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Exhibit 10.2
 
PIPELINE PURCHASE AND SALE AGREEMENT
 
BY AND AMONG
 
DENBURY ONSHORE, LLC,
 
AND
 
GENESIS FREE STATE PIPELINE, LLC
 
for the Free State Pipeline System in Eastern Mississippi
 
Dated: May 30, 2008

 
 

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TABLE OF CONTENTS
 

       
Page
         
ARTICLE I. DEFINITIONS
 
1
         
1.1
 
Defined Words and Terms
 
1
     
ARTICLE II. DESCRIPTION OF PIPELINE SYSTEM
 
4
         
2.1
 
Description of Pipeline System
 
4
         
2.2
 
Assumed Liabilities
 
5
         
2.3
 
Excluded Liabilities
 
5
     
ARTICLE III. PURCHASE AND SALE OF PIPELINE SYSTEM
 
6
         
3.1
 
Sale and Delivery of Pipeline System
 
6
         
3.2
 
Consideration
 
6
         
3.3
 
Closing
 
7
         
3.4
 
Allocation of Purchase Price
 
7
         
3.5
 
Deliverables at Closing
 
7
     
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER
 
9
         
4.1
 
Organization and Authority
 
9
         
4.2
 
Execution and Effect
 
10
         
4.3
 
No Violation
 
10
         
4.4
 
Title to Rights of Way
 
10
         
4.5
 
Title to Pipeline and Equipment
 
10
         
4.6
 
Litigation
 
11
         
4.7
 
Compliance with Applicable Law
 
11
         
4.8
 
Condition of Pipeline System
 
11
         
4.9
 
Taxes
 
11
         
4.10
 
Preferential Purchase Rights
 
11
         
4.11
 
Environmental Matters
 
11
         
4.12
 
Contracts and Rights of Way
 
12
         
4.13
 
Disclosure
 
12
         
4.14
 
No Unsatisfied Liabilities
 
12
     
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
13
         
5.1
 
Organization and Authority
 
13

 
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5.2
 
Execution and Effect
 
13
         
5.3
 
No Violation
 
13
         
5.4
 
Sufficiency of Funds
 
14
         
5.5
 
Disclaimer
 
14
         
5.6
 
Evaluation by Purchaser
 
14
         
5.7
 
Fairness Opinion
 
14
         
5.8
 
Compliance with Laws
 
15
         
5.9
 
Disclosure
 
15
     
ARTICLE VI. OTHER AGREEMENTS AND OBLIGATIONS OF THE PARTIES
 
15
         
6.1
 
Assignments Requiring Consents, Preferential Purchase Rights
 
15
         
6.2
 
No Solicitation of Employees
 
16
         
6.3
 
Incidental Contamination
 
16
         
6.4
 
Document Retention
 
16
         
6.5
 
Further Assurances
 
17
     
ARTICLE VII. SURVIVAL OF OBLIGATIONS; INDEMNIFICATION
 
17
         
7.1
 
Survival of Obligations
 
17
         
7.2
 
Indemnification by Seller
 
17
         
7.3
 
Indemnification by Purchaser
 
18
         
7.4
 
Indemnification Procedures
 
19
         
7.5
 
Certain Limitations on Indemnification
 
19
         
7.6
 
Tax Treatment of Indemnity Payments
 
20
         
7.7
 
No Consequential Damages
 
20
         
7.8
 
Exclusive Remedy
 
21
     
ARTICLE VIII. TAXES -PRORATIONS AND ADJUSTMENTS
 
21
         
8.1
 
Proration
 
21
         
8.2
 
Sales Taxes
 
22
         
8.3
 
Cooperation
 
22
         
8.4
 
Payables
 
22
     
ARTICLE IX. DISPUTE RESOLUTION
 
23
         
9.1
 
Dispute Resolution
 
23
     
ARTICLE X. MISCELLANEOUS
 
23
         
10.1
 
No Brokers
 
23
         
10.2
 
Expenses
 
23

 
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10.3
 
Further Assurances
 
23
         
10.4
 
Assignment; Parties in Interest
 
23
         
10.5
 
Entire Agreement; Amendments
 
23
         
10.6
 
Severability
 
24
         
10.7
 
Interpretation
 
24
         
10.8
 
Notices
 
24
         
10.9
 
Waiver of Rescission
 
25
         
10.10
 
Governing Law
 
25
         
10.11
 
Counterparts
 
25
         
10.12
 
Exhibits
 
25
         
10.13
 
No Third-Party Beneficiary
 
25
         
10.14
 
Use of Seller’s Name
 
25
         
10.15
 
Conflict with Conveyance Agreements
 
25
         
10.16
 
Denbury Guaranty
 
25
         
10.17
 
Tax Opinion to Genesis MLP and Genesis Energy, Inc.
 
26

 
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PIPELINE PURCHASE AND SALE AGREEMENT
 
THIS PIPELINE PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered
into on this 30th day of May, 2008, by and between DENBURY ONSHORE, LLC (the
“Seller”), a Delaware limited liability company, and GENESIS FREE STATE
PIPELINE, LLC (the “Purchaser”), a Delaware limited liability company.  Seller
and Purchaser are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”
 
RECITALS:
 
Seller desires to sell to Purchaser, and Purchaser desires to purchase from
Seller, the Pipeline System (as hereinafter defined) and related assets on the
terms and conditions set forth in this Agreement.
 
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
 
ARTICLE I.
DEFINITIONS
 
1.1           Defined Words and Terms. Except where the context otherwise
indicates another or different meaning or intent, the following words and terms
as used herein shall have the meanings indicated:
 
(a)           The term “Affiliate” in reference to any Person, means and
includes any Person which directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person.  The term “control” (including the terms “controlling,” “controlled
by” and “under common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of any Person, whether through ownership of voting securities, by
contract or otherwise. For purposes of this Agreement only and without thereby
altering the determination of the existence of an affiliate relationship of
Purchaser and Seller for other circumstances, when used with reference to (i)
Purchaser, “Affiliate” shall include Genesis MLP, its subsidiaries and its
general partner, Genesis Energy, Inc., and (ii) Seller, “Affiliate” shall
include Denbury and its subsidiaries excluding those entities described in (i).
 
(b)           The term “Applicable Laws” means and includes any and all laws,
ordinances, orders, rules, regulations and other legal requirements of all
Governmental Bodies having jurisdiction over the use, occupancy, operation and
maintenance of the Pipeline System, as such may be amended or modified from time
to time.
 
(c)           The term “Effective Time” shall have the meaning set forth in
Section 3.1 below.
 
(d)           The term “Environmental Costs and Liabilities” means, with respect
to any Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all reasonable fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
of the foregoing by any other Person or in response to any violation of or
liability under any Environmental Law, to the extent based upon, related to, or
arising under or pursuant to any Environmental Law, Environmental Permit, order
or agreement with any Governmental Body or other Person, which relates to any
environmental condition, violation of Environmental Law or a Release or
threatened Release of Hazardous Materials, whether known or unknown, accrued or
contingent, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute.
 
 
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(e)           The term “Environmental Law” means any foreign, federal, state or
local statute, regulation, ordinance or other legal requirement as now or
hereafter in effect in any way relating to the protection of or regulation of,
the environment or natural resources, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App.
§ 5101 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et
seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42
U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §
136 et seq.), as those laws have been amended, any analogous laws and the
regulations promulgated pursuant thereto.
 
(f)           The term “Environmental Permit” means any Permit required by
Environmental Laws for the operation of the Pipeline System.
 
(g)           The term “Governmental Body” means any government or governmental
or regulatory body thereof, or political subdivision thereof, whether foreign,
federal, state, or local, or any agency, instrumentality or authority thereof,
or any court or arbitrator (public or private).
 
(h)           The term “Hazardous Material” means any substance, material or
waste which is regulated, classified, or subject to liability under or pursuant
to any Environmental Law, including, without limitation, petroleum and its
by-products, asbestos, polychlorinated biphenyls, radon, mold or other fungi,
and urea formaldehyde insulation.
 
(i)           The term “Knowledge” means as follows: (i) with respect to
Purchaser, the individuals listed on Exhibit 1.1(i)(1), or their respective
successors in the same or similar officer positions, shall be deemed to have
knowledge of a particular fact or other matter if such individual is consciously
aware of such fact or other matter at the time of determination after due
inquiry; and (ii) with respect to Seller, the individuals listed on Exhibit
1.1(i)(2), or their respective successors in the same or similar officer
positions, shall be deemed to have knowledge of a particular fact or other
matter if such individual is consciously aware of such fact or other matter at
the time of determination after due inquiry.
 
(j)           The term “Permits” means any approvals, authorizations, consents,
licenses, permits or certificates.
 
