ex10_3.htm


    
      

    

    Exhibit
10.3


       

      TRANSPORTATION
SERVICES AGREEMENT

       

      BY
AND BETWEEN

       

      GENESIS
FREE STATE PIPELINE, LLC

       

      AND

       

      DENBURY
ONSHORE, LLC

      


       

      Dated:
May 30, 2008


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      TABLE
OF CONTENTS

       

      
        	 
      	 
      	 
      	 
      	
                Page

              
	 	 	 	 	 
	
                ARTICLE I.

              	 
      	
                DEFINITIONS

              	 
      	
                1

              
	 	 	 	 	 
	
                1.1

              	 
      	
                Defined
      Words and Terms

              	 
      	
                1

              
	 	 	 	 	 
	
                ARTICLE
      II.

              	 
      	
                SCOPE
      OF TRANSPORTATION SERVICE

              	 
      	
                3

              
	 	 	 	 	 
	
                2.1

              	 
      	
                Transportation
      of Carbon Dioxide

              	 
      	
                3

              
	 	 	 	 	 
	
                2.2

              	 
      	
                Redelivery
      of Carbon Dioxide

              	 
      	
                3

              
	 	 	 	 	 
	
                2.3

              	 
      	
                Operation
      of the Pipeline

              	 
      	
                3

              
	 	 	 	 	 
	
                2.4

              	 
      	
                Entire
      Capacity

              	 
      	
                4

              
	 	 	 	 	 
	
                2.5

              	 
      	
                Anthropogenic
      Carbon Dioxide

              	 
      	
                4

              
	 	 	 	 	 
	
                2.6

              	 
      	
                Agreement
      to Remain Shipper

              	 
      	
                5

              
	 	 	 	 	 
	
                ARTICLE
      III.

              	 
      	
                TRANSPORTATION
      FEE

              	 
      	
                6

              
	 	 	 	 	 
	
                3.1

              	 
      	
                Transportation
      Fee

              	 
      	
                6

              
	 	 	 	 	 
	
                ARTICLE
      IV.

              	 
      	
                TERM;
      RENEWALS; EVENTS OF DEFAULT; REMEDIES

              	 
      	
                6

              
	 	 	 	 	 
	
                4.1

              	 
      	
                Initial
      Term

              	 
      	
                6

              
	 	 	 	 	 
	
                4.2

              	 
      	
                Renewal
      Terms

              	 
      	
                6

              
	 	 	 	 	 
	
                4.3

              	 
      	
                Default

              	 
      	
                6

              
	 	 	 	 	 
	
                4.4

              	 
      	
                Remedies
      Upon Default

              	 
      	
                7

              
	 	 	 	 	 
	
                4.5

              	 
      	
                New
      Transportation Services Agreement

              	 
      	
                8

              
	 	 	 	 	 
	
                ARTICLE
      V.

              	 
      	
                RECEIPT
      POINTS, DELIVERY POINTS AND PRESSURES

              	 
      	
                8

              
	 	 	 	 	 
	
                5.1

              	 
      	
                Receipt
      Points and Delivery Points

              	 
      	
                8

              
	 	 	 	 	 
	
                5.2

              	 
      	
                Responsibility

              	 
      	
                9

              
	 	 	 	 	 
	
                5.3

              	 
      	
                Pressure
      Criteria

              	 
      	
                9

              
	 	 	 	 	 
	
                ARTICLE
      VI.

              	 
      	
                QUANTITY

              	 
      	
                9

              
	 	 	 	 	 
	
                6.1

              	 
      	
                Delivery
      Rates

              	 
      	
                9

              
	 	 	 	 	 
	
                6.2

              	 
      	
                Cooperation
      Regarding Deliveries

              	 
      	
                9

              
	 	 	 	 	 
	
                ARTICLE
      VII.

              	 
      	
                QUALITY
      SPECIFICATIONS

              	 
      	
                10

              
	 	 	 	 	 
	
                7.1

              	 
      	
                Specification

              	 
      	
                10

              
	 	 	 	 	 
	
                7.2

              	 
      	
                Testing

              	 
      	
                10

              
	 	 	 	 	 
	
                7.3

              	 
      	
                Disclaimer

              	 
      	
                10

              
	 	 	 	 	 
	
                7.4

              	 
      	
                Sour
      Carbon Dioxide

              	 
      	
                10

              
	 	 	 	 	 
	
                ARTICLE
      VIII.

              	 
      	
                OWNERSHIP
      AND OPERATION OF THE PIPELINE

              	 
      	
                11

              


      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	
                8.1

              	 
      	
                Facility
      Ownership

              	 
      	
                11

              
	 	 	 	 	 
	
                8.2

              	 
      	
                Maintenance
      and Repair of Pipeline; Improvements to Pipeline

              	 
      	
                11

              
	 	 	 	 	 
	
                8.3

              	 
      	
                Reimbursement
      for Carbon Dioxide Losses

              	 
      	
                12

              
	 	 	 	 	 
	
                ARTICLE
      IX.

              	 
      	
                MEASUREMENT

              	 
      	
                12

              
	 	 	 	 	 
	
                9.1

              	 
      	
                Measurement
      Point

              	 
      	
                12

              
	 	 	 	 	 
	
                9.2

              	 
      	
                Procedure

              	 
      	
                13

              
	 	 	 	 	 
	
                9.3

              	 
      	
                Atmospheric
      Pressure

              	 
      	
                13

              
	 	 	 	 	 
	
                9.4

              	 
      	
                Meter
      Standards

              	 
      	
                13

              
	 	 	 	 	 
	
                9.5

              	 
      	
                Temperature

              	 
      	
                13

              
	 	 	 	 	 
	
                9.6

              	 
      	
                Calibration
      of Meters

              	 
      	
                13

              
	 	 	 	 	 
	
                9.7

              	 
      	
                Meter
      Inaccuracies

              	 
      	
                13

              
	 	 	 	 	 
	
                9.8

              	 
      	
                Samples

              	 
      	
                14

              
	 	 	 	 	 
	
                ARTICLE
      X.

              	 
      	
                FORCE
      MAJEURE

              	 
      	
                14

              
	 	 	 	 	 
	
                10.1

              	 
      	
                Definition

              	 
      	
                14

              
	 	 	 	 	 
	
                10.2

              	 
      	
                Limitation
      on Force Majeure

              	 
      	
                15

              
	 	 	 	 	 
	
                10.3

              	 
      	
                Strikes
      and Lockouts

              	 
      	
                15

              
	 	 	 	 	 
	
                ARTICLE
      XI.

              	 
      	
                NOTICES

              	 
      	
                15

              
	 	 	 	 	 
	
                11.1

              	 
      	
                Denbury
      Notices

              	 
      	
                15

              
	 	 	 	 	 
	
                11.2

              	 
      	
                Genesis
      SPE Notices

              	 
      	
                16

              
	 	 	 	 	 
	
                11.3

              	 
      	
                Change
      of Address

              	 
      	
                16

              
	 	 	 	 	 
	
                11.4

              	 
      	
                Electronic
      Notices

              	 
      	
                16

              
	 	 	 	 	 
	
                ARTICLE
      XII.

              	 
      	
                PAYMENT,
      AUDIT AND FINANCIAL RESPONSIBILITY

              	 
      	
                16

              
	 	 	 	 	 
	
                12.1

              	 
      	
                Payment

              	 
      	
                16

              
	 	 	 	 	 
	
                12.2

              	 
      	
                Auditing

              	 
      	
                17

              
	 	 	 	 	 
	
                12.3

              	 
      	
                Failure
      to Pay

              	 
      	
                17

              
	 	 	 	 	 
	
                ARTICLE
      XIII.

              	 
      	
                WARRANTIES

              	 
      	
                17

              
	 	 	 	 	 
	
                13.1

              	 
      	
                Denbury
      Warranty

              	 
      	
                17

              
	 	 	 	 	 
	
                13.2

              	 
      	
                Genesis
      SPE Warranty

              	 
      	
                17

              
	 	 	 	 	 
	
                ARTICLE
      XIV.

              	 
      	
                GENERAL
      TERMS AND CONDITIONS

              	 
      	
                18

              
	 	 	 	 	 
	
                14.1

              	 
      	
                Waiver
      of Breach

              	 
      	
                18

              
	 	 	 	 	 
	
                14.2

              	 
      	
                Regulatory
      Bodies

              	 
      	
                18

              
	 	 	 	 	 
	
                14.3

              	 
      	
                CHOICE
      OF LAW

              	 
      	
                18

              
	 	 	 	 	 
	
                14.4

              	 
      	
                Joint
      Preparation

              	 
      	
                18

              


      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      
        	
                14.5

              	 
      	
                Assignment

              	 
      	
                18

              
	 	 	 	 	 
	
                14.6

              	 
      	
                Modification
      and Entire Agreement

              	 
      	
                19

              
	 	 	 	 	 
	
                14.7

              	 
      	
                Headings

              	 
      	
                19

              
	 	 	 	 	 
	
                14.8

              	 
      	
                Damage
      Limitation

              	 
      	
                19

              
	 	 	 	 	 
	
                14.9

              	 
      	
                Arbitration

              	 
      	
                19

              
	 	 	 	 	 
	
                14.10

              	 
      	
                Change
      in Use

              	 
      	
                20

              
	 	 	 	 	 
	
                14.11

              	 
      	
                Guaranty

              	 
      	
                20

              
	 	 	 	 	 
	
                14.12

              	 
      	
                Reserve
      Reports

              	 
      	
                20

              
	 	 	 	 	 
	
                14.13

              	 
      	
                Financials

              	 
      	
                20

              
	 	 	 	 	 
	
                ARTICLE
      XV.

              	 
      	
                DENBURY’S
      RIGHT OF FIRST REFUSAL

              	 
      	
                20

              
	 	 	 	 	 
	
                15.1

              	 
      	
                Right
      of First Refusal

              	 
      	
                20

              
	 	 	 	 	 
	
                ARTICLE
      XVI.

