. All decisions and acts of the Committee shall be final and binding upon Holder and all other affected parties.

13.      Beneficiary. Holder’s rights hereunder shall be exercisable during Holder’s lifetime only by Holder or Holder’s legal representative. Holder may file with the Administrator a written designation of beneficiary (such person(s) being his “Beneficiary”), on such form as may be prescribed by the Administrator. Holder may, from time to time, amend or revoke a designation of Beneficiary. If no designated Beneficiary survives Holder, the Holder’s estate shall be deemed to be Holder’s Beneficiary.

14.      Holder’s Access to Information. As soon as reasonably possible after the close of the preceding Fiscal Year, the Committee (and the Administrator to the extent it shall have been directed by the Committee) shall make all relevant annually-determined calculations and determinations hereunder, and shall communicate such information to the Administrator. The Administrator will furnish all such relevant information to Holder as soon as reasonably possible following the date on which all, or a substantial majority, of the information is available.

15.      No Transfers Permitted. The rights under this Award are not transferable by the Holder otherwise than by will or the laws of descent and distribution, and so long as Holder lives, only Holder or his or her guardian or legal representative shall have the right to receive and retain Vested Earned Shares.

16.      No Right To Continued Employment. Neither the Plan nor this Award shall confer upon Holder any right to continue to serve in the employ of the Company nor interfere in any way with Holder’s right to resign.

17.      Governing Law. Without limitation, this Award shall be construed and enforced in accordance with and governed by the laws of Delaware.

18.      Binding Effect. This Award shall inure to the benefit of and be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.

19.      Waivers. Any waiver of any right granted pursuant to this Award shall not be valid unless it is in writing and signed by the party waiving the right. Any such waiver shall not be deemed to be a waiver of any other rights.

20.      Severability. If any provision of this Award is declared or found to be illegal, unenforceable or void, in whole or in part, the remainder of this Award will not be affected by such declaration or finding and each such provision not so affected will be enforced to the fullest extent permitted by law.

 

  

  

  

 

IN WITNESS WHEREOF, the Company has caused this Award to be executed on its behalf by its duly authorized representative and Holder has hereunto set his or her hand, all on the day and year first above written.

Dated as of this 6th day of January, 2012.

DENBURY RESOURCES INC.

	
By:

	  	  	  
	  	
Phil Rykhoek

CEO

	  	
Mark C. Allen

Senior VP, CFO & Asst. Secretary

 

  

  

  

 

ACKNOWLEDGMENT

The undersigned hereby acknowledges (i) my receipt of this Award, (ii) my opportunity to review the Plan, (iii) my opportunity to discuss this Award with a representative of the Company, and my personal advisors, to the extent I deem necessary or appropriate, (iv) my understanding of the terms and provisions of the Award and the Plan, and (v) my understanding that, by my signature below, I am agreeing to be bound by all of the terms and provisions of this Award and the Plan.

Without limitation, I agree to accept as binding, conclusive and final all decisions, factual determinations, and/or interpretations (including, without limitation, all interpretations of the meaning of provisions of the Plan, or Award, or both) of the Committee upon any questions arising under the Plan, or this Award, or both.

Dated as of this                      day of                     , 2012.

 

	  	  	  
	  	  	
Officer Name

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