 
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(k)           The term “Permitted Encumbrances” shall mean: (a) any liens for
Pipeline System Taxes that are not yet due and payable; (b) materialmen’s,
mechanic’s, repairmen’s, employees’, contractors’ and other similar liens or
charges arising in the ordinary course of business; (c) all rights reserved to
or vested in any governmental, statutorial or public authority to control or
regulate any of the real property interests constituting a part of the Pipeline
System; and (d) easements, rights of way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the Pipeline System as it is currently being used or
materially interfere with the ordinary conduct of the Pipeline System.
 
(l)           The term “Person” means any individual, corporation, partnership,
firm, joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.
 
(m)           The term “Pipeline System” shall have the meaning set forth in
Section 2.1 below.
 
(n)           The term “Pipeline System Taxes” means all Taxes specifically
assessed against the Pipeline System, including Taxes imposed on the use,
occupancy or possession of the Pipeline System but specifically not including
any gross receipts, income or franchise taxes, or other taxes of the nature of
income taxes that are imposed upon the Pipeline System or the owner thereof.  
 
(o)           The term “Related Agreements” means those three (3) Meter Station
and Pipeline Lateral Easement and Road Use Agreements (“Easement and Road
Agreements”) between Purchaser as Grantee and Seller as Grantor, dated as of the
date hereof, made with respect to the Eucutta Field, the Soso Field, and the
Martinville Field, and those two (2) Agreements to Provide Electrical Power
(“Power Agreements”) between Seller and Purchaser, dated as of the date hereof,
made with respect to the Eucutta Field and the Soso Field.
 
(p)           The term “Release” means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, or leaching into
the indoor or outdoor environment, or into or out of any property.
 
(q)           The term “Remedial Action” means all actions to (i) clean up,
remove, treat or in any other way address any Hazardous Material; (ii) prevent
the threatened Release of any Hazardous Material so it does not endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv) to correct a condition of
non-compliance with Environmental Laws.
 
(r)           The term “Tax” or “Taxes” means, however denominated, (x) any and
all taxes, assessments, customs, duties, levies, fees, tariffs, imposts,
deficiencies and other governmental charges of any kind whatsoever (including,
but not limited to, taxes on or with respect to net or gross income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added, transfer,
real property transfer, transfer gains, transfer taxes, inventory, escheats,
unclaimed property, capital stock, license, payroll, employment, social
security, unemployment, severance, occupation, real or personal property,
estimated taxes, rent, excise, occupancy, recordation, bulk transfer,
intangibles, alternative minimum, doing business, withholding and stamp),
together with any interest thereon, penalties, fines, damages costs, fees,
additions to tax or additional amounts with respect thereto, imposed by any
federal, state or local taxing authority of any jurisdiction; (y) any liability
for the payment of any amounts described in clause (x) as a result of being a
member of an affiliated, consolidated, combined, unitary or similar group or as
a result of transferor or successor liability; and (z) any liability for the
payments of any amounts as a result of being a party to any tax sharing
agreement or as a result of any express or implied obligation to indemnify any
other person with respect to the payment of any amounts of the type described in
clause (x) or (y).
 
 
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(s)           The term “Tax Return” means any report, return, document,
declaration or other information or filing (including any amendments, elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to any federal, state or local taxing authority or
jurisdiction with respect to Taxes, including, where permitted or required,
combined or consolidated returns for any group of entities that includes either
Party or any subsidiary of any such Party, any documents with respect to or
accompanying payments of estimated taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information.
 
ARTICLE II.
DESCRIPTION OF PIPELINE SYSTEM
 
2.1           Description of Pipeline System.
 
(a)           As used herein, the term “Pipeline System” shall mean the existing
Free State pipeline system in Eastern Mississippi, which extends from the
upstream flange of the motor control valve which is downstream of Seller’s Free
State metering facilities at Seller’s Jackson Dome Field dehydration facilities
to the inlet valves which are downstream of all delivery points on the pipeline,
including the 4.4 mile lateral pipeline to the Martinville Field, as more
specifically described in Exhibit A.
 
(b)           The specific assets and properties comprising the Pipeline System
shall also include the following:
 
(i)           the pipeline comprising the Free State pipeline system (the
“Pipeline”);
 
(ii)          the surface leases, easements, rights of way, Permits and other
grants described in Exhibit B (collectively, the “Rights of Way”);
 
(iii)         the contracts, agreements and instruments listed in Exhibit C (the
“Contracts”);
 
(iv)         the motor control valves, side valves, and meters, as shown on
Exhibit A (the “Equipment”);

 
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(v)          as they may exist on the Closing Date, copies of all studies,
analyses, as-built drawings, blueprints, plans, constructions, specifications,
surveys, reports, diagrams, and repair records related to the Pipeline System;
 
(vi)         to the extent transferable to Purchaser, all warranties,
indemnities and guarantees to Seller from Seller’s vendors and suppliers with
respect to materials, goods or services supplied to Seller in connection with
the construction, operation, repair and maintenance of the Pipeline System; and
 
(vii)        all rights, claims or causes of action pertaining to the Pipeline
System.
 
(c)           Purchaser acknowledges that portions of the Pipeline System
(including lateral lines) are located on fee property owned by Seller and
Purchaser shall have access to such portions pursuant to Easement and Road
Agreements, as discussed hereunder, and Purchaser shall have power supplied to
such portions pursuant to Power Agreements, as discussed hereunder.
 
2.2           Assumed Liabilities.  At Closing, Purchaser shall assume and
timely perform, perform and discharge in accordance with their respective terms,
the following liabilities and obligations of Seller (collectively, the “Assumed
Liabilities”):
 
(a)           all liabilities and obligations of Seller with respect to the
Rights of Way or under the Contracts that are due or to be performed after the
Closing Date;
 
(b)           any transfer taxes applicable to the transfer of the Pipeline
System;
 
(c)           all liabilities and obligations relating to prorated Pipeline
System Taxes and other prorated amounts required to be paid by Purchaser arising
under Article VIII of, or arising elsewhere under, this Agreement; and
 
(d)           all other liabilities and obligations with respect to the Pipeline
System or the use, occupancy, ownership, maintenance or operation thereof,
including but not limited to liabilities and obligations for Pipeline System
Taxes not covered by Section 2.2(c) above, that first exist and arise, or are
due or to be performed, from and after the Effective Time on the Closing Date,
as those terms are defined in Article III below.
 
2.3           Excluded Liabilities
 
.  Notwithstanding anything hereinto the contrary, the Purchaser shall not and
does not assume or agree to pay, perform or discharge any Excluded
Liabilities.  The “Excluded Liabilities” means:
 
(a)           all liabilities and obligations of Seller with respect to the
Rights of Way or under the Contracts that are due or to be performed on or prior
to the Closing Date;
 
 
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(b)           all liabilities and obligations relating to prorated Pipeline
System Taxes and other prorated amounts required to be paid by Seller arising
under Article VIII of, or arising elsewhere under, this Agreement;
 
(c)           all other liabilities and obligations with respect to the Pipeline
System or the use, occupancy, ownership, maintenance or operation thereof that
first exist and arise, or are due to be performed prior to the Effective Time on
the Closing Date;
 
(d)           all liabilities and obligations of Seller for Taxes (expressly
excluding those transfer taxes specifically assumed by Purchaser pursuant to
Section 2.2(b) above and those Pipeline System Taxes expressly assumed by
Purchaser pursuant to Section 2.2(c) and Section 2.2(d) above); and
 
(e)           all other obligations or liabilities of Seller or otherwise
related to the Pipeline System not included within the definition of Assumed
Liabilities.
 
ARTICLE III.
PURCHASE AND SALE OF PIPELINE SYSTEM
 
3.1           Sale and Delivery of Pipeline System.  Upon the terms and subject
to the conditions set forth in this Agreement, at the Closing provided for in
Section 3.3, Seller shall sell, transfer, convey, assign and deliver to
Purchaser, and Purchaser shall purchase, acquire and accept from Seller, as of
the Effective Time (as defined below) on the Closing Date (as defined in Section
3.3 hereof), all of Seller’s right, title and interest in and to the Pipeline
System, free of all liens, charges, mortgages, security interests, pledges or
other encumbrances of any nature whatsoever, claimed by any party claiming by,
through or under Seller but not otherwise, except for Permitted
Encumbrances.  The “Effective Time” shall mean 7:00 a.m. Central Standard Time
on the Closing Date.
 
3.2           Consideration.  Upon the terms and subject to the conditions set
forth in this Agreement, in consideration of the aforesaid sale, conveyance,
assignment, transfer and delivery of all of Seller’s rights, title and interest
in and to the Pipeline System as provided in Section 3.1 above, Purchaser will
assume all Assumed Liabilities in connection with the Pipeline System from and
after Closing, and Purchaser shall pay to Seller consideration totaling
Seventy-Five Million and No/100 Dollars ($75,000,000) (the “Purchase Price”),
consisting of the following: (a) Fifty Million and No/100 Dollars ($50,000,000)
in immediately available funds to be paid to Seller by Federal Reserve wire
transfer, plus (b) issuance to Seller or its affiliates by Genesis Energy, L.P.
(“Genesis MLP”) of that number of Common Units of Genesis MLP representing
limited partner interest in Genesis MLP (“Genesis Common Units”) determined by
dividing Twenty-Five Million and No/100 Dollars ($25,000,000) by the average,
closing price on the American Stock Exchange of a Genesis Common Unit during the
five consecutive trading days ending on the date that is the second trading day
immediately following the Closing Date, and rounding such number of Genesis
Common Units up to the nearest whole number of Genesis Common Units.
 