              	 
      	
                REPRESENTATIONS
      AND COVENANTS OF GENESIS SPE; SPECIAL REPRESENTATIONS AND COVENANTS OF
      GENESIS SPE

              	 
      	
                20

              
	 	 	 	 	 
	
                16.2

              	 
      	
                Special
      Representations and Covenants of Genesis SPE

              	 
      	
                22

              
	 	 	 	 	 
	
                16.3

              	 
      	
                Reporting
      Requirement

              	 
      	
                24

              
	 
      	 
      	 
      	 
      	 
      
	
                EXHIBIT
      “A”

              	 
      	
                Transportation
      Fee Schedule

              	 
      	 
      
	 	 	 	 	 
	
                EXHIBIT
      “B”

              	 
      	
                Receipt
      Point Descriptions

              	 
      	 
      
	 	 	 	 	 
	
                EXHIBIT
      “C”

              	 
      	
                Delivery
      Point Descriptions

              	 
      	 
      
	 	 	 	 	 
	
                EXHIBIT
      “D”

              	 
      	
                Pipeline
      System

              	 
      	 
      
	 	 	 	 	 
	
                EXHIBIT
      “E”

              	 
      	
                Dispute
      Resolution Procedures

              	 
      	 
      
	 	 	 	 	 
	
                EXHIBIT
      “F”

              	 
      	
                Form
      of Memorandum of Agreement

              	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                EXHIBIT
      “G”

              	 
      	
                Outstanding
      Consents

              	 
      	 
      


      


      
        
           


        

        
          iii

          
            

          

        

        
           


        

      


      TRANSPORTATION SERVICES
AGREEMENT

       

      THIS TRANSPORTATION SERVICES
AGREEMENT (this “Agreement”), made and
entered into effective as of May 30, 2008 (the “Effective Date”), by
and between GENESIS FREE STATE
PIPELINE, LLC a Delaware limited liability company (hereinafter referred
to as “Genesis
SPE”), and DENBURY
ONSHORE, LLC, a Delaware limited liability company (hereinafter referred
to as “Denbury”).

       

      
        R E C I T A L
S:

      

       

      WHEREAS,
Genesis SPE owns the Free State Pipeline currently used for the transportation
of Carbon Dioxide, which pipeline extends from Receipt Point(s) (as defined in
Section 1.1) at the dehydration facilities in Rankin County, Mississippi to
multiple Delivery Points (as defined in Section 1.1) in eastern Mississippi;
and

       

      WHEREAS,
Denbury desires to arrange for the transportation of Carbon Dioxide through the
Pipeline and Genesis SPE desires to receive from, transport and redeliver to
Denbury, Carbon Dioxide, in accordance with the terms and conditions stated in
this Agreement.

       

      NOW,
THEREFORE, for and in consideration of the mutual benefits to be derived, the
terms and conditions contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Genesis SPE and
Denbury hereby agree with each other as follows:

       

      ARTICLE
I.

      DEFINITIONS

       

      1.1           Defined Words and
Terms. The following capitalized words and terms as used herein shall
have the meanings indicated:

       

      (a)           The
term “Anthropogenic
Carbon Dioxide” means any Carbon Dioxide that is not sourced from
underground natural deposits of Carbon Dioxide or natural deposits of natural
gas that contain significant volumes of Carbon Dioxide.

       

      (b)           The
term “Applicable
Laws” means and includes any and all laws, ordinances, orders, rules, and
regulations of all governmental bodies (state, federal, tribal and municipal)
having jurisdiction over the use, occupancy, operation and maintenance of the
Pipeline, as such may be amended or modified from time to time.

       

      (c)           The
term “Bankruptcy
Event” means, with respect to either party, the entry of a decree or
order by a court of competent jurisdiction adjudging the party as bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the party under the
Federal Bankruptcy Code or any other applicable law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
party or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of sixty (60) consecutive Days; or the
consent by such party to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or consent seeking
reorganization or similar relief under the Federal Bankruptcy Code or any other
applicable law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the party or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as they
become due and its willingness to be adjudicated a bankrupt.

       

      
        
           


        

        
          1

          
            

          

        

        
           


        

      


      (d)           The
term “Carbon
Dioxide” means a substance primarily composed of molecules containing one
atom of carbon and two atoms of oxygen and containing at least 95 percent (dry
basis) by volume of such molecules.

       

      (e)           The
term “Contract
Year” means a period of three hundred sixty-five (365) consecutive Days
beginning on the first Day of the first full Month following the Month in which
deliveries commence under this Agreement or on any anniversary thereof; provided, however, that any
such year which contains a date of February 29th shall consist of three hundred
sixty-six (366) consecutive Days. This definition of Contract Year contemplates
the possibility of first deliveries occurring on a Day other than the first Day
of a Month.

       

      (f)           The
term “Cubic
Foot” means the amount of Carbon Dioxide necessary to fill one cubic foot
of space at a base pressure of 15.025 Psia and at a base temperature of 60°
Fahrenheit.

       

      (g)           The
term “Daily Maximum
Quantity” means the maximum amount of Carbon Dioxide that can be
transported through the Pipeline in a Day at an operating pressure equal to the
lesser of (i) the designed maximum allowable operating pressure of the Pipeline
or (ii) the actual pressures from time to time out of Denbury’s Jackson Dome
Field at the Receipt Point(s).

       

      (h)           The
term “Day”
means a period beginning at 7:00 a.m. (local time) on a calendar day and ending
at 7:00 a.m. (local time) on the next succeeding calendar day.  The
date of a Day shall be that of its beginning.

       

      (i)           The
term “Delivery
Points” has the meaning stated in Section 2.2.

       

      (j)           The
term “Denbury
Designee” means a subsidiary of Denbury, a joint venture in which Denbury
owns an equity interest or any other third-party, in each case that Denbury
designates as entitled to receive Carbon Dioxide at a Delivery Point, or to
deliver Carbon Dioxide to Denbury at a Receipt Point.

       

      (k)           The
term “Genesis
Holdings” means Genesis Free State Holdings, LLC, a Delaware limited
liability company.

       

      (l)           The
term “Genesis
MLP” means Genesis Energy, L.P., a Delaware limited
partnership.

       

      (m)           The
term “Governmental
Body” means any government or governmental or regulatory body thereof, or
political subdivision thereof, whether foreign, federal, state, tribal or local,
or any agency, instrumentality or authority thereof, or any court or arbitrator
(public or private).

       

      (n)           The
term “Knowledge” means,
with respect to Genesis SPE, the following individuals: Ross Benavides, Pat
Hodgins, Mike Moore, John Millar and Grant Sims, or their respective successors
in the same or similar officer positions, all of whom 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.

       

      
        
           


        

        
          2

          
            

          

        

        
           


        

      


      (o)           The
term “MCF”
means 1,000 Cubic Feet of Carbon Dioxide.

       

      (p)           The
term “MMCF”
means 1,000,000 Cubic Feet of Carbon Dioxide.

       

      (q)           The
term “Material”
or “Materially”
when used in reference to (i) the amount of Carbon Dioxide that is able to ship
through the Pipeline, or (ii) to the Pipeline capacity generally, means greater
than 5.0% of the then current Pipeline capacity (which on the Effective Date is
450 MMCF per Day).

       

      (r)           The
term “Month”
means a period beginning at 7:00 a.m. (local time) on the first Day of a
calendar month and ending at 7:00 a.m. (local time) on the first Day of the next
succeeding calendar month.

       

      (s)           The
term “Permitted
Encumbrances” means (a) materialmen’s, mechanic’s, repairmen’s,
employees’, contractors’ and other similar liens or charges arising in the
ordinary course of business, so long as, at any time,  no enforcement
action with respect to any such lien has progressed to the point where a
judgment or decree for foreclosure, or a foreclosure sale, could be entered or
conducted with the next ensuing thirty (30) day period; (b) all rights reserved
to or vested in any Governmental Body to control or regulate any of the real
property interests constituting a part of the Pipeline; and (c) 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 as it is currently being used or materially interfere with the ordinary
conduct of the Pipeline.

       

      (t)           The
term “Pipeline”
means the existing Free State pipeline, which extends from the upstream flange
of the motor control valve which is downstream of the Denbury Free State
metering facilities at Denbury’s Jackson Dome Field dehydration facilities to
the outlet flanges of the motor-operated delivery valves which are downstream of
Genesis SPE’s metering facilities at all Delivery Points, which term shall also
include a 4.4 mile lateral pipeline to the Delivery Points at the Martinville
Field.

       

      (u)           The
term “Pipeline
System” has the meaning stated in Section 4.4(c).

       

      (v)           The
term “Pound-Mass” means the
mass quantity of Carbon Dioxide equivalent to a pound-mass as defined by the
United States National bureau of Standards.

       

      (w)           The
term “Psia”
means pounds per square inch absolute.

       

      (x)           The
term “Psig”
means pounds per square inch gauge.

       

      (y)           The
term “Receipt
Points” has the meaning stated in Section 2.1.

       

      
        
           


        

        
          3

          
            

          

        

        
           


        

      


      (z)           The
term “Related
Agreements” means all Meter Station and Pipeline Lateral Easement and
Road Use Agreements (“Easement and Road Agreements”) between Genesis SPE 2 as
Grantee and Denbury as Grantor, including those three (3) Easement and Road
Agreements dated May 30, 2008, made with respect to the Eucutta Field, the Soso
Field, and the Martinville Field, and all Agreements to Provide Electrical Power
(“Power Agreements”) between Denbury and Genesis SPE 2, including those two (2)
Power Agreements dated May 30, 2008, made with respect to the Eucutta Field and
the Soso Field, and any additional Easement and Road Agreements or Power
Agreements made between Genesis SPE 2 and Denbury in connection with additional
Delivery Points.

       

      (aa)           The
term “Subject
Area” means the (a) oil fields currently operated by Denbury in Eastern
Mississippi, and (b) other oil fields located within a radius of twenty-five
(25) miles of the Pipeline, so long as it is economically reasonable to obtain
rights-of-way access from such oil fields to the Pipeline..

       

      (bb)           The
term “Transportation
Fee” has the meaning stated in Section 3.1.

       

      ARTICLE
II.

      SCOPE
OF TRANSPORTATION SERVICE

       

      2.1           Transportation of Carbon
Dioxide. Subject to all of the terms, conditions, and limitations of this
Agreement, each Day during the term hereof Denbury shall have the right to
tender to Genesis SPE at the Receipt Points set forth in Exhibit B (including
future Receipt Points added pursuant to the terms of Section 5.1, the “Receipt Points”) for
transportation hereunder any volume of Carbon Dioxide up to the Daily Maximum
Quantity.  Denbury shall maintain ownership of the Carbon Dioxide
while in the Pipeline (the “Inventory”).


       

      2.2           Redelivery of Carbon
Dioxide. Subject to all of the terms, conditions, and limitations of this
Agreement, each Day during the term hereof Genesis SPE shall redeliver to
Denbury, at the Delivery Points set forth in Exhibit C (including
future Delivery Points added pursuant to terms of Section 5.1, the “Delivery Points”),
the volume of Carbon Dioxide delivered by Denbury to Genesis SPE at the Receipt
Points on such Day, as such volumes may be adjusted for gains or reductions due
to Carbon Dioxide added, lost or unaccounted for in the Pipeline and any other
gain, loss or shrinkage factor generally applicable from time to time to the
Pipeline.  Any losses of Carbon Dioxide from the Pipeline which occur
as a result of the gross negligence or willful misconduct of Genesis SPE, shall
be accounted for in accordance with Section 8.3 below.

       

      2.3           Operation of the
Pipeline. Genesis SPE will at all times act as a prudent operator and, at
its sole cost and expense, control, operate and maintain, preserve and keep in
good repair, working order and condition all improvements, machinery, equipment,
pipelines, tanks, metering facilities, fixtures and other personal property and
equipment of every kind and nature now or hereafter required in connection with
operation of the Pipeline, and promptly make all necessary and proper repairs,
renewals, replacements and substitutions, subject to the rights of Denbury set
forth in Section 8.1 below.  Furthermore, Genesis SPE will promptly
notify Denbury of any natural or artificial condition that does or reasonably
could be expected to Materially limit or impede the operation of the Pipeline or
to Materially decrease the amount of Carbon Dioxide that Denbury is able to ship
through the Pipeline.

       

      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      Denbury
shall at all times during the Term be permitted to observe, inspect and monitor
Genesis SPE’s operation of the Pipeline to ensure Genesis SPE’s compliance with
its obligations under this Agreement and its ability to perform transportation
services in accordance with all applicable regulatory and industry accepted
standards.  Genesis SPE shall at all times during the Term be
permitted to observe, inspect and monitor Denbury’s operation of the metering
facilities at the Jackson Dome Field to ensure Denbury’s compliance with its
obligations under this Agreement.

       

      2.4           Entire Capacity.


       

      (a)           Subject
to the terms of Sections 2.6(b) and 14.10, in consideration of Denbury’s
agreement to pay the Transportation Fee under Section 3.1 during the Initial
Term and any Renewal Terms (as such terms are defined under Section 4.2) Denbury
shall have the sole and exclusive right to the entire capacity of the Pipeline
to transport Carbon Dioxide, or any other substance.  Subject to the
terms of Sections 2.6(b) and 14.10, no other person, including Genesis SPE
itself, shall have the right to transport Carbon Dioxide, or any other
substance, through the Pipeline during the Term without Denbury’s consent, which
can be given or withheld in its sole discretion.

       

      (b)           If
Denbury’s sole and exclusive right (subject to Sections 2.6(b) and 14.10) to use
the entire capacity of the Pipeline to transport Carbon Dioxide, or any other
substance (the “Exclusive Right”)
under the terms of this Agreement is reasonably believed by Denbury to be
threatened due to (a) an application of, or a change in, federal law or
regulations or interpretation thereof, applicable to Carbon Dioxide pipelines or
their operation or ownership, (b) an application of, or a change in, law or
regulations or  interpretation thereof, of any state in which the
Pipeline, or any pipeline connected thereto, is located which is similarly
applicable, or (c) assertion by a third party of an actual or alleged right to
ship Carbon Dioxide on any part of the Pipeline, or any pipeline connected
thereto, then on request of Denbury, the parties hereto shall negotiate in good
faith to modify and will modify the terms of this Agreement and all documents
collateral hereto in order to assure that Denbury will continue to have the
Exclusive Right, on terms substantially the same as those contained in Section
2.4(a) hereinabove.

       

      (c)           Consistent
with Denbury’s Exclusive Right provided in Section 2.4(a) above, Genesis SPE
agrees to own and operate the Pipeline and conduct its business as a private
carrier and not as a common carrier, and that neither will it operate the
Pipeline for the purpose of transporting Carbon Dioxide or any other substance
to or for the public for compensation, nor will it seek certification as a
public utility or public service corporation under Mississippi law or other
Applicable Laws.

       

      2.5           Anthropogenic Carbon
Dioxide.  If at any time during the Term Denbury desires to
tender Material amounts (determined in reference to the Pipeline capacity
generally) of Anthropogenic Carbon Dioxide to Genesis SPE at the Receipt Points
(specified on Exhibit
B, as revised) for shipping, Denbury shall first notify Genesis SPE of
such desire and thereafter the parties shall negotiate in good faith to identify
mutually acceptable terms under which such Anthropogenic Carbon Dioxide may be
tendered or shipped; provided however, in no event
shall Denbury be prohibited from transporting Anthropogenic Carbon Dioxide.


       

      
        
           


        

        
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      2.6           Agreement to Remain
Shipper.  During the Initial Term or any Renewal Term(s) of
this Agreement: 

       

      (a)           During
any period in which Denbury or any of its affiliates is the direct or indirect
provider of Carbon Dioxide (including through the ownership of reserves in place
or the acquisition, lease or other procurement arrangement relating to natural
or anthropogenic Carbon Dioxide) to any of its oil and gas operations located in
the Subject Area on which enhanced oil recovery operations using Carbon Dioxide
are being conducted, and there is sufficient delivery capacity on the Pipeline,
Denbury will (and will cause its affiliates and others it controls, including by
operating agreement or otherwise, to) use the Pipeline to transport all of such
Carbon Dioxide.  To the extent that (i) there is not sufficient
delivery capacity on the Pipeline for the volumes of such Carbon Dioxide (such
volumes of Carbon Dioxide in excess of such available capacity, the “Excess Volumes”); or
(ii) the cost of transporting such Carbon Dioxide on the Pipeline is materially
higher than the cost of other transportation alternatives (such volumes of
Carbon Dioxide that, if transported on the Pipeline, would result in such
materially higher transportation cost to Denbury, the “Uneconomic Volumes”),
then Denbury shall be permitted to transport the Excess Volumes and/or the
Uneconomic Volumes by means other than the Pipeline.

       

      (b)           Denbury
will deliver to Genesis SPE, as soon as reasonably practicable, advanced written
notice of any material changes to its planned use of the Pipeline, and if
Denbury reasonably determines in good faith that it no longer intends to
transport any amounts of Carbon Dioxide through the Pipeline and provides
Genesis SPE with written notification of such intention, which specifies a date
following which Denbury will no longer transport Carbon Dioxide through the
Pipeline (the “Abandonment Date” and
the “Abandonment
Notice”), then, notwithstanding anything contained in this Agreement to
the contrary, Genesis SPE shall be permitted at any time after both Genesis
SPE’s receipt of the Abandonment Notice and the arrival of the Abandonment Date
to (i) terminate this Agreement, the Special Representations and Covenants
Agreement dated as of the Effective Date (“SRCA”) by and between Denbury,
Genesis Holdings and Genesis MLP and the ROFR (as such term is defined in Article XV) by and
between Denbury, Genesis Holdings and Genesis SPE without any further
obligations, costs or penalties, effective upon written notice of termination to
Denbury, (ii) accept Carbon Dioxide or any other substance for transport through
the Pipeline from any third party, (iii) make any such alterations or
modifications as may be required to the Pipeline to permit the transportation of
oil, natural gas or any other substance as determined by Genesis SPE, and (iv)
sell or otherwise dispose of the Pipeline (not subject to the ROFR or the
restrictions on transfer contained herein). Denbury shall be permitted at any
time after both Genesis SPE’s receipt of the Abandonment Notice and the arrival
of the Abandonment Date to terminate this Agreement, the SRCA and the ROFR
without any further obligations, costs or penalties, effective upon written
notice of termination to Genesis SPE.

       

      
        
           


        

        
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      ARTICLE
III.

      TRANSPORTATION
FEE

       

      3.1           Transportation Fee.
For the transportation of Denbury’s or Denbury Designee’s  Carbon Dioxide received
at the Receipt Points during any Month of the Initial Term and to the extent
they come into existence, the Renewal Terms, Denbury shall pay Genesis SPE a
transportation fee as more fully described in Exhibit A (the “Transportation Fee”).


       

      ARTICLE
IV.

      TERM;
RENEWALS; EVENTS OF DEFAULT; REMEDIES

       

      4.1           Initial Term. Subject
to the other provisions hereof, this Agreement shall be effective from the date
hereof and shall continue in force and effect for twenty (20) Contract Years
(the “Initial
Term”).

       

      4.2           Renewal
Terms.  Provided that Denbury is not in default under this
Agreement beyond applicable notice and cure or grace periods as set forth in
this Article IV
at the time of exercise of the Options granted herein, Denbury is granted two
options (the “Options”) to renew
this Agreement on the same terms and conditions hereunder, the first such option
for an additional term of five (5) years (which shall be referred to as the
“First Renewal
Term”) and the second such option for a subsequent renewal period of five
(5) years (which shall be referred to as the “Second Renewal
Term”); the First Renewal Term and the Second Renewal Term may be
collectively referred to hereinafter as the “Renewal
Terms”).  The First Renewal Term shall commence on the next Day
after the expiration of the Initial Term and the Second Renewal Term shall
commence on the next Day after the expiration of the First Renewal
Term.  Denbury shall exercise the Options, if at all, by delivering to
Genesis SPE written notice of the exercise of the Options at least six (6)
Months prior to the expiration of the Initial Term, or the First Renewal Term
(the Initial Term and to the extent they come into existence, the Renewal Terms,
may be collectively referred to in this Agreement as the “Term”).  

       

      4.3           Default. The
occurrence of one or more of the following matters shall constitute an event of
default (a “default”):  

       

      (a)           by
either party, upon the occurrence of a Bankruptcy Event involving such
party;

       

      (b)           by
either party, upon the failure of such party to make any payment to the other
party as and when due hereunder where such failure continues for thirty (30)
Days after the delivery of written notice by the other party of such failure to
make such payment;

       

      (c)           (i)
by either party, upon the material breach by such party of any other covenant,
agreement, obligation, duty or provision of this Agreement, (ii) by Genesis SPE,
upon the material breach by Genesis Holdings or
Genesis MLP of any representation, warranty, covenant or agreement made by
Genesis Holdings or Genesis MLP under the SRCA, or (iii) by Denbury, upon the
material breach by Denbury Resources Inc. of any covenant or agreement regarding
the Guaranty Agreement as provided in Section 14.11, where such breach under
(i), (ii) or (iii) above continues for thirty (30) Days after the breaching
party’s receipt of written notice thereof from the other party; provided, however, that if the
matter which is the subject of the breach cannot by its nature with due
diligence be remedied by such party within said thirty (30) Day period, and such
party shall have prepared a plan for remedying such failure that is reasonably
acceptable to the other party and such party is proceeding with diligence to
implement such plan, such thirty (30) Day period shall be extended by such
additional time period as may be reasonably required to implement such plan,
and, provided further, however, that the remedying of such potential default
shall not affect any right provided hereunder of the other party to terminate
this Agreement if other defaults occur before such potential default has been
remedied, and provided further that the notice and opportunity to cure
provisions of this Section 4.3(c) shall not apply to any of the events of
default under Sections 4.3(a), (b), or (d), and provided further,
however, that demand may be made on Denbury Resources Inc. on the
Guaranty Agreement only if a failure by Denbury to make a payment as and when
due hereunder continues unremedied for thirty (30) Days after the delivery of
written notice by Genesis SPE to Denbury of such failure, but following demand
on the Guaranty Agreement no further notice and opportunity to cure will be
required under the Guaranty Agreement related to such failure by
Denbury;

       

      
        
           


        

        
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      (d)           by
Genesis SPE, upon the occurrence of event of default by Genesis SPE, Genesis
MLP, or any other Genesis MLP affiliate, under any credit facility, financing
arrangement or other indebtedness for borrowed money to which Genesis SPE,
Genesis MLP or any other Genesis MLP affiliate is a party, co-borrower or
guarantor in an aggregate principal amount exceeding $10,000,000.