 
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3.3           Closing.  The closing of the sale and purchase contemplated by
this Agreement (the “Closing”) shall take place on the date of this Agreement as
hereinabove stated.  The date on which the Closing occurs is referred to herein
as the “Closing Date.”
 
3.4           Allocation of Purchase Price.  The Purchase Price shall be
allocated among the assets and properties comprising the Pipeline System
acquired by the Purchaser from Seller pursuant to this Agreement, as shall
mutually be agreed to by the Purchaser and Seller on or before the Closing
Date.  Such agreed allocation of the Purchase Price shall be set forth on
Exhibit 3.4 attached hereto.  Purchaser and Seller agree that they shall use
these allocations to prepare, on a consistent basis, and file as required, Form
8594 under Section 1060 of the Internal Revenue Code and not to take any
position inconsistent therewith upon examination of any tax return, in any
refund claim, in any litigation, investigation or otherwise, unless required by
Applicable Laws or with the consent of the other Party.
 
3.5           Deliverables at Closing.
 
(a)           Simultaneously with the execution of this Agreement, at the
Closing, Seller is conveying the Pipeline System to Purchaser, and delivering to
Purchaser the following (the documents referred to in clauses (i) and (ii) below
being herein referred to as the “Conveyance Agreements”, and together with the
Transportation Services Agreement, Right of First Refusal and Option to Purchase
Agreement, Special Covenants and Representations Agreement, Proration Agreement,
Easement and Road Agreements and Power Agreements shall be collectively the
“Ancillary Agreements”):
 
(i)           a Pipeline Deed, Bill of Sale and Assignment of Rights of Way
Interest in substantially the form attached hereto as Exhibit 3.5(a)(i)
conveying the Pipeline and Equipment and the Rights of Way to Purchaser;
 
(ii)          a Assignment and Assumption of Contracts in substantially the form
attached hereto as Exhibit 3.5(a)(ii) assigning all Contracts comprising a part
of the Pipeline System to Purchaser;
 
(iii)         a certified copy of the resolutions of the Board of Managers of
Seller by which the disposition of the Pipeline System was authorized;
 
(iv)         a certificate of the Secretary or Assistant Secretary of Seller
evidencing the incumbency and specimen signature of the officer executing
documents to be delivered at the Closing on behalf of Seller;
 
(v)          a Transportation Services Agreement in substantially the form
attached hereto as Exhibit 3.5(a)(v) by and between Seller and Purchaser;
 
(vi)         a Right of First Refusal and Option to Purchase Agreement in
substantially the form attached hereto as Exhibit 3.5(a)(vi) by and between
Seller, Genesis Free State Holdings, LLC (“Genesis Holdings”) and Purchaser;
 
(vii)        a Special Covenants and Representations Agreement in substantially
the form attached hereto as Exhibit 3.5(a)(vii) by and between Seller, Genesis
Holdings and Genesis MLP;
 
 
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(viii)       any other agreements, documents, instruments and writings required
to be delivered by Seller to Purchaser at or prior to the Closing pursuant to
this Agreement;
 
(ix)          a legal opinion from counsel to the Seller in the form attached
hereto as Exhibit 3.5(a)(ix) (the “Seller’s Legal Opinion”);
 
(x)           a certification to Purchaser in a form acceptable to Purchaser as
required by regulations under Section 1445 of the Internal Revenue Code, that
Seller is not a “foreign person” within the meaning of Treasury Regulations
1.1445-2(b)(2)(i) (the “FIRPTA Affidavit”);
 
(xi)          all Required Consents (as defined in Section 6.1 below) set forth
in Exhibit 3.5(a)(xi)-(1), other than the Outstanding Consents (as defined in
Section 6.1 below) set forth in Exhibit 3.5(a)(xi)-(2) which will be subject to
Section 6.1 below;
 
(xii)         a Proration Agreement in substantially the form attached hereto as
Exhibit 3.5(a)(xii) by and between Seller and Purchaser;
 
(xiii)        all Easement and Road Agreements in substantially the form
attached hereto as Exhibit 3.5(a)(xiii) by and between Seller and Purchaser;
 
(xiv)        the Guaranty in the form attached hereto as Exhibit 3.5(a)(xiv)
executed by Denbury Resources Inc., in favor of Purchaser; and
 
(xv)         all Power Agreements in substantially the form attached hereto as
Exhibit 3.5(a)(xv) by and between Seller and Purchaser.
 
(b)           Simultaneously with the execution of this Agreement, at Closing,
Purchaser is delivering to Seller the following:
 
(i)           the cash portion of the Purchase Price;
 
(ii)          a certified copy of the resolutions of the sole Member of
Purchaser and the Audit Committee of Genesis MLP by which the acquisition of the
Pipeline System was authorized;
 
(iii)         a certificate of the Secretary or Assistant Secretary of Purchaser
evidencing the incumbency and specimen signature of the officer executing
documents to be delivered at the Closing on behalf of Purchaser;
 
 
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(iv)         a Transportation Services Agreement in substantially the form
attached hereto as Exhibit 3.5(a)(v) by and between Seller and Purchaser;
 
(v)          a Right of First Refusal and Option to Purchase Agreement in
substantially the form attached hereto as Exhibit 3.5(a)(vi) by and between
Seller, Genesis Holdings and Purchaser;
 
(vi)         a Special Covenants and Representations Agreement in substantially
the form attached hereto as Exhibit 3.5(a)(vii) by and between Seller, Genesis
Holdings and Genesis MLP;
 
(vii)        executed counterparts of the Conveyance Agreements;
 
(viii)       a legal opinion from counsel to Purchaser in the form attached
hereto as Exhibit 3.5(b)(viii) (the “Purchaser’s Legal Opinion”);
 
(ix)          a Proration Agreement in substantially the form attached hereto as
Exhibit 3.5(a)(xiii) by and between Seller and Purchaser;
 
(x)           any other agreements, documents, instruments and writings required
to be delivered by Purchaser to Seller at or prior to the Closing pursuant to
this Agreement;
 
(xi)          all Easement and Road Agreements in substantially the form
attached hereto as Exhibit 3.5(a)(xiv) by and between Seller and Purchaser;
 
(xii)         all Power Agreements in substantially the form attached hereto as
Exhibit 3.5(a)(xvii) by and between Seller and Purchaser; and
 
(xiii)        a copy of the tax opinion addressed to Genesis MLP and Genesis
Energy, Inc., referenced in Section 10.17 below.
 
(c)           On the fifth (5th) Business Day following the Closing, Purchaser
will  deliver to Seller the Genesis Common Units.
 
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
 
Seller hereby represents and warrants to Purchaser that as of the Closing Date:
 
4.1           Organization and Authority.  Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to transact business in the State of
Mississippi, and has full power and authority to enter into this Agreement and
to carry out the transactions contemplated hereby.  Seller and its applicable
Affiliates have full power and authority to enter into the Ancillary Agreements
and each other agreement, instrument, certificate, exhibit, schedule or other
document that is required by this Agreement to be executed by Seller or its
Affiliates at Closing and to carry out the transactions contemplated
thereby.  The execution and delivery of this Agreement, the Ancillary Agreements
and the Other Seller Documents (as defined in Section 4.2 below), and the
consummation of the transactions contemplated hereby and thereby by Seller and
its applicable Affiliates have been duly and validly authorized by all necessary
action of Seller and its applicable Affiliates.
 
 
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4.2           Execution and Effect.  This Agreement and the Ancillary Agreements
have been (and at Closing each other agreement, instrument, certificate,
exhibit, schedule or other document that is required by this Agreement to be
executed and delivered by Seller or its Affiliates, which are herein called
collectively the “Other Seller Documents”) duly and validly executed and
delivered by Seller and its applicable Affiliates and assuming the due
authorization, execution and delivery of this Agreement and Ancillary Agreements
and such other documents to which Purchaser is a party by Purchaser, constitutes
a valid, binding and enforceable obligation of Seller and its applicable
Affiliates; subject, however, to the effect of bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect relating
to the rights and remedies of creditors, as well as to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
 
4.3           No Violation.  Neither the execution and delivery of this
Agreement, the Ancillary Agreements or the Other Seller Documents by Seller and
its applicable Affiliates nor the consummation by Seller and its applicable
Affiliates of the transactions contemplated hereby or thereby (a) violates any
provision of the Limited Liability Company Agreement of Seller or the formation
documents of such applicable Affiliates, (b) subject to obtaining the
Outstanding Consents which are set forth on Exhibit 3.5(a)(xi)-(2), constitutes
a breach of or default under (or an event that, with the giving of notice or
passage of time or both, would constitute a breach of or default under), or will
result in the termination of, or accelerate the performance required by, or
result in the creation or imposition of any security interest, lien, charge or
other encumbrance upon Seller’s interest in the Pipeline System under, any
material contract, commitment, understanding, agreement, arrangement or
restriction of any kind or character to which Seller is a party or by which
Seller or any of its assets are bound ((provided, however, that this Section 4.3
shall not be construed as constituting a representation or warranty as to either
(i) whether or not any of the Outstanding Consents, which are set forth on
Exhibit 3.5 (a)(xi)-(2), will be obtained or (ii) the effect of failing to
obtain any such Outstanding Consent), or (c) violates in any material respect
any statute, law, regulation or rule, or any judgment, decree, writ or
injunction or any Governmental Body applicable to Seller or any of its assets.
 