       

      4.4           Remedies Upon
Default. 

       

      (a)           Subject
to the requirements of Section 14.9 below that disputes be resolved in
accordance with the dispute resolution provisions described in Exhibit E hereto,
upon the occurrence of a default by a party and the expiration of any applicable
cure or grace period provided herein with respect thereto, the other party may
exercise any right or remedy it may have at law and/or in equity.

       

      (b)           Upon
the occurrence of a default by Genesis SPE under Sections 4.3(c) or 4.3(d)
above, (and the expiration of any applicable cure or grace period provided
herein with respect thereto), if the event of default Materially decreases the
amount of Carbon Dioxide that Denbury is able to ship through the Pipeline,
Denbury shall have the right to appoint a replacement operator for Genesis SPE
as operator of the Pipeline during the Term; provided that such replacement
operator shall not be Denbury, Denbury Resources Inc., or any of its controlled
subsidiaries other than Genesis MLP or one of its controlled subsidiaries; and
provided further, that upon such replacement, Genesis SPE shall supervise and
monitor the performance of the replacement operator to confirm such replacement
operator’s compliance with the performance obligations of the operator hereunder
(an “Operator
Replacement”).  Further, upon the occurrence of a default by Genesis
SPE under Section 4.3(a), Denbury shall have the right to effect an Operator
Replacement.  All fees and
expenses of the replacement operator shall be borne by Genesis
SPE.

       

      (c)           Upon
the occurrence of a default by Genesis SPE under Section 4.3(c) or 4.3(d),
above, if such event of default Materially decreases, or will Materially
decrease the amount of Carbon Dioxide that Denbury is able to ship through the
Pipeline, or upon the occurrence of a default under Section 4.3(a), Denbury
shall have the option, but not the obligation, but only within thirty (30) Days
of the occurrence of any such event of default, to notify Genesis SPE of its
intention to purchase the Pipeline, along with the assets, contracts and
properties associated therewith (as described on Exhibit D, and
collectively referred to as the “Pipeline System”,
provided that the term Pipeline System shall also include all assets, contracts
and properties (including Related Agreements) that become associated with the
Pipeline during the Term subsequent to the Effective Date, including new Receipt
Points and Delivery Points that may be established as provided in Article V hereunder)
at a price equal to one hundred percent (100%) of the Pipeline System’s Fair
Market Value (as defined below); provided, however, that Denbury
may elect to offset or recoup any other amounts owed by Genesis SPE to Denbury
under this Agreement against the purchase price of the Pipeline System at the
time that the Fair Market Value is determined.  As used herein, the
term “Fair Market Value” shall mean the higher of (i) the fair market value of
the Pipeline System;  or (ii) the fair market value of the Pipeline
System after giving effect to this Agreement.  If the parties cannot
agree upon such Fair Market Value within thirty (30) Days of Denbury’s notice to
Genesis SPE of its intention to purchase the Pipeline System, the purchase price
shall be determined pursuant to an arbitration proceeding conducted in
accordance with Section 14.9.  The parties shall cooperate in good
faith to consummate the sale as soon as reasonably possible, and if the parties
are unable to close the transaction within ninety (90) Days of Denbury’s notice
to Genesis SPE of its intention to purchase the Pipeline System, the parties
shall submit to an arbitration proceeding conducted in accordance with Section
14.9 to resolve any remaining issues related to the purchase of the Pipeline
System by Denbury.  All future obligations of the parties under this
Agreement, the Guaranty Agreement and the Related Agreements and all of Genesis
SPE’s interests therein, shall terminate upon consummation of any such purchase
of the Pipeline System by Denbury, provided that the parties shall retain any
and all rights to pursue remedies provided herein against the other for damages
resulting from breaches of this Agreement that occur prior to the consummation
of any such purchase.

       

      
        
           


        

        
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      4.5           New Transportation Services
Agreement. Provided that Denbury is not in default under this Agreement
beyond applicable notice and cure or grace periods as set forth in this Article IV, and
assuming Denbury has previously exercised both Options for the Renewal Terms as
provided in Section 4.2 above, at Denbury’s request the parties agree to
negotiate in good faith regarding a new transportation services agreement on
terms consistent with then-current market conditions, for the period after the
expiration of the Second Renewal Term.  The parties shall commence any
negotiations on a new transportation services agreement no later than twelve
(12) Months prior to the expiration date of the Second Renewal Term (the “Negotiation
Period”).  During the Negotiation Period, if any bona fide
written or oral offers are delivered by Genesis SPE to third-parties (the “Delivered Offers”) or
received by Genesis SPE from third-parties (the “Received Offers,” and
together with the Delivered Offers, collectively the “Offers”) regarding
the transportation of any substance on the Pipeline by Genesis SPE on behalf of
such third-parties after expiration of the Second Renewal Term, Genesis SPE
shall provide Denbury with written notification of all terms and conditions of
each Offer within ten (10) Days following delivery or receipt
thereof.  Thereafter, if a third-party desires to accept a Delivered
Offer, or Genesis SPE desires to accept a Received Offer, before entering into
any transportation services agreement between Genesis SPE and such third-party
based on such Offer, Genesis SPE will provide Denbury with the final agreed form
of such transportation services agreement and thereafter Denbury shall have
thirty (30) Days to enter into such transportation services agreement with
Genesis SPE in lieu of such third-party.

       

      
        
           


        

        
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      ARTICLE
V.

      RECEIPT
POINTS, DELIVERY POINTS AND PRESSURES

       

      5.1           Receipt Points and Delivery
Points.

       

      (a)           The
Receipt Points are set forth on Exhibit
B.  The Delivery Points are set forth on Exhibit
C.  Denbury may notify Genesis SPE at any time and from time to
time that Denbury or Denbury’s Designee requires one or more additional Receipt
Points or Delivery Points on the Pipeline and Genesis SPE will establish such
additional Receipt Points or Delivery Points as soon as reasonably
practicable.  Denbury shall reimburse Genesis SPE for all incremental
costs incurred or to be incurred by Genesis SPE as a result of the addition of
such Receipt Points or Delivery Points through a one-time reimbursement payment.
Upon the addition of any Receipt Point or Delivery Point, the parties shall
execute an amendment of this Agreement which shall reflect all of the Receipt
Points or Delivery Points on a revised Exhibit B or Exhibit C, as
appropriate.  Furthermore, the parties may enter into additional
Related Agreements, as needed, with respect to such new Receipt Points or
Delivery Points.

       

      (b)           The
exact point at which delivery by Genesis SPE to Denbury or Denbury’s Designee
shall be deemed to be made shall be the outlet flange of Genesis SPE’s motor
operated delivery valve connecting the facilities of the Pipeline with the
facilities of Denbury or Denbury’s Designee.

       

      (c)           The
parties agree that (i) new Receipt Points will be established for any
Anthropogenic Carbon Dioxide that is to be shipped on the Pipeline or, (ii) to
the extent Denbury commingles Anthropogenic Carbon Dioxide and naturally
occurring Carbon Dioxide upstream of the established Receipt Points, the parties
shall reasonably agree upon an allocation of volumes between the naturally
occurring Carbon Dioxide and Anthropogenic Carbon Dioxide at such Receipt
Points.

       

      5.2           Responsibility.  As
between the parties hereto, and subject to the limitations set forth in other
provisions of this Agreement, Genesis SPE shall be responsible for any injuries,
losses, expenses, claims, liabilities, or damages caused by the Carbon Dioxide
while it is in the Pipeline until it shall have been delivered to Denbury or
Denbury’s Designee at the Delivery Points.  Prior to receipt by
Genesis SPE at the Receipt Points and after such delivery to Denbury or
Denbury’s Designee at the Delivery Points, Denbury or Denbury’s Designee shall
be responsible for any injuries, losses, expenses, claims, liabilities, or
damages caused thereby. Subject to the limitations set forth in other provisions
of this Agreement, each party (the “Indemnifying Party”)
shall indemnify the other party in respect of any injuries, losses, expenses,
claims, liabilities, or damages occurring while the Carbon Dioxide is in
possession of the Indemnifying Party. Genesis SPE shall not take title to
Denbury’s Carbon Dioxide in the Pipeline merely by receipt of such Carbon
Dioxide for Denbury’s account. Genesis SPE will not have title to any of the
Carbon Dioxide including any Carbon Dioxide provided by Denbury for
Inventory.

       

      5.3           Pressure
Criteria.  All Carbon Dioxide tendered by Denbury at any
Receipt Point shall be delivered at pressures sufficient to enter the Pipeline
at the working pressures maintained by Genesis SPE at such Receipt Point from
time to time. Genesis SPE shall deliver the volumes of Carbon Dioxide as
provided for hereunder at the Delivery Points at pressures ranging from 1100 to
1680 psig.  It is the intention of both parties that the pressure of
the Pipeline will be controlled by Denbury’s operations at its Jackson Dome
Field and that Genesis SPE shall not be required to install compression or
pumping equipment to increase or control the pressure in the Pipeline at any
time.

       

      
        
           


        

        
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      ARTICLE
VI.

      QUANTITY

       

      6.1           Delivery Rates.
Genesis SPE and Denbury shall endeavor to deliver and to accept, respectively,
Carbon Dioxide in as reasonably constant rates as is practicable. Genesis SPE
and Denbury understand and agree that the amount of Carbon Dioxide delivered
hereunder from time to time may not exactly equate with the volume of Carbon
Dioxide requested for delivery hereunder since variations may occur due to the
inherent fluctuations in normal pipeline operations.

       

      6.2           Cooperation Regarding
Deliveries. Genesis SPE and Denbury agree to fully cooperate with each
other in adjusting monthly and daily deliveries hereunder.  In the
event of an emergency which poses danger to life or property, no prior notice
shall be necessary before partial or total shutdown by either party, but notice
of such shutdown and the reason therefore shall be given as soon as practicable
thereafter. If a shutdown becomes necessary for either party on a non-emergency
basis, such party shall give at least twenty-four (24) hours’ prior notice to
the other party.

       

      ARTICLE
VII.

      QUALITY
SPECIFICATIONS

       

      7.1           Specification. The
Carbon Dioxide delivered by Denbury to Genesis SPE at the Receipt Points and
delivered by Genesis SPE to Denbury at the Delivery Points shall meet the
following specifications (collectively the “Quality
Specifications”):

       

      (a)           Water. The Carbon
Dioxide shall not contain any free water and the water vapor content shall not
exceed thirty (30) pounds per MMCF.

       

      (b)           Hydrogen Sulfide. The
Carbon Dioxide shall not contain more than 100 ppm of hydrogen sulfide on a
volume basis.

       

      (c)           Volume.  The
Carbon Dioxide shall be at least 95% pure (dry basis).

       

      (d)           Pressure.  The
Carbon Dioxide shall have a minimum pressure of 1100 psig.

       

      (e)           Temperature.  The
Carbon Dioxide shall have a maximum temperature no higher than 110 degrees
Fahrenheit.

       

      7.2           Testing.  Denbury
shall ensure that tests to determine the quality of Carbon Dioxide are conducted
as often as necessary in Denbury’s sole opinion, utilizing approved standard
methods in general use. At Genesis SPE’s request, Denbury shall furnish Genesis
SPE with copies of all test results. Denbury shall give Genesis SPE reasonable
notice of all such tests in order that Genesis SPE or Genesis SPE’s agent may
have its representative present, if Genesis SPE so desires.

       

      
        
           


        

        
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      7.3           Disclaimer. THE
PARTIES HERETO RECOGNIZE AND AGREE THAT NEITHER PARTY IS A MERCHANT OF FOOD
GRADE OR MERCHANTABLE CARBON DIOXIDE FOR USE IN FOOD OR DRINK OR OTHER
CONSUMABLES AND NEITHER PARTY IN ANY WAY WARRANTS THE MERCHANTABILITY OR FITNESS
OF ANY CARBON DIOXIDE DELIVERED OR TO BE DELIVERED HEREUNDER FOR ANY PARTICULAR
PURPOSE.

       

      7.4           Sour Carbon
Dioxide.  In the event that Denbury desires to have Genesis SPE
transport Carbon Dioxide that contains hydrogen sulfide in excess of the
specifications set forth in Section 7.1(b) (“Sour Carbon Dioxide”), Denbury
shall so notify Genesis SPE and advise Genesis SPE of the expected hydrogen
sulfide composition of the Sour Carbon Dioxide that Denbury desires to have
transported. Promptly upon receipt of such notice, Genesis SPE shall conduct
such studies as it believes are necessary to determine the incremental costs
that Genesis SPE will incur to transport such Sour Carbon Dioxide for Denbury,
and it shall complete such studies within 90 Days of its receipt of Denbury’s
notice.  Genesis SPE shall make all such studies available to Denbury,
and based on such studies, the parties shall negotiate a revised Transportation
Fee which shall be designed to take into account such incremental
costs.  In the event the parties are unable to mutually agree upon a
revised Transportation Fee, either party may submit the determination of the
revised Transportation Fee to the dispute resolution provisions conducted in
accordance with Section 14.9. Upon the determination of the revised
Transportation Fee, Genesis SPE shall promptly commence to modify the Pipeline
so as to enable it to transport Denbury’s Sour Carbon Dioxide, and it shall
prosecute such modification to completion with due diligence. Genesis SPE shall
advise Denbury when such modification has been completed, and thereafter Denbury
shall be entitled to commence the delivery of Sour Carbon Dioxide to Genesis SPE
hereunder. 

       

      ARTICLE
VIII.

      OWNERSHIP
AND OPERATION OF THE PIPELINE

       

      8.1           Facility Ownership.
Genesis SPE will own, operate, maintain and make any improvements to the
Pipeline. However, any improvements made to, or maintenance or operations of,
the Pipeline by Genesis SPE following the Effective Date shall not adversely
affect Denbury’s intended use of the Pipeline set forth
hereunder.  Denbury will own, operate and maintain the pipelines and
measurement facilities that are upstream of the upstream flange of the motor
control valve which is downstream of the Denbury Free State metering facilities
at Denbury’s Jackson Dome Field dehydration facilities at each Receipt Point and
the pipelines and measurement facilities beginning with and downstream of the
outlet flange of the motor-operated delivery valve located downstream of Genesis
SPE’s custody transfer meter at each Delivery Point.  Denbury will
maintain Carbon Dioxide custody to the upstream flange of Genesis SPE’s motor
control valve which is downstream of Denbury’s measurement facilities at each
Receipt Point.  Denbury shall be solely responsible for the delivery
of Carbon Dioxide to the upstream flange on the inlet side of Genesis SPE’s
motor control valve at each Receipt Point.  Genesis SPE will maintain
Carbon Dioxide custody from the motor control valve which is downstream of
Denbury’s Free State metering facility at each Receipt Point to the flange on
the outlet side of Genesis SPE’s motor-operated valve which is downstream of
Genesis SPE’s metering facility at each Delivery Point. Genesis SPE shall be
solely responsible for the delivery of Carbon Dioxide to the flange on the
outlet side of Genesis SPE’s motor-operated delivery valve at each Delivery
Point. All piping downstream from the Delivery Points shall be the
responsibility of Denbury. Any of Denbury’s rights to deliver and receive Carbon
Dioxide under this Agreement may be transferred to a Denbury Designee and the
provisions of this Section 8.1 will be deemed modified to account for such
transfer to Denbury’s Designee; provided however, that Denbury
remains responsible for all of its obligations hereunder, including without
limitation for payment of Transportation Fees for all Carbon Dioxide delivered
by the Pipeline on behalf of a Denbury Designee hereunder.

       

      
        
           


        

        
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      8.2           Maintenance and Repair of
Pipeline; Improvements to Pipeline.  To the extent the Pipeline
requires maintenance or repair work, or improvements that, when performed, could
reasonably be expected to adversely affect Genesis SPE’s ability to accept or
redeliver a Material volume of Carbon Dioxide delivered by Denbury, the parties
will evaluate circumstances and determine the most optimal timing and means by
which to conduct such maintenance, repair or improvement activity so as to
minimize the negative impact of such maintenance, repair or improvements on
Denbury’s throughput of Carbon Dioxide through the Pipeline.  Upon
such determination by the parties, Genesis SPE shall perform such work as soon
as reasonably practicable. To the extent the Pipeline requires maintenance or
repair work resulting from an emergency situation and such work can be
immediately performed by Denbury, and Denbury reasonably determines that Genesis
SPE will not immediately perform the work, then Denbury shall have the right,
but not the obligation, to perform such maintenance or repair work, subject to
industry accepted standards, on Genesis SPE’s behalf and in connection
therewith, incur reasonable expenses for the account of Genesis SPE, and any and
all such sums expended or obligations reasonably incurred by Denbury in
connection therewith shall be paid by Genesis SPE to Denbury within thirty (30)
Days following written invoice from Denbury.  In the event Genesis SPE
fails to reimburse and pay same to Denbury, Denbury may deduct such amounts from
subsequent monthly installments of the Transportation Fee and other charges (if
any) that from time to time thereafter may become due and payable by Denbury to
Genesis SPE hereunder.  Any such deduction from the monthly
Transportation Fee shall not constitute an event of default by Denbury.


       

      8.3           Reimbursement for Carbon
Dioxide Losses.  In the event that losses of Carbon Dioxide for
a given Month during the Term occur in excess of the average normal losses or
average normal unaccounted for volumes occurring during the immediately
preceding three (3) Months, and that such losses are due in any substantial part
to the gross negligence or willful misconduct of Genesis SPE during its
operation of the Pipeline, Genesis SPE shall reimburse Denbury for the actual
volume of such excess loss in an amount per MCF of Carbon
Dioxide  equal to 1.0% of the arithmetic average of all daily
settlement prices published for the “Light Sweet Crude Oil” (CL) prompt month
contract reported by the New York Mercantile Exchange (NYMEX) (trade days only)
beginning on the first day of the Delivery Month through and including the last
day of the Delivery Month. The Delivery Month shall be the month in which the
Carbon Dioxide was lost.  The actual volume lost will be the
difference between (i) the Month to date total of all Carbon Dioxide received as
measured by all Receipt Point meters less the average
normal losses and average normal unaccounted for volumes of Carbon Dioxide
during the immediately preceding three (3) Months, and (ii) the Month to date
total volume of all Carbon Dioxide actually determined to be delivered as
measured by all Delivery Point meters.  

       

      
        
           


        

        
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      If for
any reason the total excess loss cannot be ascertained or computed from the
readings of existing meters it shall be estimated and agreed upon by the parties
upon the basis of the best data available, using the first of the following
methods which is feasible: (x) by using the registration of any check meters, if
installed and accurately registering; (y) by estimating the quantity delivered
during preceding periods under similar conditions, or (z) by mathematical
calculations where appropriate.

       

      ARTICLE
IX.

      MEASUREMENT


       

      9.1           Measurement Point.
The Carbon Dioxide received and delivered hereunder shall be measured for
custody transfer by Denbury at the Receipt Points and by Genesis SPE at the
Delivery Points in accordance with the standards set out in this
Article.  Each party shall have sole responsibility for the operation
and maintenance of its respective Carbon Dioxide metering
facilities.  Genesis SPE shall have care, custody and control of the
Carbon Dioxide following transfer at the Receipt Points until the Carbon Dioxide
is re-delivered to Denbury at the Delivery Points.

       

      9.2           Procedure. Custody
transfer measurement of Carbon Dioxide shall be determined from Pound-Mass
quantities, which will be converted to standard Cubic Feet quantities. The
molecular weight of the metered stream of Carbon Dioxide, calculated from the
compositional analyses, shall be the basis for conversion of Pound-Mass
measurement units to standard Cubic Feet measurement units.

       

      9.3           Atmospheric Pressure.
The atmospheric pressure at the Receipt Points and Delivery Points shall be
based upon 14.73 Psia at sea level, which corrected to actual elevation is
15.025 Psia, and may be assumed to be constant for calculation
purposes.

       

      9.4           Meter Standards. The
Carbon Dioxide delivered hereunder shall be measured with orifice meters
constructed and installed in accordance with the October, 1981, compilation of
standards in the American Petroleum
Institute, Manual of Petroleum Standards, Chapter 14, with any subsequent
amendments, revisions and additions which may be mutually acceptable to Genesis
SPE and Denbury. Computations of Pound Mass shall also be made in accordance
with said manual.  Either party may install, at its own expense, a
check meter at the location of the other party’s custody transfer meter, which
meter shall be of similar quality to the custody transfer meter in
place.  The installation and operation of such check meter shall be
conducted so as not to adversely affect the operation of the existing metering
facilities.  Both Denbury and Genesis SPE shall have reasonable access
to the Carbon Dioxide metering facilities of the other, including access to
check meters, at all reasonable times.  

       

      9.5           Temperature. The
temperature of the Carbon Dioxide shall be determined by an on-line temperature
measuring device so installed that it will sense the temperature of the Carbon
Dioxide flowing through the meter.