4.4           Title to Rights of Way.  Except as set forth on Schedule 4.4, the
Rights of Way (including easements and other non-fee property) identified in
Exhibit B constitute all material Rights of Way encompassing, relating to, or
required for the proper operation of, the Pipeline System, and Seller has title
thereto, free and clear of all liens, charges, mortgages, security interests,
pledges or other encumbrances of any nature whatsoever, claimed by any party
claiming by, through or under Seller but not otherwise, except for the Permitted
Encumbrances.
 
4.5           Title to Pipeline and Equipment.  The Equipment shown on Exhibit A
constitutes all material motor control, side valves and meters relating to, or
required for the proper operation of, the Pipeline System, and Seller has title
thereto, free and clear of all liens, claims, charges, mortgages, security
interests, pledges or other encumbrances of any nature whatsoever, claimed by
any party claiming by, through or under Seller but not otherwise, except for the
Permitted Encumbrances (to the extent same pertain to or affect Equipment).
 
 
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4.6           Litigation.  Except as set forth in Schedule 4.6 and to Seller’s
Knowledge: (a) there are no judgments, orders, writs or injunctions of any
Governmental Body, presently in effect or pending or threatened, against Seller
with respect to its interest in the Pipeline System or the operation thereof,
or, which, if adversely determined, would impair or prohibit the consummation of
the transaction contemplated hereunder or under the Ancillary Agreements,
(b) there are no claims, actions, suits or proceedings by or before any
Governmental Body pending or threatened by or against Seller with respect to its
interest in the Pipeline System or the operation thereof, and (c) the Pipeline
System is not the subject of any pending or threatened claim, demand, or notice
of violation or liability from any Person.
 
4.7           Compliance with Applicable Law.  Except (a) as disclosed in
Schedule 4.7 and (b) with respect to Environmental Law, which are addressed in
Section 4.11(b) below, to Seller’s Knowledge, Seller has complied with all
material provisions of all Applicable Laws, judgments and decrees applicable to
its operation and use of the Pipeline System as presently conducted and Seller
has not received any written notification, and is not aware of any planned
written notification, that it is not presently in compliance therewith.
 
4.8           Condition of Pipeline System.  Except as disclosed in Schedule
4.8, the Pipeline System is in good operating condition, complies with
Applicable Laws and meets prevailing industry standards for operation and use.
 
4.9           Taxes.  All Tax Returns required to be filed by federal, state or
local laws with respect to the Pipeline System Taxes prior to Closing have been
filed by Seller prior to Closing, and all Pipeline System Taxes imposed or
assessed, whether federal, state or local, which are due or payable for any
period ending on or prior to the Closing Date, have been paid or provided for
prior to Closing.
 
4.10           Preferential Purchase Rights.  There are no preferential purchase
rights, options, or other rights in any Person not a party to this Agreement, to
purchase or acquire any interest in the Pipeline System, in whole or in part.
 
4.11           Environmental Matters.
 
(a)           Except as disclosed in Schedule 4.11(a), (i) Seller has not
received any written notification that asserts (and does not have any Knowledge)
that any portion of the Pipeline System is not in compliance with applicable
Environmental Law and (ii) to Seller’s Knowledge, no condition or circumstance
exists which would give rise to any Environmental Costs and Liabilities related
to the Pipeline System.
 
(b)           Except as disclosed in Schedule 4.11(b), (i) all of the
Environmental Permits have been granted by the appropriate authority and (ii)
are valid and in full force and effect. There are no material actions or
proceedings for the revocation thereof or any other material action or
proceeding before any Governmental Body involving any Environmental Permit.

 
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4.12           Contracts and Rights of Way.  Other than the Rights of Way,
Exhibit C contains a list of the contracts, agreements and other documents and
instruments to which Seller or any of its Affiliates is a party or otherwise
constituting part of the Pipeline System, and each such Contract is in full
force and effect.  The Contracts, together with the Rights of Way and the
Ancillary Agreements constitute all of the material contracts, agreements,
rights of way, licenses, permits, and other documents and instruments required
for the operation and business of the Pipeline System.  Except for obtaining the
Outstanding Consents, Seller and its applicable Affiliates have performed all
material obligations required to be performed by them to date under the
Contracts and the Rights of Way, and are not in default under any obligation of
any such contract or Right of Way. To the Seller’s Knowledge, no other party to
any Contract or Right of Way is in default thereunder.
 
4.13           Disclosure.  The representations and warranties contained in this
Article IV do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article IV not misleading.  To Seller’s Knowledge,
there is no fact that has not been disclosed in this Agreement or the Exhibits
that has or could be reasonably expected to impair the ability of Seller to
perform this Agreement, any undertaking herein or the transactions contemplated
hereby or the Ancillary Agreements.
 
4.14           No Unsatisfied Liabilities.  There are no debts, liabilities or
obligations of the Seller secured by or burdening the Pipeline System other than
(i) such debts, liabilities or obligations that will be satisfied, or the
security interest released, in full at or prior to Closing and (ii) such
obligations to be performed following the Closing Date under the terms of the
Rights of Way and Contracts or imposed by Applicable Law.
 
4.15   Fairness Opinion.   Seller has received a fairness opinion regarding the
fairness from a financial point of view to Seller of the Purchase Price to be
received by Seller hereunder issued to Seller by Morgan Stanley Co. Incorporated
and a true, correct and complete copy of such fairness opinion has been provided
to Purchaser prior to the Closing Date.
 
4.16           Investment Intent; Investment Experience; Restricted
Securities.  Seller is an “accredited investor” within the meaning of Rule 501
of Regulation D under the Securities Act of 1933; (ii) has sufficient knowledge
and experience in investing so as to be able to evaluate the risks and merits of
its investment in Genesis MLP and it is able financially to bear the risks
thereof; (iii) has received or has had full access to all the information it has
requested and considers necessary or appropriate to make an informed investment
decision with respect to the Genesis Common Units to be acquired by Seller; (iv)
is acquiring such Genesis Common Units for its own account for the purpose of
investment and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933; (v) has
made its own independent inquiry into and an independent judgment concerning,
Genesis MLP and such Genesis Common Units; (vi) understands that such Genesis
Common Units have not been registered under the Securities Act of 1933; and
(vii) understands and agrees that such Genesis Common Units may not be sold,
pledged, hypothecated or otherwise transferred except pursuant to an applicable
exemption from registration under the Securities Act of 1933 and other
applicable securities laws.
 
 
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Purchaser hereby represents and warrants to Seller that as of the Closing Date:
 
5.1           Organization and Authority.  Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and is (or on or prior to the Closing will be) duly
qualified to transact business in the State of Mississippi, and has full power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. Purchaser and its applicable Affiliates have full power and
authority to enter into the Ancillary Agreements and each other agreement,
instrument, certificate, exhibit, schedule or other document that is required by
this Agreement to be executed by Purchaser or its Affiliates at Closing and to
carry out the transactions contemplated thereby.  The execution and delivery of
this Agreement, the Ancillary Agreements and the Other Purchaser Documents (as
defined in Section 5.2 below) and the consummation of the transactions
contemplated hereby and thereby by Purchaser and its applicable Affiliates have
been duly and validly authorized by all necessary action of Purchaser and its
applicable Affiliates.
 
5.2           Execution and Effect.  This Agreement and the Ancillary Agreements
have been (and at Closing each other agreement, instrument, certificate,
exhibit, schedule or other document that is required by this Agreement to be
executed and delivered by Purchaser or its Affiliates, which are herein called
collectively the “Other Purchaser Documents”) duly and validly executed and
delivered by Purchaser and its applicable Affiliates and, assuming the due
authorization, execution and delivery of this Agreement, Ancillary Agreements
and such other documents to which Seller is a party by Seller, constitutes a
valid, binding, and enforceable obligation of Purchaser and its applicable
Affiliates; subject, however, to the effect of bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect relating
to the rights and remedies of creditors, as well as to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
 
5.3           No Violation.  Neither the execution and delivery of this
Agreement, the Ancillary Agreements or the Other Purchaser Documents by
Purchaser and its applicable Affiliates nor the consummation by Purchaser and
its applicable Affiliates of the transactions contemplated hereby or thereby
(a) violates any provision of the Limited Liability Company Agreement of
Purchaser or the formation documents of such applicable Affiliates; (b)
constitutes a material breach of or default under (or an event that, with the
giving of notice or passage of time or both, would constitute a material breach
of or default under), or will result in the termination of, or accelerate the
performance required by, or result in the creation or imposition of any security
interest, lien, charge or other encumbrance upon any of the assets of Purchaser
under, any material contract, commitment, understanding, agreement, arrangement
or restriction of any kind or character to which Purchaser is a party or by
which Purchaser or any of its assets are bound, or (c) violates in any material
respect any statute, law, regulation or rule, or any judgment, decree, order,
writ or injunction of any Governmental Body applicable to Purchaser or any of
its assets.
 