       

      
        
           


        

        
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      9.6           Calibration of
Meters.  Denbury and Genesis SPE agree to maintain their
respective meter facilities so as to perform accurately and remain in good
repair.  Each Receipt Point meter (which will be owned by Denbury) and
Delivery Point meter (which will be owned by Genesis SPE) shall be calibrated
(by checking the temperature, pressure and pressure differential transducers) at
least once every thirty (30) Days by Denbury and Genesis SPE, respectively. Each
party shall provide reasonable notice to the other party of such test of its
measuring equipment in order that, if so desired, the other party may have its
representative present to witness such test.  In addition to the
foregoing, the measuring equipment shall be inspected, tested and calibrated by
an independent certified company agreeable to both parties twice a year. At any
time Denbury or Genesis SPE may challenge the accuracy of the custody transfer
metering equipment at the Delivery Point or Receipt Point, respectively, and if
challenged, the equipment shall be tested and repaired as
necessary.  If the accuracy of the metering equipment is challenged
and is found to be inaccurate by two percent (2%) or less, the challenging party
shall pay the expenses related to the special test.  If the metering
equipment is found to be inaccurate by an amount exceeding two percent (2%),
registrations thereof shall be corrected at zero percent (0%) for a period
extending back to the time such inaccuracy occurred, if such time is
ascertainable, and if such time is not ascertainable, then back one-half (1/2)
of the time elapsed since the last date of calibration.

       

      9.7           Meter
Inaccuracies.  If any inaccuracies greater than two percent
(2%) are found in a custody transfer meter as set forth in Section 9.6 above, or
if a custody transfer meter is out of service or out of repair so that the
amount of Carbon Dioxide delivered cannot be ascertained or computed from the
readings thereof or corrected pursuant to Section 9.6 above, the Carbon Dioxide
measurement during the period the meter is inaccurate or out of service or out
for repair shall be estimated and agreed upon by the parties using the best data
available, upon the first of the following methods which is feasible:


       

      (a)           By
using the registration of any check meter, if installed and accurately
registering.

       

      (b)           By
correcting the error if the percentage of error is ascertainable by calibration,
test, or mathematical calculation.

       

      (c)           By
estimating the quantity delivered by deliveries during preceding periods under
similar conditions when the meter was registering accurately.

       

      9.8           Samples.  A
composite sample of Denbury’s Carbon Dioxide stream shall be accumulated during
each Month at the Receipt Point and analyzed for its composition by gas
chromatograph or other methods agreed to by Genesis SPE and Denbury, at
Denbury’s expense.

       

      ARTICLE
X.

      FORCE
MAJEURE

       

      10.1           Definition. If, while
this Agreement is in effect, either party is rendered unable, wholly or in part,
by Force Majeure to carry out its obligations (except financial obligations)
under this Agreement, it is agreed that, on such party’s giving notice and
reasonably full particulars of such Force Majeure in writing to the other party
within three (3) business Days after the occurrence of the Force Majeure relied
on, then the obligations of the party giving such notice, so far as they are
affected by such Force Majeure, shall be suspended during the continuance of any
inability so caused, but for no longer period, and such cause shall so far as
possible be remedied with all reasonable dispatch. The term “Force Majeure,” as
used herein, shall mean acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, wars, terrorism, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
storms, floods, high water, washouts, arrests and restraints of government and
people, civil disturbances, explosions, breakage or accident to machinery or
lines of pipe, freezing of wells or lines of pipe, partial or entire failure of
wells, and any other causes, whether of the kind herein enumerated or otherwise,
not reasonably within the control of the party claiming Force Majeure. Without
limiting the generality of the foregoing, the term “Force Majeure” shall
likewise include those instances where either party hereto is required to
furnish materials and supplies for the purpose of constructing or maintaining
facilities or is required to secure permits, rights-of-way or permissions from
any governmental agency or other person or entity to enable such party to
perform hereunder, the inability of such party to acquire, or the delays on the
part of such party in acquiring, at reasonable cost and after the exercise of
reasonable diligence, such materials and supplies, permits and
permissions.  An occurrence of Force Majeure that affects the source
of Denbury’s Carbon Dioxide or the ability of Denbury’s operations to receive
and utilize the Carbon Dioxide supplies shall be deemed to be an occurrence of
Force Majeure affecting Denbury hereunder.

       

      
        
           


        

        
          15

          
            

          

        

        
           


        

      


      10.2           Limitation on Force
Majeure.  The fact that an emergency situation is an event of
Force Majeure will not limit Denbury’s rights to perform maintenance or repair
work to the Pipeline as provided in Section 8.2 above.  If, after
deliveries have commenced hereunder, an event of Force Majeure Materially
affects the amount of Carbon Dioxide that Denbury is able to ship through the
Pipeline during a consecutive period of 45 or more Days, then, at any time after
such period and prior to the time such event has been remedied, Denbury may
effect an Operator Replacement and/or Denbury may purchase the Pipeline System
under the same terms as described in Section 4.4(c); provided that,
notwithstanding the right of Denbury to effect an Operator Replacement, and the
right of Denbury to purchase the Pipeline as described in Section 4.4(c), a
Force Majeure event as described in this sentence shall not be treated as an
event of default under this Agreement. 

       

      10.3           Strikes and
Lockouts.  It is understood and agreed that the settlement of
strikes or lockouts shall be entirely within the discretion of the party having
the difficulty and that the above requirement that any Force Majeure shall be
remedied with all reasonable dispatch shall not require the settlement of
strikes or lockouts by acceding to the demands of any opposing party when such
course is inadvisable in the discretion of the party having the difficulty.


       

      ARTICLE
XI.

      NOTICES

      


      11.1           Denbury
Notices.  All notices provided for herein shall be in writing
and shall be deemed to be delivered to Denbury when received via the United
States mail at the following address:

      


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      DENBURY
ONSHORE, LLC

      Attn:
Phil Rykhoek, Chief Financial Officer

      5100
Tennyson Parkway

      Suite
1200

      Plano,
Texas 75024


       

      With a copies
to:


       

      DENBURY
RESOURCES, INC.

      Attn: H.
Raymond Dubuisson, Vice President – Land

      5100
Tennyson Parkway

      Suite
1200

      Plano,
Texas 75024


       

      Baker
& Hostetler LLP

      Attn:
Donald W. Brodsky, Esq.

      1000
Louisiana

      Suite
2000

      Houston,
Texas 77002

       

      11.2         Genesis SPE Notices.
All notices provided for herein shall be in writing and shall be deemed to be
delivered to Genesis SPE when received via the United States mail at the
following address:

       

      GENESIS
FREE STATE PIPELINE, LLC

      Attn:
Joseph A. Blount, President and Chief Operating Officer

      500
Dallas St.

      Suite
2500

      Houston,
Texas 77002


       

      With a copies
to:


       

      Akin Gump
Strauss Hauer & Feld LLP

      Attn: J.
Vincent Kendrick, Esq.

      1111
Louisiana Street

      44th
Floor

      Houston,
Texas 77002

       

      11.3         Change of Address.
Either party may change its address described in this Article by sending written
notice to the other party in accordance with the provisions of this
Article.

      


      11.4         Electronic
Notices.  With respect to notices required under Section 6.2
and Section 7.2 above, the parties may elect to provide such notices via
electronic communication (i.e., electronic mail and telephone facsimile) to the
other party to the following contact information:


      
        
           


        

        
          17

          
            

          

        

        
           


        

      


      Denbury:

      
        	
                 
      

              	
                Attn:

              	
                Dan
      E. Cole, Vice President, Marketing

              


      

      
        	
                 
      

              	
                E-Mail:

              	
                dan.cole@denbury.com

              


      

      
        	
              	
                Facsimile:

              	
                (972)
      673-2299

              


      

       

      Genesis
SPE:

       

      
        	
                 
      

              	
                Attn:

              	
                Joe
      Blount, President & Chief Operating
Operator

              


      

      
        	
                 
      

              	
                E-Mail:

              	
                JAB@genlp.com

              


      

      
        	
              	
                Facsimile:

              	
                (713)
      860-2636

              


      

       

      Furthermore,
all written notices as required under this Article XI to be sent
via United State Mail may also be distributed via electronic mail and facsimile
at the discretion of either party.

       

      ARTICLE
XII.

      PAYMENT,
AUDIT AND FINANCIAL RESPONSIBILITY

       

      12.1           Payment. Genesis SPE
shall furnish a monthly statement by the first (1st) work Day of the Month
following any Month during which Carbon Dioxide is delivered (a “Subject Month”)
showing: (i) the total quantity of Carbon Dioxide received at all Receipt Points
during the Subject Month, (ii) the Inventory at the end of the Subject Month,
(iii) the quantity of Carbon Dioxide added, lost or unaccounted for during the
Subject Month, (iv) the quantity of Carbon Dioxide delivered to each Delivery
Point during the Subject Month, and (v) the total quantity of Carbon Dioxide
delivered at all Delivery Points during the Subject Month, and all other details
that are necessary to account for the volumes transported.  Denbury
shall make payment on or before the 20th day of the Month following the Subject
Month for the total quantity of Carbon Dioxide delivered at all Delivery Points
during the Subject Month at the monthly average MMCF/Day tier rates, in
accordance with Exhibit A attached
hereto. 

       

      12.2           Auditing. Each party
shall have the right at reasonable business hours to examine the books, records,
and measurement documents of the other party to the extent necessary to verify
the accuracy of any statement, payment, calculation, or determination made
pursuant to the provisions of this Agreement for any Contract Year within two
(2) Contract Years following the end of such Contract Year. If any such
examination shall reveal, or if either party shall discover, any error or
inaccuracy in its own or the other party’s statement, payment, calculation, or
determination, then proper adjustment and correction thereof shall be made as
promptly as practicable thereafter, except that no adjustment or correction
shall be made for an error or inaccuracy if more than two (2) Contract Years
have elapsed since the end of the Contract Year in which such error or
inaccuracy occurred.

       

      12.3           Failure to Pay. If
Denbury fails to pay any amount payable to Genesis SPE hereunder when due, then
commencing five (5) Days from the date written notice is received by Denbury of
such failure until the date payment is made, interest thereon shall accrue and
be payable at the lesser of (i) the
highest legally permissible rate or (ii) the prime lending rate (as such rate
may vary from day-to-day), plus an additional
two percent (2%), established by JP Morgan Chase Bank, N.A., New York until the
date payment is made.  If, for any reason, such failure to pay any
amount continues for thirty (30) Days or more after the date that written notice
is received by Denbury of such failure, then (a) Genesis SPE may suspend its
deliveries of Carbon Dioxide hereunder and (b) such matter shall be resolved in
accordance with the arbitration provisions described in Section 14.9.


       


      
        
           


        

        
          18

          
            

          

        

        
           


        

      


      ARTICLE
XIII.

      WARRANTIES

       

      13.1           Denbury Warranty.
Denbury warrants, for itself, its successors, heirs, legal representatives and
assigns, to Genesis SPE that at the time Denbury delivers Carbon Dioxide to
Genesis SPE, Denbury will have good title to or the right to deliver such Carbon
Dioxide, and that such Carbon Dioxide shall be free and clear from liens,
encumbrances and claims of every kind and shall meet the quality specifications
set forth under Article VII. Denbury
shall indemnify and save Genesis SPE harmless from all suits, claims, liens,
damages, costs, losses, expenses and encumbrances of whatsoever nature arising
from and out of claims of any or all persons to said Carbon Dioxide, or title
thereto, or to royalties, taxes, license fees, payments or other charges thereon
applicable before the delivery of the Carbon Dioxide by Denbury or a Denbury
Designee to Genesis SPE and after the redelivery of the Carbon Dioxide by
Genesis SPE to Denbury or a Denbury Designee.

       

      13.2           Genesis SPE
Warranty.  Genesis SPE warrants, for itself, its successors,
heirs, legal representatives and assigns, to Denbury that at the time Genesis
SPE re-delivers Carbon Dioxide to Denbury or a Denbury Designee, Genesis SPE
will have the right to deliver such Carbon Dioxide, and that such Carbon Dioxide
shall be free and clear from liens, encumbrances and claims of every kind, and
shall meet the quality specifications set forth under Article VII. Genesis
SPE shall indemnify and save Denbury harmless from all suits, claims, liens,
damages, costs, losses, expenses and encumbrances of whatsoever nature arising
from and out of claims of any or all persons to said Carbon Dioxide, or title
thereto, or to royalties, taxes, license fees, payments or other charges thereon
applicable after the delivery of the Carbon Dioxide by Denbury or a Denbury
Designee to Genesis SPE and before the redelivery of the Carbon Dioxide by
Genesis SPE to Denbury or a Denbury Designee.

       

      ARTICLE
XIV.

      GENERAL
TERMS AND CONDITIONS

       

      14.1           Waiver of Breach. The
waiver by any party of any breach of the provisions of this Agreement shall not
constitute a continuing waiver of other breaches of the same or other provisions
of this Agreement.

       

      14.2           Regulatory Bodies.
This Agreement, all operations contemplated hereunder and all terms and
provisions contained herein, and the respective obligations of the parties are
subject to Applicable Laws.  However, nothing contained herein shall
be construed as a waiver of any right of any party to question or contest any
such law, order, rule, or regulation in any forum having or alleging to have
jurisdiction. Denbury and Genesis SPE each agree to comply with all Applicable
Laws and regulations governing the operations and transactions involved in this
Agreement, including, but not limited to, applicable regulations governing
safety, pollution, and pipeline and other operations. Genesis SPE and Denbury
understand that Genesis SPE’s ability to deliver Carbon Dioxide hereunder is
subject to existing and future governmental regulations affecting the
Pipeline.

       

      
        
           


        

        
          19

          
            

          

        

        
           


        

      


      14.3           CHOICE OF LAW. THIS
AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF MISSISSIPPI, EXCLUDING ITS CONFLICTS OF LAW
PROVISIONS.

       

      14.4           Joint Preparation.
This Agreement was prepared by all parties hereto and not by any party to the
exclusion of one or the other.

       

      14.5           Assignment.  Except
as provided in this Section 14.5, during the Term, neither Denbury nor Genesis
SPE may Transfer (as defined in Section 16.2(b)) this Agreement or their rights
or obligations hereunder, either in whole or in part.  Notwithstanding
the foregoing, and subject to Denbury’s rights and obligations set forth under
Article XV
hereunder and the ROFR referenced therein:

       

      (a)           Denbury
may Transfer this Agreement to an affiliate or other entity which is the
successor to all or substantially all of Denbury’s assets relating to this
Agreement without the consent of Genesis SPE, provided that such Transfer of
this Agreement shall require the assignee to expressly agree in writing to
assume and perform all of Denbury’s obligations under this Agreement, and
provided further, that Denbury Resources Inc. executes and delivers an
unconditional guarantee of the payment obligations of such assignee under this
Agreement, in favor of Genesis SPE, in substantially the same form as the
Guaranty Agreement, as such term is defined in Section 14.11 below;

       

      (b)           Denbury
may encumber or pledge its interests in this Agreement in connection with a bona
fide third-party financing without the consent of Genesis SPE; 

       

      (c)           Genesis
SPE (or as applicable its successor) shall be permitted and required to assign
this Agreement in connection with a Permitted Sale Transfer of the Pipeline
System consummated in accordance with the terms and conditions of the ROFR (as
that term is defined in Section 15.1 below); and

       

      (d)           Any
purported Transfer of this Agreement or any right or obligation hereunder in
contravention of the foregoing terms shall be null and void.  Subject
to the foregoing, this Agreement binds and inures to the benefit of the parties
and their respective permitted successors and assigns and each reference to a
party in this Agreement shall be deemed to be a reference to such party’s
successors and assigns.  Except as expressly stated therein, nothing
contained in this Agreement is intended to confer upon any other person or
entity any benefits, rights, or remedies.  

       

      14.6           Modification and Entire
Agreement. No amendment or other modification of the terms or provisions
of this Agreement shall be made except by the execution of written agreements by
both parties, and any attempted modification or amendment not in compliance with
the terms of this sentence shall be void ab initio. This Agreement
constitutes the entire understandings, covenants and agreements of Genesis SPE
and Denbury with respect to transportation services relating to the
Pipeline.  Genesis SPE and Denbury each acknowledge that with respect
to transportation services relating to the Pipeline, no representations,
inducements, promises or agreements, oral or written, have been made by Genesis
SPE or Denbury, or anyone acting on behalf of Genesis SPE or Denbury, which are
not contained herein, and any prior agreements, promises, negotiations, or
representations not expressly set forth in this Agreement are of no force or
effect.

       

      
        
           


        

        
          20

          
            

          

        

        
           


        

      


      14.7           Headings. The Table
of Contents and headings contained in this Agreement are used solely for
convenience and do not constitute a part of the agreement between the parties
hereto, and they should not be used to aid in any manner in construing this
Agreement.

       

      14.8           Damage
Limitation.  Notwithstanding anything to the contrary in this
Agreement, neither party shall be liable to the other for any special, indirect,
consequential or punitive damages of any nature.

       

      14.9           Arbitration.  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 E attached
hereto and incorporated herein by reference for all purposes.

       

      14.10         Change in
Use.  In the event Denbury does not exercise its Options
pursuant to Section 4.2 to extend the Initial Term for the First Renewal Term or
to extend the First Renewal Term for the Second Renewal Term, then in either
case, immediately upon the earlier to occur of
(a) the Abandonment Date (as described above in Section 2.6), or (b) the
expiration of the then-current Term, Genesis SPE shall, notwithstanding anything
contained in this Agreement to the contrary, be permitted to (a) accept Carbon
Dioxide or any other substance for transport through the Pipeline from any third
party, and (b) make any such alterations or modifications as may be required to
the Pipeline to permit the transportation of oil, natural gas or any other
substance as determined by Genesis SPE.

       

      14.11         Guaranty.  Simultaneously
with the execution of this Agreement, Denbury Resources Inc. is executing and
delivering, and during the Term will maintain in effect, a Guaranty Agreement
(the “Guaranty Agreement”) for the benefit of Genesis SPE, that unconditionally
and irrevocably guarantees the payment obligations of Denbury under this
Agreement. 

       

      14.12        
Reserve
Reports.  If during the Term, Denbury Resources, Inc. is no
longer a reporting entity under the Securities and Exchange Act of 1934, Denbury
shall deliver annual reserve reports to Genesis SPE, within 90 days after the
end of each fiscal year, with respect to (i) each Carbon Dioxide field from
which Carbon Dioxide is shipped on the Pipeline System, and (ii) each
hydrocarbon field in the Subject Area to which Carbon Dioxide is shipped on the
Pipeline System.

       

      14.13          Financials.  Unless
available through the electronic data gathering, analysis and retrieval system
of the Securities and Exchange Commission (“SEC”), or otherwise publicly
available as documents are filed with the SEC, Denbury shall furnish to Genesis
SPE on or before 60 days after the end of each fiscal quarter and on or before
120 days after the end of each fiscal year, a copy of all of Denbury Resources
Inc.’s and its subsidiaries’ and affiliates’ quarterly and annual financial
statements (prepared in accordance with generally accepted accounting principles). 

       

      
        
           


        

        
          21

          
            

          

        

        
           


        

      


      14.14         Recording.  A
memorandum of this Agreement, substantially in the form attached hereto as Exhibit F, will be
recorded or filed by any party or its successors or assigns, in or with any
public or governmental office, officer, agency or records
repository.  If requested by the recording or filing party, the other
party shall cooperate with the recording or filing party’s efforts and
furthermore, the other party shall execute any documents or agreements necessary
to effectuate the recording or filing of a memorandum of this
Agreement.

       

      ARTICLE
XV.

      DENBURY’S
RIGHT OF FIRST REFUSAL

       

      15.1           Right of First
Refusal.  During the Term, neither Genesis SPE nor its
successor shall Transfer the Pipeline System (including any assets, contracts
and properties (including Related Agreements) that may become associated with
the Pipeline System subsequent to the Effective Date) or any component thereof
or interest therein to any third party unless such Transfer is permitted
pursuant to the terms and conditions of Section 1(a) of that certain Right of
First Refusal and Option to Purchase Agreement by and between Denbury, Genesis
SPE and Genesis MLP, dated as of the Effective Date hereof (the “ROFR”), or is
permitted under Section 16.2(b) below.  

       

      ARTICLE
XVI.

      REPRESENTATIONS
AND COVENANTS OF GENESIS SPE;

      SPECIAL
REPRESENTATIONS AND COVENANTS OF GENESIS SPE

       

      16.1           Representations and
Covenants of Genesis SPE.  In addition to the terms,
conditions, representations and warranties contained in this Agreement, as of
the Effective Date and throughout the Term of this Agreement (as if remade on
each Day during the Term), Genesis SPE covenants, represents and warrants as
follows:

       

      (a)           Genesis
SPE has title to the Pipeline
System, 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 Genesis SPE, except for Permitted
Encumbrances.

       

      (b)           Genesis
SPE is and will continue to be duly organized, validly existing and in good
standing under the laws of the state of its organization and is and will be duly
qualified to transact business in those states in which the Pipeline is
situated.

       

      (c)           Genesis
SPE has all requisite power and authority, has taken all actions required by its
organizational documents and Applicable Law, and has obtained all necessary
consents, to execute, deliver and perform its obligations under this
Agreement.  Genesis SPE will not be in breach of this Section 16.1(c)
by virtue of the failure to obtain, in connection with its acquisition of the
Pipeline System, any Outstanding Consent, as that term is defined and as set
forth, on Exhibit
G hereto.