 
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5.4           Sufficiency of Funds. At Closing, Purchaser has funds sufficient
to consummate the transactions contemplated hereby.
 
5.5           Disclaimer. PURCHASER HAS MADE SUCH INDEPENDENT INSPECTIONS,
ESTIMATES, COMPUTATIONS, REPORTS, STUDIES, AND EVALUATIONS OF THE PIPELINE
SYSTEM AS IT DESIRED AND HAS SATISFIED ITSELF PRIOR TO THE CLOSING WITH RESPECT
TO THE CONDITION OF THE PIPELINE SYSTEM. PURCHASER FURTHER ACKNOWLEDGES THAT
SELLER HAS NOT MADE AND IS NOT MAKING ANY REPRESENTATION OR WARRANTY CONCERNING
THE PRESENT OR FUTURE VALUE OF THE POSSIBLE INCOME, COSTS OR PROFITS IF ANY, TO
BE DERIVED FROM THE PIPELINE SYSTEM.  
 
FURTHERMORE, PURCHASER ACKNOWLEDGES THAT THE PIPELINE SYSTEM HAS BEEN USED PRIOR
TO THE CLOSING FOR THE TRANSPORTATION OF CARBON DIOXIDE. PURCHASER ACKNOWLEDGES
THAT (A) IT HAS HAD ACCESS TO AND AN OPPORTUNITY TO INSPECT THE PIPELINE SYSTEM
FOR ALL PURPOSES, INCLUDING, WITHOUT LIMITATION, FOR THE PURPOSES OF DETECTING
THE PRESENCE OF HAZARDOUS OR TOXIC SUBSTANCES, ENVIRONMENTAL HAZARDS AS OTHER
CONTAMINATION OR POLLUTION, (B) IT HAS SATISFIED ITSELF AS TO THE PHYSICAL AND
ENVIRONMENTAL CONDITION OF THE PIPELINE SYSTEM AND (C) IN MAKING THE DECISION TO
ENTER INTO THIS AGREEMENT AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY,
PURCHASER HAS RELIED SOLELY ON ITS OWN INDEPENDENT INVESTIGATION OF THE PIPELINE
SYSTEM, THE RECORDS AND ENVIRONMENTAL REPORTS RELATED THERETO AND THE EXPRESS
REPRESENTATIONS, WARRANTIES AND COVENANTS AND AGREEMENTS OF SELLER IN THIS
AGREEMENT.
 
NOTWITHSTANDING THE FOREGOING, PURCHASER AND SELLER ACKNOWLEDGE AND AGREE THAT
NOTHING CONTAINED IN THIS SECTION 5.5 SHALL LIMIT THE SELLER’S INDEMNIFICATION
OBLIGATIONS PROVIDED IN ARTICLE VII OF THIS AGREEMENT OR THE ALLOCATION OF THE
ASSUMED LIABILITIES AND THE EXCLUDED LIABILITIES PROVIDED FOR UNDER THIS
AGREEMENT.
 
5.6           Evaluation by Purchaser.           By reason of Purchaser’s
Knowledge and experience in the evaluation, acquisition and operation of similar
properties, Purchaser has evaluated the merits and risks of purchasing the
Pipeline System and has formed an opinion based solely upon Purchaser’s
Knowledge and experience and upon Seller’s representations and warranties set
forth in Article IV hereof and Seller’s and Purchaser’s other agreements
contained herein and not upon any other representations or warranties made by
Seller or any of its representatives.
 
5.7           Fairness Opinion.   Purchaser represents that the Audit Committee
of the Board of Directors of the general partner of Genesis MLP has received the
opinion of Credit Suisse Securities (USA) LLC to the effect that, as of the date
of such opinion, (i) the Purchase Price provided for under this Agreement and
(ii) the  Consideration  as defined in and provided for under the  Closing
Agreement by and between Denbury Onshore, LLC and Genesis NEJD Pipeline, LLC ,
in the aggregate, is fair, from a financial point of view, to Genesis MLP.
 
 
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5.8           Compliance with Laws.  Purchaser shall promptly obtain, or have
transferred to its name, and maintain all permits or consents required by public
or private parties in connection with the Pipeline System purchased.
 
5.9           Disclosure.  The representations and warranties contained in this
Article V do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article V not misleading.  To the Purchaser’s
Knowledge, there is no fact that has not been disclosed in this Agreement, that
has or could be reasonably expected to impair the ability of Purchaser to
perform this Agreement, any undertaking herein or the transactions contemplated
hereby.
 
ARTICLE VI.
OTHER AGREEMENTS AND OBLIGATIONS OF THE PARTIES
 
6.1           Assignments Requiring Consents, Preferential Purchase Rights.
 
(a)           Exhibit 3.5(a)(xi)-(1) sets forth all consents of any third-party
required in connection with the assignment of any rights of Seller under Rights
of Way, including Environmental Permits or any occupational health or safety
laws, licenses, franchises or any other assets comprising a part of the Pipeline
System (the “Required Consents”).  All Required Consents that have not been
obtained as of the Closing Date are set forth on Exhibit 3.5(a)(xi)-(2) (the
“Outstanding Consents”). Seller shall, subject to the terms of this Section 6.1,
use commercially reasonable efforts to obtain all Outstanding Consents within a
reasonable time following Closing. The refusal of any third-party (other than an
Affiliate of Seller) to give any Outstanding Consent or the fact or claim that
the attempted assignment of any rights by Seller is ineffective because of the
failure to obtain any Outstanding Consent shall not constitute a breach of any
of the representations, warranties or covenants of Seller hereunder, including,
without limitation, the representation and warranty in Section 4.3(b), provided
that Seller complies with this Section 6.1, and further assists Purchaser in
making or seeking alternative arrangements (including, but not limited to,
granting right-of-way licenses to Purchaser). Purchaser also agrees that it
shall have no claim against Seller based upon any failure to obtain any
Outstanding Consent (provided that Seller shall otherwise comply with the terms
of this Agreement, including this Section 6.1).
 
(b)           In each instance where an Outstanding Consent has not been
obtained as of the Closing, Seller shall, for no additional consideration, to
the extent permitted by Applicable Law or the terms of the applicable contract,
enter into such alternative arrangements and agreements with Purchaser as may be
appropriate in order to permit Purchaser to realize, receive, and enjoy
substantially similar rights and benefits and to enable Purchaser to conduct the
operation of the Pipeline System until such consents are obtained.  If, after
the exercise of efforts consistent with the standard set forth in clause (a)
immediately above, any such Outstanding Consents are not obtained, to the extent
permitted by Applicable Law or the terms of the applicable contract, Seller
shall cooperate with Purchaser in any reasonable efforts of Purchaser to provide
for alternative arrangements (including, but not limited to, the obtaining by
Purchaser of new right-of-way licenses) designed to provide for the benefit of
Purchaser any and all rights of Seller in and to such right-of-way grant. To the
extent an assignment of a right-of-way grant is prohibited by law or otherwise,
nothing herein shall constitute or be construed as an attempt of an assignment
thereof.
 
 
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(c)           Notwithstanding anything to the contrary stated in this Section
6.1, Purchaser assumes the risk of any transfer restrictions or renegotiation
requirements associated with, or the expiration of, any Rights of Way, Permits,
franchises, Contracts or other agreements applicable to the Pipeline System.
 
6.2           No Solicitation of Employees.  For a period of one (1) year
following the Closing, Purchaser will not, without Seller’s prior written
consent, directly or indirectly, (i) cause or attempt to cause any employee of
Seller to terminate his or her employment relationship with Seller, (ii)
interfere or attempt to interfere with the relationship between the Seller and
any employee of Seller, or (iii) solicit or attempt to solicit any employee of
Seller; provided, however, that the restrictions set forth in this Section 6.2
shall not be applicable with respect to any employee who is terminated by Seller
after the Closing or who is solicited by Purchaser with the written consent of
Seller.
 
6.3           Incidental Contamination.  Purchaser acknowledges that the
Pipeline System may contain Naturally Occurring Radioactive Material ("NORM") in
various potential forms.  Purchaser also expressly understands that special
procedures may be required for the remediation, removal, transportation and
disposal of NORM from the inside or outside of the piping, equipment and other
personal property included of the Pipeline System.  Notwithstanding any contrary
provision or definition contained herein, in connection with these substances
affixed to the inside or outside of the piping, equipment and other personal
property included of the Pipeline System, Purchaser expressly assumes all
liability for or in connection with the future abandonment and removal of the
pipelines, tanks, equipment and other personal property included in the Pipeline
System and the assessment, remediation, removal, transportation and disposal of
any such pipelines, equipment and personal property and associated activities in
accordance with all relevant rules, regulation and requirements of governmental
authorities.
 
6.4           Document Retention.
 
(a)           Within 60 days after Closing, Seller shall turn over to Purchaser
at Seller’s offices copies of the following types of records and information
relating to the Pipeline System, in each case to the extent same are reasonably
necessary for the ownership of the Pipeline System by Purchaser: studies,
analyses, as-built drawings, blueprints, plans, constructions, specifications,
surveys, reports, diagrams, and repair records related to the Pipeline
System.  Seller and Purchaser agree to cooperate with each other and act in good
faith in connection with the turnover of records and information pursuant to
this Section 6.4.
 
(b)           Seller and Purchaser agree that documents and materials relating
to the Pipeline System held by either Party shall be open for inspection by the
other Party at reasonable times and upon reasonable notice during regular
business hours for such period following the Closing Date as may be required by
law or governmental regulation, and that the other Party may during such period
at its expense make such copies thereof as it may reasonably request.
 
(c)           From and after the Closing Date, Seller and Purchaser shall use
their reasonable efforts to afford the other access to its employees who are
familiar with the operations of the Pipeline System for proper corporate
purposes, including, without limitation, the defense of legal proceedings. Such
access may include interviews or attendance at depositions or legal proceedings;
provided, however, that in any event all expenses (including wages and salaries)
reasonably incurred by either Party in connection with this Section 6.4(c) shall
be paid or promptly reimbursed by the Party requesting such services.
 
 
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6.5           Further Assurances.  Upon the request of Seller, Purchaser agrees
to execute and deliver mutually agreeable, specific assumption agreements with
respect to the obligations and liabilities assumed by Purchaser pursuant to this
Agreement.  Each Party agrees to comply with all notice or other requirements
necessary or required by Applicable Laws in connection with the transactions
contemplated by this Agreement and Purchaser’s assumption of obligations and
liabilities hereunder.
 
ARTICLE VII.
SURVIVAL OF OBLIGATIONS; INDEMNIFICATION
 
7.1           Survival of Obligations.  The representations, warranties,
covenants and agreements of the Parties contained in this Agreement shall
survive the Closing and claims may be asserted with respect thereto to the
extent permitted by this Article VII.
 
7.2           Indemnification by Seller.
 
(a)           Subject to Section 7.5 below, Seller hereby agrees to indemnify
and hold Purchaser, its Affiliates and each of their respective directors,
officers, employees, Affiliates, contractors, agents, attorneys,
representatives, successors and permitted assigns (collectively, the “Purchaser
Indemnified Parties”) harmless from and against:
 
(i)           any and all losses, liabilities, obligations, damages, actions,
suits, proceedings, investigations, complaints, claims, demands, assessments,
judgments, penalties, fines, costs, expenses and fees (including court costs and
attorneys’ fees and expenses), but subject to Section 7.7 below (individually, a
“Loss” and, collectively, “Losses”) to the extent based upon or arising from or
out of:
 
(A)         any breach of the representations, warranties, covenants or
agreements made by Seller or its Affiliates in this Agreement, the Ancillary
Agreements or in the Conveyance Agreements; or
 
(B)          any Excluded Liabilities.
 
(ii)           any and all Environmental Costs and Liabilities to the extent
based upon or arising from or out of any condition first existing prior to the
Closing Date, or act or omission by Seller or any of its Affiliates on or prior
to the Closing Date with respect to the Pipeline System, or Seller’s (or its
Affiliates’) use, ownership, occupancy, operation or maintenance thereof.  To
the extent that any Losses are also Environmental Costs and Liabilities,
Seller’s only indemnification obligation regarding such Losses will be under
this Section 7.2(a)(ii).  
 
 
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(iii)          To the extent covered by an indemnification obligation in this
Agreement, Losses and Environmental Costs and Liabilities, are individually
referred to herein as a “Covered Loss” and collectively referred to herein as
“Covered Losses.”
 
(b)           Purchaser acknowledges and agrees that Seller shall not have any
liability under any provision of this Agreement for any Covered Loss pursuant to
Section 7.2 to the extent that such Covered Loss results from action or omission
by Purchaser determined by final, non-appealable order to constitute gross
negligence or willful misconduct of Purchaser after the Closing Date.  Without
in any manner limiting Seller’s indemnification obligations in this Article VII,
Purchaser shall take and cause its Affiliates to take all reasonable steps to
mitigate any Covered Loss with respect to which indemnification is provided to
Purchaser by Seller under this Section 7.2 upon becoming aware of any condition
or event which would reasonably be expected to, or does, give rise thereto,
including incurring costs only to the minimum extent necessary to remedy the
breach which gives rise to any Covered Loss.
 
7.3           Indemnification by Purchaser.
 
(a)           Subject to Section 7.5, Purchaser hereby agrees to indemnify and
hold Seller, its Affiliates and each of their respective directors, officers,
employees, Affiliates, contractors, agents, attorneys, representatives,
successors and permitted assigns (collectively, the “Seller Indemnified
Parties”) harmless from and against:
 
(i)           any and all Losses to the extent based upon or arising from or out
of:
 
(A)         any breach of the representations, warranties, covenants or
agreements made by Purchaser or its Affiliates in this Agreement, the Ancillary
Agreements or the Conveyance Agreements; or
 
(B)          any Assumed Liabilities.
 
(ii)           any and all Environmental Costs and Liabilities to the extent
based upon or arising from or out of any condition first existing after the
Closing Date, or act or omission by Purchaser or any of its Affiliates after the
Closing Date with respect to the Pipeline System, or Purchaser’s (or its
Affiliates’) use, ownership, occupancy, operation or maintenance thereof.  To
the extent that any Losses are also Environmental Costs and Liabilities,
Purchaser’s only indemnification obligation regarding such Losses will be under
this Section 7.3(a)(ii).
 
(b)           Seller acknowledges and agrees that Purchaser shall not have any
liability under any provision of this Agreement for any Covered Loss pursuant to
Section 0 to the extent that such Covered Loss results from action or omission
by Seller determined by final, non-appealable order to constitute gross
negligence or willful misconduct of Seller after the Closing Date.  Without in
any manner limiting Purchaser’s indemnification obligations in this Article VII,
Seller shall take and cause its Affiliates to take all reasonable steps to
mitigate any Covered Loss with respect to which indemnification is provided to
Seller by Purchaser under this Section 7.3 upon becoming aware of any condition
or event which would reasonably be expected to, or does, give rise thereto,
including incurring costs only to the minimum extent necessary to remedy the
breach which gives rise to any such Covered Loss.
 
 
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7.4           Indemnification Procedures.
 
(a)           In the event that any claims shall be instituted or asserted by
any Person in respect of which indemnification may be sought under Section 7.2
or 7.3 hereof, regardless of the limitations set forth in Section 7.5 (an
“Indemnifiable Claim”), the indemnified party shall reasonably and promptly
cause notice of such Indemnifiable Claim of which it has knowledge to be
forwarded to the indemnifying party, provided, however, that the omission to so
notify such indemnifying party shall not relieve such indemnifying party from
any liability which such indemnifying party may have to the indemnified party
unless it is determined by non-appealable, final order that such indemnifying
party is materially prejudiced in its defense by reason of such delay.  The
indemnifying party shall have the right, at its sole option and expense, and
using counsel of its choice, which must be reasonably satisfactory to the
indemnified party, to elect to defend against, negotiate, settle or otherwise
deal with any such Indemnifiable Claim, subject to the limitations set forth in
this Section 7.4.  The indemnifying party shall within thirty (30) days (or
sooner, if the nature of the Indemnifiable Claim so requires) of receiving
notice thereof from the indemnified party, notify the indemnified party whether
or not it elects to defend against, negotiate, settle or otherwise deal with any
such Indemnifiable Claim.  If the indemnifying party elects not to defend
against, negotiate, settle or otherwise deal with any Indemnifiable Claim, or if
the indemnifying party fails to notify the indemnified party within thirty (30)
days (or sooner, if the nature of the Indemnifiable Claim so requires) whether
or not it so elects, the indemnified party may defend against, negotiate, settle
or otherwise deal with such Indemnifiable Claim.  If the indemnifying party does
elect to defend against, negotiate, settle or otherwise deal with any such
Indemnifiable Claim, the indemnified party may participate, at his or its own
expense, in dealing with such Indemnifiable Claim; provided, however, that such
indemnified party shall be entitled to so participate with separate counsel at
the expense of the indemnifying party, and further provided, that the
indemnifying party shall not be required to pay for more than one such counsel
for all indemnified parties in connection with any Indemnifiable Claim. The
parties hereto agree to cooperate fully with each other in connection with the
defense, negotiation or settlement, or otherwise dealing with, any such
Indemnifiable Claim.  Notwithstanding anything in this Section 7.4 to the
contrary, neither the indemnifying party nor the indemnified party shall,
without the written consent of the other party, settle or compromise any
Indemnifiable Claim, or permit a default judgment or consent to entry of any
judgment with respect to such Indemnifiable Claim, unless the claimant and such
party provide to such other party an unqualified release from all liability in
respect of the Indemnifiable Claim.  If the indemnifying party makes any payment
on any Indemnifiable Claim, the indemnifying party shall be subrogated, to the
extent of such payment, to all rights and remedies of the indemnified party to
any insurance benefits or other rights of the indemnified party with respect to
such Indemnifiable Claim.
 