       

      (d)           Neither
the execution and delivery of this Agreement nor the performance by Genesis SPE
of its obligations hereunder does or will (i) violate any restriction to which
Genesis SPE or the Pipeline is subject or will become subject; (ii) require any
consent from a third-party that has not been obtained; (iii) constitute the
violation of any Applicable Laws; (iv) result in the creation of any lien,
charge or encumbrance upon the Pipeline or any part thereof; or (v) violate the
terms of, any other contract, commitment, understanding, arrangement or
restriction of any kind or character to which Genesis SPE or any Genesis MLP
affiliate is a party or by which its assets are bound.  Genesis SPE
will not be in breach of this Section 16.1(d) by virtue of the failure to
obtain, in connection with its acquisition of the Pipeline System, any
Outstanding Consent.

       

      
        
           


        

        
          22

          
            

          

        

        
           


        

      


      (e)           There
are not now pending any proceedings for any attachments of or executions on the
Pipeline by, or assignments of the Pipeline for the benefit of creditors of,
Genesis SPE.

       

      (f)           Except
as set forth in Exhibit G and to
Genesis SPE’s Knowledge,  (a) there are no judgments, orders, writs or
injunctions of any Governmental Body, presently in effect or pending or
threatened, against Genesis SPE with respect to its interest in the Pipeline
System or the operation thereof, or which, if adversely determined, would impair
or prohibit Genesis SPE’s ability to enter into and perform its obligations
under this Agreement, (b) there are no claims, actions, suits or proceedings by
or before any Governmental Body pending or threatened by or against Genesis SPE
with respect to its interest in the Pipeline System or the operation thereof, or
which, if adversely determined, would impair or prohibit Genesis SPE’s ability
to enter into and perform its obligations under this Agreement, 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.

       

      (g)           Genesis
SPE has not received notice of, and there has not been, any change in Applicable
Laws with respect to the Pipeline, or, to Genesis SPE’s Knowledge, any pending
or threatened judicial or administrative action which in any way limits or
impedes the operation of the Pipeline.

       

      (h)           Genesis
SPE has and will continue to have all licenses, certificates and permits that
are required to fulfill all of its obligations hereunder and has paid and will
continue to pay all taxes, assessments and charges against the
Pipeline.

       

      (i)           No
condemnation, eminent domain or similar proceedings has been instituted or
threatened against the Pipeline.

       

      (j)           To
Genesis SPE’s Knowledge, all information and other items heretofore or hereafter
submitted to Denbury by or on behalf of Genesis SPE, regarding the Pipeline,
this Agreement or Genesis SPE, are true, correct and complete and to the extent
applicable, will continue to be true, correct and complete. Genesis SPE will not
fail to supply Denbury with any material information or other items with respect
to the Pipeline, this Agreement or Genesis SPE, nor will Genesis SPE fail to
supply any information which may be required to prevent the information or other
items already supplied from being misleading.

       

      16.2           Special Representations and
Covenants of Genesis SPE.  Genesis SPE represents that as of
the Effective Date, none of the acts or events described below have
occurred.  Genesis SPE agrees that throughout the Term of this
Agreement, including any renewals of such Term, Genesis SPE will neither take or
fail to take any action as a result of which any of the acts or events described
below will occur, nor permit, approve or authorize any of the acts or events
described below to occur:

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      
 

      (a)           Any
failure by Genesis SPE to continue to exist and be in good standing under the
laws of its state of organization and qualified to do business in the states in
which the Pipeline is situated;

       

      (b)          Any
transfer, directly or indirectly, voluntarily, involuntarily or by operation of
law, including by merger, reorganization, consolidation, exchange of securities,
sale, conveyance, assignment, pledge or otherwise (collectively “Transfer”) to
any third party (including Genesis MLP or any Genesis MLP Affiliate) either of
the Pipeline System, or any component thereof or interest therein, or this
Agreement, or any of Genesis SPE’s rights or obligations hereunder, or any of
Genesis SPE’s other physical or other assets, or the Related Agreements or any
of Genesis SPE 2's interest therein, without both Denbury’s prior written
approval and proper written documentation and corporate authority, provided that
without Denbury’s prior approval Genesis SPE may make:

      


      
        	
                 
      

              	
                (i)

              	
                a
      Permitted Sale Transfer (as that term is defined in the ROFR) subject and
      pursuant to the terms and conditions of the
  ROFR;

              


      

      
        	
                 
      

              	
                (ii)

              	
                a
      sale of a component of the Pipeline System in connection with the repair
      or replacement thereof made in the ordinary course of business of Genesis
      SPE, provided that if such sale would impede or adversely affect the
      operation of the Pipeline System or Denbury’s ability to ship carbon
      dioxide through the Pipeline, or negatively impact on the ability of
      Genesis SPE to perform its obligations under the Transportation Services
      Agreement, such sale may not be made without Denbury’s prior approval;
      and

              


      

      


      (c)          Any
merger of Genesis SPE with or into, or consolidation of Genesis SPE with, any
other entity.

       

      (d)          Any
failure by Genesis SPE to maintain the operation of its business as a stand
alone business separate and apart from the operation of any other business owned
either directly or indirectly by Genesis MLP or Genesis MLP’s
affiliates.

       

      
        (e)         
Any
change by Genesis SPE of its entity structure or organizational
documents.

      

       

      (f)          Any
failure by Genesis SPE to keep and maintain its own set of books and
records.

       

      (g)          Genesis
SPE being a party to any agreement which provides for the commingling of its
monies or any of its assets with the monies or assets of any other entity,
except that Genesis SPE may enter into a written administrative services
agreement with Genesis MLP or any Genesis MLP affiliate, setting out, on a
predetermined basis, the terms and conditions (including the charges, if any),
on which the parties to such agreement will handle the cash flows between such
parties, and any other administrative services provided to Genesis SPE.


       

      (h)          Genesis
SPE entering into any agreement which provides that it will become obligated on
any debt for its own account or that it will become obligated on or guaranty any
debt or contractual obligation on behalf of or for the benefit of Genesis MLP,
any Genesis MLP affiliate or any other entity.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      (i)          
Genesis SPE employing any employees on a shared basis with any other
entity, other than Genesis SPE being able, on a part time basis, to
utilize the services of employees who are also employed
by Genesis MLP or any Genesis MLP affiliate, pursuant to a written
agreement between Genesis SPE and Genesis MLP or any Genesis MLP affiliate
providing that Genesis SPE will bear, on a pre-determined basis, all direct and
indirect costs for compensation, benefits and overhead resulting
from employment of any such employee that are attributable
to the portion of such employee's time devoted to providing services to Genesis
SPE.

       

      (j)          Genesis
SPE failing to conduct only the business of owning and operating the Pipeline
and performing its obligations under this Agreement, or Genesis SPE owning any
assets other than those necessary in connection the conduct of such
business.

       

      16.3           Reporting
Requirement.  On
a periodic basis, but at least quarterly, Genesis SPE, through its managing
partner, managing member or other authorized officer, shall submit a
certificate, using a format reasonably acceptable to Denbury, that expressly
states that Genesis SPE is in compliance with each and every representation,
warranty, covenant and agreement in this Article XVI and/or that each and every
such representation, warranty, covenant and agreement is true and correct, as
applicable.  If Genesis SPE cannot make such certification for any
reason, Genesis SPE shall specify those provisions with which it is in
compliance and those provisions with which it is not in compliance (specifying
why it is not in compliance) and/or those provisions which are true and correct
and those provisions which are not true and correct (specifying why they are not
true and correct).  It is expressly agreed and understood by Genesis
SPE that the representations, warranties, covenants and agreements in this
Article XVI are ongoing during the entire Term of this Agreement, and that
Denbury will rely on such representations, warranties, covenants and
agreements.  Such certificate shall be furnished by the fifteenth
(15th) day following the month ending each
calendar quarter (e.g. the quarterly compliance certificate for January – March
is due April 15).

      


       

      [Signatures
on following page]


      
        
           


        

        
          25

          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed in multiple originals by their proper officers thereunto duly
authorized, to be effective as of the date first hereinabove
written.

       

      
        	
                DENBURY:

              	 
      	
                GENESIS
      SPE:

              
	 
      	 
      	 
      
	
                DENBURY
      ONSHORE, LLC

              	 
      	
                GENESIS
      FREE STATE PIPELINE, LLC

              
	 
      	 
      	 
      
	
                By:

              	
                /s/
      Phil Rykhoek

              	 
      	
                By:

              	
                /s/
      Ross A. Benavides

              
	
                Name:

              	
                Phil
      Rykhoek

              	 
      	
                Name:

              	
                Ross
      A. Benavides

              
	
                Title:

              	
                Senior
      Vice President and Chief Financial Officer

              	 
      	
                Title:

              	
                Chief
      Financial Officer

              


      


      
        
           


        

        
          26

          
            

          

        

        
           


        

      


      EXHIBIT
“A”

       

      TRANSPORTATION
FEE SCHEDULE

       

      Based
on Average Daily Volumes

       

      The total
Transportation Fee during the Term will be the sum of $100,000 per month plus a
throughput fee based on a tiered transportation rate structure on each range of
average daily volumes of Carbon Dioxide delivered in any given month, as set
forth below:

       

      


       

      
        	
                Average Daily Volumes of Carbon Dioxide
      Delivered

              	
                Transportation Rate for Average Daily Volumes Delivered Within
      Specified

                Quantity Range

              
	
                0-100     MMCF/day

              	
                $0.14/MCF

              
	
                100-200
      MMCF/day

              	
                $0.11/MCF

              
	
                200-300
      MMCF/day

              	
                $0.09/MCF

              
	
                300-350
      MMCF/day

              	
                $0.03/MCF

              
	
                350-400
      MMCF/day

              	
                $0.01/MCF

              
	
                400-450
      MMCF/day

              	
                $0.005/MCF

              


      

      


       

      The
throughput fee will be calculated based on the average daily volume of Carbon
Dioxide delivered during a Month through all Delivery Points.  The
average daily volume will be calculated based on the total volume of Carbon
Dioxide delivered each Month through all Delivery Points, divided by the actual
number of calendar Days for that particular Month. This tiered rate structure
provides for transportation rates that gradually reduce as additional average
daily volumes of Carbon Dioxide are delivered by Genesis SPE on behalf of
Denbury.  Once the average daily volumes of Carbon Dioxide delivered
reach each designated threshold, the transportation rate for delivery of
incremental average daily volumes will be reduced correspondingly as set forth
above.

       

      For
example, if Genesis SPE delivers a monthly average of 275 MMCF/Day of Carbon
Dioxide on behalf of Denbury under this Agreement, Denbury’s total
Transportation Fee for such month would be $100,000 plus a throughput fee
calculated as follows: (a) $0.14/MCF for the first 100 MMCF/Day delivered; (b)
$0.11/MCF for the next 100 MMCF/Day delivered; and (c) $0.09/MCF for the
remaining 75 MMCF/Day delivered.