7.5           Certain Limitations on Indemnification.
 
(a)           Notwithstanding anything herein to the contrary, in order to be
entitled to indemnification (i) under Sections 7.2(a)(i)(A) or 7.3(a)(i)(A), a
Party must give written notice (providing reasonable detail) to the other Party
of any such Covered Loss with respect to which it seeks indemnification prior to
the expiration of the fifth (5th) anniversary of the Closing Date (the “Fifth
Anniversary”), (ii) with respect to all other Covered Losses, a Party must give
written notice (providing reasonable detail) to the other Party of any such
Covered Loss with respect to which it seeks indemnification at any time
following the Closing Date.  Except as provided above, any right to
indemnification under Sections 7.2(a)(i)(A) or 7.3(a)(i)(A) for a Covered Loss
of which notice is not given by a Party on or prior to the Fifth Anniversary
will be irrevocably and unconditionally released and waived.
 
 
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(b)           Notwithstanding any other provision of this Article VII, neither
Seller nor Purchaser shall have any indemnification obligations for Covered
Losses under Sections 7.2(a)(i)(A) or 7.3(a)(i)(A), (i) for any individual
Covered Loss in an amount less than $50,000 and (ii) in respect of each
individual Covered Loss in an amount equal to or greater than $50,000, unless
the aggregate amount of all such Covered Losses exceeds $250,000   In no event
shall the aggregate indemnification to be paid by Seller under Section
7.2(a)(i)(A) exceed $15,000,000.  In no event shall the aggregate
indemnification to be paid by Purchaser under Section 7.3(a)(i)(A) exceed
$15,000,000.
 
(c)           No representation or warranty of Seller contained herein shall be
deemed untrue or incorrect, and Seller shall not be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
circumstance or event of which is disclosed in response to another
representation or warranty contained in this Agreement.
 
(d)           ALL RELEASES, DISCLAIMERS, LIMITATIONS ON LIABILITY, AND
INDEMNITIES IN THIS AGREEMENT, INCLUDING THOSE IN THIS ARTICLE VII SHALL APPLY
EVEN IN THE EVENT OF THE SOLE, JOINT AND/OR CONCURRENT NEGLIGENCE, STRICT
LIABILITY OR FAULT OF THE PARTY WHOSE LIABILITY IS RELEASED, DISCLAIMED, LIMITED
OR INDEMNIFIED.
 
7.6           Tax Treatment of Indemnity Payments. Seller and Purchaser agree to
treat any indemnity payment made pursuant to this Article VII as an adjustment
to the Purchase Price for federal, state and local income tax purposes.
 
7.7           No Consequential Damages.  Notwithstanding anything to the
contrary elsewhere in this Agreement, no Party shall, in any event, be liable to
any other Party or such other Party’s Related Indemnified Parties (the Seller’s
Related Indemnified Parties are the Persons other than Seller included in the
Seller Indemnified Parties and the Purchaser’s Related Indemnified Parties are
the Person’s other that Purchaser included in the Purchaser Indemnified Parties)
for any consequential, incidental, indirect, special or punitive damages of such
other Party or such other Party’s Related Indemnified Parties, including loss of
future revenue, income or profits, diminution of value or loss of business
reputation or opportunity relating to the breach or alleged breach hereof;
provided, however, that a Party may be liable to the other Party or such other
Party’s Related Indemnified Parties for consequential, incidental, indirect,
special or punitive damages (including loss of future revenue, income or
profits, diminution in value or loss of business reputation or opportunity
relating to the breach or alleged breach hereof) paid by such other Party or
such other Party’s Related Indemnified Parties to a third party which are part
of a Covered Loss with respect for which indemnification is provided under this
Article VII.
 
 
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7.8           Exclusive Remedy.  The sole and exclusive remedy for any breach or
inaccuracy, or alleged breach or inaccuracy, of any representation or warranty
in this Agreement or any covenant or agreement to be performed on or after the
Closing Date or otherwise related to this transaction, shall be indemnification
in accordance with this Article VII or any other express indemnification
provisions in this Agreement. In furtherance of the foregoing, the parties
hereby waive, to the fullest extent permitted by applicable law, any and all
other rights, claims and causes of action (including rights of contribution
under Environmental Laws or otherwise, if any) known or unknown, foreseen or
unforeseen, which exist or may arise in the future, that it may have against
Seller or Purchaser, as the case may be, arising under or based upon any
federal, state or local law (including any such Environmental Law relating to
environmental matters or arising under or based upon any securities law, common
law or otherwise).
 
ARTICLE VIII.
TAXES -PRORATIONS AND ADJUSTMENTS
 
8.1           Proration.  At Closing, Purchaser and Seller have entered into a
Proration Agreement, substantially the form attached hereto as Exhibit
3.5(a)(xiii) which agreement includes without limitation, a mechanism to
reconcile the payment obligations for Pipeline System Taxes, fees and other
costs relating to the Pipeline System as follows:
 
(a)           All Pipeline System Taxes for a period that straddles (i.e. that
begins before and ends after) the Closing Date (hereinafter referred to as a
“Straddle Period”) shall be prorated between Purchaser and Seller as of the
Closing Date based upon the number of days during the applicable Straddle Period
each party owned the Pipeline System, with the Purchaser being treated as the
owner on the Closing Date.  For purposes of this Agreement, Pipeline System
Taxes shall be prorated between Purchaser and Seller as of the Closing Date
regardless of when such Pipeline System Taxes are actually billed and
payable.  At Closing, Seller’s pro rata portion of any unpaid Pipeline System
Taxes for a Straddle Period shall be deducted from the Purchase Price to be paid
to Seller.  At Closing, Purchaser’s pro rata portion of any Pipeline System
Taxes for a Straddle Period that have been previously paid by Seller shall be
added to the Purchase Price to be paid by Purchaser to Seller.  Purchaser shall
actually pay to the taxing authority all Pipeline System Taxes for Straddle
Periods which are payable after the Closing Date.  Notwithstanding anything in
this Agreement to the contrary, no further adjustment shall be made for any
Pipeline System Taxes for a Straddle Period which are payable after the Closing
Date, and Purchaser hereby agrees to assume the payment of all such Pipeline
System Taxes effective upon Closing Date.
 
(b)           All refunds, credits, debits and liabilities for taxes
attributable to the Seller’s interest in the Pipeline System for periods prior
to Closing Date shall be the sole property and entitlement or detriment of
Seller, and to the extent received or incurred by Purchaser after the Closing
Date, Purchaser shall fully disclose, account for, and except as otherwise
provided for herein, remit same to or receive same from Seller promptly.  Seller
and Purchaser shall furnish each other with such documents and other records as
shall be reasonably requested in order to confirm all proration calculations.
 
(c)           All (i) amounts of rents and charges for water, sewer, telephone,
electricity, and other utilities and fuel, (ii) amounts of annual permits and/or
annual inspection fees, and (iii) other such amounts and charges that are
normally subject to pro ration between a purchaser and a seller of real or
personal property interests such as rents, fees and other amounts paid by or to
a seller under any lease, other contract or arrangement covering the Pipeline
System, that are applicable to a Straddle Period (collectively “Proratable
Amounts”) shall be prorated between Purchaser and Seller as of the Closing Date
based on the number of days of the applicable Straddle Period during which each
party owned the Pipeline System, with the Purchaser being treated as the owner
on the Closing Date.  Such Proratable Amounts shall be prorated between
Purchaser and Seller as of the Closing Date regardless of when such amounts are
actually billed and payable.  At Closing, Seller’s pro rata portion of any such
Proratable Amounts shall be deducted from the Purchase Price to be paid to
Seller.  At Closing Purchaser’s pro rata portion of any such Proratable Amounts
that have been previously paid by Seller shall be added to the Purchase Price to
be paid by Purchaser to Seller.  Purchaser shall actually pay to the applicable
party all such Proratable Amounts which are payable after the Closing
Date.  Notwithstanding anything in this Agreement to the contrary, no further
adjustment shall be made for any such Proratable Amounts which are payable after
the Closing Date, and Purchaser hereby agrees to assume the payment of all such
Proratable Amounts effective upon the Closing Date.
 
 
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8.2           Sales Taxes.  The Purchase Price provided for hereunder assumes
that no sales, use, transfer or similar taxes are required to be paid to any
state or other taxing authority in connection with the sale and transfer of
property pursuant to this Agreement (including without limitation documentary
transfer taxes, realty transfer taxes and charges or fees with respect to the
transfer of real property or to the recordation of the documents necessary for
the transfer of real property that may be required for the transfer of property
from Seller to Purchaser). However, in the event any Governmental Body deems any
such tax, fee or levy imposed on or assessed against the transfer of the
Pipeline System to Purchaser under this Agreement, Purchaser shall be liable and
responsible for timely payment thereof and shall indemnify and hold Seller
harmless with respect to the payment of any such taxes, fees or levies,
including any interest or penalties assessed thereon.  Purchaser shall also pay
all fees for recording all instruments of conveyance or applications for permits
or licenses or the transfer thereof relating to the transfer of the interests
included in the Pipeline System.
 
8.3           Cooperation. Each Party shall provide the other Party with
reasonable access to all relevant documents, data and other information which
may be required by the other Party for the purpose of preparing tax returns and
responding to any audit by any taxing jurisdiction. Each Party shall cooperate
with all reasonable requests of the other Party made in connection with
determining or contesting tax liabilities attributable to the Pipeline
System.  Notwithstanding anything to the contrary contained in this Agreement,
neither Party to this Agreement shall be required at any time to disclose to the
other Party any tax returns or other confidential tax information.
 
8.4           Payables.  Notwithstanding the Closing and except to the extent
covered by Sections 8.1 through 8.2, all of the accounts payable due to third
parties by Seller based upon its ownership or operation of the Pipeline System
through the Closing Date shall be paid and borne by Seller.
 
 
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ARTICLE IX.
DISPUTE RESOLUTION
 
9.1           Dispute Resolution.  In the event of a dispute between the parties
as to any matter arising under this Agreement, such dispute shall be resolved in
accordance with the dispute resolution provisions described in Exhibit D
attached hereto and incorporated herein by reference for all purposes.
 
ARTICLE X.
MISCELLANEOUS
 
10.1           No Brokers.  Each Party represents and warrants to the other that
there are no claims for brokerage commissions or finders’ fees or other like
payments owed by such Party to another Person in connection with the
transactions contemplated by this Agreement. Each Party will pay or discharge,
and will indemnify and hold harmless the other from and against, any and all
claims for brokerage commissions or finders’ fees incurred by reason of any
action taken by such indemnifying Party.
 
10.2           Expenses. Except as otherwise provided herein, each Party will
pay all fees and expenses incurred by it in connection with this Agreement and
the consummation of the transactions contemplated hereby.
 
10.3           Further Assurances.  Each Party will from time to time after the
Closing and without further consideration, upon the request of the other Party,
execute and deliver such documents and take such actions as the other Party may
reasonably request in order to consummate more effectively the transactions
contemplated hereby.
 
10.4           Assignment; Parties in Interest.  This Agreement shall be binding
upon, inure to the benefit of and be enforceable by the respective successors
and permitted assigns of the Parties; provided that neither Party may transfer
or assign any of its rights or obligations hereunder or any interest herein
without the prior written consent of the other Party; and provided further that
the assignment by Seller of its rights under this Agreement in the circumstances
provided below shall be a permitted assignment for the purposes of this Section
10.4 provided that no such assignment will relieve the assigning Party of its
obligations hereunder: by Seller, to an Affiliate of Seller provided that
Denbury Resources Inc. executes and delivers an unconditional guarantee of the
payment obligations of such assignee relating to this Agreement, in favor of
Purchaser, in substantially the same form as the Guaranty Agreement.
 
10.5           Entire Agreement; Amendments.  This Agreement, including the
exhibits and any agreements delivered pursuant hereto, contains the entire
understanding of the Parties with respect to the sale of the Pipeline System.
There are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings other than those expressly set forth or referred to
herein or therein. This Agreement and such other agreements supersede all prior
agreements and undertakings between the Parties with respect to the sale of the
Pipeline System, except to the extent any such prior agreement is specifically
referred to herein or therein. This Agreement may be amended or modified only by
a written instrument duly executed by each of the Parties. Unless otherwise
provided herein, any condition to a Party’s obligations hereunder may be waived
only in writing by such Party.
 
 
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10.6           Severability.  In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, and this Agreement shall
be construed as if such invalid, illegal or unenforceable provision(s) had never
been contained herein.
 
10.7           Interpretation.  The article and section headings are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
 
10.8           Notices.  Notices and other communications provided for herein
shall be in writing (which shall include notice by telex or facsimile machine
with answer back capability) and shall be delivered or mailed (or if by telex,
graphic scanning or other facsimile communications equipment of the sending
Party hereto, delivered by such equipment provided that such delivery is made
during normal business hours), addressed as follows:
 
(a)           If to Purchaser:
 
c/o Genesis Energy, L.P.
500 Dallas, Suite 2500
Houston, Texas 77002
Fax No.: (713) 860-2640
Attention:  Joseph A. Blount, President & Chief Operating Officer

 
with a copy (which shall not constitute notice) to:

 
Akin Gump Strauss Hauer & Feld LLP
1111 Louisiana Street
44th Floor
Fax No.: (713) 236-0822
Attention:  J. Vincent Kendrick, Esq.
 
(b)           If to Seller:
 
c/o Denbury Resources Inc.
5100 Tennyson Parkway, Suite 1200
Plano, Texas 75024
Fax No.: (972) 673-2150
Attention: Phil Rykhoek, Chief Financial Officer

 
with a copy (which shall not constitute notice) to:

 
Baker & Hostetler LLP
1000 Louisiana, Suite 2000
Houston, Texas 77002
Fax No.: (713) 751-1717
Attention: Donald W. Brodsky, Esq.

 
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or to such other address as the Person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above. Any
notice shall not be deemed to have been given to any Party until actually
received by such Party.
 
10.9           Waiver of Rescission.  Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of either
Party after the consummation of the Closing to rescind this Agreement or any of
the transactions contemplated hereby.
 
10.10         Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Texas, without regard
to any conflict of law rules that would direct application of the laws of
another jurisdiction, except to the extent that it is mandatory that the law of
some other jurisdiction, wherein the Pipeline System is located, shall apply.
 
10.11         Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument.
 
10.12         Exhibits. All Exhibits attached hereto are hereby made a part of
this Agreement and incorporated herein by this reference. Any terms used but not
defined in the Exhibits shall have the meanings assigned to such terms in this
Agreement.
 
10.13         No Third-Party Beneficiary. Except as expressly provided herein,
this Agreement is not intended to create nor shall it be construed to create,
any rights in any third party beneficiaries.
 
10.14         Use of Seller’s Name.  As soon as practicable after Closing,
Purchaser shall cease to use and shall remove or cause to be removed the names
and marks used by Seller and all variations and derivatives thereof and logos
relating thereto, and any information regarding Seller, from the Pipeline System
and shall not thereafter make any use whatsoever of such names, marks and logos,
or information regarding Seller, whether as identification for the Pipeline
System or in connection with documentation and correspondence relating thereto,
except as may be necessary to complete the transfer of the Pipeline System and
any consents related thereto. In the event Purchaser has not completed such
removal within 180 days after Closing, Seller shall have the right but not the
obligation to cause such removal and Purchaser shall reimburse Seller for any
costs or expenses incurred by Seller in connection therewith.
 
10.15         Conflict with Conveyance Agreements. Seller and Purchaser
acknowledge and agree that in the event of any conflict or inconsistency between
the terms and provisions of this Agreement and the terms and provisions of the
Conveyance Agreements, the terms and provisions of this Agreement shall control.
 
10.16         Denbury Guaranty.  Simultaneously with the execution of this
Agreement, Denbury Resources Inc. is executing and delivering for the benefit of
Purchaser a Guaranty Agreement that unconditionally and irrevocably guarantees
the payment obligations of Seller under this Agreement.
 
 
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10.17         Tax Opinion to Genesis MLP and Genesis Energy,
Inc.  Simultaneously with the execution of this Agreement, tax counsel to
Purchaser is rendering and delivering a tax opinion to Genesis MLP and Genesis
Energy, Inc. with respect to certain tax matters, and furthermore, tax counsel
to Purchaser shall deliver the background memorandum to Genesis MLP and Genesis
Energy, Inc. supporting such tax opinion within thirty (30) days following the
Closing Date.
 
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set
forth in the first paragraph hereof.
 

 
SELLER:
                   
DENBURY ONSHORE, LLC
             
By:
/s/  Phil Rykhoek
     
Name:
Phil Rykhoek
     
Title:
Senior Vice President and Chief Financial Officer
                       
PURCHASER:
                   
GENESIS FREE STATE PIPELINE, LLC
             
By:
/s/ Ross A. Benavides
     
Name:
Ross A. Benavides
     
Title:
Chief Financial Officer
 

 
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